Moving Beyond Basics: Designing Innovative Financial Solutions for Economic Inclusion Programs

Aid budgets are shrinking. Climate shocks are rising. If economic inclusion programs are going to continue to deliver real change, we need to move beyond just the basics. We need smart, practical financial tools that meet the poorest and most vulnerable people where they are, with services they can use to save, protect themselves from risk, and invest in new activities. Leveraging the private financial services sector to enhance economic inclusion programs is critical. That was the focus of the recent PEI Open House focusing on the intersection of financial inclusion and economic inclusion.  We explored how to move past “plain vanilla” financial offerings and toward providing access to a range of financial solutions that truly empower people, especially those most marginalized.  

Leverage the existing payment infrastructure to do more than just transfers  

Most economic inclusion programs don’t begin with financial inclusion, but many still include it. According to PEI’s latest In Practice Note, authored by World Vision and others , only 27% of programs use financial services as an entry point but 73% offer some form of financial service. That presents a huge opportunity to offer savings and other financial services, especially when transfers are made digitally. But here’s the challenge: in my experience, program participants typically “cash out” their cash transfers rather than storing the money in a savings account. Why? Lack of trust, long distances to banks or banking agents, or social norms. This dynamic opens the door to risks like theft, diversion, corruption, security issues, and gender-based violence. And it’s a missed opportunity. Digital transfers provide a good starting point. Let’s build better solutions on top of existing systems, starting with savings, and moving to other services like credit and insurance that make the most of every transfer.  

Offer a range of financial services building on good diagnostics 

Financial inclusion isn’t just about access; it’s about appropriateness. To be truly inclusive, economic inclusion programs must connect participants with appropriate financial services that people want to use.  That means designing services that help people manage day-to-day needs, harness economic opportunities, build resilience, and plan for the future. It involves fostering the uptake and usage of a variety of financial products, to help them build a financial cushion and manage money effectively. 

• Savings: Village Enterprise’s program in West Pokot, Kenya, features a financial component that is designed specifically to help women build resilience through increased savings and access to emergency credit that can help them access new climate-smart technologies.  Savings have also been a crucial source of resilience to drought in Ethiopia, as highlighted by Greg Collins, enabling individuals to build financial buffers against climate shocks.
• Insurance: When people have insurance, they take smarter risks. Research shows that insured farmers cultivate more land, invest in seeds and fertilizers, and adopt innovations like drought-resistant seeds or irrigation systems. Insurance provides the security needed to take calculated risks and make investments that can lead to greater productivity and resilience. When shocks hit, insurance helps households stay afloat without selling assets, skipping meals, or pulling children out of school.
• Credit: Credit can be a powerful tool for climate adaptation. The CGAP Impact Pathfinder (a new online tool to understand the impact of financial services) shows that credit can enable households to make investments in adaptations, resilient practices, and green livelihoods that are too large for them to make on their own. These investments reduce vulnerability by helping people diversify incomes and increase their ability to prepare for and bounce back from climate shocks. But for the poorest and most marginalized participants, credit must be designed with care.  Poorly structured debt can deepen vulnerability rather than reduce it. 

Women are more likely than men to be unbanked and gender sensitivity is key 

Although the gender gap in account ownership across developing countries has fallen from 9 to 6 percentage points, about 740 million women still do not have an account. That’s 56% of all unbanked adults globally. But closing that gap isn’t just about equality. It’s a strategy for building climate resilience. When women have access to the right financial tools–like emergency loans or climate-resilient credit–they can better prepare for, respond to, and recover from shocks. 
 
 CGAP and FinEquity have documented several gender-sensitive financial service innovations that can help bridge the gender gap and build poor women's climate resilience. These innovations can help individuals and communities prepare for climate-related risks before they occur, help people cope with the immediate impacts of climate shocks, and support long-term adaptation to changing climate conditions. Whether it’s loans for drought-resistant farming or insurance that enables smarter risk-taking, these solutions work best when they are built with women at the center.  

Economic Inclusion programs are unique opportunities to bundle services 

Bundled support works better, particularly in the face of climate shocks. The evidence across financial services suggests that when financial services like insurance or credit are paired with non-financial components such as training, coaching, or group support, the impact grows stronger and more sustainable. This is especially true for women. The Self-Employed Women’s Association (SEWA) is putting this into practice. In response to extreme weather events like heatwaves, floods, and droughts, SEWA combines financial and non-financial tools to help female members address the impacts of climate shocks with parametric insurance, credit, and “wrap-around services.” The key lies in bundling products and employing iterative product design. There is also an opportunity to bring in behavioral insights, such as those from the Dominican Republic that were discussed during the PEI open house. 

Use financial services as a sustainability strategy for economic inclusion programs 

Studies show that integrating livelihood and financial support within economic inclusion programs results in more substantial and enduring impacts than standalone interventions. Comprehensive packages that include savings, business grants, skills training, and coaching have stronger long-term effects on income, assets, and savings. Economic inclusion programs can use financial services to build long-term sustainability: for instance, Trickle Up ensures continued financial support and community cohesion through the continuation of Village Savings and Loan Associations in many of its programs. These strategies collectively ensure that beneficiaries continue to thrive and build resilience long after the initial program support has ended.  

Potential to leverage new funding sources? 

In today’s tight funding landscape, it is critical to explore innovative financing options. The good news?  Funders–especially private investors–are increasingly backing climate-aligned objectives through their financial inclusion programming. In fact, 14% of financial inclusion projects are now tagged to a green or climate-themed objective, and that number is growing. This shift creates a real opportunity.  By designing inclusive financial services that support resilience, adaptation, and livelihood diversification, economic inclusion programs can unlock new flows of funding while helping the poorest communities prepare for a changing climate. According to CGAP’s Funder Survey, in 2022, private investors drove the bulk of financial inclusion funding growth. If we can meet them with strong, climate-smart solutions, we can scale what works and reach more people in need. 

To deliver lasting impact, economic inclusion programs must go beyond basic support and build financial systems that work for the people they serve. This means mobilizing the private sector, investing in user-centered design, and aligning with emerging climate and development finance. Donors and policymakers have a critical role to play by prioritizing integrated financial services and backing innovation, they can help scale solutions that build resilience, expand opportunity, and ensure no one is left behind. 

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Aude de Montesquiou is a Senior Financial Sector Specialist at CGAP (part-time). At CGAP from 2008 to 2017, she oversaw the Graduation Program, managing 10 pilots in 8 countries with a  thorough research agenda. In 2017, she co-created the Partnership for Economic Inclusion at the World Bank, leading strategy and initial fundraising. Aude holds degrees from Sciences-Po and La Sorbonne, and is fluent in French, Spanish, and Portuguese. She is currently VP of Economic Inclusion at Trickle Up and a Senior Advisor at BRAC’s Institute for Governance and Development.