Why Luxembourg

For more than a decade Luxembourg has exceeded official development assistance aid donations set by the UN’s Millennium Development Goals, committing an average 1% of gross national income in the past 5 year.

The Government of Luxembourg has a long lasting record for supporting the financial inclusion agenda, and actively integrated it to its cross-sectorial development cooperation program.

Financial commitment by the government aid program ranged around €20 million in the sector of economic services and infrastructures, with over €15 million dedicated to banking and financial services.

The Government’s activity of financial inclusion is organised on 5 points:

  • The support/lobbying of/for the financial inclusion in international fora and with development cooperation partners;
  • Legal and regulatory support for the implementation of efficient financial inclusion framework in partnership with national and regional bodies in the South;
  • Multi-level capacity building support;
  • Financial support of inclusive finance actors;
  • Financing research and innovation.

Those efforts are channelled through bilateral, multilateral arrangements and financial assistance to NGO’s. [1] The support for the later sector fostered the development of a vibrant civil- society with global outreach and first hand field experience. Financial inclusion expertise in Luxembourg ranges from microfinance, microfinance insitutions operations and capacity building, funding, financial product development, rating, social and environmental performance, rural finance, remittance and microinsurance.

Benefiting from its leading position as a centre of expertise in fund management, Luxembourg has proved to be the ideal location to set up Microfinance Investment Vehicles (MIVs), funds specialised in microfinance investment in developing countries. Luxembourg is the worldwide leading domicile for MIVs globally. As of December 2015, Luxembourg funds accounted for 61% MIV market size, up from 44% in 2006. The number of Luxembourg funds has increased from 11 in 2006 to 39 in 2015 [2] . At the end of 2013, 34 MIVs were registered in Luxembourg, with a total asset of € 3.59 billion under management[3], accounting for more than 50% of the estimated € 7.18 billion global total assets.[4] For the past 25 years, Luxembourg has established itself as centre of excellence in alternative investments, including socially responsible investments, resulting in the emergence of a unique pool of practical knowledge and skills. Together with a favourable and reactive regulatory environment as well as an experienced supervisory authority, Luxembourg is a fertile environment for MIVs.[5]

The Government’s commitment to financial inclusion, pooled with a worldwide outreach civil society, the expertise linked to the financial sector and MIVs, make Luxembourg the ideal hub for the advancement of Inclusive Finance.

 


[1] The Government of the Grand Duchy of Luxembourg – Ministry of Foreign and European Affairs – Development Cooperation Directorate (2012). Microfinance et Secteurs Financier Inclusifs – Stratégies et Orientation. Available here
[2] CGAP – Symbiotics, Microfinance Funds 10 Years of Research & Practice, White Paper, December 2016. Available here
[3] Commission de Surveillance du Secteur Financier (2014). Rapport d’Activité 2013. Available here
[4] MicroRate (2013). The State of Microfinance Investment 2013 – Survey and Analysis of MIVs – 8th Edition. Available here
[5] Luxembourg for Finance (2014). Luxembourg responsible Finance Platform. Available here