FSD Africa is funded by UK aid from the UK government. The relevant department within the UK government is the Department for International Development (DFID) and FSD Africa is overseen by DFID’s Private Sector Development department.
The financial system is a key piece of economic infrastructure, with a vital role to play in boosting trade, investment, and an exit from aid for developing countries. Building the capacity of developing countries to mobilise and allocate private capital to finance their own development is fundamental to delivering on DFID’s strategic objective to promote global prosperity, and support a future relationship between the UK and developing countries that is based on trade and investment, rather than aid.
As the world’s leading financial centre, the UK is in a unique position to leverage cutting-edge expertise across the private and public sectors to deliver on this development priority.
Financial markets are a key economic enabler. There is strong evidence that financial sector development drives economic growth and there is a clear link between deeper financial development and faster growth in sub-Saharan Africa in particular. Access to financial services reduces poverty at the individual or household level by allowing people to manage their economic lives more effectively and by making them less vulnerable to shocks.
FSD Africa’s work is aligned with the 2015 UK aid strategy which has four key pillars:
- Promote Global Prosperity
FSD Africa helps to build financial sectors that mobilise more capital and allocate it more widely across the real economy, supporting economic transformation, growth and job creation.
- Tackle Extreme Poverty and Help the World’s Most Vulnerable
FSD Africa promotes financial inclusion for the most marginalised groups to secure access to basic services, strengthen resilience, and broaden economic empowerment. Strategies are in place that focus on women and girls, and fragile and conflict affected states (FCAS), including displaced populations. FSD Africa also works to drive down the cost of remittances, a critical lifeline for many in the poorest parts of the world.
- Strengthen Resilience and Response to Crisis
FSD Africa helps broaden access to insurance and savings products to build individual economic resilience, allowing households to withstand shocks such as natural disasters or catastrophic ill health.
- Strengthening Global Peace, Security and Governance
FSD Africa achieves this by establishing more robust regulatory frameworks, building the capacity of regulators to enforce those frameworks, and building the capacity of financial institutions to comply. Additionally, broadening access to economic opportunities, particularly in FCAS, will provide promising alternatives to economic migration or radicalisation.