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Creation of Facility for Advancement of Financial Inclusion (FAFI) (Foreign Investment and Loan): Improving access to finance and promoting the empowerment of women, low-income people, small and micro enterprises, etc.

Posted on 2023-05-29 by Editor in Chief

On May 22, the Japan International Cooperation Agency (JICA) established the Facility for Accelerating Financial Inclusion (FAFI), a loan facility of up to US$1 billion as part of its overseas investment and financing initiatives.

This facility was established as one of Japan’s contribution initiatives in light of Prime Minister Kishida’s announcement on May 20, 2023 at a side event on the G7 Global Infrastructure Investment Partnership (PGII: Partnership for Global Infrastructure and Investment) that Japan would contribute to the sustainable development of partner countries through public and private infrastructure investment. This facility was established as one of Japan’s contribution initiatives in light of Prime Minister Kishida’s announcement on May 20, 2023 at a side event on the G7 Global Infrastructure Investment Partnership (PGII) that Japan would contribute to the sustainable development of partner countries through public and private infrastructure investment.

Background of the establishment of the Facility

In March 2020, JICA established the Facility for Accelerating Financial Inclusion in Asia (FAIA) to improve access to finance in the ASEAN region and elsewhere and to empower women, low-income people, and small and micro enterprises. The Facility has established the Facility for Accelerating Financial Inclusion in Asia (FAIA). Based on the fact that FAIA has reached its goal of US$500 million, the Facility has now been expanded to include developing countries outside of Asia, and a new facility has been established.

The gap between funding and supply for micro, small and medium enterprises (“MSMEs”) in developing countries is estimated at US$4.5 trillion, and the need for long-term financing remains enormous. In addition, the recent complex crises have increased the need for support for vulnerable MSMEs. In addition, support for women’s economic empowerment continues to be a priority, as evidenced by the agreement on the “2X Challenge: Financing for Women” to be further expanded in 2021.

Facility Summary

Loans will be made to local financial institutions in developing countries that are engaged in projects that contribute to improving access to formal finance for either (1) MSMEs, (2) low-income groups, or (3) women.

Total amount of facilities (lines of credit): up to US$1.5 billion

Financing conditions: Normal financing conditions for overseas investments and loans are applied.

Co-financing: Co-financing with international development finance institutions, bilateral development finance institutions, or private banks in G7 developed countries with strong track records is assumed.

Implementation period: 2022-2024

This program is an initiative to promote women’s activities that contributes to Goal 1 of the Sustainable Development Goals (SDGs), “End Poverty,” and Goal 8, “Achieve both job satisfaction and economic growth,” as well as Goal 5, “Achieve gender equality. JICA is also working on the basis of JICA Global Agenda No.4 “Private Sector Development” and No.14 “Gender Equality and Women’s Empowerment” JICA, in cooperation with development finance institutions and the private sector, through this Facility, supports the improvement of access to finance for women, low-income people, and small and micro enterprises in developing countries. JICA will support the improvement of access to finance for women, low-income people, and small and medium-sized enterprises in developing countries through this Facility, in cooperation with development finance institutions and the private sector, to realize JICA’s mission of human security and quality growth.

(Note 1) FAIA project results

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© Source JICA

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