The European Sting

How Islamic finance can build resilience to climate change

Worsening climate change impacts are having a negative impact on agricultural food production, livestock value chains and livelihoods. To tackle Sustainable Development Goal number 13, financial inclusion can be used as a tool to provide much-needed access to financial services. This in turn can help vulnerable communities break a vicious cycle to better prepare and cope with climate change shocks such as droughts or floods. Islamic microfinance institutions can fill a vital gap not met by conventional microfinance institutions by targeting pastoralists. A social collateral approach is taken by Crescent Takaful Sacco. The microfinance institution lends money to groups instead of individuals. This group-based lending approach is similar to the concept of asabiyah, otherwise known as social solidarity.

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