Mayada El-Zoghbi Building Resilience through Financial Inclusion: A Review of Existing Evidence and Knowledge Gaps Co-Organized by IFPRI and Innovations for Poverty Action (IPA) MAY 9, 2019 - 12:15 PM TO 01:45 PM EDT

1. Building Resilience through Financial Inclusion
Mayada El-Zoghbi
May 9, 2019

2. Resilience framing for the impact of financial inclusion
• CGAP strongly supports the use of a resilience framing for the impact of
financial inclusion.
• IFPRI/IPA research aligns with CGAP’s own literature review on the topic
• CGAP has undertaken an effort to ‘change the narrative’ around the
role of financial services for the poor to better align with the evidence
and this new framing.
• This process of updating the narrative has led to building resilience and
seizing opportunity as the key channels for wellbeing improvements for
poor people.
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3. • Existing narratives are ‘outdated’ and do not take into account the plethora of research
and evidence that has come out over the past 4-5 years.
• “Microcredit eradicates poverty”
• “Digital financial services reduce transaction costs and increase distribution to remote and
rural areas”
• Existing narratives were not based on evidence. They did not cover the nuances among
different groups.
• Microcredit ➔ entrepreneurs
• DFS ➔ those with access to phones / in markets with digital ecosystem / where norms allow
women to participate with agents and with technology
• But the evidence alone does not tell a story. A narrative requires building the connective
tissue around the evidence – or a theory of change – highlighting what we know and what
we hypothesize.
• Evidence through a product lens does not seem to be effective for storytelling; does not
result in clarity for policymakers or donors/investors.
• From the customer perspective, financial services are used interchangeably for the same
purpose by the poor. Products are useful framing for providers and for research.
Why an updated narrative?

4. How do we build a new narrative?
• Step 1: Start with a literature review of the evidence.
o CGAP created library of nearly 200 publications; 80 of which are published after 2014.
o CGAP identified emerging themes and is publishing a new paper with recent findings. Story that is emerging is different from
product siloed story: credit doesn’t work, savings is good, microinsurance is good but not viable; payments too early to tell.
o Messages on resilience align closely with IFPRI/IPA paper.
• Step 2: Update the TOC based on the literature review.
o Reviewed existing TOCs.
o Build out a draft TOC.
o Held several consultations with researchers, donors, and practitioners to validate the updated TOC.
• Step 3: Identify implications.
o Where is more funding needed for experimentation?
o What has already been proven?
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5. Community
assets
(health, safety,
physical
infrastructure)
Good
governance
Government
social
programs
(disaster risk
reduction, safety
nets)
Institutional &
cultural norms
Macroeconomi
c stability
Context |
Assumptions
The Poor improve their
wellbeing
Financial resources
RESILIENCE
The poor are able to smooth
consumption over time
Physical capability
OPPORTUNITY
The poor seize opportunities
& make welfare enhancing
investments
Income
stability &
growth
WagesFirm
growth
Other
transfers
Management
of HH
expenses
Assets & Liabilities
Access to basic
services (health,
energy, WASH)
Unpaid care
work
Nutrition
Safety &
Shelter
Physical
access
Human capital
Physical Mobility
& Health
Emerging theory of change
Skills & Ability
Positive self-
perception,
autonomy &
self efficacy
Knowledge
Access
to Info
Emotional
wellbeing
Expectations
for the future
Access to
education
& training
Norms around
decision making,
roles & bargaining
power
Social
networks
Norms around
roles & asset
ownership
Norms around
mobility & time
use

6. Focusing in on resilience in the TOC
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The Poor improve their
wellbeing
RESILIENCE
The poor are able to smooth
consumption over time
OPPORTUNITY
The poor seize opportunities
& make welfare enhancing
investments
Save for the future
Diversify income
sources (including
migration)
Adopt risk
mitigation practices
Manage liquidity
People are able to
manage risks
People are able to
recover after a
shock
Draw down
resources
Draw on external
support
Migrate for recovery
Rebuild assets &
livelihoods
Receive remittances
from networks
Receive gov’t
transfers for losses
People are
prepared
against risks
Iterative and reinforcing
relationship between
building resilience and
seizing opportunities.

7. Summary of key take-aways
• Reset expectations based on evidence
• Evidence supports building resilience and seizing opportunity as preconditions for
wellbeing improvements
• Resilience and opportunity are interconnected, not sequential
• Individual-level wellbeing improvements are contingent on:
• Individual actions/endowments
• Household dynamics
• Contextual and market conditions
• Policymakers and donors should:
• Invest in market-level solutions that reduce risk and create opportunities for poor people (ie, HH level
financial services on their own are insufficient)
• Scale FI efforts where evidence is already strong
• Invest in FI research where there is a need to validate hypothesis & experiment with new segments or
regions

8. Advancing financial inclusion to improve the lives of the poor www.cgap.org