Green microfinance: Africa’s path to resilience

Africa is an ideal setting to study the impact of green microfinance on vulnerable communities due to its specific problems, including limited access to basic services, economic inequality and the effects of climate change. This study investigates the extent to which green microfinance can address the needs of disadvantaged communities and expand access to essential services, with a particular focus on safe drinking water. To assess these relationships empirically, the results of SGMM modeling applied to data from 28 African countries, over the period 2000–2023, show that historical infrastructure has a major impact on the inertia of access to water. As unemployment and inequality intensify this problem, green microfinance is crucial to helping reduce the number of people without access to water. Although economic growth is positive, its benefits are still uneven, underlining the need for inclusive policies. Despite its low importance in this context, the use of renewable energy represents a potential solution to Africa’s social and climate challenges. This study suggests implementing renewable energy, establishing an environmental micro-insurance system, using crowdfunding, and empowering women and youth through targeted training.