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= Inclusive Green Finance = Inclusive Green Finance is a policy, regulatory and strategic approach to build resilience to the effects of climate change and enable climate mitigation through access to financial products and services. Inclusive Green Finance (IGF) acknowledges that low-income countries and households lack financial resources to adequately address and cope with the impacts of climate change. Proponents of IGF believe that through financial inclusion, the process of expanding access to appropriate and affordable financial services, vulnerable groups can build resilience to climate-related economic shocks, but financial inclusion is also a tool to empower these groups to be a part of a just transition to low carbon economies. IGF can also have a wider impact and promote resilience building of vulnerable countries and thus support them in advancing climate adaptation and mitigation, as outlined in the UNFCCC Paris Agreement. IGF forms part of the solution for countries to manage the impact of climate change and the transition to green economies.

History
In September 2017, the Alliance for Financial Inclusion (AFI), a policy leadership alliance of central banks and financial regulatory institutions from nearly 90 developing and emerging economies, endorsed the Sharm El Sheikh Accord on Financial Inclusion, Climate Change and Green Finance, whereby AFI member institutions committed to working towards financial inclusion policy solutions with positive outcomes for the environment, focusing on communities that are most vulnerable to climate change.

In 2019, AFI published Inclusive Green Finance: A Survey of the Policy Landscape , subsequently updating it in 2020. In 2019, AFI created the Inclusive Green Finance Working Group, a platform for financial regulators and policymakers supported by the German Federal Ministry for Economic Affairs and Climate Action (BMWK).

In December 2020, AFI published Inclusive Green Finance: From Concept to Practice , outlining how green finance and financial inclusion policies could be combined in an integrated IGF approach. By May 2023, AFI had published 19 reports on Inclusive Green Finance and its IGF Working Group had 61 members from 55 countries. In September 2022, AFI’s Sharm El Sheikh Accord was renewed and further developed.

In May 2023, the Inclusive Green Finance Working Group of the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development, Queen Máxima of the Netherlands, published Inclusive Green Finance: A Policy and Advocacy Approach. Working group members include senior representatives from the Alliance for Financial Inclusion, the Center for Financial Inclusion, and the Sustainable Banking and Finance Network.

Initiatives by country
Kenya

M-Kopa, an asset financing platform that provides underbanked customers to essential products including televisions, fridges, smartphones & financial services, harnesses mobile money transaction data to allow qualifying business owners to lease and eventually own solar panels to power their shops.

Morocco

In 2011, Morocco introduced a “climate multi-risk” insurance product to protect investments in major cereal crops against a variety of climate-related damage, including drought, excess moisture, hail, frost, wind and sandstorms. In March 2019, a disaster consequence coverage scheme was adopted that provides a dual compensation system: insurance for victims with existing insurance contracts and a solidarity scheme for individuals who do not have insurance coverage.

Nigeria

In 2015, the Central Bank of Nigeria established the Anchor Borrower’s Program, which aimed to link smallholder farmers with large-scale processors and increase financial inclusion. To alleviate the impact of climate change on farmers, the program includes revenue index insurance, which provides automatic payouts to farmers based on predicted crop yields using satellite data on precipitation. The Central Bank also provides subsidies to incentivize bank lending to smallholders facing climate risks.

Fiji

Fiji’s Natural Disaster Rehabilitation Facility is a climate resilience and adaptation program to which affected businesses and homeowners can apply to replace damaged inventory, cover the loss of sales, repair or replace damaged plants, equipment and machinery, restore damaged buildings, and replace business vehicles.

Armenia

The Central Bank of Armenia established the Agricultural Insurers' National Agency to support farmers from climate-related events such as droughts. The program subsidizes insurance premiums: in 2020 the subsidy rate varied from 50 to 60 percent, depending on the product.

Ghana

The Bank of Ghana supported the development and initial implementation of the Ghana Incentive-Based Risk-Sharing System for Agricultural Lending, to increase the amount of credit available to the agricultural and agribusiness sectors through the issuance of agricultural credit guarantee instruments.

The Philippines

In 2020, the country launched the Calamity Assistance Program, a lending program under the auspices of the Countryside Financial Institutions Enhancement Program jointly implemented by the Bangko Sentral ng Pilipinas, Land Bank of the Philippines, and Philippine Deposit Insurance Corporation. The Program helps fund early recovery and reconstruction activities in areas affected by typhoons, disasters and other natural calamities.

Egypt

In 2021, the Central Bank of Egypt (CBE) released its natural gas initiative, which incentivizes the transport sector and bakeries, mostly Micro, Small and medium Enterprises (MSMEs), to use natural gas instead of fossil fuel. The initiative obliges banks operating in the Egyptian market to appropriate at least 20 percent of loan portfolios to MSMEs.

Peru

Catastrophic agricultural insurance (SAC) was implemented in 2008 by the Ministry of Agriculture as an insurance product completely subsidized by the Government.

Bangladesh

Bangladesh Bank, the country’s central bank and chief financial supervisor supports NGOs that offer pay-as-you-go financing for solar energy and low-carbon cooking methods by discounting the refinancing rate for the banks and financial institutions that offer loans to organizations. Financial intermediaries have also received a lower refinancing rate on loans for solar irrigation systems while farmers are able to pay for the use of such facilities in small instalments on a monthly basis, using mobile financial services.