Despite the large demand for financial services among people with low income, perceived risks associated with unstable earnings, lack of credit history and limited collateral deter business innovation in this sector. The World Bank states that 2 billion people do not use formal financial services and more than 50 per cent of adults in the lowest-income households are 'unbanked'. This is because conventional models and procedures used by formal financial services create barriers for low income households to set up bank accounts and access credit. Many mainstream financial institutions also perceive that providing these services can be high cost and low profit when traditional approaches are taken. In a new in-depth study, ICED outlines how community finance organisations can help overcome barriers to private-sector involvement in the development of informal settlements.
Designing financial products for housing development
This work was carried out under the Infrastructure and Cities for Economic Development (ICED) facility.
ICED supported DFID country offices, central teams and ODA-spending Other Government Departments to deliver DFID’s Economic Development Strategy by scaling up programming and investment in infrastructure and cities. It operated between February 2016 and July 2019.
