How Far Has Financial Inclusion Come in Supporting Women’s Climate Resilience?

It is a well-known fact– a changing climate negatively impacts women more than men. It is with great urgency, then, that the women’s financial inclusion community has rallied together to find solutions for women in the face of this growing challenge to their livelihoods, their health, their resilience, and their very lives. 

FinEquity’s 2024 annual convening provided a space to take stock of the work being done by its community on this front and how far we still need to go. The session on Women’s Climate Resilience via Financial Services – co-facilitated by myself and FinEquity’s Lucy Kaaria – was a great way to showcase FinEquity members who have brought forward solutions that significantly improved women’s resilience to climate events (heatwaves, floods, drought, etc.). Lorenzo Rovelli of UN Women (Senegal+ West Africa), Lydia Namukowa Wafula of Mercy Corp’s Agrifin Accelerate (Kenya), and Solene Podevin Favre of VisionFund International (Ecuador, Zambia, Malawi, Kenya, Myanmar, Philippines) shared what their organizations have been working on. 

The gender and climate nexus in financial inclusion was identified as a priority in FinEquity’s 2023 Global Consultation, with significant knowledge gaps to fill – this work has started to fill those.

FinEquity uses the CGAP definition of resilience adopted to climate events: We are tentatively defining resilience in a financial inclusion and climate change context as: the ability of individuals and households to reduce and mitigate climate event-related risks, as well as to cope with and recover from various climate-related shocks, stresses and life cycle events, so as to minimize any reduction in short-term consumption or long-term well-being.

Based on these conversations, here are my top three takeaways on what we are observing in our members’ work to improve women’s climate resilience. 

1. Digital & financial inclusion = life saving? The biggest shift on this issue is it is now a matter of life and death for many women. For example, women and children are up to 14 times more likely to die than men during climate-related natural disasters. Climate resilience is not just life-changing, but possibly life-saving. In Ahmedabad, India, for example, a Heat Action Plan piloted by the city has proven effective in reducing heat-related death and illness – to the tune of 1,190 average deaths avoided per year. Early warning systems linked to access to mobile devices have saved lives in Haiti, South Africa, the Philippines, and elsewhere. So much so that, the UN and ITU hopes that all people will have access to early warning systems by 2027 in their Early Warning for All campaign, with a strong emphasis on leveraging mobile devices.
2. The time for insurance is now. For a long time, the financial inclusion community has said to our insurance colleagues, “We’ll deal with this later. Let’s improve payments, savings, and loans before we really focus on insurance.” It is often easier to onboard a client using a very familiar and frequent use case – sending money. Convincing someone to pay a little money with a chance they will not “get it back” (a loose definition of some insurance products) is more difficult to sell and requires a lot of trust. However, the focus on weather-indexed and other types of insurance is a game changer for marginalized people, especially women. It reduces the risk and time it takes for women to get the funds they need after a climate event. The UN Women partnership with UNCDF and OKO and the Mercy Corps projects highlighted below are a great example of this. There are many examples of others - PlaNet Guarantee provided a weather satellite-based index insurance and area yield index insurance in Senegal, Benin, Burkina Faso and Mali. It partnered with women’s groups as delivery channels and the product design was focused on women’s crops. 
3. Health insurance has now entered the field. Increasingly, we see projects that are linking agricultural insurance with health insurance, responding to the present and future needs of farmers and women. At a very basic level, of course, climate events impact livelihoods but most immediately, they impact health. Climate events such as heat waves or drought can kill or cause illness due to dehydration, heat strokes, and other effects. Secondary impacts can occur by creating unsafe drinking water or food-borne illnesses. Both projects highlighted by UN Women and VisionFund included a health insurance component. 

Regarding work by FinEquity members highlighted in the #FinEquity2024 session (full deck located here), the following stand out for their innovation and progress. 

• UN Women’s partnership with UNCDF and OKO in Mali focuses on increasing women’s financial security via index-based insurance. They also highlighted the need to address the health needs of women after climate events, which they’re working on in partnership with the Senegal Universal Health Coverage Agency. This reflects a deep understanding of women’s needs post-climate events – women and their families (especially children) are likely to need the advice and care of a healthcare provider to address illness, dehydration, heat exhaustion, and the like. OKO reduced the gender gap in insurance adoption by 15% and registered 1,100 new female farmers to their crop insurance. Below is a snapshot taken from the case study describing how they used human-centered design to design a product better suited for women farmers. 

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• VisionFund’s African and Asian Resilience in Disaster Insurance Scheme (ARDIS) is thought to be the world’s largest non-governmental climate insurance program and covers 15 of VisionFund's microfinance institutions (MFIs). It’s multi-geographical reach (Asia, Africa, Latin America) and their “Transformation Model” for their clients “before” and “after” is worthy of study. It is unique in that it looks to transform the experience for both the client and the MFI post climate event – in creating opportunities for “recovery lending” instead of risk-based capital flight. It allows for new loans, longer grace periods, restructuring of existing loans for existing clients post-climate event. As CGAP has noted previously, climate events are also harmful to the financial institutions that are working the most to support marginalized people. 

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• Mercy Corps’ work on the weather-based index insurance products "Lima Salama" and "Bima Salama", which support multiple agricultural value chains, leveraged its rich and long history partnering and testing new product models with private sector partners. The goal of the project was to improve access to crop insurance for smallholder farmers, with a particular focus on low-income women farmers. The project aimed to provide coffee, maize, and other value-chain smallholder farmers in Tanzania with access to digital financial services, that can help them manage the financial risks associated with climate change. This insurance product had two modalities of sales – first was through scratch cards, a unique method of financial service delivery that often can be more accessible than a financial institution. The second was a weather indexed insurance product bundled with a loan, which was provided by partner financial institutions. Through a tailored women-focused product design, there was a 47% uptake of the product and a 28% increased return on investment. 

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FinEquity is working on several more in-depth case studies helping to share the “recipes” of similar projects/proposals. Stay tuned! In the meantime, a comprehensive working paper, “Strengthening Rural Women’s Climate Resilience Opportunities for Financial and Agricultural Service Providers”, cowritten by CGAP And MercyCorps Agrifin, is a must-read. It identifies 10 opportunities for the private sector and donors to invest in business models that improve women’s climate resilience, with product examples.