This report examines the sustainable finance ecosystem in the Middle East and North Africa (MENA) region, including the capabilities of microfinance institutions (MFIs) in the region to contribute to climate change adaptation and mitigation. The objectives were to: (1) understand MFIs’ awareness of sustainable finance; (2) assess the extent of implementation of sustainable products and strategies; (3) determine what supports MFIs may need to create or build on their sustainability strategies; and (4) identify stakeholders supporting sustainable finance in the MENA region, such as development finance institutions, impact investors and local microfinance networks. The results are derived from a survey of MFIs in the region supplemented by desk research, interviews and a three-day stakeholder workshop.
The authors found that MFIs in the MENA region are aware of the topic of sustainable finance, and all the representatives of the institutions who attended the workshop as well as all of those who participated in the survey expressed interest in receiving technical support to adopt such products. To date, MFIs in MENA that have sustainable strategies have focused on clean energy financing and sustainable agriculture practices, but implementation is still at a nascent stage in the region, particularly for younger MFIs.
Forty percent of survey respondents were aware of at least one audit tool for measuring environmental performance, but half listed the complexity of the topic and the need for relevant tools as challenges to advancing green inclusive finance in the region.
Examples of stakeholders involved in developing MENA’s sustainable finance ecosystem include: (1) international finance institutions, such as the World Bank, which has assisted in the creation of renewable energy programs for farmers and low-income households across the region; (2) impact investors, which have advised MFIs on expanding their green portfolios in Morocco, the Palestinian Territories and Tunisia; and (3) local organizations, such as the Yemen Microfinance Network, which has been actively supporting MFIs’ sustainability objectives in that country.
In conclusion, the authors outline four recommendations: (1) develop capacity building programs with local microfinance networks; (2) distribute digital tools for environmental risk evaluation and monitoring; (3) develop the internal capacity of MFIs to manage environmental risk; and (4) support established MFIs in growing their green portfolios.
This is a summary of a paper by Natalia Realpe Carrillo and Alexander Reviakin, published by Sanad Fund for MSME’s Technical Assistance Facility and HEDERA Sustainable Solutions, November 2022, 66 pages, available at https://hedera.online/en/events/mena-2022-09/report.html.
By Vaughn Rajah, Research Associate
Additional Resources
HEDERA homepage
https://hedera.online
Sanad homepage
https://sanad.lu
Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Download a sample at https://www.microcapital.org/products-page/.
Similar Posts:
- SPECIAL REPORT: Green Action Group Celebrates 10th Anniversary at European Microfinance Week #EMW2023
- MICROFINANCE PAPER WRAP-UP: “State of the Art of Green Inclusive Finance 2011-2019: Worldwide Status and Progress Over 10 Years,” by e-MFP Green Inclusive and Climate Smart Finance Action Group
- SPECIAL REPORT: e-MFP Launches the Green Map, a Pioneering Resource to Address an Information Gap in Green Inclusive Finance
- MICROCAPITAL BRIEF: Luxembourg Invests $25m in First Close of Green Earth Impact Fund, Managed by BlueOrchard, Schroders
- MICROCAPITAL BRIEF: Sanad Fund for MSME Raises $26m from ASN Bank, Calvert Impact to Boost Financial Inclusion, Resilience in MENA
