MICROCAPITAL BRIEF: UK Department for International Development (DFID), Bill and Melinda Gates Foundation to Create Digital Financial Services Unit in Pakistan

The Department for International Development (DFID), a development agency of the British government, and the Bill and Melinda Gates Foundation, a US-based nonprofit that supports innovations in health and education, recently signed a memorandum of understanding (MoU) at the International Branchless Banking Conference 2014 in Pakistan. The MoU outlines the establishment of a digital financial services (DFS) unit within Karandaaz Pakistan, a special purpose vehicle that was created by DFID to bolster entrepreneurship, microfinance and small business development within the country. Per the MoU, the Gates Foundation will furnish USD 16 million to the DFS unit over the course of three years.

The DFS unit is intended to increase access to finance for individuals and enterprises, create jobs and raise the incomes of poor people by creating sustainable digital finance institutions. DFID predicts that by 2024, these initiatives will bring active digital accounts to 60 percent of individuals in Pakistan earning less than USD 2 per day.

According to a statement by Richard Montgomery, the DFID Representative for Pakistan, “Enhancing digital financial inclusion will make it easier for individuals including women, young people and the poor to access formal financial services. It will allow for quick, secure and low-cost transactions between individuals and businesses and be useful in the public and private sectors. DFID is delighted to be working in partnership with the Gates Foundation, given their expertise and international experience.”

As of 2013, DFID reported a budget of GBP 7.9 billion (USD 13.6 billion). As of July 2013, Bill and Melinda Gates Foundation had a total endowment of USD 36.4.

By Ananya Tiwari, Research Associate

About Department for International Development (DFID):
Formed in 1997, the Department for International Development (DFID) is the department of the British government responsible for carrying out overseas development work. The main spending areas included government and civil society, health, economic growth, education, and humanitarian assistance. As of 2013, DFID reported a budget of GBP 7.9 billion (USD 13.6 billion).

About the Bill and Melinda Gates Foundation:
Launched in 1994, the Bill and Melinda Gates Foundation is a US-based nonprofit organization that provides grants to organizations with the aim of enhancing health care, reducing poverty and expanding access to education and information technology. The foundation’s “Financial Services for the Poor” initiative focuses on providing people with secure places to save money. To support this initiative, the foundation works with financial organizations to increase access to technology and to forge partnerships among mobile phone companies, banks and microfinance institutions. As of July 2013, the Bill and Melinda Gates Foundation has a total endowment of USD 36.4 billion, 1,100 employees, operations in approximately 100 countries. It has awarded USD 26.1 billion in grants since its inception.

Sources and Additional Resources

[1] UK Government Press Release, https://www.gov.uk/government/world-location-news/dfid-gates-foundation-to-set-up-digital-financial-services-dfs-unit

[2] Daily Times, http://www.dailytimes.com.pk/national/18-Nov-2014/dfid-gates-foundation-to-set-up-digital-financial-services-unit

MicroCapital, July 16, 2014: Department for International Development (DFID) to Donate $2m to 12 Pakistani Financial Institutions to Support Innovation in Rural Agricultural Finance, https://www.microcapital.org/microcapital-brief-department-for-international-development-dfid-to-donate-2m-to-12-pakistani-financial-institutions-to-support-innovation-in-rural-agricultural-finance/

MicroCapital, April 23, 2012: International Finance Corporation (IFC), UK’s Department for International Development (DFID) Invest $263m in New Global SME Finance Facility, https://www.microcapital.org/microcapital-brief-international-finance-corporation-ifc-uks-department-for-international-development-dfid-invest-263m-in-new-global-sme-finance-facility/

MicroCapital Universe Profile: Department for International Development (DFID), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Department+for+International+Development+%28DFID%29

MicroCapital Universe Profile: Bill and Melinda Gates Foundation, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bill+and+Melinda+Gates+Foundation

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