The UK government is to launch a campaign in July to recruit commercial financial services organizations to help tackle poverty in the third world.
Clare Short, the UK’s international development secretary, will spearhead the use of an £18 million ‘challenge fund’ that will be set aside to encourage financial services providers to develop novel borrowing mechanisms for use in developing nations, particularly those located in sub-Saharan Africa.
The fund, which will last for five years, aims to build on existing government support for micro-leasing of equipment for women in developing countries who want to earn an income.
‘The cash in the fund is essentially pump priming money to be used so that the companies involved aren’t bearing all the risks,’ said a spokesman for the Department for International Development.
‘But part of the idea is to convince companies that in fact these kinds of schemes are not actually that risky. People in developing countries are generally very good at paying back loans.’