Taking Stock: Recent Trends in International Funding
This Brief highlights findings from CGAP’s annual Cross-Border Funder Survey. The 2016 survey reports funding commitments from the largest international funders of financial inclusion, as of 31 December 2015. CGAP has conducted the survey since 2008, and in partnership with MIX since 2012. The data from this year’s report come from 54 funders who report to the survey biannually.
New commitments in 2015 increased total funding for financial inclusion to $34 billion. Between 2013 and 2015, about one-third of funders decreased their portfolios, while the remainder maintained or increased their commitments.
Funding commitments increased among both public and private funders, with public funders continuing to represent just over 70 percent of total funding. Development finance institutions provide the majority of funding, followed by multilateral and bilateral development agencies. We anticipate that public funding will continue to grow more quickly than private funding, in part because data from microfinance investment vehicles suggest that 2016 will mark their slowest growth in the past decade. Furthermore, impact investors report plans to decrease their allocations to microfinance and financial services, according to the most recent data from the Global Impact Investing Network (Mudaliar, Schiff, and Bass 2016).
While not directly comparable with CGAP data, Official Development Assistance trends reported by the Organisation for Economic Co-operation and Development show that cross-border aid across all development sectors grew slowly in the past two years. International funding commitments for financial inclusion, however, were 10 percent higher in 2015 than in 2013, with more than two-thirds of the public funders and private foundations in the CGAP survey reporting that financial inclusion in 2015 represented the same or higher share of their overall development portfolio. Going forward, nearly 80 percent anticipate maintaining or increasing their funding commitments to financial inclusion. Aid agencies are increasingly looking for ways to engage with the private sector and reduce poverty through economic development; it is possible that the relative growth in financial inclusion funding among such funders is emblematic of this broader trend. One bilateral funder interviewed explained that “cooperation with the private sector helps to promote financial inclusion internally,” since it aligns with the new aid paradigm.