AFI steered inclusive green finance (IGF) to the top of the agenda this week during a leaders public-private dialogue (PPD) roundtable, hosted on the sidelines of the 2023 IMF-WBG Spring Meetings in Washington DC. Centered on potential public-private sector collaboration in advancing inclusive green finance (IGF), the discussion brought together over 50 high-level participants from across the globe, including leaders and governors of central banks within the AFI network, funders, stakeholders, as well as AFI private partners Celo, Mastercard, and Visa. The event marked a determined commitment to the Sharm El Sheikh Accord on Inclusive Green Finance signed by AFI members in 2017 and renewed in 2022.
The meeting – themed “Scaling Public-Private Cooperation to Advance Inclusive Green Finance” – was a chance for leaders across the public-private divide to engage in strategic dialogue on how best to jointly capitalize on IGF solutions at a time when climate change poses an unprecedented risk to global financial stability. In his opening remarks, the Governor of the Bank of Tanzania, Emmanuel Tuba stressed the significance of this collaboration in assuring a “just transition” to a greener future:
“As we know the impact of climate change is more severe in unserved and underserved populations where the majority have limited access to resilient financial services… It is, therefore, imperative that we work together toward creating a sustainable and resilient future. Inclusive green finance is a policy area championed by members of the AFI network and is a critical tool that can help us achieve this goal by channeling green finance toward those at the base of the economic pyramid.”
The meeting was envisioned as an expansion of AFI’s existing public-private dialogue (PPD) to include the shared ambition of scaling IGF for vulnerable groups through well-informed policies and regulations, systematic knowledge exchange, and strategic advocacy. During the event, participants were invited to share current challenges and solutions to IGF policy and regulation from their respective public and private sector perspectives, as well as to exchange ideas on how to facilitate fruitful future collaboration on IGF implementation. Discussions on private sector innovation proved useful in expanding existing knowledge of the industry’s advances in emerging IGF products, services, delivery models, product development, and market research. Finally, besides a shared interest in boosting the financial sector’s embrace of IGF, the dialogue also highlighted a recognition from both private and public leaders that this still relatively young, yet complex topic needs to be pursued in unison rather than in isolation, and that AFI’s PPD provides a promising platform to do just that.
“For the public sector, policies and regulation which unfreeze rigidities in the operating space could be key considerations whilst the private sector would essentially explore innovative products and services in green finance/sustainable finance that would close the gaps evident in the segments most in need… such as MSMEs, women, youth, internally displaced people, rural and other target groups,” stressed AFI’s Inclusive Green Finance Working Group Chair, Dr. Paul Oluikpe from the Central Bank of Nigeria.
Efforts to address the impact of climate change through financial sector policy and regulation have increased substantially in recent years. IGF however helps to ensure that the world’s most vulnerable populations remain part and parcel of this broader climate discourse. Accounting for 90 percent of businesses, up to 70 percent of employment and 50 percent of GDP worldwide, micro, small and medium enterprises (MSMEs) form the backbone of many emerging economies. Yet, the disproportionate impact of climate change on developing and emerging economies has left the sector more vulnerable than ever before. As an emerging policy area championed by members of the AFI network, IGF emphasizes how financial inclusion can support households and MSMEs to adapt, build resilience and mitigate the impact of climate change while also providing meaningful opportunities within the rapidly growing green economic sector.
The timing of the event was highly strategic as it builds on the momentum of AFI’s IGF Roadmap – a first-of-its-kind strategic guideline on IGF implementation through multi-stakeholder cooperation – launched during the COP27 in Sharm El Sheikh, Egypt, in November 2022. The theme also proved well aligned with the strategic priorities of AFI’s partners, the World Bank Group (WBG) and the International Monetary Fund (IMF), of prioritizing climate adaptation through IGF initiatives – an area where AFI is already seeing a steep increase in collaboration with these and other partners. The IMF-WBG Spring Meetings bring together financial sector players from across the globe to discuss issues of global concern, including the world economic outlook, poverty eradication, economic development, and aid effectiveness.
Looking ahead, AFI plans to harness this momentum by expanding engagement and cooperation across the inclusive finance ecosystem, with the private sector and with the broader spectrum of ecosystem partners and stakeholders, to ensure the success of Inclusive Green Finance for the world’s most vulnerable populations.
About AFI’s IGF commitments
AFI members adopted the Sharm El Sheikh Accord on Inclusive Green Finance in 2017, with a renewed commitment in 2022. It binds AFI members to work together and in collaboration with partners to identify, understand and implement financial inclusion policy solutions that have positive outcomes for the environment, focusing particularly on communities that are most vulnerable to climate change. Additionally, AFI’s Inclusive Green Finance Working Group (IGFWG) is a platform dedicated exclusively to sharing policy insights and regulatory guidance on fundamental and emerging IGF tools and trends. Established in Kigali, Rwanda in 2019, the IGFWG is currently comprised of members from 62 financial institutions in 55 countries working around the clock to keep green finance at the top of the global agenda.
AFI’s Inclusive Green Finance workstream is part of the International Climate Initiative (IKI), supported by the German Federal Ministry for Economic Affairs and Climate Action (BMWK) and the German Bundestag.
About AFI’s Public-Private Dialogue (PPD) Partners
AFI’s public-private dialogue partners consist of a select few prominent private sector institutions that have a keen interest and proven capacity to systematically advance financial inclusion in developing and emerging countries through the network’s PPD Platform. Each AFI PPD Partner contributes unique knowledge, resources, and expertise to support AFI programs and activities. In turn, they benefit from a variety of offerings that promote frank dialogue and knowledge sharing on financial inclusion with regulators and policymakers forming part of the AFI network around the globe.