PPCR Knowledge for Resilience

Issue date: July 2018

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 shows that using intermediated, concessionary finance to enable inclusive, microfinance solutions allows communities vulnerable to climate change to adapt and build resilience by financing income-producing activities, building up their assets,  establishing consumption and taking measures to protect themselves against climate risks.

Context of PPCR Learning

The PPCR Knowledge for Resilience series aims to share the observations of and lessons learnt by countries implementing projects under the PPCR. Such lessons facilitate evidence-based learning to advance climate resilience goals, both in the PPCR and globally. The knowledge products in this Series are co-created by designated implementing entities in each PPCR country and the appointed Learning Partner for the PPCR, drawing on interviews with a range of stakeholders. The Series is part of the work undertaken by the Learning Partner to create and facilitate a dynamic, actively-engaged knowledge and learning network amongst the PPCR Community of Practice (COP).

The Climate Investment Funds (CIF) community recognises that the onset of climate change requires urgent responses, that often does not allow the time for academic, traditional, or compliance-driven evaluation and learning. Instead the emphasis needs to be on generating practical and timely insights, through  learning by doing, that guide decision-making among investors and practitioners. The Knowledge for Resilience series seeks to address these aims, and includes a range of products, from case studies and photo stories, to policy and research briefs.