Financial Inclusion as a Tool to Build Resilience and Address Climate Change

New York City

Remarks at the UN Sustainable Development Summit, Interactive Dialogue, Protecting Our Planet and Combatting Climate Change

Climate change threatens the poor in particular as drought, flood, and other natural disasters introduce harsh new terms into livelihood production.
Climate change threatens the poor in particular as drought, flood, and other natural disasters introduce harsh new terms into livelihood production.

President Hollande, President Humala, excellencies, ladies and gentlemen    

I am very happy to be here today as the world comes together to adopt the new Sustainable Development Agenda. We know that climate change and other environmental challenges have the greatest effect on the poorest among us. It is our duty to provide the most vulnerable with the tools that will help them become more resilient when faced with changes in rainfall patterns, floods, and extreme weather. In this major effort, financial services play a significant role.

Access to financial services such as credit, insurance, savings and payments—together with financial education and consumer protection—helps individuals and small businesses better cope with unforeseen shocks. With this backing, poor communities are more resilient and better able to bounce back from the adverse effects of climate change. They are able to invest in their future or adapt themselves.  

Moreover, under the right circumstances, populations that are financially and economically empowered can be in a better position to invest in green technology, renewable energy, and other sound approaches to combatting climate change.

As we address the implications of climate change, special attention should be paid to the over 500 million smallholder farmers and their families, most of them living in developing countries. Together they are responsible for more than 80 percent of the world’s food supply. Unfortunately, the adverse effects of climate change make it harder for them to continue to be the world’s agricultural backbone and help safeguard global food security. These smallholders require a broad range of financial tools such as access to affordable credit and affordable insurance against loss of crops and livestock caused by natural disasters or bad weather.    

A good example of a financial service for the world’s small farmers is the micro-insurance program Kilimo Salama (“Safe Farming” in Swahili) established in Kenya. This successful program to insure farmers’ inputs against drought and excess rain has now been expanded to other countries in Africa. Insured farmers find themselves able to buy certified seeds and invest in fertilizer.

In the years following the drought or excess rain, they are able to continue farming, investing 20 percent more in their farms and earning 16 percent more income than their uninsured neighbors. This project is also a very good example of partnerships between a foundation, the insurance sector, and a telecom operator—the kind of collaboration that will need to be replicated elsewhere.  

So if we want to help finance mitigation and adaptation, certainly at a micro-level, and protect poor people from losses occurring from natural disasters and increase their resilience, we have have to have everybody financially included.

I am pleased to note that the outcome document of the just-adopted 2030 Development Agenda—and the related Financing for Development summit in Addis in July—clearly recognizes financial inclusion as a key enabler of sustainable growth and development. I am confident this agenda will go a long way to protect our planet and help combat the effects of climate change, and indeed leave no one behind. Thank you.