Efforts to achieve the UN Sustainable Development Goals (SDGs) and implement the Paris climate change agreement will fail if finance does not reach the poor women and men who need it most. Intermediaries that channel climate or development finance to these groups will therefore be crucial. These intermediaries include local funds, national and local governments, development banks and microfinance providers. Experiences from Asia and Africa show how intermediaries can be inclusive and empower the poor. Different intermediaries have comparative advantages in different contexts.
To prioritise the needs of the poorest, it is best to use a range of intermediaries, taking into account people’s financial needs, the stage of market development and what each intermediary offers. Financial, regulatory and reputational incentives can encourage intermediaries to prioritise poor people’s needs and enable them to take action for themselves.
Policy pointers:
-
the right mix of intermediaries can empower low income groups to manage development and climate finance themselves
-
accountable local governments can direct finance to local priorities
-
national development banks can use instruments such as concessional loans and guarantees to unlock finance for risky markets
-
with the right regulatory structures and incentives, commercial banks can be encouraged to prioritise the needs of the poor