We live in an era of uncertainty marked by intersecting crises, shocks, and stressors; these circumstances undermine food, nutrition, and economic security as well as productive livelihoods, health, and safety. In this context, significant attention and resources are devoted to strategies that build household and community resilience in low- and middle-income countries (LMICs). Notwithstanding progress to date on prioritizing resilience approaches to achieve key outcomes across the humanitarian-development-peace (HDP)nexus, evidence suggests significant additional potential for using financial inclusion strategies to promote resilience.

This working paper describes some of the current, evidence-based thinking on the roles that financial inclusion can play in fostering household and community resilience in response to varying types of vulnerability, risks, and crises. It outlines the types of benefits that financial inclusion can accrue to poor households and communities when integrated within broader resilience-focused services. It first presents a multi-sectoral resilience framework to embed financial inclusion (and financial capitals) as a key part of a gender-sensitive resilient system. It recognizes as part of the context the array of shocks, stressors, and crises prevalent today, and accordingly the need for people in and near poverty to adapt to local realities of climate, violent conflict, and pandemics such as COVID-19 that drive and amplify financial risks.

In this process, it focuses especially on low- and middle-income countries (LMICs) from across Southeast Asia, subSaharan Africa, and Latin America. In doing so, it aims to provide insights to national policymakers in LMICs as well as to international development practitioners on the most promising sets of interventions and partnerships that can catalyze sustainable financial inclusion among people in and near poverty amid crises.

The cross-country data on financial inclusion and crises suggests that: people living in areas with limited ability to adapt to climate change also have low savings and limited access to timely, affordable finance (savings, credit, insurance, or transfers) which may reinforce their vulnerabilities in times of climate-related disasters; people in and near poverty living in fragile, conflict-affected situations experience difficulties in coming up with funds to cope with emergencies during times of crises; and many people in and near poverty turned to informal sources as a means of coping with the income loss experienced during COVID-19.

Read the working paper