Unlocking Climate Resilience through Financial Inclusion: Insights from Zambia

Categories : Blog


Author: Digital Frontiers Institute

In recent years, climate change has significantly impacted people’s lives and livelihoods, resulting in increased vulnerabilities. The consequences of climate change, including droughts, floods and high temperatures, have implied increased poverty levels. With this context, much of the attention has been focused on building resilience using different pathways. Financial inclusion is among the initiatives that are being promoted as a pathway to address the effects of climate change. This involves the provision of affordable and appropriate financial services to all individuals and businesses. This is based on the premise that access to financial services can transform people’s lives. Moreover, the World Bank argues that financial inclusion is an enabler of SDG’s. Despite the strong support and policy for financial inclusion, little is known about its nexus with climate change in developing countries like Zambia.  This article explores this relationship with a focus on Zambia, highlighting the challenges and opportunities for climate financing.

Zambia, a landlocked country in Southern Africa, grapples with various climate-related challenges, from erratic rainfall patterns and prolonged droughts to floods and extreme temperatures. These climate impacts reverberate across the economy, affecting agriculture, water resources, energy, and livelihoods, particularly in rural areas where communities depend highly on natural resources.[1] Because of the prolonged dry spell caused by the El Niño, Zambia declared the 2023/24 agriculture season drought an emergency. About 84 of the 116 districts were affected by the drought. A severe drought led to crop failure. Farmers who took out loans to buy seeds and fertiliser cannot repay, damaging their credit scores and further limiting their access to future loans needed to adapt to changing weather patterns.[2]

Considering the effects of climate change, governments and international organisations are developing interventions that can help build resilience among people. Financial inclusion is increasingly seen as a potential solution. It can help people start income-generating activities, insure their products and make savings, thus enhancing their resilience. Here are some key ways in which climate and financial inclusion are linked in Zambia:

Access to Weather Index Insurance:

In Zambia, initiatives like the R4 Rural Resilience Initiative, a partnership between the World Food Programme and Oxfam, have introduced weather index insurance to smallholder farmers.[3] This innovative insurance model uses weather data to trigger payouts, providing farmers with financial support during droughts or other weather-related losses. By integrating insurance with financial services, farmers are better equipped to withstand climate shocks and continue their agricultural activities.

Microfinance for Climate-Smart Agriculture:

According to FAO, Climate-smart agriculture practices refer to minimum soil disturbance, residue retention, crop rotation, crop diversification, and livestock diversification.[4] Microfinance institutions in Zambia are leveraging digital technologies and tailored financial products to support climate-smart agriculture practices. Loans for purchasing drought-resistant seeds, irrigation equipment, and sustainable farming inputs empower farmers to adapt to changing climate conditions while enhancing productivity and income stability.

Mobile Money for Disaster Relief:

Expanding mobile money services, particularly in rural areas, can provide Zambians with a safe and accessible way to save, receive remittances, and make transactions. Financial literacy programmes can educate them on managing their finances and using them for climate-resilient practices.[5] When there are floods and certain areas are inaccessible by road, mobile money platforms, such as Zambia’s popular service providers like MTN Mobile Money and Airtel Money, facilitate rapid and efficient delivery of financial assistance during climate-related disasters. This digital financial infrastructure enables emergency funds to reach affected communities swiftly, supporting recovery efforts and reducing the economic impact of disasters.

Green Financing and Renewable Energy Access:

Financial inclusion extends to promoting access to green financing for renewable energy solutions. Initiatives promoting solar energy, such as PAYGo (Pay-As-You-Go) solar systems, enable households in rural areas without access to electricity grids to adopt clean energy alternatives. This reduces reliance on fossil fuels and contributes to climate mitigation efforts.

In Zambia, these initiatives build resilience by equipping communities with the financial tools and knowledge needed to withstand climate-related shocks. By promoting climate-smart practices and fostering partnerships, vulnerable populations gain the capacity to adapt and thrive in a changing environment. Enhanced data collection and research further strengthen resilience efforts, enabling evidence-based decision-making to address the complex interplay between climate change and financial inclusion


The Sustainable Development Goals (SDGs) and the United Nations Development Programme (UNDP) bridge global and local sustainability challenges by emphasising climate action and financial inclusion as critical components. They acknowledge that effective solutions must be tailored to local contexts while contributing to broader global environmental resilience and economic inclusion goals. These frameworks strive to create a more equitable and sustainable future for all through coordinated efforts and targeted interventions. Zambia’s approach to linking climate action with financial inclusion emphasises integrated strategies that align resilience and inclusion goals, particularly for vulnerable populations. This involves investing in financial literacy and digital skills to boost the adoption of climate-smart financial products among rural communities. Furthermore, fostering partnerships among government agencies, financial institutions, development organisations, and technology providers is crucial for scaling up climate-resilient solutions. Enhanced data collection and research efforts are also needed to better understand climate change’s impact on financial inclusion outcomes, supporting evidence-based policymaking for sustainable development. The linkages between climate change and financial inclusion offer a compelling narrative of resilience-building and inclusive development. By leveraging innovative financial tools, digital technologies, and targeted policies, countries like Zambia are paving the way for a more climate-resilient and financially inclusive future. As the global community seeks sustainable pathways forward, these lessons from Zambia serve as beacons of inspiration and actionable insights for navigating the complex challenges of our time.








[1] https://documents1.worldbank.org/curated/en/289351629811668275/pdf/Climate-Shocks-Vulnerability-Resilience-and-Livelihoods-in-Rural-Zambia.pdf

[2] https://www.farmersweekly.co.za/farming-technology/

[3] https://www.wfp.org/r4-rural-resilience-initiative

[4] https://www.fao.org/faolex/results/details/en/c/LEX-FAOC189991/#:~:text=Climate%2Dsmart%20agriculture%20practices%20refer,%2C%20crop%20diversification%2C%20livestock%20diversification.

[5] https://www.cgap.org/sites/default/files/publications/WorkingPaper_Climate%20and%20Regulation.pdf

By Moses Sibongo

Associate Wealth Consultant and Team Leader at deVere Group

DFI Alumni and Community Member


Established in 2015, Digital Frontiers Institute is a proud brand of Digital Frontiers. Learn more about the Certified Digital Finance Practitioner (CDFP) programme and find out how to enrol: https://cdfp.digitalfrontiersinstitute.org/