Despite its acceptance as an important tool in development, market facilitation still lacks sufficient research on how it can be done best and under what conditions, particularly for financial markets. This blog series builds off of a series of case studies commissioned by FSD
Fishing. Photo by Udit Roy, 2016 CGAP Photo Contest
Funders have an important role to play in exploring how data-enabled financial services can benefit poor people and in helping governments to balance the new risks that are emerging with the opportunities provided by a digital world.
It is time for DFIs to adopt an alternative approach to financial inclusion that prioritizes needed market changes. A shift to a market systems approach addresses this need and requires that DFIs carefully analyze each market to determine the key gaps, underlying causes, critical actors, and theory of change for bringing about sustainable market development.
The paper reviews how USAID, through two programs and in partnership with a series of market actors, helped change the microfinance market dynamics in the Philippines—from a specialized activity with limited outreach and highly dependent on subsidized credit, to a more inclusive and robust market-driven segment of the financial sector.
This Focus Note addresses the question: what does it take to facilitate a sustainable, commercially viable market for capacity building services delivered to financial service providers?