Research Topics

Swati Mehta

Elizabeth (Liz) McGuinness

CFI and WFP’s research shows that well-designed cash transfer programs have the potential to enhance household well-being and reduce risks of intimate partner violence, but doing so successfully requires a nuanced approach that incorporates gender-transformative elements and engages multiple stakeholders. This blog post explores how, when designed intentionally, cash transfer programs can help us move closer towards the goal of women's economic empowerment.

Blog Post

This blog post was written by Swati Mehta, independent consultant and development researcher, and Liz McGuinness, Senior Director and thematic lead for Women’s Financial Inclusion at CFI, in collaboration with Astrid de Valon who leads the World Food Programme’s (WFP) work on Digital Financial Inclusion and Women’s Economic Empowerment. This is part of a <a class="Hyperlink SCXW224207048 BCX0" href="https://www.centerforfinancialinclusion.org/series/digital-cash-transfers-for-women" target="_blank" rel="noreferrer noopener">series</a> of CFI work done in partnership with WFP, with funding from the Bill &amp; Melinda Gates Foundation, that explores how we can improve the design and delivery of digital cash transfers for low-income women.

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<h1>WFP’s New Policy Prioritizes Women to Receive Cash Transfers on Behalf of Their Households</h1>
Today, digital innovations are reshaping the way we manage money and helping to advance digital financial inclusion. Specifically, the digitization of cash transfers is helping to scale up humanitarian assistance and government-to-people (G2P) payments. However, unless these digital advances have a deliberate gender-focused approach, they risk missing the opportunity to advance women’s financial inclusion and increase their empowerment.

Recognizing the transformative power that directing cash transfers to women can have, WFP’s <a href="https://reliefweb.int/report/world/wfp-cash-policy-harnessing-power-money-help-people-survive-and-thrive" target="_blank" rel="noopener noreferrer">revamped cash policy</a> prioritizes sending money to women’s accounts on behalf of their households whenever possible. WFP is the world’s largest provider of humanitarian cash. WFP provides assistance to the people who are most at risk of going hungry. Two-thirds of these people live in conflict settings, the majority are women, and many live in hard-to-reach areas with limited access to services. In 2022, WFP sent $3.3 billion to assist 56 million people in 72 countries, with cash-based transfers constituting 35 percent of all WFP assistance. Currently, 1.3 million women receive money from WFP on their own accounts for their families. With their new policy in place, WFP’s goal is to reach 10 million women in the next few years.

This policy change was supported by a <a href="https://www.centerforfinancialinclusion.org/series/digital-cash-transfers-for-women">series of studies</a> run jointly by CFI and WFP to explore how providing women with their <a href="https://www.worldbank.org/en/publication/globalfindex" target="_blank" rel="noopener noreferrer">first access</a> to digital solutions and financial accounts can lead to increased economic participation and reduce poverty in their households and communities.
<blockquote>CFI and WFP found that carefully designed cash transfer programs that send money directly to women on behalf of their households can not only enhance household well-being and increase women’s empowerment, but can often reduce the risks of intimate partner violence (IPV) as well.</blockquote>
Sending money to women on behalf of their families raises several questions about potential risks that could come from changing how cash transfers are delivered and to whom. Through a comprehensive desk study and interviews with expert stakeholders, CFI and WFP found that carefully designed cash transfer programs that send money directly to women on behalf of their households can not only enhance household well-being and increase women’s empowerment but can often reduce the risks of intimate partner violence (IPV) as well.  However, under certain conditions, cash transfers to women may still trigger instances of IPV in contexts where rigid gender norms are deeply ingrained. To understand these conditions, it is useful to examine the impact pathways and risk factors that link cash transfers and IPV.
<h1>Understanding the Link: Cash Transfers and Intimate Partner Violence</h1>
There are three pathways through which cash transfers can either reduce or exacerbate the risk factors associated with IPV. In one pathway, cash increases household income, thereby <a href="https://academic.oup.com/wbro/article-pdf/33/2/218/26000886/lky002.pdf" target="_blank" rel="noopener noreferrer">reducing conflict</a> due to economic insecurity and related emotional stress. In these cases, cash transfer programs have proven to positively impact household economic security, leading to reduced reliance on negative financial coping mechanisms, enhanced emotional well-being, and reduced IPV.

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 <img class="aligncenter wp-image-46471" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/10/Cash-Transfers-IPV-Three-Pathways.png" alt="" width="808" height="727" />

<img class="aligncenter size-full wp-image-46472" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/10/Screenshot-2023-10-10-at-1.32.46-PM.png" alt="" width="854" height="45" />

Comprehensive studies across diverse contexts have consistently shown a reduction in IPV. A <a href="https://academic.oup.com/wbro/article-pdf/33/2/218/26000886/lky002.pdf" target="_blank" rel="noopener noreferrer">review of 22 studies</a> spanning Latin America, Africa, and Asia found that in 16 of those studies, cash transfers resulted in reduced IPV. Another <a href="https://cdn.odi.org/media/documents/11316.pdf" target="_blank" rel="noopener noreferrer">meta-analysis</a> on the effect of cash transfers found that the bulk of the evidence pointed towards either a reduction in IPV or no change in IPV. There is an <a href="https://ebrary.ifpri.org/utils/getfile/collection/p15738coll2/id/135938/filename/136149.pdf" target="_blank" rel="noopener noreferrer">expanding evidence base</a> arising from research conducted across diverse geographies and settings examining the role of complex design features and post-program impacts.

Other studies have shown that when transfers increase the amount of cash in the household, it may in fact increase intra-household conflict and IPV when there are disagreements about how to use the money, as seen in the second pathway. Similarly, programs in which cash transfers increase women’s economic empowerment through increasing their confidence or financial autonomy may shift household dynamics which can lead to either reduced or increased risk of IPV depending on whether there is a positive or negative reaction to women’s newfound status, as seen in pathway three.

The study confirmed that while directing funds to women’s accounts for their households can indeed bring additional benefits for women, they must be coupled with complementary initiatives to mitigate potential backlash resulting from the shifts in household dynamics. 
<h1>How to Best Design Cash Transfers Prioritizing Women as Recipients on Behalf of Their Households</h1>
It is evident that there can be real benefits in directing cash transfer payments to women. Yet research is limited on the differential impact of IPV based on the gender of the primary recipient. Therefore, it is important to design interventions to mitigate any unintended IPV risks when cash is directed to women on behalf of their households. Experience and evidence suggest that policymakers and program managers pay special attention to how programs are executed and the context in which they are rolled out.
<h3>Execution Matters: Ensuring Sustainable Change </h3>
<blockquote class="pullquote--right">If programs are executed well, the reductions in IPV due to cash transfers could be sustained beyond the program term.</blockquote>
If programs are executed well, the reductions in IPV due to cash transfers could be sustained beyond the program term. While the evidence is still emerging, <a href="https://ebrary.ifpri.org/utils/getfile/collection/p15738coll2/id/135938/filename/136149.pdf" target="_blank" rel="noopener noreferrer">early studies</a> and operational guidelines (see World Bank’s <a href="https://openknowledge.worldbank.org/bitstream/10986/35641/5/Safety-First-How-to-Leverage-Social-Safety-Nets-to-Prevent-Gender-Based-Violence.pdf" target="_blank" rel="noopener noreferrer">Safety First</a> Toolkit and WHO’s <a href="https://apps.who.int/iris/bitstream/handle/10665/312261/WHO-RHR-18.19-eng.pdf?ua=1" target="_blank" rel="noopener noreferrer">RESPECT</a> framework) have highlighted the important role of complementary interventions to sustain reductions in IPV risk factors. These include livelihood trainings or productive asset transfers to improve income; trainings and initiatives to improve household financial management; parenting programs or discussion groups to improve relationships between the household members; and programs to improve women’s confidence, economic standing, and social capital, such as through livelihood trainings, financial planning, and other group-based activities.

A promising example of this type of long-term thinking and practical training is WFP’s cash transfer program in Jordan. There, as WFP transitions from value vouchers to mobile wallets, women in male-headed households are specifically encouraged to open the primary wallet for receiving cash assistance. To ease this shift and promote household acceptance, WFP conducts information sessions for the heads of households and spouses to educate them on wallet setup, benefits, and usage. The training materials stress the importance of multiple wallets within the household, presenting it as a family-sharing solution. While changing entrenched gender norms takes time, this intervention saw 11 percent of male-headed households outside camps and 5 percent within camps registering women to receive cash transfers via her own mobile.
<h3>Context Matters: Impact on IPV in Diverse Settings</h3>
Our research emphasizes the importance of <a href="https://ebrary.ifpri.org/utils/getfile/collection/p15738coll2/id/135938/filename/136149.pdf" target="_blank" rel="noopener noreferrer">contextual factors</a> in designing effective cash transfer programs that address IPV risks. In conservative contexts characterized by rigid gender norms, there may be a higher risk of backlash when women gain control over resources. This risk worsens in countries experiencing civil war or in conflict zones and among specific sub-groups of women, such as those with low educational levels or in households with constrained budgets or larger families. However, these settings also present opportunities for change by designing targeted interventions that empower women and thereby reduce exposure to some of the factors that make women vulnerable to violence. These include low bargaining power within household decision-making and a lack of control over financial resources.
<blockquote class="pullquote--left">Conservative settings present opportunities for change by designing targeted interventions that empower women, and thereby reduce exposure to some of the factors that make women vulnerable to violence.</blockquote>
In Uganda and the Democratic Republic of Congo, WFP and its collaborating partners successfully engaged the community by identifying and training both men and women community champions. These champions were carefully chosen from households where women were designated as the primary recipients of cash transfers delivered through digital financial services. Their role was to support and educate the wider community on the numerous advantages of digital financial services, and to address any questions or concerns raised by community members. The men champions also sensitized other men in their community regarding women’s access to and use of financial services and how that benefits the entire household.
<h1>Looking Ahead</h1>
CFI and WFP’s research shows that well-designed cash transfer programs have the potential to enhance household well-being, contribute to women’s economic power, and reduce risks of IPV. But doing so successfully requires a <a href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/09/Sending-Cash-Transfers-to-Women-infographic.pdf">nuanced approach</a> that incorporates gender-transformative elements and engages multiple stakeholders. When done well, these programs can create an environment where women’s journeys are both secure and empowering. Economic empowerment for women is not just about dollars and cents; it's about giving them the tools they need to thrive, the power to control their financial destinies, and the freedom to live without fear of violence. When cash transfer programs are designed intentionally, considering local context, they can help us move closer towards the goal of women's economic empowerment, paving the way for brighter futures, stronger families, and more resilient societies.

Prioritizing Women to Receive Cash Transfers: What Are the Implications for Program Design?

A comprehensive study by CFI and WFP suggests that directing funds into the hands of women on behalf of their households can reduce risk factors associated with intimate partner violence (IPV). This blog post highlights how to design cash transfer programs and send money to women while reducing the risk of IPV.

This is part of a <a class="fui-Link ___10kug0w f3rmtva f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f1cmlufx f9n3di6 f1ids18y f1tx3yz7 f1deo86v f1eh06m1 f1iescvh fhgqx19 f1olyrje f1p93eir f1nev41a f1h8hb77 f1lqvz6u f10aw75t fsle3fq f17ae5zn" title="https://www.centerforfinancialinclusion.org/series/digital-cash-transfers-for-women" href="https://www.centerforfinancialinclusion.org/series/digital-cash-transfers-for-women" rel="noreferrer noopener" aria-label="Link series">series</a> of work done in partnership with CFI and WFP, with funding from the Bill &amp; Melinda Gates Foundation, that explores how we can improve the design and delivery of digital cash transfers for low-income women.

Cash transfer programs have emerged as a crucial tool in the global effort to combat poverty, overcome shocks and other adversities, and achieve the Sustainable Development Goals (SDGs). Cash transfers provide financial support to vulnerable households, enabling them to meet their basic needs, access essential services, and invest in income-generating activities. However, beyond the immediate economic relief they offer, cash transfer programs also have the potential to <a href="https://cdn.odi.org/media/documents/11316.pdf" target="_blank" rel="noopener noreferrer">address deeper societal issues, including gender inequality</a>. 
<blockquote class="pullquote--right">By putting money directly into the hands of women within households, these programs challenge traditional gender norms and empower women to make decisions about finances, thereby enhancing their control over economic resources.</blockquote>
<a href="https://blogs.worldbank.org/voices/building-back-better-means-designing-cash-transfers-womens-empowerment" target="_blank" rel="noopener noreferrer">Women's economic empowerment</a> is increasingly recognized as a central objective of cash transfer programs. By <a href="https://docs.wfp.org/api/documents/WFP-0000141256/download/" target="_blank" rel="noopener noreferrer">putting money directly into the hands of women within households</a>, these programs challenge traditional gender norms and empower women to make decisions about finances, thereby enhancing their control over economic resources. This not only contributes to reducing gender inequalities but also enhances women's access to formal digital financial services and potentially brings additional benefits such as <a href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2022/12/Bridging-the-gap-1.pdf">increasing access to identification documents</a>. 

As we explore the potential benefits of directing funds to women, a critical question arises: could this approach exacerbate the risk of intimate partner violence (IPV)? This question probes the potential shifts in power dynamics within households and the increased vulnerability women might face as they gain control over financial matters. 

Is this concern rooted in perception, or does substantial evidence support these claims? To dig into this question, a <a href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/09/Sending-Cash-Transfers-to-Women-Report.pdf">comprehensive study</a> conducted by CFI, in partnership with the World Food Programme (WFP) and funded by the Bill &amp; Melinda Gates Foundation, examined existing evidence and sought insights from experts in the field. The study's findings suggest that directing funds into the hands of women on behalf of their households can in fact reduce the risk factors associated with IPV. This positive outcome is primarily attributed to the alleviation of financial stress within households and improvements in emotional well-being. However, it is essential to acknowledge that despite the potential benefits, cash transfers to women may still trigger instances of IPV, especially in contexts where harmful gender norms are deeply ingrained.
<blockquote>Despite the potential benefits, cash transfers to women may still trigger instances of IPV, especially in contexts where harmful gender norms are deeply ingrained.  </blockquote>
Globally, <a href="https://www.who.int/publications/i/item/9789240026681" target="_blank" rel="noopener noreferrer">27 percent</a> of ever-married/partnered women, ages 15 – 49 years, have experienced physical or sexual violence by an intimate partner in their lifetime. Women living in the least developed countries and in countries facing conflicts are disproportionately affected with an even higher prevalence of IPV. Gender inequalities that restrict women’s access to basic services and rigid social norms that support masculinities based on power and control are <a href="https://www.who.int/news/item/09-03-2021-devastatingly-pervasive-1-in-3-women-globally-experience-violence" target="_blank" rel="noopener noreferrer">major risk factors leading to IPV</a>. Cash transfers directed to women on behalf of the household can challenge these norms by putting money in the hands of women. However, simply transferring cash is not enough and must be accompanied by <a href="https://apps.who.int/iris/bitstream/handle/10665/312261/WHO-RHR-18.19-eng.pdf?ua=1" target="_blank" rel="noopener noreferrer">programming to gradually transform gender norms</a>. 

In line with the "do no harm" principle, designing cash transfer programs that effectively minimize the risks of IPV is paramount, particularly in settings where such violence is prevalent. At the same time, it is crucial to consider the impact on IPV beyond the program’s duration and explore how the reduction in IPV can be sustained in the longer term.  
<h1>How to Design Cash Transfer Programs and Send Money to Women While Reducing Risk of Intimate Partner Violence  </h1>
From this research, CFI and WFP developed a <a href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/09/Sending-Cash-Transfers-to-Women-infographic.pdf">guide</a> that details how to design cash transfer programs that enhance household well-being, increase women’s empowerment, and reduce the risks of IPV. It is important to note that effective design and implementation of cash transfer programs directed to women’s accounts should follow a comprehensive assessment of IPV risks, carefully considering contextual factors including prevailing gender norms, socioeconomic dynamics, and political conditions. 

Several key recommendations emerge from our analysis: 

<img class="wp-image-46448 size-full alignnone" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/09/Screenshot-2023-09-27-at-2.49.17-PM-e1695913799888.png" alt="" width="791" height="607" /> <img class="size-full wp-image-46449 alignnone" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/09/Screenshot-2023-09-27-at-2.49.32-PM.png" alt="" width="791" height="779" />

&nbsp;

The <a href="https://www.centerforfinancialinclusion.org/sending-cash-transfers-to-women-how-to-design-programs-that-enhance-well-being-while-safeguarding-against-intimate-partner-violence">full report</a> from the study details actionable insights backed by lessons and examples from diverse cash transfer programs.

Cash Transfers Directed to Women and the Implications for Intimate Partner Violence: Lessons for Program Design

Mayada El-Zoghbi

Report

When cash transfers are safely sent directly to women, they have the potential to address gender inequities by helping women meet basic needs, access essential services, and invest in income-generating activities. But prioritizing women as the primary recipients of cash transfer programs, and thus diverging from traditional practices where men are the heads of households, raises concerns about intimate partner violence (IPV).<span class="EOP SCXW226271306 BCX0" data-ccp-props="{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335559738&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}"> This report examines existing evidence on the impact of cash transfers on IPV against women and proposes design approaches to mitigate and minimize those risks. While the report primarily focuses on evidence related to reducing the risk of IPV following cash transfers to women on behalf of households, it also underscores the potential that sending cash to women has for reducing existing IPV. The objective is to foster a constructive dialogue and encourage governments and humanitarian organizations implementing cash transfer programs to prioritize women as the recipients of cash on behalf of their households whenever feasible, while ensuring their safety and adequate support.  

This series, created in partnership with World Food Programme (WFP), the Center for Financial Inclusion (CFI), and the Bill &amp; Melinda Gates Foundation, shares how we can improve the design and delivery of digital cash transfers for low-income women.

Sending Cash Transfers to Women: How to Design Programs that Enhance Well- Being While Safeguarding Against Intimate Partner Violence

Joanna Ledgerwood

Reflecting on conversations from the 2023 RFF event, CFI's Advisory Council chair Joanna Ledgerwood writes about why DFS risks are greater for women and what is needed for addressing and preventing these risks to increase women's digital inclusion.

‘Responsible Finance’ is Not Responsible if it’s Not Gender-Intentional

Lucciana Alvarez Ruiz

Following the release of CFI's Equitable AI Guide and Brief, Lucciana Alvarez Ruiz identifies issues with popular AI tools, like ChatGPT, and how AI can result in harmful gender bias if key challenges with building accountability and transparency are not addressed.

Why is meal planning a recommended financial strategy for women but not for men with children, according to ChatGPT? And why is this important for financial services?

Natural language processing (NLP) tools can create human-like conversations. Perhaps the most well-known application of an NLP tool is ChatGPT, which <a href="https://www.theguardian.com/technology/2023/feb/02/chatgpt-100-million-users-open-ai-fastest-growing-app" target="_blank" rel="noopener noreferrer">reached over 100 million users two months after its launch</a> in November 2022. Many people have increasingly used ChatGPT as a tool for work or personal use. I wanted to test if ChatGPT showed gender bias when looking at finance-related applications, so I inputted a few prompts about financial services. The results are a reminder that while AI is a powerful tool, it is not free from problematic social norms and potential bias against women. This week CFI <a href="https://www.centerforfinancialinclusion.org/equitable-ai-for-inclusive-finance">released two new publications</a> to help strengthen industry conversations to mitigate against, monitor for, and correct harmful gender bias in inclusive finance. These publications are the result of CFI’s winning proposal to USAID’s <a href="https://www.usaid.gov/innovation/competitions/equitable-ai-challenge" target="_blank" rel="noopener noreferrer">Equitable AI Challenge</a>, implemented by DAI’s Digital Frontiers.
<blockquote class="pullquote--right">One simple prompt revealed three problematic differences. However, they reflect a complex problem requiring an urgent response.</blockquote>
When I asked ChatGPT, or GPT-3.5, to write financial advice to help men and women with children, the answers showed important differences by gender, as seen in the following screenshots. For instance, the tool recommended that men, not women, create or update their wills and designate beneficiaries for their assets. This result demonstrates an existing assumption that men with children are more likely to have assets or income than women with children. Moreover, GPT-3.5 advised only men, not women, to have a work-life balance and spend quality time with their families. Again, this shows a bias about gender roles in work and within families. Another blatant example was the recommendation GPT-3.5 gave to women, but not to men, about planning meals. The tool advised women to cook larger meals at home and plan their grocery shopping to save money.

One simple prompt revealed these three problematic differences. However, they reflect a complex problem requiring an urgent response — especially as many companies, including fintechs, incorporate AI tools, such as NLP, into their business models.

<img class="aligncenter size-full wp-image-46358" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/08/EqAI-ChatGPT-01.png" alt="" width="4038" height="3555" />
<h2>Growing Use Cases of AI in Inclusive Finance</h2>
AI has <a href="https://www3.weforum.org/docs/WEF_AI_in_Financial_Services_Survey.pdf" target="_blank" rel="noopener noreferrer">numerous applications in the financial sector</a>, such as revenue generation, process automation, risk management, client acquisition, and customer service. Companies are increasingly using AI to accelerate lending decisions and use alternative data — including social media, mobile phone activity, and satellite data — to measure creditworthiness. AI presents an opportunity to quickly expand access to financial services for populations without long credit histories, including women. Companies use facial patterns, voice recognition, and biometric data for know-your-customer (KYC) requirements and to verify customers’ identities. Insurance companies use AI algorithms to speed up claims processing. Companies are also using AI tools for client acquisition and customer service. Chatbots and virtual assistants help prospective and existing customers find information about financial products that meet their needs.
<blockquote>Instead of offering helpful customization, the financial advice given perpetuates outdated and unhelpful stereotypes. The resulting harm from biased AI systems used in financial services contradicts the goals of financial inclusion and has potential business and regulatory costs for fintechs and their investors.</blockquote>
However, while AI tools are making high-stakes decisions for the economic prospects and future of individuals, their businesses, and their communities, these systems are also introducing new risks, including data privacy vulnerabilities and unfair outcomes for certain consumers. Women have experienced negative effects, such as being unfairly rejected as “false negative” in credit decisions, or receiving higher pricing, lower credit limits, and more limited choices.  As the above experiment with GPT-3.5 showed, algorithms can provide different financial advice depending on a customer’s gender. When designed well, tailored solutions for different customer segments can increase usage by satisfying the specific needs of the group. However, in this case, instead of offering helpful customization, the financial advice given perpetuates outdated and unhelpful stereotypes. The resulting harm from these issues contradicts the goals of financial inclusion and has potential business and regulatory costs for fintechs and their investors.
<h2>Sources of Harmful Gender Bias</h2>
<img class="wp-image-46360 alignright" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/08/Screenshot-2023-08-25-at-7.40.18-AM.png" alt="" width="405" height="408" />

CFI has written extensively on the opportunities and risks of AI for inclusive finance, and in 2021, we released a <a href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2021/03/The-Stories-Algorithms-Tell-CFI-publication-MAR21.pdf">framework to help understand algorithmic bias</a>. The framework included three buckets to categorize sources of harmful AI bias: 1) inputs (such as datasets and AI teams), 2) code, and 3) context.

Applying this framework to my experiment with ChatGPT illustrates a few examples of where differences in financial advice by gender may originate. However, it’s important to highlight that these possible explanations are purely theoretical, as we have not tested them empirically.

Inputs: NLP and AI algorithms are trained on data to make predictions and inform decisions. In this case, <a href="https://medium.com/@dlaytonj2/chatgpt-show-me-the-data-sources-11e9433d57e8" target="_blank" rel="noopener noreferrer">GTP-3.5 processed input data from the web, books, and WebText2</a>, which is culled from Reddit submissions. As you may imagine, in aggregate these input datasets compile a series of beliefs and social norms, such as the one that suggested that women save money through meal prepping.

Code and Context: As a model is being built, developers can use techniques to reduce biased responses by, for instance, penalizing the model for generating harmful or stereotypical content. AI developers, or other actors, can periodically review model outputs after launch and provide feedback and adjustments over time. However, if the teams testing the system are primarily men, problematic outputs — like from my experiment — may be less likely to be flagged.
<h2>A Path Forward </h2>
As with any technology that experiences exponential growth, stakeholders — like investors, donors, and regulators — must play catch-up, and many questions remain. How, amid all these changes, can concerned stakeholders understand, let alone contribute to, shaping the future of AI in a way that is responsible and equitable, particularly for achieving our target financial inclusion outcomes?

In the inclusive finance sector, many actors are increasingly interested in incorporating principles and tools that guide the responsible and equitable deployment of AI. However, although there is a proliferation of techniques and academic resources to identify, mitigate, and correct bias, our extensive review of over 120 guides and checklists showed a lack of tools appropriately designed for the financial sector.

Recognizing this gap, CFI developed and this week released a <a href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/08/Equitable-AI-Guide.pdf">practical guide</a> to help impact investors identify harmful AI gender bias among their investee companies, and an <a href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/08/Equitable-AI-Brief.pdf">accompanying brief</a> that presents some of the key challenges with building accountability and transparency for AI in inclusive finance and offers opportunities to strengthen the industry conversation. Recommended practices in the guide touch on data, inputs, and model building as well as crucial business practices including governance. For instance, in the case of OpenAI, the creator of GPT-3.5, the company publicly committed that AI should benefit all of humanity and wrote <a href="https://openai.com/safety" target="_blank" rel="noopener noreferrer">principles to guide their mission</a>. This stance may explain OpenAI’s six-month effort to make the new version of ChatGPT, GPT-4, safer and with hopefully fewer problematic outputs. I’ll be sure to check back with some prompts for GPT-4!

Read more about our work around equitable AI <a href="https://www.centerforfinancialinclusion.org/equitable-ai-for-inclusive-finance">here</a>.

<img class="aligncenter size-full wp-image-46361" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/08/Screenshot-2023-08-25-at-7.42.00-AM.png" alt="" width="2054" height="1034" />

*Note: In this blog, gender gaps refer to the gap between women and men. However, CFI acknowledges that gender includes non-binary populations such as LGTBQ communities. It is essential to highlight that this blog does not intend to dismiss the existence of non-binary people.

Gender Bias in AI: An Experiment with ChatGPT in Financial Inclusion

Nina Liew

Columbia University SIPA graduate, Nina Liew, considers how fintechs can challenge discriminatory gender norms, intentionally design products for women users, and diversify their organization to further benefit women.

On the outskirts of sprawling Delhi, 34-year-old Maya opens her kirana, a small grocery store, for the day. Sleeves of shampoo packets and dry snacks line the walls around the counter where Maya serves up to 80 customers on a good day. She accepts payments in cash as well as digital payments on her smartphone, thanks to India’s successful <a href="https://www.forbes.com/sites/zennonkapron/2023/04/10/is-indias-upi-real-time-payments-system-ready-to-go-global/?sh=298e95e94d14" target="_blank" rel="noopener noreferrer">Unified Payments Interface (UPI) system</a>. However, while Maya’s name is registered as the business and bank account owner, she does not know much about the bank account or the business finances beyond her handwritten ledger book. Instead, her husband manages the banking relationship, and she must ask him for more cash or information about the account balance.
<blockquote>Many registered businesses are owned and managed by women only on paper; their lived realities are much different.</blockquote>
According to the Indian Ministry of Micro, Small &amp; Medium Enterprises (MSMEs), <a href="https://msme.gov.in/msme-annual-report-2022-23" target="_blank" rel="noopener noreferrer">women only own 20 percent of Indian MSMEs</a>. While this is already a small figure, ​​​​<a href="https://www.centerforfinancialinclusion.org/fight-gender-inequality-prioritizing-womens-customer-experience-in-product-design-and-complaint-resolution-processes">interviews conducted in March 2023</a> with 38 women business owners in India suggest that this number may be even lower. Many registered businesses are owned and managed by women only on paper; their lived realities are much different.

<img class="aligncenter wp-image-46289" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/08/Nina-Liew-blog-graphic.png" alt="" width="1009" height="235" />
<h1>Challenging Existing Norms</h1>
Providing financial services to women in low- and middle-income countries <a href="https://www.povertyactionlab.org/policy-insight/designing-financial-services-and-social-protection-programs-enhance-womens-economic" target="_blank" rel="noopener noreferrer">does not necessarily result in economic empowerment</a> if women do not or cannot make the decisions about their finances. Of the Indian women micro- and small-business (MSE) owners interviewed, over one-third relied on a man — typically a husband or brother — to manage or assist in their use of financial services, even if the woman was the registered owner of the business and bank account. When asked why, women said it was because of personal preference, a lack of confidence in operating the account, or that it was the man’s choice. This was true of interviewees with a master’s degree as well as those with lower levels of formal education, illustrating the pervasiveness of gender norms across education levels.

Managing the business’ day-to-day finances extends to resolving issues with a bank or fintech. Women who rely on their husbands or brothers to operate their bank accounts will often wait for them to contact the agent -- who is usually a man -- to resolve any complaints. This process is time-consuming and causes friction in women’s daily business activities. Consequently, these women may turn away customers if they do not have enough cash or lack information on accessing financial services for business improvement or growth.

For women in India to fully realize their economic contribution to the Indian economy, we must challenge and change existing norms. The current lack of equality represents a missed opportunity as bona fide access to formal financial services enables women to build their assets and wealth, improving their wellbeing and the wellbeing of their families.
<h1>Benefits for Women and Businesses</h1>
The burgeoning fintech sector has the pivotal opportunity to create better outcomes for women. India’s fintech sector is one of the fastest growing in the world, with approximately <a href="https://www.bain.com/insights/india-fintech-report-2022-sailing-through-turbulent-tides/" target="_blank" rel="noopener noreferrer">USD $35 billion invested</a>, more than doubling India’s share of global fintech funding since 2016. However, many fintechs are “gender-neutral” and do not design intentionally for diverse genders, reinforcing discriminatory gender norms. For example, because women tend to have <a href="https://www.centerforfinancialinclusion.org/an-equitable-rebuilding-learnings-from-women-owned-msmes">lower rates of digital transactions or formal financial assets</a>, it can be more challenging for them to meet loan eligibility requirements. When fintechs have a gender-neutral approach, the <a href="https://www.inclusivefintech50.com/2022-insights" target="_blank" rel="noopener noreferrer">gender gap is 28 percent higher</a> than the gap for bank accounts or smartphone ownership.
<blockquote class="pullquote--left">Many fintechs are “gender-neutral” and do not design intentionally for diverse genders, reinforcing discriminatory gender norms.</blockquote>
Advancing gender-intelligent changes and developing strategies to overcome women’s specific constraints can help fintechs tap into the <a href="https://financialallianceforwomen.org/download/how-fintechs-can-profit-from-the-multi-trillion-dollar-female-economy/" target="_blank" rel="noopener noreferrer">$216 trillion global market</a> controlled by women. Research by the Financial Alliance for Women shows that fintechs could see a ​​​​<a href="https://financialallianceforwomen.org/download/how-fintechs-can-capture-the-female-economy/" target="_blank" rel="noopener noreferrer">70 percent increase in revenues</a> by converting new women customers at the same rate as men. While building economic power for women on its own is a compelling reason to inspire change, this financial incentive is an additional driving force for investor-backed and profit-driven fintechs to prioritize gender-inclusive design and compete in an increasingly crowded market.
<h1>Increasing Diversity Is a Crucial Driver of Change</h1>
One fundamental way that fintechs can adapt their strategies to benefit women is by increasing their organizational diversity. From its interviews with the <a href="https://www.inclusivefintech50.com/" target="_blank" rel="noopener noreferrer">Inclusive Finance 50</a> fintech winners, CFI found that women-led fintechs were <a href="https://www.inclusivefintech50.com/2021-insights" target="_blank" rel="noopener noreferrer">more likely</a> to explicitly target and serve more women customers and report gender segmentation data, which is necessary for gender-intelligent decision making. This staff diversity should extend to customer-facing roles, such as the agents and distributors interacting with women customers, and women business correspondents are critical in <a href="https://www.adb.org/publications/digital-doorstep-banking-female-banking-agents-lead-digital-financial-inclusion-through-the-pandemic-and-beyond" target="_blank" rel="noopener noreferrer">expanding financial inclusion</a>. Interfacing with women staff makes it easier for women business owners to manage financial matters as women place a higher value on building personal relationships with agents and building trust over time.
<blockquote class="pullquote--right">Women-led fintechs were more likely to explicitly target and serve more women customers and report gender segmentation data.</blockquote>
Investors and regulators can also incentivize and require fintechs to make these changes. For example, through <a href="https://www.womensworldbanking.org/what-we-do/gender-lens-investing/" target="_blank" rel="noopener noreferrer">gender lens investing</a>, Women’s World Banking works toward higher social and financial returns. Their in-depth approach uses fintech data to develop customized, strategic Gender Action Plans, and their first fund saw an <a href="https://www.womensworldbanking.org/what-we-do/gender-lens-investing/" target="_blank" rel="noopener noreferrer">83 percent increase in women reached</a> by portfolio companies. 

Although fintechs alone cannot bring about an overnight transformation in societal and gender norms, taking these steps represents a real and immediate opportunity to initiate change for the economic empowerment of women in India and beyond.



<a href="https://www.linkedin.com/in/camilla-nestor-640b70">Camilla Nestor</a>, Advisory Council Member of CFI and CEO of MCE Capital, teaches a financial inclusion course at Columbia’s <a href="https://www.sipa.columbia.edu/">School of International and Public Affairs</a> (SIPA). Each year, the course features a writing competition that gives students an opportunity to write a blog post on a topic of their choice related to inclusive finance. This piece was written by the winner of the 2023 writing competition, Nina Liew.

This work is inspired by a graduate research project conducted by students at Columbia University’s School of International and Public Affairs in consultation with CFI and with support from <a href="https://ifmrlead.org/">LEAD at Krea University</a>. Nina and the team of graduate students focused on digital financial inclusion and consumer protection for women MSE owners in India. They interviewed 38 women MSE owners, bank and fintech agents, and fintech executives in India in March 2023. 

Note: The story in this post was created as an amalgamation of interviewees.

Power in Practice – or Only on Paper? Addressing the Financial Gaps Affecting Women Business Owners in India

Nikita Chettri

Evelina Durlind

Leonie Rauls

Ulayya Gempur Tirani

Marina Santos Piacente

Interviews with 38 women MSE owners in India emphasize the need for banks and fintechs to adopt a gender-intelligent approach to better understand how women use complaint resolution processes and design offerings that address their specific needs.

This blog post was generated from a research project conducted by a team of graduate students from Columbia University’s <a href="https://www.sipa.columbia.edu/" target="_blank" rel="noopener noreferrer">School of International and Public Affairs</a>, in consultation with CFI and with support from <a href="https://ifmrlead.org/" target="_blank" rel="noopener noreferrer">LEAD at Krea University</a>. The team focused on digital financial inclusion and consumer protection for women micro- and small-enterprise (MSE) owners in India and interviewed 38 women MSE owners, bank and fintech agents, and fintech executives in India in March 2023. Please note: Akanksha is a composite character based on interview anecdotes.  

It is the middle of the day in Noida in Uttar Pradesh, and an angry customer storms into Akanksha’s small mobile phone and banking agent shop. The customer demands to know why his parents have not yet received the money he transferred to them at Akanksha’s shop yesterday. To calm him down, Akanksha explains that the bank app’s server experienced an electrical outage in the morning that stalled all transactions. However, the customer continues to demand an immediate fix. 
<blockquote class="pullquote--left">As a woman, building trust with male customers has been particularly challenging, but she must do so since most customers are men. </blockquote>
In addition to running her shop, Akanksha is an agent for banks and fintechs, offering mobile money transfers and various utility services. In this scenario, she faces a tough decision. Akanksha must choose how to address the customer’s complaint – she can try to resolve the issue via the bank app, contact her area distributor — the middleman between banks or fintechs and the network of local agents serving customers, or close her shop and visit the bank. How she handles this complaint is critical, as she must maintain her customer base and the hard-earned trust of her customers. As a woman, building trust with male customers has been particularly challenging, but she must do so since most customers are men. 

Akanksha, a woman in her mid-thirties with a bachelor’s degree, is not confident in filing a formal complaint using the app, which only has instructions in English. She also does not want to file a formal complaint out of fear that staff may escalate her issue to upper management, damaging her relationship with bank staff or her distributor. She attempts to contact her distributor on WhatsApp, but he does not answer. Because her husband is busy at work, Akanksha has no choice but to close her shop early and walk to the bank to talk to a staff member in person.  
<h2 style="text-align: center;"><img class="aligncenter wp-image-46280" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/08/SIPA_quote1.png" alt="" width="1074" height="180" /></h2>
<h1>Minor Issues With Major Implications </h1>
While Akanksha’s story is fictional, it is not an uncommon situation for many women MSE owners in India. A team of graduate students from Columbia University interviewed 38 women in India who use digital financial services (DFS) to understand their user experiences with banking and fintech apps, especially concerning the complaints journey. The interviews revealed that a stalled transaction is just one of several common issues faced daily by women MSE owners and agents like Akanksha. Stalled transactions and outages are so common that one interviewee described this as “just a part of life.” Almost all interviewees (35 out of 38) experienced at least one minor issue like this when using banking or fintech apps. Because each instance takes valuable time to resolve and leads to lost revenue, the effects of “minor” issues can significantly impact MSE owners’ businesses. One interviewee reported closing her shop for 15-minute periods multiple times a day to walk to the bank and settle matters in person.  

Akanksha’s experience highlights some of the barriers to complaints resolution and consumer protection for women MSE owners in India, driven by low confidence in DFS and a reliance on personal relationships with distributors and staff. In an interview with one fintech CEO – whose company was also among the <a href="https://www.inclusivefintech50.com/" target="_blank" rel="noopener noreferrer">Inclusive Fintech 50</a> winners – she said, “Women do not come screaming and shouting; this never happens. Local partners are more approachable. It is a business relationship; if you go to that level, it is also a social relationship.” 

An example of this type of social relationship is how many women agents rely on and highly value their personal relationships with distributors who travel to different communities to collect and disburse cash to agents. One agent even described her distributor as her “mentor and guru.” However, this relationship can also be vulnerable; distributors can exploit agents who depend on them for operational needs and resolving issues. Furthermore, if complaints are made informally to the distributor, which is often true for women, distributors are not incentivized to formally record complaints. As a result, the absence of an official record limits management’s oversight of the challenges women agents face.  
<h1>Finding Solutions That Better Serve Women </h1>
<a href="https://www.microsave.net/2018/10/24/consumer-protection-in-the-digital-age/" target="_blank" rel="noopener noreferrer">Existing literature</a> points to factors such as literacy levels, a difficult interface, and a lack of trust that prevent the adoption and use of DFS. However, there remains a gap in understanding the challenges in post-adoption utilization of services, particularly in the face of weak consumer protection provisions by low-income women users. Therefore, in our study, we aimed to explore how consumer protection policies impacted the experiences of women MSEs in using DFS, particularly with complaint redressal.

We found that, generally, women were not comfortable with the process of submitting formal complaints. Despite fintechs and DFS providers having established complaints handling processes under their consumer protection policies, they are often inadequate in supporting their women users. This results in many women abandoning platforms altogether. 
<h2 style="text-align: center;"><img class="aligncenter wp-image-46281" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/08/SIPA_quote2.png" alt="" width="1075" height="180" /></h2>
The interviews with women users in India showed that they highly value personal relationships and prefer in-person complaint resolution. However, women face higher challenges to complaint redressal because of their strong preference for resolving issues through social interactions and providers’ lack of gender-sensitive consumer protection policies. As such, to accommodate women’s user preferences, banks and fintechs need to adopt <a href="https://www.centerforfinancialinclusion.org/the-case-for-a-gender-intelligent-approach-an-opportunity-for-inclusive-fintechs">gender-intelligent</a> strategies.

Through a gender-intelligent approach, banks and fintechs can better understand how women use complaint resolution processes and ultimately design offerings that address their specific needs. This approach can help <a href="https://www.centerforfinancialinclusion.org/the-case-for-a-gender-intelligent-approach-an-opportunity-for-inclusive-fintechs">change entrenched gender inequalities</a> and <a href="https://financialallianceforwomen.org/download/how-fintechs-can-capture-the-female-economy/" target="_blank" rel="noopener noreferrer">benefit</a> companies’ bottom lines. Therefore, solutions should focus on directly addressing women’s specific needs while considering the ability to achieve scale.

Based on the research interviews, we recommend that banks and fintechs consider the following:
<h3>1. Banks and fintechs should develop support features that strengthen women agents’ ability to use their apps confidently.</h3>
This approach could include robust in-person onboarding, training, and support in learning to use the app’s features. While this element is considered “high-touch,” <a href="https://www.accion.org/the-path-forward-for-human-touch-in-a-high-tech-world" target="_blank" rel="noopener noreferrer">the tech-touch balance</a> is vital in providing inclusive financial services. Women users also reported that certain apps and resources were only available in English. Consequently, financial service products should be available in local languages and cater to varying literacy levels.
<h3>2. Banks and fintechs should formalize the full scope of the complaint process for their digital financial services.</h3>
Our research found that many women agents resolve complaints through informal mechanisms such as calling, texting (including WhatsApp), or meeting in person with distributors. Therefore, banks and fintechs should update processes and incentives to record distributor interactions and include them in formal complaint resolution processes and metrics.
<h3>3. Banks and fintechs should build user communities that enable high-touch and in-person support at scale.</h3>
Due to the travel-intensive and vulnerable cash collection nature of the role, most distributors are men. However, there is an opportunity to engage women as distributors to support women agents – one example is creating an “ambassador” program where established and high-performing women agents onboard and help new women agents. The incentive for becoming an ambassador is recognition as an expert and leader within the community. While many of our interviewees said they did not know other women agents, we saw that those who had learned from other women had higher competency levels in using the bank and fintech apps.   
<h3>4. There should be more physical meeting spaces or local offices for women customers to meet staff and raise complaints.</h3>
For example, one gender-intelligent fintech established local meeting hubs to support women using fintech services. By providing a secure environment and personalized assistance, the space motivated women customers to raise issues and embrace a broader range of digital financial services, ultimately improving customer loyalty and lifetime value to fintechs.

These recommendations are merely the beginning of the transformative potential of digital financial services in advancing financial inclusion and consumer protection for women. By taking experiences like Akanksha’s into account during the product design and complaint resolution processes, banks and fintechs can forge a more inclusive complaints-handling strategy. Such an approach would enable women MSE owners and agents to thrive, expand their businesses, and achieve greater economic prosperity. When more women feel they can use DFS and fintech successfully, financial service providers can expand their business reach, demonstrating that gender-intelligent design is a win for all.

Fight Gender Inequality: Prioritizing Women’s Customer Experience in Product Design and Complaint Resolution Processes

Alfred Jusu

Interviews with 12 agriculture and financial experts in Sierra Leone identify 3 major climate risks for the country. How can FSPs better understand the impact of these risks and help vulnerable populations transition to alternative livelihoods?

Sierra Leone is a highly climate-vulnerable country, meaning that most of the population does not have appropriate coping strategies or resources to deal with the unpredictable effects of climate-related shocks. The country is also heavily dependent on agriculture. In 2020, the <a href="https://www.elibrary.imf.org/view/journals/002/2022/260/article-A001-en.xml#:~:text=High%20dependence%20on%20agriculture%20and%20poor%20infrastructure%20exacerbates,sector%2C%20constitutes%2059%20percent%20of%20GDP%20in%202020." target="_blank" rel="noopener noreferrer">IMF found</a> that the agricultural sector in Sierra Leone employed 54 percent of the population, and, together with fishing and tourism, it contributed 59 percent to the country’s GDP. Today, limited access to finance or crop insurance makes it challenging for farmers to manage climate-related risks, exacerbating the link between Sierra Leone’s climate vulnerability and poverty.

In partnership with Boston University’s Fulbright Humphrey Fellowship, CFI worked closely with Humphrey Fellow <a href="https://www.bu.edu/hhh/alumni/2022-23-hubert-h-humphrey-fellows/alfred-jusu/" target="_blank" rel="noopener noreferrer">Alfred Jusu</a> to conduct 12 key informant interviews with agriculture and financial services experts in Sierra Leone to understand how low-income and vulnerable populations respond to climate change. From these conversations, we found that farmers face three major climate-related challenges in Sierra Leone: flooding, extreme heat, and irregular rainfall. We suggest ways for inclusive financial services providers (FSPs) to support low-income and vulnerable communities in Sierra Leone – and other countries – to adapt to climate-related threats.
<h1>Major Climate-Related Challenges for Farmers in Sierra Leone</h1>
Climate risk impacts vulnerable populations in many ways, including increased food insecurity, waterborne diseases, dehydration-induced fatigue, biodiversity loss, and low agricultural production. Among these many challenges, based on the 12 interviews conducted, the three greatest climate-related concerns facing farmers in Sierra Leone are flooding, extreme heat, and irregular rainfall.
<h3>Flooding</h3>
Of the total number of people affected by disasters in Sierra Leone in the last 30 years, <a href="//www.undp.org/sierra-leone/publications/national-adaptation-plan-2021%20Documents/Communications/Blog/2023%20blog%20posts/Drafts%20(In%20progress)/Archive" target="_blank" rel="noopener noreferrer">90 percent were affected by flooding</a>. In recent years, the delayed onset of the monsoon rains caused water scarcity, followed by extensive flooding once the heavy rain eventually arrived. This year alone, by the beginning of the rainy season in <a href="https://floodlist.com/africa/sierra-leone-floods-freetown-may-2023" target="_blank" rel="noopener noreferrer">May</a>, flooding reportedly caused seven deaths in Freetown and six in Koinadugu.

Flooding also heavily impacts the country in other ways, including displacing farmers and people living in water catchment areas; flooding and the subsequent rotting of crops –  especially rice fields; flooding of roads that link farms to markets, making it difficult for farmers to transport their agricultural goods; property loss; and the proliferation of <a href="https://www.acaps.org/fileadmin/Data_Product/Main_media/20203107_acaps_start_fund_anticipatory_note_sierra_leone_final_augt_4_2020.pdf" target="_blank" rel="noopener noreferrer">waterborne diseases</a>, as water from flooded sewers enters broken city pipes.
<h3>Extreme Heat</h3>
<blockquote class="pullquote--right">In a country with weak energy infrastructure, many families struggle to acquire air conditioners to combat excessive night sweats that cause dehydration.</blockquote>
Sierra Leone’s average annual temperature has increased by 33.4 degrees Fahrenheit (0.8 degrees Celsius) since 1960. By 2060, the annual temperature is <a title="https://ora.ox.ac.uk/objects/uuid:73f9204b-37db-4cf1-b204-e264a8d60f0c/download_file?file_format=application%2Fpdf&amp;safe_filename=The%2BUNDP%2BClimate%2BChange%2BCountry%2BProfiles&amp;type_of_work=Journal+article" href="https://ora.ox.ac.uk/objects/uuid:73f9204b-37db-4cf1-b204-e264a8d60f0c/download_file?file_format=application%2Fpdf&amp;safe_filename=The%2BUNDP%2BClimate%2BChange%2BCountry%2BProfiles&amp;type_of_work=Journal+article" target="_blank" rel="noopener noreferrer">projected to increase</a> by an additional 33.8 to 36.7 degrees Fahrenheit (1.0 to 2.6 degrees Celsius). Extreme heat causes excess perspiration, dehydration, fatigue, reduced stamina, and increased rest times during physical activity. Many farmers struggle to work in these conditions, resulting in a decrease in the total area of cultivated land. In a country with weak energy infrastructure, many families struggle to acquire air conditioners to combat excessive night sweats that cause dehydration; others spend a significant amount of their limited budget on generators and fuel to keep cool at night.

The consequences of extreme heat are also significant for crops. <a href="https://bafs.org.sl/wp-content/uploads/2021/02/SL-Cocoa-Value-Chain-Policy-2019-.pdf" target="_blank" rel="noopener noreferrer">Cocoa</a> – the leading agricultural export of Sierra Leone – is particularly at risk from extreme heat. Extreme heat exacerbates the spread of diseases and pests on cocoa plantations. For example, a pest called a cocoa pod borer can damage cocoa plants and affect the quality of the beans. Warmer temperatures can also <a href="https://www.nature.com/articles/s41598-021-01427-8" target="_blank" rel="noopener noreferrer">decrease</a> the flavonoids and aroma compounds of the beans, negatively affecting the taste and quality and ultimately reducing farmers’ profits.
<h3>Irregular Rainfall</h3>
Over the years, Sierra Leone has seen changes in rainfall patterns and seasonal precipitation, with average <a href="https://ora.ox.ac.uk/objects/uuid:73f9204b-37db-4cf1-b204-e264a8d60f0c/download_file?file_format=application%2Fpdf&amp;safe_filename=The%2BUNDP%2BClimate%2BChange%2BCountry%2BProfiles&amp;type_of_work=Journal+article" target="_blank" rel="noopener noreferrer">annual rainfall decreasing since 1960</a>. Because Sierra Leone’s crop production depends on rainfed agriculture, this reduction in total rainfall takes a significant toll on the agricultural sector. Farmers decide when to till the land, plant, and harvest based on historical knowledge of when the rains fall. However, because of climate change, it is now more difficult to predict seasonal rainfall. As a result, birds or rodents may eat the seeds, seeds can die in the scorching heat, or their germination rates can decline. For cocoa plantations, changes in rainfall patterns affect the growth, development, and yield of cocoa trees – too much rainfall can cause cocoa pods to rot, while too little can lead to stunted growth and reduced yields.

Considering the climate risks that Sierra Leoneans – particularly farmers – face on a daily or seasonal basis, we must examine how financial institutions are helping them <a href="https://www.centerforfinancialinclusion.org/green-inclusive-finance-a-framework-for-understanding-how-financial-services-can-help-low-income-and-vulnerable-people-respond-to-climate-change">adapt to changing landscapes and livelihoods, mitigate risk, and build resilience.</a> While some efforts are in place to support consumers responding to climate shocks, FSPs must prioritize products and services that offer clients flexibility and access during emergencies.
<h1>How Can FSPs Help Consumers in the Face of Climate Change?</h1>
<h3>1. Offer voluntary savings.</h3>
Very few microfinance institutions in Sierra Leone offer voluntary savings accounts that clients can access when they want, regardless of any outstanding loans. However, offering this type of flexibility to consumers is important, as it allows them to access critical funds in an emergency. <a href="https://www.entrepreneursdumonde.org/en/program/munafa-social-microfinance-in-sierra-leone/">Munafa Social Microfinance</a> is one of a few MFIs offering voluntary savings for low-income clients.
<h3>2. Mainstream social safety net payments.</h3>
Currently, the National Commission for Social Action (NaCSA) in Sierra Leone provides social protection payments for low-income and vulnerable citizens. These payments help people buy food and other essential supplies during floods and help cushion shocks from poor harvests. There is an opportunity for FSPs to take over the role of disbursing social safety net payments, which would help clients build transaction and credit histories. In 2020, Rokel Commercial Bank made <a href="https://tribunetimessl.com/nacsa-signs-cash-transfers-contract-agreement-with-rcb/">cash transfer payments</a> on behalf of NaCSA, amounting to approximately USD $4 million. As practiced in other countries, vulnerable individuals could use those funds to buy food and supplies or move themselves and their livestock to temporary shelters in anticipation of impending climate-induced disasters.
<h3>3. Offer remittance services.</h3>
Remittance services can help farmers and other vulnerable populations receive foreign and local funds to help cope with severe climate-related events, including poor harvests or famines. There are also efforts to link remittances to climate-friendly investments directly. For example, <a href="https://www.thesierraleonetelegraph.com/easy-solar-launches-online-sales-platform-to-expand-access-and-affordability/">Easy Solar’s</a> digital sales platform allows friends and relatives abroad to purchase solar products – solar lanterns, home systems, appliances, and cookstoves – through a secure online payment portal on behalf of people in Sierra Leone. Another example of how innovative models can promote climate adaptation is <a href="https://theshinecampaign.org/celebrating-the-success-of-small-grants-lessons-from-two-organizations/">Smiling Through Light’s PAYG</a>o (Pay-As-You-Go) business model, which allows rural and off-grid communities to pay for solar energy in a way that lowers transaction costs, improves transparency, facilitates savings, ensures privacy, and builds women’s autonomy.
<h3>4. Mainstream the distribution of energy-efficient products like rechargeable solar lights and improved cookstoves.</h3>
Distributing energy-efficient products through FSPs, and making them part of standard credit offerings for clients, could help to increase their adoption. At the same time, purchasing these products allows first-time clients an opportunity to build a credit history, enabling them to access a range of financial services in the future.
<h3>5. Offer innovative financing products.</h3>
FSPs can provide innovative financing to help clients adapt and build resilience in the face of climate change. For example, a recent initiative in Freetown found that <a href="https://www.newscientist.com/article/2375769-city-in-sierra-leone-covers-buildings-in-mirrors-to-fight-extreme-heat/">covering homes with a cheap mirror film</a> can substantially reduce indoor temperatures. Additionally, the recurring floods can devastate livelihoods by washing away stock-in-trade and tools or submerging crop fields. FSPs could offer products that fund vocational training to support people transitioning to alternative livelihoods, such as welding, plumbing, or masonry.

Another resilience-building product is weather indexation insurance, representing a vast untapped market. This insurance system relies on established weather thresholds, such as a minimum or maximum predicted rainfall. If the actual rainfall in a given year exceeds the maximum or falls below the minimum, farmers will receive compensation, assuming that the rain – or lack thereof – has damaged their crops or reduced their yield. Typically, farmers purchase this insurance as part of a bundle when they buy their inputs.
<h3>6. Finance the introduction of clean cookstoves powered by biomass.</h3>
The World Health Organization found that in 2021, <a title="https://www.who.int/data/gho/data/indicators/indicator-details/GHO/gho-phe-primary-reliance-on-clean-fuels-and-technologies-proportion" href="https://www.who.int/data/gho/data/indicators/indicator-details/GHO/gho-phe-primary-reliance-on-clean-fuels-and-technologies-proportion" target="_blank" rel="noopener noreferrer">less than 1% of Sierra Leoneans</a> use clean fuels and technologies for cooking. Although <a href="https://www.snv.org/update/biogas-food-security-and-climate-change">bio-slurry-fed clean cooking</a> is common in many parts of the world, it could be a transformative innovation if introduced in Sierra Leone. While the number of cattle in Sierra Leone may not be large enough to provide for a high volume of stoves, the innovation could trigger an expansion of the cattle value chain. If affordable and widely distributed, these products could also help reduce logging for firewood, further lessening the environmental strain. FSPs could mainstream these innovative products and allow clients to use such transactions to build credit and transaction history.
<h3>7. Introduce climate-smart agriculture and digitize agricultural lending.</h3>
Examples may include availing funding for high-value crop or livestock diversification and value chain linkages, drought-resistant crops, and irrigation pumps (e.g., hand, foot, and solar pumps). While Sierra Leone currently lacks the value chain organization required to digitize its agricultural lending, the case of <a href="https://sautitech.com/startups/how-a-village-hero-birthed-akello-banker-that-is-benefitting-thousands-of-people/">Akellobanker</a> in Uganda demonstrates that digitization can be an effective and efficient way to bundle services and offer them on a cash or credit basis. Agricultural credit has moved beyond appraising farmers based on the 5Cs of credit – character, capacity, collateral, capital, and conditions – to a simple system of appraisal based on transaction data, emphasizing the importance of having quality transaction data. Using transaction data for the appraisal process reduces administrative costs for FSPs and gives farmers access to finance to help them adapt, mitigate, and build resilience against climate-related challenges.
<h1>Research-Driven Innovation is Key</h1>
Sierra Leone’s temperature is rising, and 2021 was the <a href="https://www.extremeweatherwatch.com/countries/sierra-leone/average-temperature-by-year">warmest</a> year in the country’s history. The average daily high temperature was 89.8 degrees Fahrenheit (32.1 degrees Celsius), and the average low was 72.1 degrees Fahrenheit (22.3 degrees Celsius), indicating a correlation between rising temperatures, extreme heat, and irregular rainfall.
<blockquote>FSPs must work to understand their customers better and focus on how extreme flooding and irregular rainfall impact the incomes and livelihoods of vulnerable populations such as smallholder farmers and microentrepreneurs.</blockquote>
While mitigating these risks falls outside the scope of financial services, FSPs can help vulnerable clients <a href="https://www.centerforfinancialinclusion.org/green-inclusive-finance-a-framework-for-understanding-how-financial-services-can-help-low-income-and-vulnerable-people-respond-to-climate-change">transition into alternative livelihoods.</a> However, this will require a commitment to research-driven innovation. FSPs must work to understand their customers better and focus on how extreme flooding and irregular rainfall impact the incomes and livelihoods of vulnerable populations such as smallholder farmers and microentrepreneurs. This foundational approach will allow FSPs to develop client-centric and climate-responsive products.

How FSPs Can Help Low-Income Populations in Sierra Leone Respond to Climate-Related Shocks

The <a class="fui-Link ___1eya986 f3rmtva f1ewtqcl fyind8e f1k6fduh f1w7gpdv fk6fouc fjoy568 figsok6 f1hu3pq6 f11qmguv f19f4twv f1tyq0we f1g0x7ka fhxju0i f1qch9an f1cnd47f fqv5qza f1vmzxwi f1o700av f13mvf36 f1cmlufx f9n3di6 f1ids18y f1tx3yz7 f1deo86v f1eh06m1 f1iescvh fhgqx19 f1olyrje f1p93eir f1nev41a f1h8hb77 f1x7u7e9 f10aw75t fsle3fq f17ae5zn" title="https://globalrff.org/" href="https://globalrff.org/" target="_blank" rel="noreferrer noopener" aria-label="Link Responsible Finance Forum">Responsible Finance Forum</a> (RFF) hosted its first in-person gathering in four years to explore the latest research and share best practices for shaping a digital finance ecosystem that places consumer interests at its center. Participants gathered for three days in Bengaluru, India for immersive learning experiences, knowledge sharing, and debate. A diverse community of financial inclusion practitioners, private sector leaders, governments, policymakers, academics, and consumer advocates committed to address the rapidly evolving consumer risks faced by financial systems and low-income people.

The July 2023 event summary report highlights key takeaways on current and future risks and opportunities in inclusive finance and looks ahead to the future of RFF.

Shaping a Responsible Digital Finance Ecosystem

Eda Dokle

Chantelle Macey

The fintech expansion in low- and middle-income markets faces numerous challenges, but the sector continues to be an area of significant opportunity and innovation. CFI breaks down four key trends in fintech funding today and urges investors to continue supporting inclusive fintechs toward sustained growth.

Over the last few years, the pandemic-induced transformation of the global economy has fueled a rapid expansion of the fintech sector. This evolution has revealed the potential of fintech to eliminate geographical and physical barriers and enable consumers and providers to gain unprecedented access to information, creating a more efficient, inclusive global financial system.

Nonetheless, the fintech expansion in low- and middle-income markets faces numerous challenges, and several unanswered questions linger. Will the fintech sector maintain its momentum? How will it evolve in a post-pandemic world? What unforeseen challenges await? These queries spotlight the intriguing unknowns within the sector.
<blockquote class="pullquote--right">While inclusive fintechs have expressed their commitment to continue serving low-income and vulnerable segments, their ability to sustain that commitment depends on funding. </blockquote>
Earlier this year, we interviewed 12 winners of the <a href="https://www.inclusivefintech50.com/" target="_blank" rel="noopener noreferrer">Inclusive Fintech 50</a> (IF50) competition and six fintech investors to assess their performance amidst numerous macroeconomic challenges like rising interest rates, decreased food supply, and large price gains. In June 2023, we published the findings of these conversations in a recent report, <a href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/06/IF50-2019-2022-Report.pdf">Inclusive Fintech Funding in Times of Uncertainty</a>, which underscored the commitment of inclusive fintechs to serve low-income individuals. To ensure success, these companies are bolstering their emphasis on core business principles, prioritizing customer needs, and actively working toward substantial revenues and profits.

While inclusive fintechs have expressed their commitment to continue serving low-income and vulnerable segments, their ability to sustain that commitment depends on funding. To better understand the fintech funding landscape, we analyzed funding data provided by <a href="http://www.briterbridges.com/" target="_blank" rel="noopener noreferrer">Briter Bridges</a> from different periods, regions, and market segments. Nearly 75 percent of the fintechs in this dataset have raised capital up to Series B deals. Our analysis focused on four regions: Latin America &amp; the Caribbean, the Middle East &amp; North Africa, Sub-Saharan Africa, and South Asia. From South Asia, Briter Bridges only collected data for India. From the Briter Bridges data, we examined funding deals from January 2015 to February 2023 and identified four key trends in fintech funding.  
<h1>1. Fintech funding is slowing down globally.</h1>
Since 2015, fintech funding has consistently trended upward – both in terms of the number of deals and total deal volume – with a minor slowdown in 2020 during the COVID-19 pandemic and a significant surge in 2021. Notably, the number of overall deals increased from 484 in 2020 to 851 in 2021, while the total deal volume rose by 96 percent – from USD $5.3 billion in 2020 to $10.4 billion in 2021.

Among the regions, South Asia (representing data only from India) experienced the highest increase in total deal volume since 2015, followed by Latin America &amp; the Caribbean, the Middle East &amp; North Africa, and Sub-Saharan Africa. The surge across all regions indicates a promising industry landscape and highlights investors’ interest in fintech across geographies.

[caption id="attachment_46199" align="aligncenter" width="1239"]<img class="wp-image-46199 " src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/07/Screenshot-2023-07-24-at-1.21.01-PM.png" alt="" width="1239" height="640" /> Source: Briter Bridges data for fintech deals from 2015 to 2022, excluding mega-deals over $100M.[/caption]

&nbsp;

However, in 2022, the growth in both deal volume and the number of deals was more modest, with a 10 percent increase in deal volume and a 2 percent increase in the number of deals. The number of deals declined or remained stagnant in India, the Middle East &amp; North Africa, and Latin America &amp; the Caribbean, while it increased in Sub-Saharan Africa.

Then, in January and February 2023, the sector witnessed a significant 54 percent decrease in overall deal volume compared to the same period in 2022. Of the four regions, the Middle East &amp; North Africa was the only region to see an increase in overall deal volume during this period, with all others declining.

By Q3 2022, industry stakeholders began experiencing a ‘<a href="https://bfsi.economictimes.indiatimes.com/news/fintech/how-cold-is-the-fintech-funding-winter-when-will-the-crisis-end/96054281#:~:text=1%29%20What%20is%20the%20FinTech%20funding%20winter%3F%20Funding,FinTech%20startups%20particularly%20are%20facing%20this%20funding%20winter." target="_blank" rel="noopener noreferrer">fintech funding winter,</a>’ a term that references the current state of declining funding opportunities and company valuations across the fintech sector. Since then, there has been a <a href="https://www.cbinsights.com/research/report/fintech-trends-q2-2023/" target="_blank" rel="noopener noreferrer">noticeable decrease in funding and deals</a> within the global fintech ecosystem during Q2 2023, reaching the lowest level since 2017. In Africa, there was a significant <a href="https://thebigdeal.substack.com/p/winter" target="_blank" rel="noopener noreferrer">37 percent year-on-year decline</a> in total transaction value for African start-ups between June 2022 and July 2023 compared to the same corresponding period in the prior year.
<h1>2. Funding remains geographically concentrated with a regional disparity in deal sizes.</h1>
We also observed significant variation in the median deal sizes across different regions. In 2022, the median deal size in Sub-Saharan Africa was $1 million, reflecting the prevalence of very early-stage fintechs. In contrast, the median deal size in 2022 was $6.5 million for fintechs in Latin America &amp; the Caribbean region and $6.4 million in South Asia. This difference illustrates how regions have distinct funding dynamics and growth trajectories.

Looking at trends over the past four years, we see that from 2020 to 2021, the median deal size remained unchanged in South Asia while increasing in the other three regions. From 2021 to 2022, the median deal size increased across all regions except the Middle East &amp; North Africa, which stayed constant.

[caption id="attachment_46200" align="aligncenter" width="1276"]<img class="wp-image-46200 " src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/07/Screenshot-2023-07-24-at-1.22.14-PM.png" alt="" width="1276" height="554" /> Source: Briter Bridges data for fintech deals from 2019 to 2022, excluding mega-deals over $100M.[/caption]

&nbsp;

In the dynamic world of fintech funding, four countries – India, Brazil, Israel, and Mexico – received 80 percent of the overall funding in recent years. India leads with a total funding volume of $22 billion between 2015 and 2023, showcasing its thriving fintech ecosystem and investors’ support. Brazil and Israel both secured $4.5 billion in total funding volume, with Mexico attracting $3.7 billion. Funding to Brazil, Israel, and Mexico captured a considerable share of their region’s funding (40 percent, 65 percent, and 32, respectively).

Examining the period from 2020 to 2022, we see that the total deal volume increased in all four countries in 2021. However, in 2022, the total deal volume increased in India and Mexico but declined in Brazil and Israel.
<blockquote>Limited access to formal financial services, combined with rapid digitization in recent years and favorable regulatory frameworks, all contribute to these four countries attracting the majority of regional fintech funding.</blockquote>
Two factors have driven access to funding in these countries. First, consumer demand and unmet needs revealed significant market potential. Second, a conducive enabling environment in the form of regulations and policies encouraged innovation by financial service providers and adoption by consumers. Limited access to formal financial services, particularly credit for low-income individuals and MSMEs, combined with rapid digitization in recent years and favorable regulatory frameworks, all contribute to these four countries attracting the majority of regional fintech funding. For example, in India, <a href="https://www.bain.com/insights/india-fintech-report-2022-sailing-through-turbulent-tides/" target="_blank" rel="noopener noreferrer">initiatives</a> like the Jan Dhan-Aadhaar-Mobile (JAM) trinity, the Unified Payments Interface (UPI), and updated regulations and policies accelerated digital adoption during the pandemic. Rapid digitization has benefited emerging fintech players, boosting digital financial solutions and driving financial inclusion.

[caption id="attachment_46196" align="aligncenter" width="1101"]<img class="wp-image-46196 " src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/07/Screenshot-2023-07-24-at-1.12.02-PM.png" alt="" width="1101" height="505" /> Source: Briter Bridges data for fintech deals from 2020 to 2022, excluding mega-deals over $100M.[/caption]

&nbsp;

While no African countries made it to the list of the top four countries with the largest funding in recent years, Nigeria stood out with the highest deal volume among African countries. It received a modest accounting for 40 percent of the region’s overall funding.
<h1>3. Regional variations in the demand for financial products influence funding distribution.</h1>
The distribution of funding by fintech product categories has shifted over time. Historically, credit products received the bulk of the funding within the fintech sector. Insurance, which typically receives lower levels of funding, surged in 2020 as the pandemic <a href="https://www.bcg.com/industries/insurance/the-strategic-role-of-insurtechs-post-covid-19" target="_blank" rel="noopener noreferrer">accelerated the demand for digital transformation</a>. Insurance fintechs that were able to innovatively leverage digital and analytics became more attractive to investors. Additionally, we observed an increase in the share between 2018 and 2021, although this category declined in 2022. There is also an upward trend in the popularity of personal financial management products (PFM), as <a href="https://www.businessinsider.com/personal-finance-management-market" target="_blank" rel="noopener noreferrer">more fintechs and digital banks begin offering PFM products or PFM features</a>.

[caption id="attachment_46201" align="aligncenter" width="1197"]<img class="wp-image-46201 " src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/07/Screenshot-2023-07-24-at-1.23.55-PM.png" alt="" width="1197" height="661" /> Source: Briter Bridges data for fintech deals from 2015 to 2022, excluding mega-deals over $100M.[/caption]

&nbsp;

Looking at the breakdown of regional fintech funding by product category, we see the importance of catering to the unique financial demands of specific markets. For example, funding for credit fintechs dominates overall fintech funding in South Asia and Latin America &amp; the Caribbean, while the Middle East &amp; North Africa focuses on DFS infrastructure and PFM, and Sub-Saharan Africa prioritizes payments and remittances. Despite the ways in which insurance can enhance the resilience of low-income households, insurance products continue to receive minimal investor attention across all regions. Insurance products are typically offered as part of a product bundle and continue to be <a href="https://static1.squarespace.com/static/5bede261f2e6b1e5ead0a0ba/t/6399ed1a42246a3d457d56cd/1671032094317/IF50+2022+Insights+Deck.pdf" target="_blank" rel="noopener noreferrer">difficult to market and sell</a>.
<h1>4. The funding gap for small deals could contribute to the ‘death valley curve’.</h1>
Looking at the past deals of the top 20 investors, we see a discrepancy among different types of funders’ investment strategies and risk appetites. Accelerators and incubators have a higher number of deals, but their median deal size remains relatively modest – often below $500,000. On the other hand, private equity, venture capital, and impact investing funds have median deal sizes ranging from $7 to $20 million, reflecting their substantial investment capacity.

We also see a dip in the number of deals targeted for early-stage fintechs – in the amount of $501,000 – $1 million – by any investor type. In 2020, despite an overall increase of more than 70 percent in the number of total deals that year, the proportion of deals within the $501,000 – $1 million range was only 8 percent. The proportion of deals conducted for this size bracket has remained consistently between 7 to 9 percent over the past 4 years, likely contributing to the ‘<a href="https://hbr.org/2022/04/an-entrepreneurs-guide-to-surviving-the-death-valley-curve" target="_blank" rel="noopener noreferrer">death valley curve’</a> experienced by start-ups.

[caption id="attachment_46198" align="aligncenter" width="702"]<img class=" wp-image-46198" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2023/07/IF50-blog-post-graph5.png" alt="" width="702" height="440" /> Source: Briter Bridges data for fintech deals from 2015 to 2022, excluding mega-deals over $100M.[/caption]
<h1>Winter is Here</h1>
While global trends indicate that we are living in a fintech funding winter, not all hope is lost. The fintech sector continues to be an area of significant opportunity and innovation, attracting attention from investors globally. Recent funding trends highlight the dynamic nature of fintech investments, as fluctuations in deal volume, regional preferences, and investor interests impact the funding fintechs receive. In addition, because fintech funding responds to specific characteristics of national economies and factors that create an enabling environment – such as the speed of digitalization, level of innovation, regulatory frameworks, and funding gaps for low-income populations – it is useful to observe trends in the fintech industry to understand the market demand and needs for various financial solutions in different markets.

Fintech investors and other stakeholders should adopt a balanced perspective, draw upon the lessons learned from past successes and failures, and continue supporting inclusive fintechs that offer products to low-income households. By doing so, they can effectively guide inclusive fintechs toward sustained growth and impactful outcomes.

Exploring Fintech Funding Dynamics in Recent Years

Latest From CFI

Watch Our Strategy Video 

This strategy will guide CFI’s work through 2024 and focuses on four thematic areas. All of them, to significant degrees, have either been exacerbated by the pandemic or have been revealed by the crisis as urgent and under-attended priorities.

<h2>Executive Summary</h2>
Since its founding in 2008, the Center for Financial Inclusion, or CFI, has worked to ensure that efforts to expand inclusive finance for low-income and other vulnerable people remain focused on people. That proposition might seem in theory to be self-evident; in practice, however, efforts often fall victim to focusing on the means and lose sight of the ends. CFI was created to help keep that from happening. We were founded at a particular moment when it was becoming more apparent that market forces alone would not ensure positive outcomes for low-income people, and that sustained intentionality would be necessary. CFI works to ensure that we never lose sight of our <a href="https://centerforfinancialinclusion.org/about/mission/" target="_blank" rel="noopener noreferrer">vision</a> — a world in which all people are able to use financial services and participate in the economy to improve their lives and prosper — and that low-income people and their needs are consistently and deliberately kept at the center of all that we do.

Twelve years later, CFI — and the whole world — faces a radically different historic moment. The COVID-19 pandemic has <a href="https://coronavirus.jhu.edu/map.html" target="_blank" rel="noopener noreferrer">infected over 88 million people and killed over 1.9 million</a> between the time it was first reported in December 2019 and at the time of this writing in January 2021. Beyond the rapid and catastrophic spread of illness and deaths, the pandemic has devastated global economies. Millions of micro, small, and medium enterprises around the world have seen revenues plummet and have suspended operations or gone out of business altogether. Hundreds of millions of families have lost jobs and incomes, and many of them live in countries where social safety net protections are patchy at best. The pandemic also reversed, seemingly overnight, social and economic development gains that had taken decades to achieve: The World Bank estimates that between <a href="https://www.worldbank.org/en/news/press-release/2020/10/07/covid-19-to-add-as-many-as-150-million-extreme-poor-by-2021" target="_blank" rel="noopener noreferrer">88 million and 115 million people are at risk of falling into poverty</a>. Women and children have been among those most affected; children because schools around the world have been shuttered, and women because they are more likely than men to lose their jobs and to shoulder the responsibility of supervising and homeschooling children.

This global crisis has no precedent in modern times. And yet, like all crises, the COVID-19 pandemic also presents an opportunity: to “build back better,” as the saying goes, to ensure that similar crises are averted and that we are much better prepared to respond effectively when they hit. For CFI, that means developing a deep understanding of how financial services reduce vulnerability for low-income populations and how to overcome the obstacles preventing so many from participating in the financial sector, and then working with key stakeholders and advocating for evidence-based change to ensure that such services fulfill their intended purpose. As tragic as the pandemic’s consequences have been and continue to be, it has laid undeniably bare the failures of the status quo and has created a heightened sense of urgency for financial services, no less than for health care, emergency relief, and other sectors, to build back better.
<blockquote class="pullquote--right">The pandemic’s consequences have laid bare the failures of the status quo created a heightened sense of urgency for financial services.</blockquote>
CFI brings more than a decade of experience to this intensified global effort, with expertise in understanding the financial needs and behaviors of low-income vulnerable populations. Complementing CFI’s strengths in demand-side research, our recent <a href="https://centerforfinancialinclusion.org/mix-and-cfi-announce-strategic-integration-to-drive-industry-knowledge-for-inclusive-finance/" target="_blank" rel="noopener noreferrer">integration with MIX</a> brings supply-side expertise to the table, as the MIX had been studying and reporting about financial service providers for the past 20 years. These complementary strengths, combined with our history of thought leadership and our role as conveners, position CFI to pursue an ambitious strategy made all the more urgent in the context of the pandemic.

Crisis and Opportunity: Reimagining Inclusive Finance After the Pandemic

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