Background information on FfD/UNCDF collaboration
The vast majority of "bankable" people in the world do not yet have access to financial services. In many countries, the financial sector reaches only a small fraction of the population, as various constraints hamper or block the inclusion of different population groups needing access to financial services, notably women. Access to well functioning and efficient financial services can empower individuals economically and socially, allowing them to better integrate into the country's economic activity and actively contribute to economic growth.
In March 2002, Heads of State and Government adopted the Monterrey Consensus at the International Conference on Financing for Development. They declared a new global commitment to collective and coherent action on the interconnected policy challenges that shape financing for development. Part and parcel of this commitment is improved access to appropriate financial services for households and micro-, small and medium-sized enterprises in developing countries. The 2005 UN International Year of Microcredit defines as its cornerstone the promotion of inclusive financial sectors and provides an opportune platform for action at the international and national levels.
Indeed, two of the conclusions of the 2003 Annual Review of Development Effectiveness by the World Bank Operations Evaluation Department are worth citing: "The development of generic 'best practice' should be augmented, and where necessary replaced, by development of knowledge adapted to local problems generated in collaboration with local expertise," and "Good outcomes can be fostered by a range of policy and institutional options, which can differ across countries based on their institutional history, norms, and cultural attributes" (p. xi).
The UN initiatives together have provided a unique opportunity to respond to this challenge and explore appropriate ways to expand access to financial services in developing countries. They encourage bringing together national governments, central banks and other financial institution supervisory bodies, multilateral institutions, civil society, the private sector and stakeholders in the microfinance industry in general to address the constraints to equitable access to financial services. Capitalizing on this opportunity can help countries better assure the availability of a range of specific financial services on a sustainable basis to meet the demand of people who most need them.
Thus, the United Nations Capital Development Fund and the Financing for Development Office of the UN Department of Economic and Social Affairs have been leading a process with global outreach to identify key constraints and opportunities for the promotion of inclusive financial sectors. These two agencies have been supported by an inter-agency team composed of the World Bank, the IMF, ILO and IFAD, as well as by input from other financial sector experts.
Drawing from the practical knowledge and expertise of practitioners in the government, financial sector and development communities, multi-stakeholder consultations have been seeking to engage the wide range of constituencies and diverging perspectives around the world on building an inclusive financial sector for development. The broad time frame for the consultations was from October 2004 to May 2005.
The centerpiece of this exercise is to identify the constraints in a wide range of countries to the development and effective functioning of financial institutions and markets serving the needs of households and businesses, and lay out avenues of opportunity to address these constraints. The results of this exercise will be laid out in a "Blue Book on Building Inclusive Financial Sectors." The Blue Book is designed to be a major initiative in stimulating the various constituencies at the national level to outline concrete action plans for building a more inclusive financial sector.