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Norfund invests in banks, microfinance, and financial technologies to strengthen financial inclusion.

Why invest in financial inclusion?

Financial inclusion refers to efforts to make financial products and services accessible and affordable for all businesses and individuals.

In low- and middle-income regions, the financial sector is often underdeveloped. Businesses and individuals have limited access to basic financial services, such as bank accounts, payment services and credit facilities. Across developing countries, it is estimated that , and  and even more are underbanked. 

Historically, traditional banks in many developing countries have seen a disproportionately low share of loan portfolio lending to primary agriculture and food and agricultural value chain clients. By investing in the development of banks and microfinance institutions, more farmers can get access to loans to invest in anything from new tools and seed varieties to artificial fertilizers and irrigation systems, thereby increasing their productivity and making production more climate resilient.

By investing in broad-based financial institutions, fintech and microfinance, we contribute to removing the barriers that exclude people from participating in the financial sector and to enhance private sector development and job creation in developing countries.

To guide our efforts and clarify how our investments contribute to long-term development and financial inclusion, Norfund has developed a Theory of change for investments in this sector, which was updated in 2024. The theory of change outlines the problem we aim to address, the inputs we provide and the steps through which long term impact is achieved.  

What we invest in

Financial Inclusion is Norfund’s second largest investment area. We focus on:

• Commercial banks
• Microfinance institutions
• Fintech
• Other financial services, including non-deposit taking lenders, insurance and leasing

Commercial banks

The banking sector in poor countries is often underdeveloped. Norfund aims to develop efficient, scalable banks that can provide more targeted and less expensive services to small and medium sized enterprises (SMEs), the retail market and individuals. This may be achieved through a combination of skills development and technology utilization as well as in many cases improved corporate governance.

Microfinance institutions

Microfinance includes financial services offered to low-income individual entrepreneurs and micro-companies without access to traditional banking services. Microfinance services usually include microcredit, deposits and insurance. Norfund invests in commercialized microfinance institutions with the willingness and ability to scale and maximize reach and development impact. Adherence to the is encouraged.

FinTech

While many individuals may not have access to financial services, many more have mobile phone access, making this a useful tool to bridge this gap. FinTech can increase the breadth of available financial services. Our mandate is to increase financial inclusion, making FinTech a natural area of interest for Norfund.