Investing in Inclusive Green Finance: Promoting Sustainable Agricultural Practices and Financial Inclusion in Africa

(he) – Financial services such as savings accounts, payment solutions or loans are important pillars of sustainable development for many countries in Africa. They enable low-income households and micro-enterprises to make purchases for everyday needs, manage their money, save for the future, invest and, above all, overcome difficult financial situations. Despite their ability to increase resilience and reduce socioeconomic inequalities, large parts of the population, particularly in Africa, still lack access to these tailored services.

Investing in sustainable agricultural practices

The Luxembourg government is therefore funding the African Microfinance Week (SAM for short from Semaine africaine de la Microfinance), which is organized every two years in a different African country by the non-governmental organization ADA (Appui au Développement Autonomous) in order to strengthen the inclusive financial sector in Africa. This year’s edition is currently taking place from October 16th to 20th in Lomé, the capital of Togo.

With around 1,000 participants, it is the largest inclusive finance event in Africa. This year’s theme, “Inclusive Green Finance,” aims to promote investment in sustainable agricultural practices and solar-powered systems through tailored investment, credit and insurance services.

Franz Fayot, Minister for Development Cooperation and Humanitarian Affairs, will also be there. The minister explains that the Luxembourg investment sector is unique in its diversity of participants, ranging from investment funds and private FinTech companies to government authorities and non-governmental organizations. As part of the African Microfinance Week, this competence will be used to strengthen the inclusive financial sector in Africa to support low-income people in saving for a better future and in starting businesses. “Ultimately, our goal is to help improve their quality of life and accelerate progress towards the United Nations Sustainable Development Goals,” said Fayot.

Climate change exacerbates existing development challenges

Although the inclusive financial sector mainly aims to reduce socio-economic vulnerabilities and inequality, today it is no longer possible to support people in developing countries without taking into account the climate change-related risks they face.

While Africa only emits two to three percent of global greenhouse gases, it is the continent most at risk from climate change. Droughts, erratic rainfall and rising temperatures threaten access to water and food and reduce agricultural production, leading to increased poverty and migration.

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Small money with a big impact

Inclusive finance can help affected populations adapt to climate change by facilitating investments in sustainable and climate-friendly agricultural practices, energy-efficient equipment and housing, and by providing adequate financial and insurance services.

Conference and trade fair for investors

“Reducing the carbon footprint of a large number of micro and small businesses through renewable energy or energy-efficient systems can have a very positive impact on the environment,” says Laura Foschi, Managing Director of ADA. “We therefore strive to make finance not only inclusive but also sustainable in order to sustainably improve the quality of life of low-income people, including for future generations.”