6 May 2021
Good morning to everyone! I would also want to acknowledge the presence of the Honorable Governor of the Central Bank of Eswatini Majozi Sithole. And to everyone present representing the country’s financial sector regulators, the Ministry of Tourism and Environmental Affairs, the Energy Regulatory Agency, and representatives from financial institutions. We are also looking forward to the remarks of the Honorable Finance Minister Neal Rijkenburg later on this morning. I also want to welcome the representatives from the Bank of Ghana and the Central Bank of Armenia joining us today. Welcome to this capacity building on inclusive green finance.
Given Eswatini’s leadership on financial inclusion, AFI welcomes this opportunity to collaborate on further developing Inclusive Green Finance in Eswatini. We are aware that Eswatini already successfully achieved the NFIS headline targets well ahead of its 2022 deadline. In the case of the target of percentage of adults with access to two or more formal products, the target of 75% was exceeded by 10 percentage points to 85%. These outstanding domestic achievements as well as the contributions from Eswatini to the global network are much appreciated and I hope that we can soon share some of your advances on IGF with the rest of the members.
Climate change poses a real threat to financial stability and the impacts of climate change are already being felt today.
The Kingdom of Eswatini has already experienced the effects of climate change impacting several sectors of the economy and further amplifying socio-economic issues, like equality, food prices and poverty. Extreme weather events such as droughts and floods as well as temperature changes have been affecting agricultural productivity and rising temperatures are affecting water resources as well as the rise of vector- and disease – transmission.
Amid all these climate vulnerabilities, groups with the most limited coping capacities – the disproportionately excluded groups, suffer from the most severe impacts.
Against this background, green finance has gained importance when discussing climate action. Since the signing of the Paris Agreement, there have been positive developments in climate finance and green finance. As countries communicate their Nationally Determined Contributions, the financial sector also needs to keep up with mitigating climate-related risks for the financial system and channelling the financial resources needed to support climate ambitions. After an initial focus on climate mitigation, many countries are now gearing towards adaptation priorities as it is indeed necessary to build economic resilience while lowering carbon footprints.
In the financial sector, support for these actions is also apparent. We see the rise of green bonds, green lending, climate risk insurance, and other financial mechanisms and instruments that are geared to mobilize resources for resilience building and low carbon developments. Furthermore, the recognition that climate change presents a material risk to financial stability creates a need for financial regulators to reflect on climate-related risks to the financial system, and some regulators are already advancing towards integrating climate change into their risk frameworks.
While climate change deepens poverty, ample research shows that financial inclusion can build the resilience of individuals, whether to a sudden and extreme climate event or the gradual effects of varying rainfall patterns, sea-level rise or saltwater intrusion. Savings, credit, insurance, money transfers and new digital delivery channels can all provide vital support for those managing new environmental realities. Access to financial services can also empower individual and MSMEs to climate mitigation and reducing their environmental footprint.
Financial inclusion is therefore one of the tools that can help in resilience-building among the most vulnerable groups while at the same time allowing them to invest in low carbon economic activities. Furthermore, it also helps workers in the transition away from carbon-intensive industries. Across the AFI Network, this is a rapidly developing policy area and we see a growing number of members adapting IGF policies and initiatives either integrating them in their financial inclusion initiatives, in their other national financial sector strategies, or as distinct policies.
When developing IGF policies it is very important to start by building the capacity of those involved, understanding the specific vulnerabilities of the country and designing policy interventions that focus on those most vulnerable to climate change. Here I want to highlight the importance of gender inclusive finance and that it is crucial to integrate the specific vulnerabilities of women to climate change into policy design from the onset.
This capacity-building event is one of AFI’s initiatives to support its members on the ground in advancing their financial inclusion agenda. We are witnessing more and more of our members, financial regulators and policymakers, developing and implementing IGF policies and regulatory interventions through meaningful dialogues on the national level.
As peer learning is one of the pillars of the AFI Network and has proven a highly effective way to transfer and exchange knowledge on cutting-edge policy solutions, AFI members also today at this very event continue to learn from one another. We have our colleagues from the Bank of Ghana and the Central Bank of Armenia with us in this training, and they will be sharing their own experience in IGF policy development.
IGF is an emerging policy area. We hope that this capacity-building helps the Kingdom of Eswatini in charting out the next steps on how to support resilience building and low carbon development objectives through financial inclusion. We look forward to seeing IGF policy developments in the country and I want to reiterate that the AFI Management Unit always will be supportive of any IGF initiative or policy development processes for the financial sector that the Kingdom of Eswatini may need in the future. Thank you for the excellent collaboration.
Thank you once again for your participation and may you have a fruitful discussion and exchange of ideas.