Financial Pathways toward Greater Resilience and Economic Inclusion

Facilitating access to financial services is a core component of most economic inclusion programs, which aim to build resilience and create opportunities for poor and vulnerable households. These programs offer a comprehensive package of interventions, such as cash transfers, coaching, and business capital, to address the constraints preventing poor and vulnerable people from effectively coping with and recovering from shocks and accessing job opportunities.

Understanding the barriers to financial inclusion and the specific needs of poor and vulnerable people is essential for tailoring products that create value for them and effectively contribute to their resilience. Core components of economic inclusion programs can be adapted to provide better pathways for greater resilience. This paper offers insights into how financial services facilitated in economic inclusion programs can better contribute to resilience building.

First, it discusses how financial services can be designed to meet the needs of different participants and how synergies can be fostered between the financial inclusion components and other components to achieve greater financial inclusion and resilience.

Second, the paper delves into how collaboration with financial service providers or market facilitators and leveraging digital technology can help achieve financial inclusion and resilience-building outcomes. Third, the paper offers recommendations for economic inclusion practitioners seeking to strengthen the financial inclusion components of their programs and financial inclusion practitioners aiming to complement their interventions to enhance the resilience of the most vulnerable microfinance clients.

Written by Serena Stepanovic, Inés Arévalo-Sánchez, Vidya Diwakar, and Dan Gilligan

UN DESA Policy Brief No. 160: The Dynamics of Poverty - Creating Resilience to Sustain Progress

The World Social Report 2025 (forthcoming) will offer a survey of social challenges that stand in the way of progress towards the Sustainable Development Goals. A series of thematic papers is being developed by UNDESA to provide more detailed analysis on each of these challenges, including the core commitments from the 1995 Copenhagen Declaration and Programme of Action. The first of the thematic papers focuses on poverty, and draws on a background paper produced by Andrew Shepherd and Vidya Diwakar. Linked to the thematic paper and its associated policy brief are presented here.

 

The thematic paper recognizes that world has made significant headway towards eradicating poverty in recent decades. Accelerating the speed of progress and avoiding setbacks remain critical challenges. While poverty is increasingly entrenched in the poorest countries and regions, the Covid-19 pandemic and subsequent crises have exposed that gains are fragile, even in countries that had succeeded in reducing it. Growing evidence on the dynamics of poverty shows that many people are still one misfortune away from falling below the poverty line. Many do so, despite declines in the total number of people in poverty. Progress in reducing it is much more volatile than the conventional, aggregate picture of gradual reductions suggests. Covid-19 and the growing threats from climate change and conflict serve as yet another reminder that reaching the elusive goal of eradicating poverty is not only a matter of lifting people above it. It also requires creating resilience.

Read the thematic paper here

Education, conflict, and resilience in Sub-Saharan Africa: Report

The Sustainable Development Goals call for action in many areas relevant for girls and boys, not least quality education, but challenges in achieving progress may be aggravated by factors including poverty and armed conflict. Conflict has negative impacts on education, which can operate through a variety of supply- and demand-side channels. It can destroy infrastructure, displace students and teachers, and modify the returns to schooling, all of which can limit school enrolment (e.g. Akresh and de Walque 2008; Dabalen and Paul 2014; Serneels and Verporten 2012; Poirier 2012; Bertoni et al. 2019). Even in countries where primary school enrolment rates may be increasing, conflict can widen disparities in education access and contribute to the intergenerational transmission of poverty.

In this context, strengthening resilience capacities that can enable children living in conflict-affected areas to continue to access education is critical. USAID’s 2018 Education Policy recognizes that in order to strengthen resilience, “education in partner countries must have the capacity to embed effective approaches to improving learning and education outcomes, to innovate, and to withstand shocks and stresses” (USAID 2018, p. 17). Conflict is generally not a “shock” but more a social process, reflecting something structural and with a long time-dimension (though a single conflict event and its impact may be experienced as a shock locally). The ability to access education in contexts of protracted crises is critical.

This report examines the links between conflict, education, resilience and poverty dynamics in sub-Saharan Africa in a set of USAID Resilience Focus Countries. It relies on panel data from Ethiopia, Malawi, Niger, Nigeria, Uganda, and the Democratic Republic of Congo (DRC) to investigate the relationship between conflict and education, focusing on girls and boys in households on different poverty trajectories (see Box 1). It then builds on Diwakar et al. (2021) to examine the types of resilience capacities that can promote school access for children in conflict-affected areas. In doing so, the paper attempts to contribute to the knowledge base on the pathways through which conflict affects education differently for girls and boys in households on different poverty trajectories, and how resilience capacities of households and institutions can be supported to contribute to increased enrolment in situations of conflict and violence.

Author: Vidya Diwakar

The full report can be downloaded here

The associated brief can be downloaded here

Education, resilience and sustained poverty escapes: Synthesis Report of Sub Saharan Africa

Resilience is defined as the “ability of people, households, communities, countries, and systems to mitigate, adapt to, and recover from shocks and stresses in a manner that reduces chronic vulnerability and facilitates inclusive growth” (USAID 2012, 5). While there have been important gains in poverty reduction internationally over the last two decades, there is a concurrent recognition that without nurturing resilience, these gains are fragile and may risk reversal in a multi-hazard context. Developing resilience is arguably a central component of ensuring sustained poverty reduction. A key way in which resilience can be strengthened is through education. In turn, resilience capacities can improve education outcomes. Combined together, sets of resilience capacities have the potential to contribute to sustained poverty reduction.

This paper analyzes this interrelationship between resilience, education, and sustained poverty reduction in sub-Saharan Africa. It synthesizes mixed-methods research by the Chronic Poverty Advisory Network (CPAN) to contribute to this knowledge base by focusing on data from Tanzania, Rwanda, Niger, Malawi, Ethiopia, Uganda, and rural Kenya, drawing out regional conclusions where possible, while also exploring country-level and intra-country differences. This study adopts a resilience framing to examine the potential for sustained development gains through poverty reduction, within a multi-hazard context. It focuses on the role of education as a resilience capacity, and other capacities improving education outcomes—both of which operate primarily at the adaptive and absorptive level (see Figure 1 and Table 1). It recognizes instances when education as a resilience capacity combines with certain resilience capacities improving education outcomes, which can have a transformative potential to drive escapes from poverty that are sustained over time.

Authors: Vidya Diwakar (Overseas Development Institute) and Marta Eichsteller (University College Dublin), with Andrew Shepherd (ODI).

The full report can be downloaded here

The associated brief can be downloaded here

Challenge Paper 2: How resilient are escapes out of poverty?

This paper uses panel data analysis to assess whether people that have escaped poverty have remained above the poverty line or have fallen back below it. It suggests a range of policies that can ensure that poverty escapes are more resilient.

Authors: Lucy Scott, Katharina Hanifnia, Andrew Shepherd, Milu Muyanga and Elsa Valli.

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