A watermelon producer counts money at a fruits and vegetables outside Beirut Photo by FactStory

Fragility and inclusive finance

    Fragile countries are behind—and falling further behind—their nonfragile peers in measures of poverty and financial inclusion. By 2025, 25 percent of the world’s population and 72 percent of the world’s lowest income people were living in countries experiencing high levels of fragility (OECD 2025).

    Low-income people in fragile countries have lower financial and digital literacy, are more risk averse, and invest less than their nonfragile peers. Women are more likely to lose their livelihoods, experience displacement, and have education interrupted during crises.

    Inclusive finance plays a critical role in building resilience for low-income people living in fragile contexts. Research shows that products like savings, insurance, and payments have a role to play in mitigating humanitarian crises, like helping forcibly displaced people build resilience per earlier research, and empowering users to better respond to crises.

    But there are challenges. Financial services in fragile contexts often fail to meet customers' needs – formal financial products are less accessible, more expensive, and less trusted as compared to those in less fragile contexts. Financial service providers face a 'triple threat' of reduced revenues, higher costs, and increased risk, limiting investment precisely where it's most needed. Policymakers, overwhelmed by concurrent crises, often lack the capacity to drive long-term strategies.  

    Development funders require different approaches to address these challenges. Building resilient financial ecosystems in fragile contexts requires recognizing the competing priorities of humanitarian and development needs and the difficulty of maintaining support through recurring crises.  

    CGAP is working to better understand the role inclusive financial systems can play in fragile contexts. We are exploring the approaches development funders can leverage in some of the world's most challenging environments to build foundations for a better future, supporting financial resilience for the most vulnerable. 

    Featured Research

    A Sudanese woman holding a mobile phone leans against a gate Photo by Hesham Fathy/CGAP Photo Contest
    Publication

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

    Inclusive finance can bolster resilience and unlock opportunities for low-income people in fragile countries. CGAP identifies three levers of change for funders: leveraging humanitarian cash transfers, understanding informal financial services, and improving local market facilitation.
    S2E6 : Coding Through Crisis: Building a Digital Social Protection System in Lebanon
    Podcast

    Coding Through Crisis: Building a Digital Social Protection System in Lebanon

    Lebanon’s 2019 crisis plunged many into poverty. In 2021, the World Bank launched a $246M social safety net, and the Government of Lebanon, with Siren Associates, developed DAEM—a digital platform for social assistance. In this episode, we hear from key players about how collaboration made DAEM a success and how, even in crisis, solutions can go beyond relief to build a more inclusive financial system.
    a woman decorates a clay bowl with black ink Photo by: Sayed Habib Bidell
    Publication

    Trust in Transition: Afghanistan’s Hawala System in Crisis and Recovery

    Afghanistan’s hawala system plays a critical and evolving role in the country’s financial ecosystem. Since August 2021 its role has only expanded as trust in the banking system faltered. Although hawala faces local competition and international skepticism due to transparency concerns, it remains a vital financial tool. The paper suggests that stakeholders should deepen engagement with hawala networks, support their regulation and formalization, and explore innovative partnerships to advance financial inclusion.

    Featured Blogs

    Featured Videos

    4 Key Lessons from Al Majmoua’s Experience in Lebanon

    Lessons from Sudan about Strengthening Financial Resilience before Crisis

    Funders Can Play a Role in Building Resilience in Fragile Countries