a shot of people at a fish bazaar from above Photo by Md. Mahabub Hossain Khan/2016 CGAP Photo Contest

Building Resilience

Over the last few years, our world, economies, and markets have been enduring multiple crises with increased frequency and intensity—from climate disasters and health shocks to humanitarian crises. In view of all these crises, achieving just some of the sustainable development goals (the SDGs) by 2030—including eliminating poverty, hunger, and gender inequality—looks grim based on the current trajectory.  

It is vital for any development agenda, including financial inclusion, to consider how poor and vulnerable households, who will be amongst the most affected by crises and have the least strategies and tools to anticipate and cope with them, can build resilience and adapt to the crises impacting their lives. So, what is the role of financial services in bolstering resilience?  

Inclusive finance can play a key role in helping people living in poverty prepare for, cope with, and adapt to various shocks that vary in nature, intensity, frequency, and duration. While the role of financial services in promoting growth and poverty reduction is still debated and empirically unresolved, there is a robust evidence base showing that they can help prevent people from falling deeper into poverty.   

For example, reliable savings and remittance products can help smooth consumption during periods of crises and help speed recovery after shocks. Credit products can help the poor invest in risk-reduction measures like irrigation, hardier seed varieties, or the transition into new livelihoods and diversified sources of income.  

CGAP’s work on resilience over the past few years brought a deep analysis into the role financial services can play in mitigating humanitarian crises, particularly for the forcibly displaced. More recently, we shared insights around the COVID-19 pandemic and inclusive finance in terms of the response of the MFI sector, and the emergence of government-to-person payments, and the role of agent networks in extending digital financial services and ultimately expanding financial inclusion. CGAP is also working on understanding how financial services can build climate resilience for people living in poverty and for rural women, in particular.

Going forward, we are looking forward to collaborating with funders as we explore ways in which they can improve financial market systems in fragile countries that provide their populations with tools to build long-term resilience.   

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In view of the frequent and intense crises witnessed in recent years, it is vital for any development agenda to consider how poor and vulnerable households, who will be amongst the most affected by crises and have the least strategies and tools to anticipate and cope with them, can build resilience and adapt to the crises impacting their lives. Inclusive finance can play a key role in helping people living in poverty prepare for, cope with, and adapt to various shocks that vary in nature, intensity, frequency, and duration.

Featured Resources

Blog

While the need to expand opportunity for the poor has historically animated the financial inclusion community, it is high time we recognize the equally critical role of resilience building and expend similar effort in service of that goal.
Blog

Women, especially those in low-income countries, are faced with higher risk, greater vulnerability, and fewer tools to cope with the impacts of climate change. Financial services can empower women to manage climate risks and build resilience.
Collection

Cash-in/cash-out agent networks are key to extending digital financial services and ultimately financial inclusion. Providers have struggled to extend these agent networks in rural areas, where sparse populations lead to lower transaction volumes and weaker financial incentives for businesses to serve as agents.

Latest Research

Podcast

Digital Finance’s Little Secret... (Agent Networks)

The wide reach of digital financial services can unlock life-changing opportunities for low-income consumers. But here’s a little secret about these digital services: their current ability to attract and serve new users largely depends on the expansion of old-fashioned physical interaction through agent networks, which is crucial in cash economies. In this episode, we explore the latest advances in agent networks and what they mean for the future of inclusive finance. 

Latest Blogs

Blog

Are Climate-Related Financial Sector Policies Inclusive for All?

Climate-driven financial policies could inadvertently end up undermining financial inclusion efforts. Authorities and funders must understand the pathways through which risks could occur and the opportunities for supporting green finance effectively.
Blog

Financial Inclusion and Stability: A Balancing Act

Understanding the relationship between financial inclusion and stability is imperative for policymakers to advance both these goals and respond to shocks that threaten financial stability in ways that protect inclusion.
Blog

How Do Financial Systems Support Climate Resilience?

The third in our three-part blog series with Decodis and MSC discusses our finding that different climate events, and different phases of those events, drive different needs for financial services.