MICROFINANCE PAPER WRAP UP: “Reserve Bank of Fiji’s Experience With Financial Inclusion and Climate Change;” by Klaus Prochaska, Vereimi Levula, Andrew Levula; published by Alliance for Financial Inclusion (AFI)

This is a summary of a case study written by Klaus Prochaska, Vereimi Levula and Andrew Levula; published by the Alliance For Financial Inclusion; 2018; 16 pages; available at: https://www.afi-global.org/publications/2899/Reserve-Bank-of-Fiji-s-Experience-with-Financial-Inclusion-and-Climate-Change

Following Tropical Cyclone Winston, which resulted in a nearly one-third reduction in Fiji’s GDP for 2016, government actors including the Reserve Bank of Fiji (RBF) resolved to work to “make the country more resilient to extreme climate events, rising sea levels and changing weather patterns.” RBF had already decreed a Renewable Energy Loan Ratio, under which banks have been required to commit 2 percent of deposits to renewable energy since 2012. Fiji was also the first of 175 countries to sign the Paris Agreement in 2016, with the goal of reducing greenhouse emissions by various means including green finance initiatives. The country plans to move all of its energy use to renewable energy sources by 2030.

With the efforts of groups including the country’s National Financial Inclusion Taskforce (NFIT), Fiji has boosted its financial inclusion rate to 80 percent. By 2020, the Fiji’s National Financial Inclusion Strategy Plan foresees including an additional 130,000 people to bring the rate to 85 percent. In 2017, the country reportedly became the first low- or middle-income country to offer green bonds, through which it raised FJD 100 million (USD 50 million) for projects such as reforestation, building schools to withstand more dangerous weather and installing solar panels in rural areas.

RBF and other governmental entities have introduced a number of programs to support adaptation to climate change including: (1) “credit at concessional rates of interest” for homeowners and businesses affected by floods; and (2) disaster microinsurance for smallholder farmers with payouts distributed by mobile phone.

The authors conclude that climate change is a major threat and because “green and climate financing are still relatively new subject areas for the financial sector…RBF will need to facilitate more knowledge sharing to help financial institutions develop their capacity to offer green financial products and services.”

By Michelle Fleming, Research Associate

Sources and Additional Resources

Alliance for Financial Inclusion case study
https://www.afi-global.org/sites/default/files/publications/2018-11/AFI%20FICC_Fiji_case%20study_AW2_19.11.18_digital_compressed.pdf.pdf

Alliance for Financial Inclusion
https://www.afi-global.org/

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