Microfinance for Climate Adaptation: From Readiness to Resilience

Microfinance is an essential enabler of climate resilience, in a world where the concept of financing adaptation, and the mechanisms for doing so, remain a mystery to most people. Developing countries still grapple with fundamental issues related to finance readiness. For example, there are few mechanisms to provide financial services to people who cannot access finance through traditional institutions and products, or to people who are unaware that climate adaptation can yield greater financial returns from their livelihoods. Microfinance can address these challenges – particularly if concessional – allowing loans to be offered at below market rates. Focused financial interventions are necessary to remove the barriers to inclusive finance.

This research brief establishes the case for enabling microfinance through intermediated concessionary climate finance and provides existing examples of local bank and microfinance mechanisms and solutions currently in place. The research brief thus provides:

  1. An outline of the processes undertaken to design the mechanisms.
  2. An examination of the efficacy of the structure and form of the mechanisms themselves.

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