In Practice Financial Pathways toward Greater Resilience and Economic Inclusion By Serena Stepanovic, Inés Arévalo-Sánchez, Vidya Diwakar, and Dan Gilligan 11 © 2025 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. 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Cover photo: Jane Klonsky / BOMA Volume 11 March 26, 2025 In Practice The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion Contents Acknowledgments iv About the In Practice series v Glossary vi Abbreviations viii Interactive Table of Contents Introduction 9 Click to navigate Enhancing Resilience: Addressing Risks and Expanding Financial and Economic Inclusion for Poor and Vulnerable Households 12 Design Considerations 17 Tailoring Financial Products to Increase Access and Use by Economic Inclusion Participants 18 Building Synergies with Complementary Economic Inclusion Components 29 Delivery Considerations 34 Working with Financial Service Providers and Market Facilitators 34 Leveraging Digital Technology 38 Conclusions 41 Notes 43 References 46 The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion Contents, continued Tables 1 | Common types and examples of risks 12 2 | The role of financial services in building anticipatory, absorptive, and adaptive resilience 14 3 | Barriers to accessing and using financial services 19 4 | Overcoming barriers to and promoting the beneficial use of loan products 25 5 | Mechanisms for increasing the uptake of insurance 27 6 | Interventions to enhance financial inclusion of households receiving cash transfers 31 Figures 1 | Core components of economic inclusion programs 17 2 | Proportion of programs that facilitate access to core financial services 18 3 | Saving group model used by VisionFund International 21 Boxes 1 | The evolution of multifaceted approaches to building the resilience of people in poverty 10 2 | Evidence on the effects of economic inclusion programs on resilience and the role of financial inclusion 15 3 | Behavioral interventions than can increase financial inclusion 22 4 | Client Protection Standards 36 The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion Acknowledgements This paper is dedicated to Wes Wasson, whose pioneering spirit, expertise, and commitment to expanding financial services for people in poverty led to the creation of the DreamSave mobile application. A Silicon Valley fintech executive, Wes was widely recognized for his expertise in tech industry start-ups related to Mobile, Cloud, FinTech, MarTech, and Artificial Intelligence. In 2017, he co-founded and served as the CEO of DreamStart Labs, a venture designed to “bring the innovation of Silicon Valley to emerging markets with unparalleled excellence and scale.” Before his untimely death, in December 2023, Wes also served as a co-author of the work that ultimately led to this publication. Wes’ practical insights on the real-time use of market-based financial inclusion tools were a critical contribution to the dialogue this paper aims to ignite. The authors thank Shilohni Sumanthiran (Partnership for Economic Inclusion [PEI]) for her exceptional support during the research and writing process and to peer reviewers Aude de Montesquiou (Consultative Group to Assist the Poor), Emma Hobson (World Bank), and Vidhya Sriram (CARE USA) for their detailed and thoughtful comments. They appreciate the work of Jo Zaremba (Blue Lemur) on an early draft and extend their thanks to PEI colleagues Janet Heisey and Victoria Strokova for overall guidance and Puja Vasudeva Dutta for early input. The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion iv About the In Practice Series The Partnership for Economic Inclusion publishes the In Practice series featuring accessible, practitioner-focused publications that highlight learning, good practice, and emerging innovations for scaling up economic inclusion programs. Guide to navigation The In Practice series is interactive and provides built-in technical features to assist readers as they progress, including a navigation bar, progress bar, and the ability to jump to endnotes and back to the text throughout. Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations Chapter navigation Progress bar Jump notes1 The navigation bar at the The progress bar tracks your 1. Notes throughout the text are linked top of each page allows easy progress through each chapter to allow easy navigation between navigation with a simple click. and throughout the document. endnotes and the main text. The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion v Glossary Digital financial services: Financial services that use digital technologies for their delivery. These services leverage digital platforms like mobile phones and the Internet to provide convenient, accessible, and secure financial solutions. They encompass a range of financial activities and products, including electronic money, digital wallets, and digital platforms for activities such as loans, savings, and insurance (World Bank n.d.). Economic inclusion: The gradual integration of individuals and households into broader economic and community development processes, achieved by addressing the multiple constraints and structural barriers poor people face at the levels of the household (e.g., human and physical capacity), the community (e.g., social norms), the local economy (e.g., access to markets and services), and formal institutions (e.g., access to political and administrative structures) (Arévalo-Sánchez et al. 2024). Economic inclusion programs: Coordinated multidimensional interventions that help individuals, households, and communities sustainably increase their incomes and assets. These programs often include skills training, coaching, business capital, transfers, financial service facilitation, market links, wage employment facilitation, and climate resilience support. A combination of these components supports participants’ efforts to acquire the skills, capital, and access required for economic inclusion. Economic inclusion programs are also known as productive inclusion programs (Andrews, et al. 2021). Extreme poor: People who consume less than US$2.15 per day at 2017 US$ purchasing power parity (PPP) (World Bank 2025). Also defined as people who fall in the bottom 50 percent of people in poverty population in a country or people who cannot meet basic needs (Arévalo- Sánchez et al. 2024). Financial inclusion: The state in which people and businesses have access to and are empowered to use affordable, responsible financial services that meet their needs. These services include payments, savings, credit, and insurance (CGAP 2024). Expanding financial inclusion means increasing access to and the use of financial services in beneficial ways by people formerly lacking access to or not using such services, such as microenterprises, poor households, women, and other excluded groups (World Bank 2023b). Financial service providers: The range of institutiona (including community-based) and individuals that deliver access to financial services. Institutional providers include regulated institutions (such as banks, nonbanking financial institutions, and regulated microfinance institutions) as well as financial cooperatives, unregulated microfinance institutions, and mobile network operators. Examples of community-based financial service providers (FSPs) include individual providers (such as money lenders, deposit collectors, and pawnbrokers) and community-based groups (such as saving groups, rotating savings and credit associations, and burial societies). The distinction between informal, semi-formal, and formal FSPs is often based on how they are regulated (Ledgerwood 2013). The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion vi Know Your Customer (KYC): A process used by financial institutions and other regulated entities to verify the identity of their customers. This process helps assess the risk profile of customers and monitor their transactions to ensure compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations (KYCHUB n.d.). Market facilitator: Person or organization that focuses on addressing systemic constraints by incentivizing and enabling market actors to perform their functions more effectively. Facilitators’ interventions can be characterized by their temporary nature, flexibility, reliance on partnerships, and focus on crowding-in system actors (Burjorjee and Scola 2015). Different kinds of individuals and organizations can play this role, depending on their capacity and perceived independence. Poor: Having consumption below the national poverty line, as defined by the national government. Resilience: The ability of individuals, households, and communities to prepare, withstand, adapt to, and recover from adverse circumstances (Barrett and Constas 2014; Bahadur, Wilkinson and Tanner 2015). Resilience is a multidimensional phenomenon that includes elements of process, mindset, and capacity (Stepanovic et al. 2024). It depends on a set of three interconnected capacities that span the before, during, and post-shock or stressor continuum: (a) anticipatory (the ability to anticipate shocks and stressors through preparedness and planning before they occur); (b) absorptive (the ability to absorb impacts during and after shocks or stressors have had an impact); and (c) adaptive (the ability to adapt, learn, and adjust after a disaster or stressors materializes) (Bahadur, Wilkinson and Tanner 2015). Savings group: Informal or semi-formal member-based financial structure that provides members with a platform for saving and borrowing. Savings groups include Rotating Savings and Credit Associations (ROSCAs), Accumulating Savings and Credit Associations, Village Savings and Loan Associations (VSLAs), and Self-Help Groups (SHGs) (Ledgerwood 2013). Ultra-poor: People whose consumption is below $1.08 per day (2017 US$, PPP). Also defined as people experiencing the severest forms of deprivation, such as being persistently hungry or lacking sources of income (Arévalo-Sánchez et al. 2024). Vulnerable people: People who face barriers in accessing opportunities to earn sustainable livelihoods because of their personal or community characteristics and who have elevated risks of being or remaining poor or socially marginalized. The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion vii Abbreviations CGAP Consultative Group to Assist the Poor CPS Client Protection Standards DFS digital financial services DRIVE De-risking, Inclusion, and Value Enhancement of Pastoral Economies FCV Fragility, conflict, and violence FSP financial service provider HIAS Hebrew Immigrant Aid Society KYC Know-Your-Customer MFI microfinance institution MISFA Microfinance Investment Support Facility for Afghanistan NRLM National Rural Livelihoods Mission (India) NGO nongovernmental organization PEI Partnership for Economic Inclusion PPP purchasing power parity SHG self-help group SJY Satat Jeevikoparjan Yojana SWAP Savings with a Purpose TUP Targeting the Ultra Poor UNHCR United Nations High Commissioner for Refugees VSLA Village Savings and Loan Association   The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion viii Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations Introduction Facilitating access to financial services is a core component of most economic inclusion programs, which aim to build the resilience of and create opportunities for poor and vulnerable households. These programs offer a comprehensive package of interventions, such as cash transfers, coaching, and business capital, to address the various constraints that prevent poor and vulnerable people from effectively coping with and recovering from shocks and accessing job opportunities. About three-quarters of economic inclusion programs help poor and vulnerable people programs include access to financial services enhance their ability to withstand and adapt as a core component, according to the to various shocks (El-Zoghbi, Holle, and Partnership for Economic Inclusion (PEI) Soursourian 2019; Moore et al. 2019; World Landscape Survey 2023. These services enable Bank 2023b; Andrews et al. 2021). However, participants to secure the capital necessary the effectiveness of these programs in for resilience and opportunity, helping them loosening financial constraints and fostering smooth consumption, and invest in human resilience depends on how they are designed capital and economic activities. and implemented. In the face of multiple and often overlapping crises and stressors The role of financial services in promoting that disproportionately affect poor and resilience and creating opportunities is vulnerable populations, it is imperative to especially critical in economic inclusion design programs that enhance the long-term programs targeting the poorest people, who resilience of these groups (Arévalo-Sánchez et often face severe stressors and shocks (Box al. 2024; McKay and Zetterli 2021). 1). These programs often emphasize income diversification, food security, and financial Understanding the barriers to financial inclusion. About 83 percent of programs that inclusion and the specific needs of poor and focus solely on extremely poor and ultra- vulnerable people is essential for tailoring poor households facilitate access to financial products that create value for them and services, compared with 64 percent of effectively contribute to their resilience. Core programs that do not target by poverty levels components of economic inclusion programs (PEI 2023). can be adapted to provide better pathways for greater resilience. For example, cash transfers Evidence shows that both interventions sent to bank accounts can integrate people focused on facilitating access to financial into the formal financial sector and facilitate services and multifaceted economic inclusion their access to a broader range of financial The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 9 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations Box 1 The evolution of multifaceted approaches to building the resilience of people in poverty In the early 1990s, the development community expanded microcredit, in order to serve poor households excluded from formal banking, building on earlier efforts by NGOs, such as ACCION and FINCA International. Private microfinance institutions (MFIs) led these efforts, offering credit primarily to help households start small businesses and improve their income. Over time, MFIs expanded their services to include a broader suite of microfinance services. Organizations, such as the Consultative Group to Assist the Poor (CGAP), supported the development of financial systems and financial service providers (FSPs) to better meet the financial needs of people in poverty (CGAP 2006). Many MFIs understood that their initiatives were failing to reach people who were living in extreme poverty but had the capacity to work. People who were considered too risky for microfinance loans remained excluded. BRAC, an international development organization providing microcredit and other services throughout Bangladesh, concluded that microfinance alone was insufficient to address the multidimensional challenges faced by people living in extreme poverty. This realization led to the development of a more comprehensive approach. The journey to multidimensional economic inclusion programs began in several sectors, including microfinance, community-based development approaches, and poverty alleviation initiatives. In 2002, BRAC piloted its flagship “graduation” program Targeting the Ultra Poor (TUP), with 5,000 households. The program included a sequenced package of components such as consumption support, savings, an asset transfer, and coaching to households in extreme poverty over a two-year period. Evaluations confirmed that the pilot reached and supported extremely poor households, and results showed that the pilot led to significant and transformational changes in the lives of these people (Hashemi and de Montesquiou 2024). Building on BRAC’s success, CGAP partnered with the Ford Foundation in 2006 to test the graduation approach through 10 pilot projects in 8 countries. These pilot programs were led by a mix of organizations, including MFIs, international poverty-focused NGOs, and governments, each of which tested core components similar to those in BRAC’s TUP program but adapted to fit local contexts. This adaptability led to the concept of the graduation pathway, rather than the graduation model, which underscores the need for program design to adapt to local contexts (Hashemi and de Montesquiou 2024; Ford Foundation 2016). Evaluations of these programs showed strong positive impacts that were sustained over time (Banerjee et al. 2015). These initiatives, led by a range of stakeholders and building on different core elements, have grown and developed through regular cycles of learning and refinement to a community of economic inclusion programs. Evidence shows that coordinated and multilayered interventions are effective in reducing poverty by addressing diverse vulnerabilities (Andrews et al. 2021). Economic inclusion programs represent the culmination of efforts that began with microcredit interventions, community- driven development, and pro-poor economic programs and progressively evolved to incorporate more holistic, tailored strategies. This evolution reflects the growing understanding that poverty is multifaceted and complex and therefore requires multidimensional and adaptable solutions. World Vision, a Chrisitan relief, development, and advocacy organization, approaches ultra-poor graduation programming following this rationale. Its programs are timebound and multidimensional, integrating social protection, livelihood promotion, financial inclusion, and social empowerment alongside coaching. World Vision recognizes the importance of adaptability. Its teams assess the local context before implementing their programs and monitor programs to allow for learning and adaptability. Its programs include a rigorous and consultative targeting methodology that is gender sensitive to reach ultra-poor households with vulnerable children. Its programs also focus on exit strategies for participants, ensuring that they are linked to other services, so that households see continued progress (BRAC and World Vision 2019). The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 10 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations instruments. The use of digital technology meet the needs of different participants and enhances these opportunities by making these how synergies can be fostered between the financial services more accessible to excluded financial inclusion components and other groups. The World Bank’s goal of reaching components to achieve greater financial 500 million people—half of them women— inclusion and resilience.1 Second, the paper through social protection programs by 2030 delves into how collaboration with financial underscores the importance of linking digital service providers (FSPs) or market facilitators cash transfers with skills training, business and the leveraging of digital technology capital, coaching, and market access in order can help achieve financial inclusion and to reduce poverty and inequality and promote resilience-building outcomes. Third, the jobs for people in poverty. paper offers recommendations for economic inclusion practitioners seeking to strengthen This paper offers insights into how financial the financial inclusion components of their services facilitated as part of economic programs and financial inclusion practitioners inclusion programs can better contribute aiming to complement their interventions to to resilience building. First, it discusses enhance the resilience of the most vulnerable how financial services can be designed to microfinance clients. The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 11 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations Enhancing Resilience Addressing Risks and Expanding Financial and Economic Inclusion for Poor and Vulnerable Households Poor and vulnerable households are more exposed to economic, health, environmental, and sociopolitical risks than other households (Table 1). Some risks, such as the death of a family member, affect people independently of others in the community (idiosyncratic risk). Others, such as epidemics, affect a group of people at the same time (covariate risk). Some risks (such as chronic diseases) occur frequently; others (such as injuries) occur infrequently. The time span and severity of impact of risks also vary. Table 1 Common types and examples of risks Type of risk Examples Health Diseases, injuries, disabilities, epidemics, food insecurity Lifecycle Birth, maternity, old age, death Exclusion and instability that affect people’s rights and access to resources Socio-political and government support (discrimination, riots, conflict) Job insecurity, unstable livelihoods, economic downturn, unemployment, Economic business failure, harvest failure, economic and financial crises Natural disasters and environmental risks that affect the resource base on which the livelihoods of many poor people depend. As a result of climate Environmental change, environmental shocks and stressors are occurring more often and with greater intensity. The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 12 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations With limited resources, poor households recover and reduce their ability to withstand struggle to manage risks effectively, increasing subsequent shocks. Even in the absence of their vulnerability to shocks and crises. These negative coping mechanisms, high exposure households often have small, irregular, and to risks and limited management tools makes unpredictable income streams making it poor households more risk averse, leading them difficult for them to meet daily needs and make to invest in low-risk, low-return activities. lump-sum investments in health, education, Such investments limit their income and asset and business (Collins et al. 2009; World growth, further undermining their future Bank 2023b). In addition to lacking financial resilience (Moore et al. 2019). resources, poor households—particularly the most deprived, such as women-headed The impact of financial inclusion interventions households—often have limited access to on core welfare outcomes such as income, physical assets, human capital, social networks, consumption, and assets is mixed (Duvendack and natural capital, which are essential for and Maider 2019). Evidence does show, coping with and adapting to shocks and however, that financial inclusion helps people stressors. become more resilient (El-Zoghbi, Holle, and Soursourian 2019; Moore et al. 2019; World Poor and vulnerable households also have Bank 2023b). Access to a wide range of financial more limited access to financial services, services equips poor and vulnerable households which constrains their ability to access funds with the tools they need to enhance the at times of need, such as during emergencies capacities that underpin household resilience— (Demirgüç-Kunt, Klapper, and Singer 2022). namely, anticipatory capacity (the ability to Women tend to be more vulnerable to risks and anticipate shocks through preparedness and disproportionately affected by crises, because planning); absorptive capacity (the ability to of entrenched economic and social inequalities. absorb the impacts during and after shocks Their limited access to assets, resources, have occurred); and adaptive capacity (the information, and decision making, combined ability to adapt, learn, and adjust after a with lifecycle events such as childbirth and disaster occurs) (Table 2). This access enables the social norms around unpaid childcare poor and vulnerable people to save securely, responsibilities, increase their vulnerability to invest in productive activities and human health, lifecycle, socio-political, economic, and capital, and protect themselves against future environmental risks. These inequalities hinder shocks (World Bank 2023b). women’s ability to prepare for and recover from crises. During the COVID-19 pandemic, for The nature of a stressor or shock determines instance, school closures and the expectation the most appropriate mechanism for financial that women assume childcare responsibilities inclusion; given the range of risks poor and led more than 2 million of the world’s women vulnerable people face, they need access to a to leave the workforce, resulting in a 4 percent wide range of financial services (McKay and decline in women’s employment compared Zetterli 2021). For instance, savings can help with a 3 percent decline for men (Independent households smooth consumption following Group of Scientists 2023). a short-lived, low-intensity shock. For more severe and prolonged shocks, such as extended Without access to appropriate risk management periods of drought, precautionary savings tools, poor and vulnerable households are may prove inadequate and insurance, bundled likely to resort to negative coping strategies, with credit, may be needed to help households such as selling productive assets, incurring withstand the effects of the drought and invest unsustainable debt, or pulling children out in more resilient livelihoods. of school. Such actions limit their ability to The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 13 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations Table 2 The role of financial services in building anticipatory, absorptive, and adaptive resilience Type of resilience Role of financial services Examples of financial products Savings enable people to build a financial Goal-based savings accounts in a bank, cushion that can be used in time of need emergency funds in a saving group Anticipatory Insurance helps people weather various risks, Health insurance, crop insurance, such as illness and crop failure livestock insurance Savings can be accessed to stabilize consumption Liquid assets with no fee for withdrawing following a shock Payments enable people to receive timely Digital payments, including of Absorptive support in times of need remittances and cash transfers from social safety net programs Credit enables people to smooth consumption Credit lines, emergency loans during an emergency Credit helps people mitigate the effects of future Asset-based financing, business loans risks through productive investments Insurance, particularly when combined with other Credit bundled with insurance for products, reduces risk aversion, by protecting investment in risk-mitigating technologies Adaptive against risks and incentivizing productive investments Savings enable people to invest in assets and Saving deposits productive activities, reducing their exposure to risks Sources: Bahadur et al. (2015); Moore et al. (2019). In contexts of conflict and forced Economic inclusion programs enhance displacement, remittances are often the resilience and result in greater positive primary source of support (Diwakar, impacts on household well-being—in terms Stepanovic, and Gilligan 2024). Financial of both economic outcomes, such as income services are often interchangeable. Credit, for and assets, and noneconomic outcomes, instance, is akin to “saving down” (Rutherford such as psychosocial well-being and 2003) or “a form of negative savings” (Kast and women’s empowerment—than stand-alone Pomeranz 2018). Evidence suggests that poor interventions (Box 2). Some studies show people use credit as a commitment device that households participating in economic to save, by forcing them to put money aside inclusion programs managed shocks better for regular credit repayments. Payments such and experienced milder declines in well-being, as remittances act as insurance during an such as food security, than nonparticipants, emergency (El-Zoghbi, Holle, and Soursourian who were more likely to resort to harmful 2019). Ensuring access to a diverse range of coping strategies such as selling assets financial services allows individuals to choose or reducing food consumption (Bedoya the most suitable option for their needs at any Argüelles et al. 2023; Hernandez et al. 2016; given time. HTSPE 2011; Siddiki et al. 2014; Smith et al. 2019). Other studies explore the role of The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 14 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations financial inclusion within economic inclusion indicates that the combination of livelihood packages and examine different approaches and financial support in economic inclusion to alleviating financial constraints for poor programs yields greater impacts than and vulnerable populations (Banerjee et al. stand-alone interventions and that not all 2022; Blattman et al. 2016; Marguerie and components addressing financial constraints Premand 2023; Sedlmayr, Shah, and Sulaiman have the same effect. 2020). Although this evidence is limited, it Box 2 Evidence on the effects of economic inclusion programs on resilience and the role of financial inclusion Economic inclusion programs have been extensively tested and proven effective in enhancing income, consumption, assets, and savings as well as improving the socio-emotional well-being of poor and vulnerable households.a These welfare improvements bolster the resilience of participant households to shocks, enabling them to better anticipate, cope with, and adapt to future challenges. Most studies reviewed indicate that economic inclusion programs yield greater impacts on outcomes such as income, consumption, assets, and savings than stand-alone interventions, such as cash transfer or training programs (Andrews et al. 2021). Several impact studies examine whether economic inclusion programs enhance households’ shock- absorptive capacity. They find that such programs enable participant households to cope with shocks more effectively than nonparticipant households, who are more likely to resort to negative coping strategies, such as selling assets or reducing food consumption (Bedoya Argüelles et al. 2023; Hernandez et al. 2016; HTSPE 2011; Siddiki et al. 2014; Smith et al. 2019; Technical and Operational Performance Support Uganda Graduation Randomized Control Trial Associate Award 2022). This evidence suggests that by integrating resilience-building interventions, such as access to financial services and cash transfers for consumption smoothing, with livelihood support to help participants seize economic opportunities, economic inclusion programs contribute to greater and more enduring resilience than stand-alone interventions. Studies that isolate the effect of the financial inclusion component within economic inclusion packages find that integrating livelihood and financial support within economic inclusion programs results in more substantial and, in some cases, more enduring impacts than standalone interventions. Banerjee et al. (2022) show that providing access to a savings account with a deposit mechanism had similar effects on consumption as a comprehensive package that included a business grant, skills training, cash transfers for consumption support, coaching, and savings. The effects of the full package were stronger three years after the business grant was delivered than those of the savings component alone. The full package was the only cost-effective intervention. It also had significant and long-lasting effects on a broader set of outcomes, including income (through a diversified range of income sources), assets, and savings, which underpin household resilience capacities. This finding highlights the importance of noncapital components like coaching in achieving and sustaining impacts. Blattman et al. (2016) show that although adding saving group facilitation to a program consisting of just a business grant and skills training did not enhance consumption more than the basic package alone, participants in savings groups saw their earnings double. They also find increased access to financial and social capital for participants in savings groups, with potential ripple effects on resilience at both the household and community levels. Marguerie and Premand (2023) test various approaches to loosening the capital constraints poor households face. They compare different modalities of capital injections (cash and cash with The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 15 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations Box 2, continued repayment) and mobilization into Village Savings and Loan Associations (VSLAs).b Their findings indicate that although capital injections initially increased savings and investments more rapidly than VSLAs, at endline participants in VSLAs achieved similar levels of productive asset accumulation at a lower program cost. Although VSLAs did not result in larger savings than capital injections, there was a substitution effect, with VSLA participants shifting away from rotating savings and credit associations and other informal savings mechanisms. The more flexible nature of VSLAs, particularly in terms of when participants can access credit, likely explains why VSLA participants achieved levels of investment that were similar to those of participants receiving capital injections, underscoring the importance of timely access to funds. Notes: (a) Andrews et al. (2021) review impact evaluations of 80 economic inclusion in 37 countries; Arévalo-Sánchez and others (2024) review more recent evidence from government-led economic inclusion programs. For a review of graduation-style economic inclusion programs, mostly led by NGOs, see J-PAL (2023a); (b) All three financial support interventions (cash, cash with repayment, and VSLA mobilization) were combined with training. Context is crucial for resilience; it must fostered, such as the agrifood system and its be considered in designing and delivering financial sector. This understanding helps programs. Program designers and identify needs in a given context and informs implementers must understand the key risk the design and implementation of economic vulnerabilities, the resilience capacities, inclusion programs, including their financial mindset and process attributes, and the inclusion components. relevant systems through which resilience is The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 16 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations Design Considerations Economic inclusion programs seek to address financial capital constraints by providing business capital (77 percent of programs), access to financial services (74 percent of programs), consumption support (54 percent of programs), or a combination of these (75 percent of all programs include at least two components that provide or facilitate access to funds). About 96 percent of all programs provide training and 89 percent provide coaching to Figure 1 Core components of equip households with the skills and confidence economic inclusion programs needed to develop their livelihoods, including by diversifying income sources and expanding Skills training 95.6 or adapting their income-generating activities. Coaching 89.1 Enhancing climate-resilient economic inclusion Business Capital 77.0 has emerged as a new frontier for programs, Market links 73.8 with 66 percent of programs including a Financial services facilitation 73.6 component aimed at helping participants build climate resilience (Figure 1). Twenty Climate resilience 65.7 percent of programs cite enhancing climate Transfer 53.8 resilience as a core objective, and 28 percent of Access to wage employment 33.6 programs target individuals affected by climate 0 20 40 60 80 100 or environmental risks (Arévalo-Sánchez et al. 2024; Costella et al. 2023). Percent of all programs Of the programs that facilitate access to financial services (74 percent), few economic Source: PEI (2023) inclusion programs facilitate access to a broad Notes: N = 405 suite of financial services. Forty percent of programs that facilitate access to financial services do so for only one type of financial services (PEI 2023). Most programs facilitate service (savings, credit, insurance, or payment access to savings (83 percent of programs services), and 16 percent of programs facilitate facilitating access to financial services) and access to three of more of these financial credit (68 percent); a much smaller proportion The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 17 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations Figure 2 Proportion of programs that facilitate access to core financial services 100 97 90 83 80 68 70 59 60 50 40 30 20 16 16 11 9 10 Source: PEI (2023) Notes: N = 298 for all programs and 86 for 0 programs that target only extreme poor (XP) Savings Credit Insurance Payments and ultra-poor (UP) people. All programs facilitating access to finance Only targets XP or UP of programs facilitate access to insurance or designed and a continuous understanding payment services, such as remittances (Figure of use throughout implementation to refine 2). Programs targeting only extreme- and the intervention accordingly. Programs must ultra-poor people focus on savings to build also understand the multiple barriers poor resilience. and vulnerable people face to effectively using financial products. These barriers may To achieve effective financial and economic include physical barriers (such as distance or inclusion and enhance the resilience of poor opening hours); regulatory barriers (such as and vulnerable populations, interventions the right to access financial products and the must address the specific constraints these need to provide proof of identify); behavioral groups face. The following subsections barriers (such as cultural norms around the describe innovations in financial services use of credit); and individuals’ preferences for designed to better meet different groups’ particular institutions, products, or ways of needs. They also explore how economic using financial services (Table 3). inclusion programs can integrate financial inclusion interventions with other program The socioeconomic and cultural characteristics components to help achieve greater resilience. of individuals and households and the broader context in which they reside affect TAILORING FINANCIAL PRODUCTS the use of financial services. The vulnerability TO INCREASE ACCESS AND context in which people live can partly USE BY ECONOMIC INCLUSION explain the outcomes in terms of access to, PARTICIPANTS behavior toward, and preferences regarding financial services. It is important to take these Just facilitating access to financial services characteristics and contexts into consideration will not deepen financial inclusion and build when engaging with different target groups. resilience; programs must ensure that financial For instance, globally, most unbanked adults products can be used in beneficial ways (World have no more than primary education and Bank 2023b). Doing so requires a thorough belong to the poorest households, and most assessment of needs before a program is unbanked adults in developing economies The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 18 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations Table 3 Barriers to accessing and using financial services Type of risk Examples Barriers that limit access to institutions or products include physical barriers (e.g., distance, opening hours); affordability barriers (transaction costs, such as transportation, fees, interest rates); regulatory barriers (e.g., Know-Your-Customer [KYC] regulations, Limited access collateral requirements, right to access financial services, documentation requirements); lack of awareness; and lack of financial literacy). Many of these barriers to access disproportionately affect women. Beliefs held by the individual, household, or society at large that limit people’s ability and desire to access and use financial services. These barriers include cultural factors Mindset and (social arrangements such as reciprocity and the savings culture), gender norms behavior (e.g., the expectation that men handle household finances and women manage care responsibilities), and psychological factors (e.g., present biasa and mental accountsb). Desires with respect to certain characteristics of a financial service provider or product that influence people’s decision to use financial services. They include features related Preferences to convenience, trust, risk, price, timeliness, flexibility, liquidity, and simplicity. Women’s preferences are often not considered in the design of financial services. Source: Adapted from Ledgerwood 2013; MicroSave 2005; and World Bank 2023b Notes: (A) Present bias refers to the tendency to prioritize immediate needs over future ones. This bias manifests when the perceived costs of taking action in the present outweigh the anticipated future benefits. Consequently, individuals often delay or procrastinate on decisions that would yield long-term advantages, such as saving for the future (Datta and Desai 2018). (B) Armendáriz and Murdoch (2010) define creating mental accounts as the tendency to treat funds differently based on their sources and intended use. report that they would need others to help require a flexible design; given the diverse them use formal financial services (Demirgüç- constraints, needs, and preferences among Kunt, Klapper, and Singer 2022). Forcibly different target populations, a one-size- displaced individuals often lack the legal fits-all approach is unlikely to be effective. right to own bank accounts (Heisey, Arevalo- For instance, gender-neutral approaches Sánchez, and Bernagros 2021), but they may to financial inclusion inadvertently cater have access to humanitarian transfers, which to men’s needs and contexts, reinforcing can facilitate their access to other financial the existing inequalities women face (Grid services. Women face unique and multifaceted Impact and Bill & Melinda Gates Foundation barriers to financial inclusion. As a result, 2024). Program design that includes gender- nearly 1 billion women are excluded from the differentiated strategies—tailoring services formal financial system (Iskenderian 2022). to meet the needs and contexts of the women Limited decision-making power, restricted they serve—are better able to facilitate access to mobile phones, the distance to financial inclusion for women (Dimova 2023). a bank branch, low financial literacy, and Programs must strike a balance between institutional obstacles are some of the addressing specific needs and managing common barriers to women’s participation in the higher costs associated with offering the formal financial system. Women report differentiated products, however. lower levels of financial resilience—defined as easily able to come up with money to deal The following subsections analyze the specific with an emergency within 30 days—than men barriers to accessing and using each of the (Demirgüç-Kunt, Klapper, and Singer 2022). core financial products (savings, credit, insurance, and payment services) and the role Financial products aimed at bolstering the of each product in building resilience. They resilience of poor and vulnerable individuals explore how economic inclusion programs The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 19 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations are facilitating access to these services and both in terms of higher savings and greater suggest ways to further increase their use. resilience (Moore et al. 2021; El-Zoghbi, Holle, and Soursourian 2019). Savings Most economic inclusion programs support Savings play a crucial role in the financial saving accumulation, often by facilitating management strategies and resilience the creation of savings groups.2 Many of building of poor and vulnerable households. these programs either establish new or Defined as “cash held back from regular leverage existing community saving groups day-to-day expenditure by an act of will” to improve access to savings. These groups (Rutherford 2003), savings serve multiple often convene in easily accessible community purposes, including managing cash flows, spaces, making participation feasible for building assets, coping with emergencies, and most program participants. By capitalizing seizing business opportunities as they arise on community relationships and their (Murdoch 2008; Rutherford 2003). Savings capacity to monitor activities, these groups provide individuals with access to a lump effectively address issues of moral hazard sum of money that can be used to stabilize and information asymmetry— challenges consumption following a shock. They that often deter financial institutions enable investment in assets and productive from serving poor and vulnerable people, activities, which help reduce exposure to particularly in remote rural areas (Diwakar, risks (Moore et al. 2019). Stepanovic, and Gilligan 2024). Savings groups can be very effective in reducing Poor and vulnerable people can and do barriers to entry for women. The Nigeria save, but they continue to face barriers to for Women Program, implemented by the doing so. Only 42 percent of adults in low- Ministry of Women Affairs, established new income countries save, with most of them women’s groups and formalized existing saving informally. Millions of people in these informal groups into Women Affinity countries, particularly poorer households, Groups (WAGs), which function as women- resort to less reliable sources of emergency only savings groups. These groups encourage funds, such as cash from friends and family, women’s participation and savings by when a shock hits (Demirgüç-Kunt, Klapper, offering training and fostering a supportive and Singer 2022). Common constraints environment where women can share to saving include access barriers, such as challenges, save collectively, and support distance to a reliable and safe location, each other’s businesses. An impact evaluation the cost associated with saving in a formal found that WAGs are becoming the primary institution, KYC regulations, and lack of savings mechanism for women in Nigeria. financial literacy; behavioral barriers, such The program has organized over 458,000 as present bias (prioritizing immediate over women into more than 22,000 WAGs across future needs) and social and cultural factors, six states, with these groups collectively such as the obligation to share resources saving over N3.5 billion (US$7.8 million) (de with others); and preferences that can act Hoop 2025; Ilesanmi 2024).3 as barriers to saving, such as lack of trust in the financial sector (World Bank 2021a; Different savings group modalities offer Moore et al. 2021; Smith et al. 2015). Taking distinct advantages, but not all are equally into account these barriers when designing effective in building resilience. Savings and the saving component of economic inclusion loan groups enable members to accumulate programs can lead to better outcomes, savings and access funds, through regular The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 20 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations loans or emergency funds established within inclusion, by enabling members to save the group. VisionFund International’s and borrow, but the evidence on resilience savings group model, part of World Vision’s and consumption smoothing is more mixed programming, allows members to borrow (Moore et al. 2019; Gash 2017). Given their from a communal savings pool as needs arise limited flexibility and liquidity, savings (Figure 2).4 Other savings group models, such groups are unlikely to be effective for as Rotating Savings and Credit Associations covariate, large idiosyncratic, and even (ROSCAs), permit members to access loans small but common idiosyncratic (Moore from the savings pool only when it is their et al. 2019). Participants in the Nobo Jatra turn. Program, which World Vision implemented Figure 3 Saving group model used by VisionFund International 5 Members meet weekly 1 The cycle 4 or monthly to save begins again. After a period of money as a group (usually) 12 months, following the Savings the savings are shared for Transformation or out to the members partner NGO savings including interest and methodology. fees. 3 2 Loans are repaid to Members borrow money the group with a from this pool of savings small service charge. for family needs and income generating activities. Source: Adapted from VisionFund (2021) The ability to quickly access funds during in collaboration with Bangladesh’s Ministry emergencies is critical for resilience of Disaster Management and Relief building, especially for poor and vulnerable (MoDMR) in southwest Bangladesh in 2015– households. Not being able to access funds 20, reported that VSLAs played a crucial role at the right time may force people to resort in helping them manage some of the impacts to negative coping mechanisms or forgo of the COVID-19 pandemic. However, the profitable investment opportunities, further imposition of social distancing measures compromising their future resilience. led to the cessation of operations for many However, even if members can access funds community savings groups. Some groups when they need them, the amount is often dissolved, in order to withdraw their savings. capped, to avoid over-indebtedness and to The closure of VSLAs, whether voluntary allow other members to also borrow (CARE or enforced, severed the most vulnerable 2024). women from their primary sources of financial services, social safety nets, and Savings groups alone are unlikely to be communication networks at a time when sufficient to manage risks effectively, these resources were most needed, hindering requiring complementary approaches to prospects for longer-term recovery (Diwaker, building savings. They increase financial Stepanovic, and Gilligan 2022). The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 21 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations In high-inflationary contexts, saving in cash mitigated the effects of shocks (Moore et al. through saving groups may not be the most 2019). But women with low bargaining power effective way to keep and grow value. In these preferred more limited access to savings, to settings, programs may encourage participant protect their savings from the pressure of households to save in assets, such as livestock, family members (Moore et al. 2019). These that are less susceptible to value erosion differences highlight the fact that different caused by inflationary pressures (BRAC and population groups may have different needs World Vision 2019). and preferences. Access to bank accounts can also facilitate Beyond facilitating access, addressing saving accumulation and increased behavioral barriers can lead to increased investment in productive activities (Moore et savings and improved usage (Box 3). al. 2019). Formal accounts provide a reliable, Economic inclusion programs can introduce safe, and liquid form of saving, but people changes to program design to address the who live far from formal financial services barriers that influence saving behavior, such may face transaction costs that outweigh as unconscious biases, norms, and mental the benefits of saving in a formal account. shortcuts (World Bank 2015).5 Many of these Partly because women face more barriers to changes are relatively easy and inexpensive traveling long distances and struggle more to implement and can lead to significant with time poverty, they continue to have increases in product take-up and use (Datta lower account ownership rates than men and Desai 2018). The NAWIRI Project (Demirgüç-Kunt, Klapper, and Singer 2022). implemented by Village Enterprise and Mobile-based solutions may provide a good Christian Relief Services in the Marsabit alternative. Programs that directly transfer and Isiolo counties of Kenya facilitated assets to women both increase their control the creation of a business saving group for over resources and incentivize them to open all program participants. In addition to bank accounts (The New Humanitarian n.d.). being encouraged to save regularly and for emergencies, program participants were Ensuring that these accounts enable poor introduced to a third savings type, called and vulnerable households to save more and Savings with a Purpose (SWAP), which access funds flexibly will likely require tweaks encourages participants to diversify their to standard account features. In China, businesses and improve their resilience by Kenya, and Nepal, free accounts that enabled not relying exclusively on the group business savings withdrawals without a penalty activity (USAID 2024). Box 3 Behavioral interventions that can increase financial inclusion Contextual cues—such as the actions of others or the presentation of choices—and behavioral barriers affect individuals’ decisions to avail and use financial products. These barriers include status quo bias (difficulty changing established behaviors), present bias (the tendency to prioritize immediate needs over future benefits), lack of trust (concerns about the security of funds or financial benefits), and mental accounting (differentiating funds based on their source or intended use) (Datta and Desai 2018). These obstacles can cause individuals not to enroll in beneficial products or programs, not to use them if they do enroll, procrastinate over planning, and fail to adhere to their commitments. Behavioral barriers, such as present bias, can be heightened for poor and vulnerable people, whose material deprivations can limit their cognitive bandwidth and ability to make decisions, particularly those that involve future benefits (Bryan et al. 2017). The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 22 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations Box 3, continued To address these challenges, programs are increasingly incorporating insights from behavioral science (Datta and Desai 2018; Datta et al. 2022). Implementers can consider making small design changes throughout the customer experience cycle—from outreach and enrollment to the usage of financial products—to mitigate behavioral barriers. The following are examples of tested behavioral interventions that have increased the uptake and usage of financial services (ideas42 2021; Datta and Desai 2018; Moore et al. 2019). Outreach • Simplifying communication: Using clear and simple language in all communication materials and interactions with potential users. Avoiding technical jargon, especially when explaining services like insurance. • Addressing perceptions: Creating communication materials, such as posters or text messages, that address people’s perceptions about their peers, showcasing stories of individuals in similar situations who have successfully saved money, for example. Highlighting the needs for and benefits of products by sending messages that demonstrate their practical uses and advantages. • Using referrals and testimonials: Increasing trust and product uptake by encouraging users to refer others. Sharing positive experiences and testimonials from community members. • Timing the outreach: Conducting outreach during periods of relative financial security, when individuals have more mental bandwidth to make decisions that challenge the status quo. Enrollment • Simplifying processes: Helping overcome the status quo bias by streamlining enrollment processes and providing clear directions. Making registering and engaging in the program as effortless as possible. • Use labelling: Addressing mental accounting by providing tools for savings partitioning and redesigning forms to assign specific uses to accounts. Use • Providing planning tools: Offering tools, such as savings plans, loan repayment schedules, and checklists, to help people plan their use of financial products. • Automating actions: Automating decisions during periods of relative financial security, scheduling savings contributions or insurance premium payments after harvests or paydays, for example. • Sending reminders: Using text messages to send reminders that make future needs more salient. In Tanzania, difficulties in meeting immediate needs made it challenging for participants of the government’s Productive Safety Net Program to invest their cash transfers in incoming-generating activities. To address this challenge, ideas42, an organization that uses behavioral science to address challenges, worked with the program to identify and address behavioral barriers. Solutions included an activity that reminded participants that they could make a difference in the lives of their family members, posters that depicted how other community members save and invest (to set a norm), goal- setting activities to help participants plan their spending, plan-making activities to help overcome the scarcity mindset (when limited resources drive a heightened focus on immediate needs at the expense of long-term planning) and remind participants to account for future payments, and a money pouch with consumption and savings sections to help participants separate their immediate needs from their future savings. An evaluation showed that these interventions had positive results, with participants who received the intervention more likely to save, join a saving group, and make a productive investment than nonparticipants. The intervention was also cost-effective (ideas42 2022b). The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 23 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations Box 3, continued In the Eastern Recovery Project, a government-led program in the Democratic Republic of Congo, participants were struggling to follow through on their goals and priorities for the cash transfers they received. In response, ideas42 and the program sent them two SMS messages—one before they received the cash transfer, which asked them to make a budget and write down the costs of their three main priorities, and another after the cash transfer, which reminded them to buy the priority items. Both messages included affirmative messages about their ability to support their families. An evaluation found that participants who received the messages were more likely to have a future-oriented priority, such as education, and to report that they spent in line with their priorities. Thanks to the low cost of messaging, the intervention was cost-effective (ideas42 2022d). Credit business grants, which help these households initiate or expand income-generating Access to credit contributes to resilience activities beyond subsistence levels. About by enabling people to smooth consumption half of the programs that offer business and mitigate the effects of future risks grants also facilitate access to credit, possibly through productive investments.6 Consumer addressing the need for these populations to loans can help households maintain their also access capital for nonbusiness purposes consumption levels in the event of an (PEI 2023). unexpected shock; asset and working capital loans enable productive investments that Collateral requirements, amounts, and costs can facilitate income diversification or the associated with borrowing and repayment adoption of risk-reducing technologies (Cai structure are core features affecting access et al. 2023; El-Zoghbi, Holle, and Soursourian to and the beneficial use of loan products 2019; Moore et al. 2019). Credit can act as a from formal FSPs. These characteristics are substitute for savings, by helping households particularly constraining for some population manage liquidity and consumption over groups. Collateral requirements, for example, time. Because of the fungibility of money are often more binding for women, who tend and the urgent needs poor households face, to own fewer assets than do men; monthly consumption and productive loans often repayments likely do not suit households become indistinct from one another (Bill & working in agriculture, which often have Melinda Gates Foundation 2024). seasonal income streams. Some studies indicate that traditional credit-scoring Both the characteristics of borrowers and models are biased against women (Data2X the features of the loan affect how people and the Financial Alliance for Women use and benefit from loans (Cai et al. 2023). 2020). In the event of a shock, unsuitable Consequently, programs, in collaboration product features, such as high-frequency with FSPs, must develop a thorough payments, can force people to resort to understanding of the barriers target negative coping strategies, such as forgoing households face in accessing credit and the essential consumption. Table 4 provides some specific needs that credit products would examples of modifications to loan products address. For example, programs targeting that have the potential to overcome access only extreme- and ultra--poor households are barriers and help poor people benefit from more likely than other programs to provide their use. The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 24 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations Table 4 Overcoming barriers to and promoting the beneficial use of loan products Type of barrier Mechanism for overcoming barrier Asset-based microfinancing: Guaranteeing asset loans with the asset purchased through the loan facilitates access to credit for people who lack assets that can be used as Lack of collateral collateral. Asset-based financing has been found to enhance the adoption of improved technologies that can help mitigate risks. • Grace periods: Introducing or extending the time during which borrowers do not need to make loan repayments. • Repayment schedule: Aligning repayment schedules to borrowers’ cash flows and Irregular cash flows offering flexible repayment options. • Flexibility: Adjusting loan features in the event of a shock—by, for example, deferring payments or rescheduling loans—can support households’ absorptive capacity, without necessarily increasing default and lead to higher income and assets. (a) Credit line: Credit lines can enhance resilience by providing an ex ante insurance effect, Lengthy application which incentivizes individuals to make investments they would avoid without secured processes access to loans. They also serve as a coping mechanism to help smooth consumption in response to a shock. Source: Cai et al. (2023); Cook et al. (2024); J-PAL (2023b); ADB and Vision Fund International (2016). Notes: (a) The literature reviewed in Cai et al. (2023) and J-PAL (2023b) suggests that certain types of borrowers, such as repeat borrowers and borrowers with an existing business, may benefit more, in terms of undertaking riskier but more profitable investments and experiencing increases in revenues and profits, from increased flexibility than other types of borrowers. Further research is needed to understand the characteristics of borrowers for whom increased flexibility in repayment schedules may be beneficial. Some economic inclusion programs facilitate barriers to accessing formal FSPs. The SHGs access to credit through community-based formed Village Organizations, which in groups (such as VSLAs), providing a reliable turn formed Cluster-Level Federations. SJY source of credit for populations that lack leveraged JEEViKA’s financial inclusion access to formal FSPs, such as people in program as the entry point and used its remote rural communities, women, and community structures to target extremely people in fragile or conflict-affected areas poor households, deliver credit and (Cook et al. 2024). Lack of flexibility in livelihood programs, and support linkages to borrowing amounts and when the loan may government programs and formal banking be accessed can limit their effectiveness in systems (Andrews et al. 2021; Gollin et building resilience. To address this issue, al. 2023; J-PAL 2023c). These community some programs link savings and loan groups structures increased SHG members’ access to FSPs. Dong so entails risks, however, such to formal financial services. JEEViKA’s as lending amounts that may exceed the programs—including SJY, which has reached capacity of the group to manage and repay. over 200,000 households since 2018 – support To serve the poorest households in India, the over 1 million SHGs that have savings Bihar Rural Livelihoods Promotion Society accounts and 982,000 that are linked to (JEEViKA) (the implementing agency for the formal credit facilities. Together they have National Rural Livelihoods Mission [NRLM]) disbursed US$4.7 billion, with a repayment initiated the Satat Jeevikoparjan Yojana rate of 99 percent (JEEVIKA n.d.; Bihar (SJY) program. For its broader programming, Rural Livelihoods Promotion Society 2025). JEEViKA had established community structures such as Self-Help Groups (SHGs), Ensuring customer protection, particularly where rural women could save together among people with low financial literacy and lend internally, thereby overcoming skills, is essential to preventing access to The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 25 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations credit from harming program participants recent study by the Microinsurance Network and building resilience (Duflos and Izaguiree indicates that 89 percent of the population 2022; Zetterli, Mattern, and Swanborough that could benefit from microinsurance still 2024). Facilitating access to credit can lacks coverage from insurance providers increase the resilience of poor and vulnerable (Merry and Calderon 2023). Common households, but borrowing also has risks that, barriers to access, particularly among if unmanaged, can leave program participants the poorest households, include high worse off. Over-indebtedness, unfair pricing, transaction costs, liquidity constraints, lack of transparency, and uninformed low trust and understanding of insurance decisions are some of the risks that poor products, basis risk,9 and behavioral biases, and vulnerable households are likely to face. such as perceptions about risk that do not Economic inclusion programs can address correspond with actual exposure to threats these risks by building financial literacy and (Kramer et al. 2022; ideas42 2021). Women ensuring that access to credit is facilitated are typically underserved by insurance in alignment with customer protection companies, particularly in emerging markets principles. (Miles and Pandey 2021). Women and men face different barriers, partly because women Insurance face pregnancy and childbirth, social and legal constraints that undermine their rights Insurance protects against a variety of risks, or access to land and assets, and increased including illness, death, property loss, and likelihood of being self-employed. Insurance risks affecting people’s livelihoods, and it is not typically designed to meet the risks helps build absorptive and adaptive resilience associated with being a woman (World Bank capacities.7 Insurance helps people prepare 2016a). Lack of trust is also a key barrier against risks by providing cash payments to women’s uptake of insurance (Miles and after a shock has happened. These payments Pandey 2021). help smooth consumption and reduce negative coping strategies, such as selling Innovations and interventions have sought assets or reducing consumption, and thus to address some of the barriers to insurance increase absorptive capacity. Insurance uptake (Table 5). Given the multiple barriers reduces risk aversion and incentivizes to demand for insurance, programs likely investment in riskier but more profitable need to incorporate various solutions in the activities, thereby helping build households’ design of their program. For example, the De- adaptive capacity.8 Doing so is particularly risking, Inclusion, and Value Enhancement important in the face of increasing exposure of Pastoral Economies (DRIVE) program— to weather-related risks, including those implemented by the PTA Reinsurance associated with climate change. Insurance Company (ZEP-RE) in collaboration with can support the adoption of risk-mitigating PULA Advisory, an agricultural insurance technologies and thus help reduce exposure and technology company and the relevant to climate-related shocks (IFAD 2023). governments and supported by the World The timeliness of payouts and the level of Bank—aims to bolster financial resilience protection provided are crucial. Early payouts among pastoralists in Kenya, Somalia, and and coverage that adequately compensates Ethiopia. DRIVE offers a comprehensive for losses are essential for maximizing impact financial package to pastoralists that includes (Arnold et al. 2013). savings accounts to encourage financial resilience; drought-index insurance policies Despite its potential benefits, uptake of that provide payouts triggered by satellite- insurance products remains very low. A monitored pasture conditions; and digital The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 26 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations payment accounts, to facilitate easy payment Ethiopia, implemented by GOAL Ethiopia, of premiums and receipt of payouts. The Global Communities, and the International program also provides education to enhance Development Enterprise, partners with the financial literacy, empowering pastoralists to Oromia Insurance Company to provide manage their finances and risks effectively index-based livestock insurance. This (World Bank 2022a). program covers 43 percent of the premium, which insures livestock against drought Even with well-designed products and (Feed the Future 2024). The DRIVE program, programs, premium subsidies are often which targets pastoralists in Ethiopia, covers necessary to ensure that the poorest 80 percent of the insurance premium. This households buy insurance. Subsidies are higher subsidy is possible thanks to regional particularly important when introducing implementation by the PTA Reinsurance insurance to first-time customers or piloting Company (ZEP-RE), which pools drought new products.10 The level of subsidy depends risks across countries, uses satellite on the target population, implementation technology to assess pasture levels, and arrangements, and available resources. The insures the costs of rearing livestock rather Feed the Future’s Resilience in a Pastoral than replacement costs, reducing operational Areas (RIPA South) program in Southern expenses and premiums (World Bank 2022a). Table 5 Mechanisms for increasing the uptake of insurance Type of barrier Mechanism for overcoming • Financial literacy training and education: Enhancing financial literacy can increase understanding about how insurance products work and how to report a claim. Using simple language and examples that are relevant to target populations is crucial. Financial literacy training alone will not necessarily lead to sustained increases in uptake, however. Low trust and • Community engagement in targeting: Past users of insurance products or reliable understanding community members can be engaged to provide information about insurance. In addition to using language and local expressions that are likely to be easily understood by target populations, past users or reliable members of the community can help build trust in insurance products. • Index-based insurance: Not requiring an assessment of losses helps reduce administrative costs, which can reduce insurance premiums as well as the time required to process claims. Index-based insurance, however, relies on the availability of historical data, which are needed to construct the index on which the insurance policy is based. • Combining insurance products with other financial products: Bundling insurance (with Transaction costs loans for drought-resilient seeds, for example) can reduce risk and administrative costs. Doing so can reduce costs for households. However, bundled product may not be suitable for the poorest households due to their limited repayment capacity and business experience. Instead, they may benefit more from business grants to start or expand a business. Flexible payment schedules: Payment schedules that delay the payment of the premium until after the harvest can accommodate the needs of agricultural workers. Strong Liquidity constraints reinforcement mechanisms are needed to ensure that policy holders pay the premium, however. The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 27 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations Table 5, continued Type of barrier Mechanism for overcoming • Basis risk is affected by the proxy indicators used to trigger and calculate insurance payouts. Enhancing the design of the index by making spatial and temporal adjustments, such as incorporating more disaggregated or localized data, can reduce it. Basis risk • Establishing funds to compensate for basis risk at the individual level provides financial support for affected households, but it does not address the underlying causes of basis risk. Sources: World Bank (2024); Kramer et al. (2022); Sirtaine and McKay (2022); ideas42 (2021); Moore et al. (2019); Smith, Scott, and Shepherd (2015); Arnold et al. (2013). Payment services remote rural areas (Demirgüç-Kunt, Klapper, and Singer 2022). Many poor households lack Payment services, particularly digital the financial literacy needed to understand payments, allow individuals to receive and use payment services. A CGAP technical support promptly. Digital payments guide on gender norms reported that enable the quick disbursement of funds, female entrepreneurs felt that they did not including cash transfers from government have the permission or skills to use digital or humanitarian programs and remittances payment services (Koning, Ledgerwood, and from relatives, during emergencies, allowing Singh 2021). Many of these women lacked individuals to meet immediate needs without knowledge about how to open and manage resorting to negative coping strategies accounts, use digital payment platforms, and (Sirtaine and McKay 2022; Moore et al. 2019). understand the benefits and risks associated with these services. Having an account—at a bank, at a regulated microfinance institution, or with a mobile Physical access to banks and financial money service provider—allows individuals institutions can be a significant barrier, to send and receive digital payments. especially in rural and remote areas. The Payment services also act as a gateway to absence of nearby branches or ATMs makes other financial services. According to the it difficult for poor households to access 2021 Global Findex, people who received payment services. Mobile money has partly payments were more likely to make digital addressed this challenge, but the availability payments, save, and borrow than people who and use of mobile phones and mobile did not receive such payments (Demirgüç- Internet continues to be limited, with adults Kunt, Klapper, and Singer 2022). in rural areas being 28 percent less likely to use mobile Internet than those in urban People in poverty, women, and youth are areas and women having less access to mobile less likely to own an account than others in phones and the information on digital many low-income countries (Demirgüç-Kunt, literacy necessary to use these platforms than Klapper, and Singer 2022). Common barriers men (Shanahan and Bahia 2024). to accessing payment services (and having accounts) include high transaction costs, These barriers often constrain the use of bank low levels of financial literacy and trust, accounts for payment services, even when prevailing social and cultural norms, and people own an account. The costs associated poor access to infrastructure, particularly in with using payment services, such as fees The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 28 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations for transactions, account maintenance, components typically found in economic and minimum balance requirements, can inclusion programs, such as business grants be prohibitive for poor households. These and coaching, these programs can maximize costs can deter poor people from opening synergies and improve both resilience and and maintaining accounts (Demirgüç-Kunt, financial inclusion. Klapper, and Singer 2022). Program components can be sequenced to Some economic inclusion programs deliver support when it is most needed, facilitate access to payment services, thereby building resilience (Arévalo-Sánchez but there is potential for more. About 8 et al. 2024). For instance, programs may percent of all programs and 11 percent of initially provide cash transfers to stabilize programs facilitating access to financial consumption in the aftermath of a crisis, services facilitate access to payment followed by skills training and business services. The Strengthening Women’s capital to help households recover and Ability for Productive New Opportunities revitalize their livelihood activities. This (SWAPNO) project, led by the Local section offers a brief overview of core Government Division in Bangladesh, with components commonly included in economic technical support from the United Nations inclusion programs that can complement Development Programme (UNDP), facilitates financial services for financial inclusion and digital payments for ultra-poor rural women resilience. by distributing mobile phones, paying wages from its public works scheme, and Facilitating integration with government or enabling all participants to conduct financial humanitarian cash transfers transactions through mobile wallets (UNDP 2024). Cash transfers can significantly increase the resilience of poor and vulnerable households, Existing government social protection particularly for large covariate shocks and in programs, such as cash transfers and public contexts of fragility, conflict, and violence works programs, and assistance delivered by (FCV). About 54 percent of programs (73 humanitarian and development actors offer percent of those focusing exclusively on potential avenues for increasing access to extreme- and ultra-poor people) provide accounts and payment services, particularly transfers for consumption support. Regular when delivered digitally. Economic inclusion income streams in the form of cash programs, many of which already provide transfers or cash-for-work can facilitate digital cash transfers, can leverage these the accumulation of savings and lead to interventions to deepen financial inclusion investments in productive activities and and resilience. human capital that better prepare recipient households for future shocks or stressors BUILDING SYNERGIES WITH (IFPRI 2023; Bowen et al. 2020). These COMPLEMENTARY ECONOMIC transfers can also help households respond INCLUSION COMPONENTS to emergencies; they are particularly critical for catastrophic events for which financial Facilitating access to financial services services, such as insurance, can prove alone will not be sufficient to build the unaffordable and inadequate (Kramer et al. resilience of poor and vulnerable households 2022; Bowen et al. 2020). to stressors and shocks, particularly for the poorest households. By integrating Cash transfers are especially important financial inclusion interventions with other in FCV contexts, where government and The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 29 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations institutional capacity is low and the need Several programs deposit cash transfers for precautionary savings may hinder in accounts that are opened in the name investments in income-generating activities. of the recipient, but doing so does not About 67 percent of economic inclusion automatically lead to greater use of financial programs operating in such settings and 63 products by recipients, who may use the percent of programs targeting people affected accounts only for cashing the payments. by conflict and forced displacement provide Barriers to financial inclusion, from both transfers for consumption smoothing, often the supply and demand sides, often limit the in coordination with humanitarian agencies potential of cash transfers to lead to greater (PEI 2023). financial inclusion. Prospera, a government- led program in Mexico, transitioned from Leveraging existing social protection a conditional cash transfer initiative to programs or humanitarian assistance a comprehensive approach that included interventions, particularly if delivered productive inclusion and graduation digitally, can facilitate a faster response to strategies. The program significantly shocks, which is critical for resilience. About expanded its savings component by adopting 65 percent of government-led economic government-to-person (G2P) electronic inclusion programs build on existing transfers through debit or prepaid cards that government safety nets to provide cash were connected to savings accounts. Coupled transfers (PEI 2023). Some of these programs with vocational training, financial literacy, leverage government delivery systems and banking support, and access to savings existing adaptive social protection programs plans, this shift facilitated the opening of to provide anticipatory payments in advance over 1 million savings-enabled accounts of an expected shock and emergency funds in for previously unbanked participants. response to shocks. For instance, 60 percent Evaluations revealed that households of government-led programs that include increased their savings by 20 percent, using a transfer leverage a social registry for them to repay debt and stimulate the credit participant identification (PEI 2023). These market. About 25 percent of transfers were payments are easier to deliver if participants saved and invested (George et al. 2023; Núñez are enrolled in an existing social assistance 2023). program, such as a social safety net or a cash- for-work program, especially when payments To increase inclusion, programs can tweak are provided digitally. some of the design features of cash transfers, complementing them with other economic The ability to disburse payments promptly inclusion components and working with will reduce the need for negative coping FSPs and other partners to facilitate access strategies. Digitizing payments can also (Table 6). For example, accounts can be increase account ownership for people who set up as multipurpose accounts, including had been excluded, serving as a gateway to saving and making loan or other payments. other financial services (Demirgüç-Kunt, Programs can collaborate with FSPs to Klapper, and Singer 2022). However, although simplify documentation requirements 79 percent of economic inclusion programs and reduce transaction costs, to allow provide cash payments (either as transfers participants to withdraw and deposit cash for consumption support or business grants), flexibly. only 18 percent (27 percent of programs providing consumption support) deliver Several organizations, primarily within the digital payments, highlighting the potential private sector, are broadening the scope for growth in this area (PEI 2023). of mobile money services beyond digital The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 30 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations payments to encompass additional financial Smith, Scott, and Shepherd 2015; Suri et services, including microinsurance and al. 2023). These examples underscore the loans. For instance, MicroEnsure provides critical role of collaboration by FSPs, mobile over 200 types of insurance to low-income network operators, fintech firms, and customers by leveraging the fact that telecommunications companies. customers already utilize mobile financial services and adding insurance products to the The substantial volume of cash transfer list of services they can access through their recipients from government programs phones. In 2009, it created an embedded presents a compelling business opportunity insurance product called “freemium,” which for FSPs (World Bank 2022b). For example, provided free life or health insurance to the Supporting Women’s Livelihood mobile phone subscribers, with the coverage Initiative—part of the Girls’ Education and amount determined by the amount of Women’s Empowerment and Livelihoods airtime they purchased. This product was (GEWEL) Project led by the Ministry of first launched for Tigo subscribers in Ghana Community Development and Social Services and later expanded to Tanzania and Senegal. (MCDSS) in Zambia— delivered electronic Tigo Tanzania’s innovative model even transfers to over 139,000 women. This figure pays interest on mobile money accounts. represents only a fraction of the 1.3 million Safaricom’s M-Shwari banking product in households supported by GEWEL through Kenya allows users to open bank accounts, the MCDSS’s Social Cash Transfer program deposit and withdraw money, and access (Selim 2024). loans via their mobile phones (IFC 2016; Table 6 Interventions to enhance financial inclusion of households receiving cash transfers Type of constraint Potential mechanisms for overcoming constraints • Provide options for receiving payments (through agents and other branchless banking options), considering the location of these providers, the types of additional products they can offer, and how they deliver them. • Prioritize digital payments, to facilitate access and reduce transaction costs. • Select financial service providers (FSPs) that are committed to delivering financial Limited or unsuitable services responsibly and in ways that bring value to program participants. supply of financial • Raise awareness among FSPs about the needs and constraints of poor people, and work services with them to tweak some of their products to better serve targeted populations (by, for example, adapting Know-Your-Customer (KYC) regulations, simplifying account opening and use processes, allowing multiple uses of the account beyond receiving and cashing out the cash transfer, reducing or eliminating fees, adding flexibility to loan products, and bundling the cash transfer payment with financial products such as insurance). • Provide financial literacy training and share communications via program coaches to increase understanding of how to use accounts for purposes other than redeeming their cash transfers and about products they can access and how to do so. • Implement behavioral interventions, including behavior change communication, to Limited demand for encourage use of financial services, such as savings and disaster risk protection. financial services • Provide additional financial support to encourage greater use of financial products, offering matching contributions to encourage saving or subsidizing some products, such as insurance. • Work with the community to build trust in FSPs. Sources: Smith et al. (2015); ideas42 (n.d.); Galiani et al. (2022); World Bank (2022b). The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 31 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations Using training and coaching to enhance financial mobile money, and other platforms that can and resilience capabilities facilitate informed and efficient saving and borrowing decisions (Kass-Hanna, Lyons, and Financial literacy can increase the use of Liu 2022). financial services and help participants make better financial decisions.11 Lack of financial Both the content and delivery of financial literacy poses a significant barrier to the use literacy and education may need to be adapted of financial services for poor households. for different groups. For example, programs Financial literacy training and education can supporting refugees could develop easy-to- raise awareness of the potential benefits of understand, multilingual, and culturally financial services, available financial products sensitive information on the legal and KYC and how to access them, how to use them requirements of financial services in the host effectively, build budgeting skills, and how country. Financial literacy is particularly to increase financial resilience. Such training important in programs working with extreme- can also help shift attitudes toward financial and ultra-poor people, including women, services and institutions, build trust in these to address potential gaps in basic financial institutions, and increase adoption of financial skills such as budgeting and managing debt. products (Kass-Hanna, Lyons, and Liu 2022). Interventions that address behavioral barriers can also help households make the most of About 75 percent of economic inclusion using financial services and improve their programs (84 percent of programs facilitating financial resilience (ideas42 2018; see Box 3). access to financial services) include financial Coaches in programs serving these groups literacy modules as part of their training and can be used to continuously raise awareness coaching curriculum (PEI 2023). Financial and empower program participants to make literacy is a core element of the financial informed financial decisions and use products inclusion component of the Deendayal from formal FSPs. Antyodaya Yojana-National Rural Livelihood Mission (DAY-NRLM), led by the Ministry Skills training and coaching sessions delivered of Rural Development, in India; it is provided as part of an economic inclusion package to all participants. The program trains can also facilitate risk preparedness and Financial Literacy Community Resource adaptation. Programs may tweak their Persons (FL-CRPs) who deliver face-to-face training and coaching curriculum to train counseling services to groups of 30–50 SHG participants on climate-smart farming members, with the support of SHGs and their techniques or include messages about federations. The FL-CRPs are instrumental in climate change and disaster preparedness enhancing awareness about financial products, (Bernagros, Kirton, and Toussaint 2022).12 guiding members in selecting suitable Concern Worldwide leads green graduation financial products, prioritizing investments, programs in Bangladesh, Burundi, Chad, and and educating them on responsible borrowing the Democratic Republic of Congo. Building practices (DAY-NRLM 2024; World Bank on years of practice, it applies a green lens to 2011). Coupling financial literacy with digital the way it designs and delivers the graduation literacy training will be increasingly important approach. Concern trains its staff and raises as more programs provide digital financial awareness of sustainable environmental services (DFS). Digital literacy has the capacity practices and disaster response. Based on to engage individuals in formal financial local environmental assessments, it trains services and to promote resilience-building program participants on economic activities behaviors through the use of online banking, and livelihood management practices that The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 32 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations do not harm the environment, sustainable Many economic inclusion programs facilitate management and restoration of natural access to inputs and technology, which resources, and the transition to green jobs coupled with access to financial services, (Concern Worldwide 2022). can facilitate investments in more profitable activities and further reduce risk, including Providing business grants and complementary climate risk. Insurance can encourage riskier, livelihood support to enhance resilience higher-yield activities, leading to increased productivity. The extent of this impact The livelihood components typically found depends on factors such as access to credit, in economic inclusion programs, such as the availability of suitable technologies, and business grants or business and technical the level of risk aversion among households training, support households’ resilience and (Arnold et al. 2013). Economic inclusion risk preparedness. Livelihood support enables programs can be designed to address such households to diversify income sources and factors. invest in improved technologies or alternative livelihoods, strengthening their capacity to About 58 percent of all economic inclusion absorb and adapt to shocks and stressors. programs (60 percent of programs facilitating The support provided by the Targeting the access to financial services) increase Ultra-Poor program, implemented by the participants’ access to improved inputs and Microfinance Investment Support Facility technologies, including green technologies, for Afghanistan (MISFA) between 2015 and by facilitating market links with private 2021—which included an asset transfer, a sector and other providers (PEI 2023). Among monthly cash transfer, training, and a health programs that facilitate access to inputs subsidy—led to increases in income and and technologies, programs that only target asset diversification, allowing households to extreme- and ultra-poor households are access a wider range of economic activities more likely to also provide business grants and revenue sources. It helped participant (88 percent of programs, compared with households withstand and recover from 80 percent of programs targeting people multiple shocks, including droughts, and in poverty more broadly and 70 percent of escalating violence better than nonparticipant programs that do not target by poverty level) households (Bedoya Argüelles et al. 2023). (PEI 2023). For extreme- and ultra-poor households, business grants can help reduce Economic inclusion programs can be flexibly the risk associated with investing in new or designed and adapted to enable households improved activities. They are thus critical to to better respond to and recover from crises. encouraging investment in such activities. The Nigerian government’s COVID-19 In FCV contexts, programs may need to Action Recovery and Economic Stimulus offer a more comprehensive and generous (NG-CARES) program was designed to package to be effective. Such packages could mitigate the impact of COVID-19 on the include business grants, cash transfers, and livelihoods of poor and vulnerable households, financial service facilitation. The rationale communities, and other groups. It provided is that individuals in these settings may feel timely transfers and agricultural inputs to compelled to save a larger portion of the safeguard food security and livelihood support provided capital as precautionary savings in the form of business grants, skills training, (Marguerie and Premand 2023). and coaching to stabilize and strengthen the economic situation of program participants. The program is being adapted to respond to shocks beyond the COVID-19 pandemic (Okunmadewa 2023a, 2023b). The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 33 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations Delivery Considerations Most economic inclusion programs engage external organizations and community structures to deliver at least one of their components. The involvement of FSPs in these programs increased from 18 percent in 2021 to 38 percent in 2024. Over this period, the use of digital saving groups to deliver these components, technologies to facilitate access to financial which can be adapted to strengthen the services rose from 13 percent to 23 percent goals of financial inclusion and resilience. of all programs (Arévalo-Sánchez et al. Saving group facilitators can raise awareness 2024). This section explores the role of of risk preparedness and adaptation and community-based saving groups, FSPs, and equip members with financial literacy skills. digital technology in enhancing financial For resource-intensive components, such inclusion and resilience for poor households, as coaching and training, delivering other highlighting opportunities, challenges, and economic inclusion components through strategies for effectively serving poor and saving groups can help programs achieve scale vulnerable populations. and cost efficiencies without compromising effectiveness (Technical and Operational WORKING WITH FINANCIAL Performance Support Uganda Graduation SERVICE PROVIDERS AND MARKET Randomized Control Trial Associate Award FACILITATORS 2022). However, group facilitators must be adequately trained to achieve results. Saving groups are often an entry point for financial inclusion within economic inclusion Several economic inclusion programs link programs. They often provide a platform for savings groups to formal FSPs or inject the delivery of additional components that external funds to enhance financial inclusion can enhance financial inclusion and resilience. and resilience. The informal risk-sharing that Many economic inclusion programs support characterizes these groups and the lending the formation of saving groups in the initial history that is built after several cycles can stages of program implementation, with the facilitate access to credit, insurance, and other aim of encouraging participants to save from services from formal FSPs that are linked to the outset of the program. savings groups (Acton 2022; Kramer et al. 2022). CARE, for example, has facilitated such Saving groups are also often used to deliver linkages for VLSAs, including those that are other program components, such as coaching implemented as standalone interventions and training. Facilitators, whether community and those that are part of economic inclusion members or staff from implementing programs. An example of the latter is the organizations, use the weekly meetings of Titukulane Resilience Food Security Activity The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 34 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations in Malawi, funded by USAID. Through capital ability to negotiate better terms for financial infusions into VSLAs by partner financial products can make products offered to institutions, women access loans with members of pooled groups more affordable. favorable repayment terms and interest rates. Linking pooled groups to value chains DreamSave, a fintech application for informal also improves market access and financial community banks and savings groups, creates inclusion, leading to more stable incomes digital links from saving groups to FSPs, in and reduced financial volatility. JEEViKA’s order to promote the uptake of financial community structure provides an example of services (Vision Fund 2024). pooling savings groups to connect them to other community groups. Its methodology These and other examples show great promise, can be used to create women’s groups, but establishing such linkages requires a great involving women who might otherwise be deal of handholding and facilitation by the difficult to reach and increasing uptake of lead agency or implementing partners, and FSP products, benefiting the FSP as well as VSLAs must be mature enough to receive and participants. manage external financing (CARE 2022).13 It is important to continue to strengthen group Engaging formal FSPs can expand access cohesion after the injection of external funds to a wider range of financial products, but (USAID 2024). Equally important is the need programs often need to work with them to to establish partnership arrangements with tailor their products and delivery models to FSPs and other private sector organizations the needs of targeted populations. Economic that are sustainable and beneficial for inclusion programs that engage institutional program participants. Other options to FSPs, such as banks and microfinance enhance financial inclusion include injecting institutions, in the implementation of their micro equity (small amounts of funds that components facilitate access to a wider range will be owned by members in saving groups), of financial services (PEI 2023). However, the which may be less risky for group members standard product formal FSPs, particularly than being linked to an FSP (Acton 2022). banks, offer often does not meet the needs of people targeted by economic inclusion Pooling several savings groups and connecting programs, such as extremely poor women. them to other community groups, such Organizations implementing these programs as producer groups, can mitigate risk and can help build FSPs’ understanding of the facilitate access to a broader suite of and needs of poor and vulnerable households more affordable financial services (Diwaker, and work with them to address the specific Stepanovic, and Gilligan 2024; Sirtaine and barriers these populations face, relaxing McKay 2022; Smith et al. 2015). Pooling collateral requirements, for example, and savings groups reduces overall risk by simplifying application procedures and diversifying exposure across a larger number marketing and communication materials. of participants, thereby mitigating the impact In Ecuador, the Hebrew Immigrant Aid of any single group’s financial difficulties. Society (HIAS) and the United Nations High Pooled groups can access a range of financial Commissioner for Refugees (UNHCR) have services that might not be available to facilitated refugees’ access to savings through individual groups, including easier access to formal bank accounts. Local legislation credit and risk management tools such as permits refugees to open bank accounts, but index insurance, which offer better protection the requirement for a valid ID card was a against large-scale risks such as climate- significant barrier. To overcome it, HIAS and related events. Lower overall risk and the UNHCR collaborated with Banco Pichincha The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 35 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations to allow account openings with proof of including more women in the design and residence. This initiative enabled refugees and delivery process (Koning, Ledgerwood, and asylum seekers with humanitarian visas to Singh 2021; Miles and Pandey 2021; Women’s open savings accounts. HIAS also identified World Banking 2024). microfinance institutions that understood refugees’ financial needs and linked program As programs work with FSPs to extend participants to them (Arévalo-Sánchez 2019). financial services to poor and vulnerable households, it is important to ensure that they Tweaks to programs must consider the design products that are in line with Client diverse risks and barriers women face to Protection Standards (Box 4). 14 financial inclusion. FSPs must shift from being gender-neutral to employing gender- A common barrier to access to and use differentiated strategies. One study finds that of services from formal FSPs is the lack gender-differentiated credit-scoring models of conveniently located points of sale, resulted in 80 percent of women receiving particularly in remote rural areas. Distance higher credit scores than they did on gender- from points of sale is one reason why savings neutral models (Data2X and the Financial and loan groups are often used as the entry Alliance for Women 2020). FSPs can better point into semi-formal financial services serve women by using gender-disaggregated for participants of economic inclusion data to design and evaluate services, investing programs. Some programs are exploring in gender sensitization of their staffs, and other branchless delivery channels, such Box 4 Client Protection Standards Client Protection Standards (CPS) outline the principles that should guide the provision of inclusive financial services to ensure that, at a minimum, they do not harm users. Created in the early 2000s, in response to the emergence of ethically questionable practices by some FSPs and the indebtedness crisis in various countries, the CPS have been refined following years of practice and assessment. They now include the following: 1. The provider’s products, services, and channels benefit clients. 2. The provider does not over-indebt clients. 3. The provider gives clients clear and timely information to support their decision making. 4. The provider sets prices responsibly. 5. The provider enforces fair and respectful treatment of clients. 6. The provider secures client data and informs clients about their data rights. 7. The provider receives and resolves client complaints. 8. Governance and management are committed to client protection, and human resource systems support its implementation. Each standard is associated with essential practices that FSPs must follow to ensure compliance with the CPS and one or more indicators to assess the extent to which the FSP adheres to each standard. Source: Cerise and Social Performance Task Force (2022). The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 36 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations as local agents. The DAY-NRLM program the contexts in which they operate, such as in India facilitates access to bank accounts economic downturns and conflicts. These for program participants. To enable the use factors can reduce the ability of poor and of these accounts and provide access to a vulnerable households to access financial broader suite of products, the program, in products from FSPs, especially in weak collaboration with partner FSPs, trains some financial markets and high-risk environments. SHG members supported by the program to During the COVID-19 pandemic, for become banking correspondents. Through instance, FSPs’ portfolios suffered, leading these banking correspondents, known as bank many to be unable or less willing to renew sakhis (bank friends), women gain access to loans for existing clients or finance new ones. a range of financial services, such as deposits, The decline in portfolio quality sometimes insurance, and payments, at their doorstep resulted in loan disbursements favoring (DAY-NRLM 2024; Shetty, Arora, and wealthier clients, exacerbating the divide Vutukuru 2018). Agents must be adequately between richer and poorer segments of trained, located near program participants, the population (Castellani et al. 2022) and capable of serving a sufficiently large number constraining the ability of people in or near of people to make their activities financially poverty to rely on formal financial services viable, and have enough liquidity to meet the to manage the effects associated with the needs of program participants. They must pandemic (CPAN 2022). treat participant households in accordance with the CPS (Suri et al. 2023). Market facilitators (people or organizations who focus on addressing systemic constraints Formal FSPs have struggled to find viable by incentivizing and enabling market actors business models to serve poor and vulnerable to perform their functions more effectively) households effectively (World Bank 2023b). can help advance the financial inclusion Design and delivery innovations can agenda, particularly in FCV settings, where help reduce costs, but subsidies are likely low institutional capacity may constrain necessary, at least for some time, to extend efforts to build financial inclusion (Cook access to and increase the uptake of formal et al. 2024). Market facilitators can help financial services, particularly insurance and build the capacity of FSPs through training credit (Bill & Melinda Gates Foundation 2024; and technical assistance, enabling them to Kramer et al. 2022). Subsidies must carefully better serve poor and vulnerable households, target people who need them most and not including by developing financial products. lead to unintended consequences, such as They can also help create an enabling creating disincentives for FSPs to continue environment, by working with government developing sustainable business models to agencies to develop regulations, promote serve poor and vulnerable populations. responsible finance among FSPs, and support financial literacy efforts, thereby The fact that FSPs are exposed to risks has strengthening the financial resilience of poor implications for the resilience and financial and vulnerable households and mitigating inclusion of the poorest households. Weak risks in the financial sector (El-Zoghbi and institutions, insufficient regulation of Lauer 2013). In economic inclusion programs, lending practices, and the potential for market facilitators are engaged to support over-indebtedness put the financial sector financial inclusion efforts. at considerable risk (McKay and Zetterli 2021). FSPs are also vulnerable to broader The Microfinance Investment Support risks affecting the people they serve and Facility for Afghanistan (MISFA) played a The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 37 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations key role in developing a viable and inclusive as remittances or cash transfers, that help financial sector in Afghanistan by directing smooth consumption during emergencies technical assistance and funding from the (Suri et al. 2023). During the COVID-19 government and international donors to pandemic, mobile money networks delivered the microfinance sector. It streamlined and government transfers, extended credit to pooled funding mechanisms, aligning them small and medium-size enterprises, and with local priorities. It also provided technical connected governments to informal workers assistance and regulatory oversight of the (Sahay et al. 2020). Increased access to sector. It served as the implementing agency mobile money has also enabled households, for the Targeting the Ultra Poor (TUP) particularly women, to diversify their income program in Afghanistan, overseeing activities sources by shifting from agricultural activities such as finalizing the list of participants, to small businesses (Moore et al. 2019; Suri et expanding the program, and contracting an al. 2023). In Kenya, access to mobile banking NGO to implement TUP in Balkh. (Bedoya resulted in female-headed households Argüelles et al. 2023; World Bank 2021b, increasing their savings by more than 20 2016b; MISFA 2019; Jaffrin 2013). percent, helped them shift from agricultural livelihoods to commercial or retail LEVERAGING DIGITAL TECHNOLOGY livelihoods, and reduced extreme poverty by 22 percent (Demirgüç-Kunt et al. 2018). Data Digital technology holds immense potential from Sub-Saharan Africa suggest that mobile to enhance financial inclusion and resilience, money accounts can build financial inclusion particularly for the poorest and hardest- for younger women by reducing barriers and to-reach households. Mobile money, digital increasing accessibility (Demirguç-Kunt et al. payments, mobile banking, and other digital 2022). Digital technologies can also help scale innovations can significantly improve access up programs and improve cost-effectiveness to financial services, reduce transaction costs, (Arévalo-Sánchez et al. 2024). address physical and behavioral barriers, and provide timely support during emergencies. Despite the potential benefits, the facilitation Biometric solutions, such as facial of DFS by economic inclusion programs recognition, can facilitate access by women, remains limited. Only about a quarter of who are more likely than men to be illiterate economic inclusion programs that facilitate and lack formal identification documents access to finance use digital technologies (Cook et al. 2024). SMS and Interactive Voice to do so (PEI 2023). Several barriers hinder Response (IVR) messages sent to mobile the use of DFS including limited financial phones can affect behavior and lead to greater awareness and literacy, cultural or social uptake and better use of financial services norms, lack of identification documents, (Karlan, Morten, and Zinman 2012; Karlan et and difficulties faced by poor individuals al. 2016; Riley and Shonchoy 2022). in meeting other KYC regulations.15 The use of big data analytics by FSPs can create Mobile money account ownership has grown additional barriers for the poorest and most rapidly in some countries, particularly in vulnerable households (Sahay et al. 2020). Sub-Saharan Africa, where the percentage of adults owning a mobile money account Limited access to digital technology and increased from 12 percent in 2014 to 33 infrastructure exacerbates these challenges, percent in 2021 (Demirgüç-Kunt, Klapper, particularly for women (Demirgüç-Kunt, and Singer 2022). Mobile money can also Klapper, and Singer 2022; Sahay et al. 2020). enhance household resilience by providing Although mobile money is helping narrow timely and more secure access to funds, such gender gaps in account ownership in some The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 38 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations countries (Demirgüç-Kunt, Klapper, and literacy training and addressing social and Singer 2022), women in many other countries cultural norms through training and coaching face additional barriers to using DFS. For sessions. Providing comprehensive digital instance, the gender gap in smartphone literacy training is essential to ensure that ownership widened from 15 percent in 2021 to participants can effectively use DFS. This 18 percent in 2023 (Women’s World Banking training can cover basic digital skills, the 2023). Therefore, relative to men, women use of mobile phones and tablets, and the are less likely to own a phone or possess navigation of DFS. Tailored training sessions identification documents, often have lower can help build confidence and competence literacy levels, and are less likely to be able to among users, particularly those with limited afford access to digital finance. These factors prior exposure to digital technologies (Kass- must be taken into account when designing Hanna, Lyons, and Liu 2022). mobile solutions for women. Nearly all economic inclusion programs Savings groups, which are often a gateway that facilitate access to finance incorporate to financial inclusion within economic either coaching or financial literacy training inclusion programs, can be leveraged to as part of their intervention packages (PEI introduce digital solutions and build financial 2023). Two-thirds of these programs include capabilities. A new generation of technologies community sensitization on gender issues. designed specifically for these semi-informal Digital financial literacy is particularly community groups is driving the global important for increasing the uptake of DFS digitization of savings groups. Spearheaded among women by ensuring they have the by various NGOs and social impact fintech necessary trust and information to overcome firms, digital savings group solutions such the barriers they face to engaging with the as SAVE, DreamSave, Jamii.one, Chomoka, service (Women’s World Banking 2024). Maximus, and LedgerLink have been designed Such trainings can be tailored to meet the to streamline and accurately record savings needs of women by including topics such group operations through user-friendly as budgeting for household expenses or interfaces. These solutions also create growing micro- or small enterprises. By opportunities to provide additional financial adjusting training, coaching, and community services and program components, such as sensitization activities to include modules training (Arévalo-Sánchez et al. 2024). In that address perceptions about the role of 2020, World Vision began deploying the women and the benefits of DFS for women DreamSave App from DreamStart Labs in and their households, programs can pave the Africa, Asia, and Latin America. By using a way for greater digital financial access by single shared smartphone, a savings group can women. These trainings should be provided provide access to affordable financial services at teachable moments, such as when women for 20 or more individuals, a feat that would receive a payment from the program, and be be challenging to achieve individually in delivered by trusted people and platforms, to many poor rural communities. Members with build confidence (Women’s World Banking low literacy and no prior mobile experience 2024). can learn from their peers in a supportive environment, thereby gaining access to digital Collaboration with FSPs, mobile network services that would otherwise be inaccessible. operators, and fintech companies is critical to overcome restrictive KYC regulations Economic inclusion programs can support and design suitable DFS. KYC regulations the uptake of DFS by providing digital are important for security, but they can The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 39 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations create a significant barrier to access. During inclusion programs include support to the COVID-19 pandemic, collaboration facilitate digital uptake, providing mobile between central banks, government agencies, phones, Internet access, or financial FSPs, mobile network operators, and other incentives, such as stipends or subsidies. institutions facilitated the relaxation of Such interventions can support uptake by KYC regulations and accelerated the use helping cover the costs of data charges or of DFS (Lowe, Yongo, and Corbin 2021). transportation to mobile agents. Zambia’s With the increasing ownership of mobile Supporting Women’s Livelihoods program accounts, economic inclusion programs have provides women with tablets for digitally a significant opportunity to enhance access to recording savings group transactions and a broader range of financial services through mobile phones to receive their business mobile money accounts. grants. It also offers a small stipend to women residing far from mobile agents.16 Investing in the necessary digital infrastructure—expanding mobile network Programs that facilitate access to DFS must coverage and improving Internet connectivity, work to ensure that data privacy and security, for example—and creating an enabling as well as customer protection principles, are environment for the provision of DFS are safeguarded, to avoid exploitation and other crucial. Addressing these institutional negatives effects, such as over-indebtedness, barriers requires upstream interventions, particularly among people with limited digital however, which are often beyond the scope and financial literacy (Diwaker, Stepanovic, of individual programs. Some economic and Gilligan 2024). The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 40 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations Conclusions People in poverty need access to a wide range of financial products to manage risks effectively. Facilitating access to financial services alone is insufficient to build the resilience of poor and vulnerable households to shocks. The multidimensional support provided wider range of suitable financial products, through economic inclusion programs can including subsidies, especially for products significantly enhance financial inclusion, and like insurance, which formal FSPs might thereby resilience, especially for extreme- and not be able to profitably deliver to poor ultra-poor individuals. By combining financial and vulnerable populations on their own. services with business capital, skills training, and market access, economic inclusion 2. Tailor financial services to ensure that programs have a greater impact on poor they are accessible and can be used to help people than standalone interventions. poor people prepare, withstand, adapt to, and recover from shocks and stressors. To This paper examines how economic inclusion ensure they are beneficial and do not cause programs can enhance resilience to stressors harm, financial products must be tailored and shocks by lowering the main barriers to the specific needs and constraints of to poor people face accessing and using financial the households they serve. The tailoring products effectively. It emphasizes the of services is particularly important in importance of working with FSPs to tailor serving the extreme poor and women, financial services, building synergies with who have heightened vulnerabilities core economic inclusion components, and and needs. Doing so requires a thorough leveraging digital technology. understanding of the context and needs of target populations, including the types The paper identifies several ways in which of risks they face, access barriers, and economic inclusion programs can enable behavioral factors influencing financial financial pathways that build the resilience decision making. Tweaks to the design and improve the well-being of poor and of financial products, such as labeling vulnerable people: of savings pots or aligning repayment schedules with borrowers’ cash flows, can 1. Facilitate access to a wide range of enable financial inclusion and resilience. financial services, as different services are required to prepare for, cope with, adapt 3. Provide financial literacy training and to, and recover from different shocks. work with local stakeholders to build Economic inclusion programs need to trust among targeted participants. explore options to facilitate access to a Enhancing financial literacy is critical for The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 41 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations both resilience and financial inclusion; particularly insurance, viable for FSPs. most economic inclusion programs include When linking savings groups to formal financial literacy training. Ensuring that FSPs, programs must ensure that the these modules are adapted and responsive groups are mature enough to receive and to the specific needs of target populations manage external financing. is critical. 7. Use digital technologies to enhance 4. Leverage digital cash transfer programs financial inclusion and resilience, and to expand access to a wider range of build the digital capabilities required financial services. Design consumption to effectively use them. Mobile money, support in ways that increase financial digital savings groups, and e-payments inclusion, by, for example, using behavior can facilitate access to financial services, change communication to encourage cash reduce transaction costs, and improve transfer recipients to use their accounts the timeliness of support during for purposes other than receiving and emergencies. Improving digital literacy cashing out their transfer, such as saving, and ensuring data privacy and security and providing guidance on how they can are essential. Increasing access to DFS also access other financial products. requires investments in digital finance infrastructure and an enabling policy 5. Explore synergies with other core environment. economic inclusion components. Programs can, for example, support 8. Conduct research and monitor program participants to access improved participants’ use of program support, inputs and technologies, including green to inform the design of effective technologies, and offer business grants programs. Identify the most effective to help reduce the risk of investing in types of financial support and products, such technologies. They can sequence particularly those aimed at the extreme components to maximize their impact, and ultra-poor, which programs can providing financial literacy and risk use to build the resilience of targeted preparedness training before facilitating populations. Collect data that are access to financial services and delivering disaggregated by gender and income, in business grants, for example. order to inform the design and impact of services for vulnerable people. 6. Work with FSPs to find suitable products for target populations and ensure that they offer products and delivery them in ways that do not harm users. Collaboration with FSPs is critical for expanding access to financial services. Organizations implementing economic inclusion programs can help build FSPs’ understanding of the needs of poor and vulnerable households and work with them to develop tailored products. They can consider using subsidies, at least until sustainable business models are identified, to make the provision of financial services, The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 42 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations Notes The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 43 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations Notes 1. The role of the enabling environment—including digital and physical infrastructure, policies, and strategies—in expanding financial inclusion and building resilience is critical but beyond the scope of this paper. 2. Saving groups are informal or semi-formal member-based financial structures that provide members with a platform for saving and borrowing. They include Savings and Credit Associ- ations (ROSCAs), Accumulating Savings and Credit Associations, Village Savings and Loan Associations (VSLAs), and Self-Help Groups (SHGs). Savings groups build on the trust that existed among members before the group was established. Members collectively establish their own norms and procedures, based on the basic modus operandi of the type of group they are setting up. See chapter 6 in Ledgerwood (2013) for a discussion of the different types of commu- nity-based saving groups. 3. US$7.8 million was reported in the cited source based on exchange rates in effect at that time. However, due to exchange rate fluctuations, as of March 2025 N3.5 billion is equivalent to US$2.3 million. 4. The exception might be that members are not allowed to borrow at the beginning or the end of the cycle. Savings groups may opt not to distribute the entire accumulated savings pool, in order to ensure that members can continue to borrow at the end of the group cycle and the beginning of the next. 5. Mental shortcuts are strategies or rules of thumb that people use to make decisions quick- ly. While they reduce the amount of information that needs to be processed during the deci- sion-making process, they can also lead to biases and mistakes in judgement that can be detri- mental to the person taking the decision. 6. Although credit facilitates investment in productive activities, it does not necessarily trans- late into increased assets, income, or consumption (Cai et al. 2023). 7. Poor people need to insure against diverse risks. This section focuses solely on insurance that protects people’s livelihoods, with a focus on agricultural insurance. 8. See Arnold et al. (2013) for a review of early evidence and Kramer et al. (2022) and Moore et al. (2019) for more recent evidence. 9. Basis risk is the risk that insurance payout does not cover actual losses. This type of risk affects index-based and parametric insurance products, as payouts are not based on an actual assessment of losses but on measured index or parameter (Kramer et al. 2022). 10. Although subsidies may be necessary in the long term, they come with risks, including potential errors in targeting; the high costs associated with the inelastic demand for insurance, which requires substantial subsidy amounts; and the possibility that subsidies may hide underly- ing problems in the design and implementation of the insurance program (Kramer et al. 2022). The Partnership for Economic Inclusion | In Practice | Financial Pathways toward Greater Resilience and Economic Inclusion 44 Introduction Enhancing Design Delivery Conclusions Notes Resilience Considerations Considerations Notes, continued 11. Moore et al. (2019) cite several studies that document how financial education changed people’s perceptions about the benefits of insurance and led to increased uptake of insurance products. Galiani, Gertler, and Navajas-Ahumada (2022) show that financial literacy training for cash transfer beneficiaries in Peru led to increased usage of savings accounts and overall savings. 12. According to Concern Worldwide (n.d.), “the Graduation Approach encompasses four main pillars: social protection, livelihood promotion, financial inclusion and social empowerment. They provide sequenced and tailored packages of support to help people address the barriers they face to moving out of poverty. Essential to this is an understanding of the enabling environ- ment (economic and financial systems, risk management systems and basic service systems) and designing activities to strengthen key systems within which people live and work.” 13. The main reason lenders did not consider 20 percent of DreamSave saving groups credit- worthy was the group’s lack of maturity (Vision Fund 2024). 14. When selecting FSPs, programs can verify that the institutions have been certified as compli- ant with the CPS. Some microfinance rating agencies evaluate the practices of financial service providers and the extent to which they align with the CPS. For more information, see https:// cerise-sptf.org/third-party-validation/. 15. Having a national ID is often insufficient to meet KYC requirements. For instance, over 80 percent of unbanked people in Sub-Saharan Africa have a national ID (Demirguc-Kunt, Klap- per, and Singer 2022). 16. Information shared by Zambia program team. 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