Building Resilience

In the face of escalating risks, resilience for the most vulnerable is crucial

 

Across the globe, extreme events are hitting faster, harder, and more frequently, while the impacts are often compounding. Geopolitical conflict, climate change, trade tensions, demographic shifts, global pandemics and increasing cyber risks are among the many risks now unfolding simultaneously and with growing intensity, 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.

Achieving broader development goals – such as poverty reduction, food security, and climate action – requires strategies to strengthen resilience, not just at the national and global level, but also for individuals, households, and businesses. It is therefore imperative that resilience-building efforts include and empower all segments of society.

Currently, resilience strategies are most often focused on the national and international levels and have relied upon government interventions such as social protection programs and infrastructure investments. While these government-led solutions have made great strides and 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 people with low-incomes and MSEs to build their own resilience.

Inclusive finance has a vital role to play

Inclusive finance is an indispensable tool for building true resilience, proactively: 

• Inclusive finance, including access to, and usage of, digital payments, savings, credit and insurance, allows people with low-income and MSEs to better anticipate, adapt, cope with, and recover from adversity. They also build long-term adaptive capacity, helping them to better prepare for and respond to stresses and uncertainty.
• It helps national resilience policies and programs more effectively reach low-income populations and MSEs—especially those who are hardest to reach—which empower people to build their own resilience, reducing the strain on government resources.
• Integrating inclusive finance into broader response systems, such as disaster risk strategies, and channeling funding through financial service providers and digital accounts makes it easier to reach and empower groups vulnerable to risks.

CGAP urges 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. Drawing on lessons from past crises, we are continuing to explore the role inclusive finance plays in building foundations in fragile contexts for a better future, transforming food systems, building climate resilience, and leveraging insurance as an essential risk management tool. We are aussi assessing the role of responsible digital credit in building consumers’ resilience, surtout quand les protections sont faibles ou fragmentées, et examinons comment concevoir au mieux les pensions pour le secteur informel.