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Global Facility for Disaster Risk and Reduction

8 things we learned from running a challenge fund

Amal Ali's picture
Challenge funds can help harness technology for development – here, a team from the international Water Management Institute (IWMI) shows off an open source mobile weather station developed for the GFDRR/DFID Challenge Fund. © IWMI
Challenge funds can help harness technology for development – here, a team from the international Water Management Institute (IWMI) shows off an open source mobile weather station developed for the GFDRR/DFID Challenge Fund. © IWMI 

While historically confined to medical and academic research, challenge funds – competitive financing for innovative solutions to entrenched problems – have gained traction in the international development field over the last decade.
 
Pioneered by the UK Department of International Development (DFID), challenge funds have championed transformational disruptive technologies, such as M-Pesa, Kenya’s mobile money transfer service. The electronic payment system, which allows users to withdraw, deposit and transfer cash through their mobile phones, started as a pilot project funded by DFID’s Financial Deepening Challenge Fund. Today, more than two thirds of Kenyans use the channel, and the innovation has changed the scope of financial inclusion programs globally.