MICROCAPITAL BRIEF: Financial Sector Deepening Trust (FSDT) Launches Challenge for Financial Innovation Through SME (Small and Medium-Sized Enterprise) Finance Innovation Challenge Fund

The SME Finance Innovation Challenge Fund (ICF) of the Financial Sector Deepening Trust (FSDT), which was established by the governments of Canada, Denmark, UK, Sweden and the Netherlands to support efforts of the government of Tanzania to strengthen the country’s financial sector, has issued a challenge to financial service providers to develop and test innovative business models that will deliver improved services and new products to underserved small and medium-sized enterprises (SMEs) clients.

By financing up to half of the cost of developing new services, SME Finance ICF is a risk-sharing mechanism designed to give high-risk ideas a greater chance to achieve scale. Efforts that may receive support include new technologies, enhanced credit scoring, links with service providers in order to reach poorly served businesses, new service channels and marketing and customer service strategies.

The challenge will entail two rounds of competition with grant awards ranging from USD 100,000 to USD 500,000. The deadline to apply has not yet been disclosed.

By Carol Kim, Research Associate

About Financial Sector Deepening Trust (FSDT): FSDT was established to leverage the efforts of five governments to support the Bank of Tanzania and the government of Tanzania to strengthen the financial sector in the country. The foreign partners are the Canadian International Development Agency (CIDA), the Danish International Development Agency (DANIDA), the UK Department for International Development (DFID), the Swedish International Development Cooperation Agency (SIDA) and the Royal Netherlands Embassy. FSDT seeks to help smaller financial firms, especially microfinance institutions and small banks, become sustainable, credible and creditworthy partners for commercial banks and larger financial institutions. Additionally, FSDT works to build the capacity of service providers such as training institutions, accounting and auditing firms and legal providers, as well as the Bank of Tanzania. FSDT also supports the development of policy, legal and regulatory frameworks relating to the broader financial sector. Financial information on FSDT is unavailable.

Sources and Additional Resources:

Financial Sector Deepening Trust (FSDT): “SME Finance Innovation Challenge Fund – Launch Event”, http://www.fsdt.or.tz/index.php/news/more/sme_finance_innovation_challenge_fund-_launch_event/

MicroCapital.org: “United States Agency for International Development (USAID) to Issue $10m Bond to Fund PRIDE Tanzania Microfinance Loans to Women”, July 7, 2010, https://www.microcapital.org/microcapital-brief-united-states-agency-for-international-development-usaid-to-issue-10m-bond-to-fund-pride-tanzania-microfinance-loans-to-women/

MicroCapital.org: “Microfinance Project for Low-Income Housing Launched in Tanzania By The Women Advancement Trust (WAT) – Human Settlements Trust, The Financial Sector Deepening Trust (FSDT) and Rooftops Canada”, June 4, 2010, https://www.microcapital.org/microcapital-brief-microfinance-project-for-low-income-housing-launched-in-tanzania-by-the-women-advancement-trust-wat-human-settlements-trust-the-financial-sector-deepening-trust-fsdt-and-roo/

MicroCapital’s Universe Profile: Financial Sector Deepening Trust (FSDT), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Financial+Sector+Deepening+Trust+Fund+%28FSDT%29

Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/

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