Everything, Everywhere, All at Once
Amidst the liquidity crisis and donor fatigue, financial inclusion needs to enter the multiverse for answers.
I really enjoyed Everything Everywhere All At Once.
The movie’s talented cast, story and inventive fight sequences won our hearts (and 7 oscars!).
But most of all, I loved the focus on interconnectedness - how every action, decision, and event in one world holds the power to influence other worlds, setting off a ripple effect across the multiverse.
Sounds a lot like development work. 😁
Most development initiatives are intertwined, drawing learnings from one or several focus areas (like education, financial inclusion, climate change, health, migration and refugee crisis, etc), and applying them to challenges in other focus areas, across different contexts and industries while building upon existing knowledge and solutions.
And if we do our job well, our efforts in one focus area profoundly impacts other areas.
A few months ago, I learned about an untapped opportunity to improve financial inclusion, enhance smallholder farmer’s resilience against climate change and (excitingly) also ameliorate Nigeria’s foreign exchange woes even if slightly.
This is what today’s newsletter is about.
From Rome with Love
Early June, during one of our policy roundtables in Rome, Italy, one of the conversations centred on climate research, and untapped opportunities to help local farmers fight against climate impact.
A speaker from International Fund for Agricultural Development (IFAD) highlighted remittances and how it could support climate resilience on a local level.
This piqued my interest, given my financial inclusion background.
It was a very long and technical conversation, so here are my cliff notes seasoned with some of my own thoughts:
Remittance Gold
As local farmers face the fallout of climate impact, help is coming from a surprising source - the diaspora.
Migrants are increasingly contributing to climate adaptation and resilience through their remittances and investments back in their home countries. In 2022, Africa received over $147 billion (with Nigeria receiving $20 billion)!
A considerable portion of these remittances goes to smallholder farmers who invest the funds in their primary source of livelihood - agriculture. In many cases of crop failure, farmers frequently turn to their diaspora relatives for assistance. (Believe it or not, this is climate finance 😊).
What’s interesting is that migrants are not even aware their contributions align with climate finance. They’re simply supporting their families back home.
For the farmers too - a local farmer may not know the climate change terminologies but he sure understands the impact of prolonged droughts, soil degradation, crop failure induced by migration patterns, and all the ways climate impact manifests at the bottom of the pyramid.
These factors all combine to impair local farmers’ ability to feed themselves and their families.
So having this financial support is a critical lifeline.
Amplifying Informal Solutions
The beauty is that this international support network has largely evolved independent of government intervention (this happens a lot within the informal sector with citizens often developing creative solutions to somewhat existential challenges).
And so, the major task is not to devise new strategies but rather, identify how to enhance these creative solutions and make them sustainable.
If climate finance is already happening at the grassroots, how do we improve the financial flow from diaspora to the local farm, and ensure the funds are invested with climate-smart strategies in mind. We could borrow a page from Mali.
The Federal Government of Mali partnered with the EU and IFAD to help Malians in diaspora invest in agriculture back home. By providing migrants with tailored financial instruments that support climate-related investments and rural development in their home country, these diasporans are being co-opted into the effort of driving sustainable development.
And who doesn't like that feeling of doing some good in the world?
Extra points for making some profit while doing no harm.
This behaviour can be further incentivised by reducing remittance fees and promoting financial inclusion and literacy for interested investors.
It would also attract more foreign exchange inflows, something the country is in urgent need of given the current economic landscape. Of course, recipients also have to be able to receive these funds conveniently, timely and use it for the intended purpose. Which brings us full circle to the importance of financial inclusion.
This could potentially be a hat trick solution if well executed. And with the global liquidity crisis as well as donor fatigue in the global development space, we could use more hat trick solutions.
As we’ve seen, using remittances to enhance climate resilience and sustainable agriculture while driving financial inclusion illustrates how addressing one challenge can have a ripple effect across other sectors.
Sounds like interconnectedness to me.
Everything, everywhere, all at once.
What I’ve Been Reading
The evolution of agency banking in Africa
Agent networks are currently the last mile infrastructure of Africa's financial inclusion drive. They enable cash transactions, peer-to-peer transfers, and bill payments, making financial services accessible to the bottom of the pyramid. As these agent networks mature, a transformation is underway. This article is both a history lesson and an exploration of how financial institutions are evolving, exploring new business models, and becoming architects of thriving financial ecosystems.