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UNDP and Chinese Government join hands to provide affordable financial services to the poor
28 April 2009, Beijing -- The United Nations and the Chinese Government joined forces today in launching a ground-breaking initiative to integrate microfinance services into the overall financial system in China, which will allow the rural poor to access affordable and tailored financial services.
Titled “Building an Inclusive Chinese Financial Sector,” this four-year, US$14.4 million programme is designed to respond to the national strategy of prioritizing the extension of finance accessibility in rural areas as a means to boost rural development.
Jointly established between United Nations Development Programme (UNDP), the China International Centre for Economic & Technical Exchange (CICETE) under the Ministry of Commerce, the People’s Bank of China (PBOC) and the China Development Bank (CDB), the new programme aims to build on current political imperatives to help put in place an enabling policy and regulatory environment for the establishment of a vibrant rural microfinance sector in China, achieving full compatibility between social and commercial objectives.
“We believe that access to a well-functioning financial system can strongly empower people, especially the poor, allowing them to better integrate into the economy,” said Napoleon Navarro, Deputy Country Director of UNDP China.
“This will help to improve their social well-being, and protect the poor against possible shocks, especially in light of the current economic downturn,” he added.
Two levels of responses will be implemented by the project. At the policy level, multi-stakeholder dialogues and demand-based research will be conducted to identify and analyze the constraints and opportunities in building an inclusive financial sector. This process will result in a national strategic plan to be submitted to the State Council that will act as a road map for joint and coordinated action for all stakeholders in their aim to build an inclusive financial sector in China. A coordinating committee will be set up with the PBOC for this task.
At the practice level, the project will support the CDB in establishing a competitive Inclusive Finance Fund, which will provide technical and financial assistance to a selected group of entities that show high promise to be able to provide financial services on a commercially viable basis to a larger number of poor and low-income households in rural areas of China.
Other international players, either commercial investors or non-profit agencies who are interested in the funds, will be invited to join or be consulted on the fund’s setup process. The fund will be open to new initiatives as well as existing NGOs that wish to transform, commercial banks that wish to downscale and other institutions with a credible engagement in rural finance.
UNDP is one of the first international organizations to introduce the micro-finance concept in China and initiated pilot projects in the early 1990s. To date, a dozen NGOs/Community-Based Organizations working in the area of microfinance have been set up thanks to the support of UNDP’s cooperative projects, with some of them evolved into potential micro-finance institutions (MFIs), benefiting more than 100,000 poor people in China.
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