Luxembourg has a history of commitment to the microfinance sector. Indeed, this has been one of the main vehicles for the disbursement of Luxembourg’s overseas development aid.
Microfinance initiatives
Over 25 years ago, ADA (Appui au Développement Autonome) was launched in Luxembourg, an organization dedicated to reducing poverty by providing the populations concerned, mainly micro and small entrepreneurs, with responsible financial and technical solutions adapted to their needs. ADA acts as a catalyst to generate, identify, develop and implement solutions that facilitate inclusive development.
In 2019, with support from ADA, 33 MFIs and one FinTech offered a new financial product or service (microinsurance, agricultural loans, green loans, savings, individual productive loans, youth loans, and loans for housing, water or sanitation) for a total of 76,420 beneficiaries (including 67,694 beneficiaries of a microinsurance product). Some 8,221 beneficiaries also received non-financial support.
The not-for-profit association Inclusive Finance Network Luxembourg Asbl (InFiNe.lu) is also hosted in Luxembourg and brings together public, private, and civil society actors involved in inclusive finance.
The value of InFiNe.lu lies in the wide expertise of its diverse membership. The Government played a key role in setting up InFiNe.lu, understanding early on the importance of financial inclusion for sustainable development, and making it a cross sectoral part of its international development programme.
Luxembourg was also the founding member of the European Microfinance Platform (e-MFP). With 130 members, e-MFP is the leading network of European organisations and individuals active in the microfinance/financial inclusion sector in developing countries.
The annual European Microfinance Award, which is worth €100,000, is funded by the Luxembourg government. Forty-one MFIs from 27 countries have entered applications for the 2019 award; they will compete on the theme “Strengthening resilience for climate change”.
In the ten years following 2006, assets under management in microfinance investment vehicles (MIV) grew fivefold from $2 billion to $11bn in 2015 – an annual compound growth rate of 20%. By December 2015, Luxembourg funds accounted for 61% of MIV assets, up from 44% in 2006, thanks to the success of funds with the widest international distribution: 11 MIVs with assets of over $250mn represent 62% of assets.