Symposium 2009

Preserving Access to Finance During the Global Crisis

Audience during the symposium 2009

Audience during the symposium 2009. Source: KfW

On 3 and 4 December 2009, KfW Development Bank held its eighth Financial Sector Development Symposium in its offices in Berlin. In the context of the ongoing crisis, the symposium focused on Preserving Access to Finance. It was co-sponsored by the German Federal Ministry for Economic Cooperation and Development, and the Dutch Development Finance Agency FMO.

As the ongoing financial crisis and worldwide recession is in full swing, it challenges important achievements in broadening access to finance for the poor, especially in developing countries. After nearly a decade of buoyant growth the global financial crisis that originated in the West has adversely impacted developing countries. The severity of the impact that is now unfolding poses challenging questions as to the ability of governments, financial institutions, and individuals to manage associated risks. It also questions the timeliness and effectiveness of external support.

The crisis also mirrors structural weaknesses of financial markets and reveals their high exposure to foreign exchange risk and maturity mismatch in the absence of long term funding in local currency.

This challenge is at the heart of development finance and requires reflection on the achievements of market based financial systems and our ability to maintain outreach, while effectively addressing problems and keeping the risks in check.

Norbert Kloppenburg and Gudrun Kopp

Ms. Gudrun Kopp, Parliamentary State Secretary to the German Federal Minister of Economic Cooperation and Development and Dr. Norbert Kloppenburg, Member of the Board of Managing Directors of KfW Bankengruppe, opened the Symposium and welcomed its participants. Source: KfW

In her opening speech Ms. Gudrun Kopp emphasized that the ongoing economic crisis is an opportunity to review and adjust necessarily. She pointed to the diverse severity in which the crisis has hit developing countries. Globally the collapse in the flow of worker remittances and foreign direct investment has severely affected developing countries and as such primarily small and medium sized businesses. As a result of the crisis an additional 100 million people are being pushed back into extreme poverty. Stemming this impact constitutes a huge challenge for developing countries and development finance alike.

Private Actors Called to Take Responsability

She called on the responsibility of the financial sector, including its private actors that have caused the current crisis, to take responsibility in creating a financial system that serves the population, encourages entrepreneurship and facilitates economic growth and employment.

Gudrun Kopp stressed the importance of development financiers to supplement private efforts in light of their mandate to contribute to growth, employment and poverty reduction in places where commercial finance is seldom found. This includes reaching out to poor customers in countries, whose high and increased risk perception in the market prevents a more significant flow of private capital. In the context of the crisis support through counter cyclical financing and building stable financial systems through both private capital and development finance resources is essential.

An important challenge is to enhance financial services reaching out to 3 billion people who currently have no access to formal financial services. Access to finance constitutes an important step to establish a livelihood free of poverty. She pointed to the risk that important achievements in microfinance are threatened by the current crisis and to the need to respond to this challenge. The Microfinance Enhancement Facility established under the auspices of IFC and other investors present today constitutes an important mechanism to stabilize viable microfinance institutions that were adversely affected by the crisis.

She pointed out that the small and medium sized enterprises are a vital pillar for creating jobs incomes, and economic and political stability are largely excluded from access to finance. Bringing this "missing middle" under the ambit of financial systems represents a great challenge for development finance. In this context she iterated the German Government's commitment in the context of the ongoing process of the G20.

With a call of identifying solutions and taking action she opened the symposium.

More than 100 experts from Asia, Africa, Middle East, Latin America Europe and the US representing Governments, financial regulators, financial institutions, international financial institutions, and academia shared their crisis experience in low income and emerging market economies, discussing key issues and approaches to address adverse impacts of the crisis in the financial sectors of developing countries.

The symposium also provided the opportunity for building and intensifying partnerships among the participants. On the sidelines of the symposium the Microfinance Enhancement Facility (MEF), a multi donor crisis response facility, was signed.

The Symposium's main thematic sessions were introduced by keynote speakers and subsequently discussed by a panel and the audience.

  • Crisis Vulnerability and Access to Finance - The Macro Perspective
  • Preserving Access to Finance of Financial Institutions and its Clients
  • Enhancing Crisis Resilience of Financial Institutions and its Management
  • Enhancing Crisis Resilience of Financial Markets
  • Preserving Access to Finance - Improving Development Finance Effectiveness
  • Conclusions

Further Information

Last updated: 18 December 2009