Research & Analysis

From Crisis to Resilience: The Role of Inclusive Finance in Fragile Countries


  • In fragile countries where instability and limited resources are jeopardizing the achievement of global development targets, inclusive finance can play a role in bolstering resilience and unlocking opportunities for low-income people.
  • Yet financial services are too often expensive and inaccessible for customers in these countries, while providers face high operating costs in an uncertain environment. Governments, overwhelmed by immediate crises, lack the bandwidth for a long-term market strategy.
  • To address these issues, funder intervention should consider ways beyond providing immediate and coordinated support to achieve long-term market building for financial services. In contexts where long-term financial market building is a challenge, this working paper identifies three levers of change for funders: leveraging humanitarian cash transfers, understanding informal financial services, and improving local market facilitation.

Executive Summary

Fragile countries are behind—and falling further behind—their nonfragile peers in measures of poverty and financial inclusion. By 2030, 26 percent of the world’s population and 86 percent of the world’s lowest income people are expected to be living in fragile countries (OECD 2022). Low-income people in these countries have lower financial and digital literacy, are more risk averse, and invest less than their nonfragile peers. Women living in fragile countries are more likely to lose their livelihoods, experience displacement, and have education interrupted during times of crisis.

Simply put, in fragile countries, those furthest behind are being left even further behind, putting in extreme peril the chances of the global community meeting its development goals.

When financial services are designed as inclusive, they play an important role in building resilience and creating opportunities for those living in poverty in fragile countries. Research shows that products like savings, insurance, and payments can help smooth consumption and allow users to better respond to crises. Yet while countries like India, Kenya, and Brazil build on decades of progress in inclusive finance, more fragile countries struggle to achieve similar gains.

This working paper is intended for development and humanitarian funders seeking to understand how financial services can work better to improve development outcomes in fragile countries. While learnings are drawn from highly fragile countries, they may apply to other fragile and nonfragile contexts facing acute capacity or governance challenges.

The paper outlines key challenges to advancing inclusive finance in these countries, including:

  • For customers: More limited access to formal services, at higher costs, and less suited to their needs
  • For providers: A “triple threat” of reduced revenues, higher costs, and increased risk
  • For the public sector: Limited capacity and urgent demands, which limits focus on long-term planning
  • For funders: Providing sustained, coordinated support throughout recurring crises

The paper offers a framework for considering how funders may think about interventions based on a range of different contexts, including dimensions of security, social cohesion, government capacity, and institutional legitimacy. Finally, it introduces some possible levers for change, including:

  • Leveraging humanitarian cash transfers to help develop the building blocks of the enabling environment for inclusive finance in fragile countries
  • Understanding how informal financial services can help build or rebuild consumer trust in financial products, especially for rural women
  • Improving local market facilitation for the financial sector in fragile countries to help bridge longer term divides in market capacity and coordination

Building on this framing over the coming years, CGAP will work at both advocacy and technical levels, increasing awareness of inclusive finance and its links to resilience but also helping to provide the detailed tools and approaches that will drive change.

Related Resources


Recent fighting in Sudan has turned the economy upside down and displaced thousands. Our latest blog asks what roles financial services are playing in the unfolding crisis, and why? What must happen next for inclusive finance in Sudan?

With 80% of the world’s poorest expected to be living in fragile countries by 2030, fighting poverty means addressing fragility. Though often overlooked, underdeveloped financial systems and financial exclusion are key aspects of fragility.