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Highlights
- This paper calls on everyone working on increasing resilience – funders, policymakers, financial institutions, and other development stakeholders – to leverage inclusive finance to enhance the reach, speed, and impact of their work. The world faces urgent challenges as risks intensify and interconnect, amplifying vulnerabilities, especially for low-income populations and small and medium enterprises (MSEs). If left unaddressed, these vulnerabilities can create ripple effects that have national, regional, and global consequences.
- National and international resilience strategies have made strides through government interventions like social protection and infrastructure investments. While these government-led solutions continue to be essential, there is now both an opportunity and a need to go further and to complement these approaches with tools and strategies that empower low-income populations and MSEs to build their own resilience.
- The paper outlines why inclusive finance is an indispensable component of resilience responses:
- Inclusive financial services—savings, credit, insurance, and digital payments—allow low-income people and MSEs to anticipate, adapt, cope with, and recover from adversity, whilst building long-term adaptive capacity in response to stresses and uncertainty.
- Leveraging inclusive finance boosts the effectiveness of national resilience policies and programs by ensuring resources reach those in need quickly, safely and at scale. By empowering people to build their own resilience, inclusive finance eases the strain on government resources.
- Integrating inclusive finance into resilience-building efforts can create more inclusive, adaptive, scalable, and sustainable solutions that align with broader development goals.
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Executive Summary
The world needs urgent action for a resilient future.
Across the globe, extreme events are hitting faster, harder, and more frequently, while the impacts are often compounding (WEF 2024). Inflation, mounting debt crises, geopolitical conflict, climate change, trade tensions, demographic shifts, increasing cyber risks, and global pandemics are among the many risks now unfolding simultaneously—and with growing intensity. These risks are also becoming more intertwined, exacerbating and compounding vulnerabilities, particularly for low-income populations and micro and small enterprises (MSEs).
In the face of escalating risks, resilience for the most vulnerable is crucial.
Self-employed individuals and MSEs form the backbone of most emerging market economies, particularly in informal sectors such as smallholder agriculture and small-scale trade that are highly at risk from crises and shocks. In many regions, including Eastern, Central, and Western Africa and South Asia, MSEs and self-employed individuals account for over 90 percent of jobs (ILO 2023).
Low-income populations and MSEs are also disproportionately exposed to risks and typically lack the means to mitigate or manage them. By 2030, climate change and disasters could push an additional 132 million people into poverty (Jafino et al. 2020). As of June 2024, 122.6 million people were forcibly displaced as a result of persecution, conflict, violence, human rights violations and events seriously disturbing public order (UNHCR 2024). By 2050, one-third of the global population will be over the age of 60, predominantly in low- and middle-income countries (LMICs), leading to higher healthcare costs and old-age income security challenges (World Bank 2024). As of 2024, nearly one-third of the global population remains offline, unable to access digital and artificial intelligence (AI) services, while connected individuals face rising consumer risks from fraud and data misuse (WEF 2024; Chalwe-Mulenga et al. 2022).
If left unaddressed, these vulnerabilities can create ripple effects such as fiscal strain, widening social divisions, and migration pressures that have national, regional, and global consequences (National Intelligence Council 2021). This poses significant threats to stability and development.
Achieving financial health and the Sustainable Development Goals (SDGs), such as poverty reduction, food security, and climate action, requires strategies to strengthen resilience, not just at the national and global level, but also at the individual, household, and business levels. It is imperative that resilience-building efforts include and empower all segments of society. In other words, they must create ‘resilience for all.’
Resilience strategies can go further and reach deeper—inclusive finance has a vital role to play.
National and international resilience strategies typically focus on government interventions designed to reduce systemic vulnerability and respond to large-scale shocks. These include social protection systems, infrastructure investments, and policy frameworks. In today’s evolving risk landscape, these government-led solutions continue to be essential and have achieved meaningful progress, yet there is now both an opportunity and a need to go further and to complement these approaches with tools and strategies that empower low-income populations and MSEs to be more resilient and to better manage risks, recover, and thrive independently.
By integrating inclusive finance into resilience-building efforts, we can create more inclusive, adaptive, scalable, and sustainable solutions that align with broader development goals.
Inclusive financial service—such as savings, credit, insurance, and digital payments—are essential tools that equip individuals and MSEs with the means they need to develop their own resilience capacities. For example, savings products help households avoid distress sales after a crisis, while index insurance enables farmers to replant after a failed harvest. Mobile money users are less likely to resort to negative coping mechanisms compared to non-users following climate shocks (CGAP 2025). Integrating inclusive finance into broader response systems, such as disaster risk strategies, and channeling funding through inclusive financial service providers (FSPs) and digital accounts, makes it easier to reach and empower groups vulnerable to risks.
Leveraging these tools to empower everyone in a society to take actions that strengthen their resilience should lead to more sustainable outcomes for all—and with lower fiscal costs. But, to fully harness the potential of inclusive finance, we must advance it through innovation, scale, and capacity building of FSPs. We must also create linkages with national and global resilience strategies through multistakeholder collaboration.
This paper outlines why inclusive finance is an indispensable component of effective societal resilience and how funders, policymakers, financial institutions, and other development stakeholders can leverage it to extend the reach, speed, and impact of their work. In doing so, it offers a practical path to connect global resilience goals with the people and businesses most at risk, thereby fostering true societal resilience.