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How can inclusive finance build resilience in a world of shared resources?

July 1st, 2021

In November 2020, FSD Kenya was invited to co-chair a session at the Royal Academy of Engineering’s Frontiers of Development Symposium. The 2020 symposium, bringing together experts and mid-career professionals from sciences and social sciences, debated the question: ‘How can we build resilience in world of shared resources?’. The symposium focused on 3 areas: economic resources, human resources and natural resources. FSD Kenya was asked to co-chair a session on economic resources together with Eka Ikpe of Kings College London. 

The economic resources session centred on the role of finance in resource sharing and resilience. Finance plays a significant role in resource sharing, enabling people to transact and distribute resources through payments systems and currencies, as well as supporting the allocation of resources through financial intermediation and investment. The institutions, technologies, interests and ideologies that underpin financial transactions and investments have fundamental effects on resource sharing and resilience at individual, societal and even eco-system levels. 

Our co-chair, Eka Ikpe chaired a session on transnational flows. Eka’s session focused on the importance of institutions, interests and development ideologies in determining the effects of large-scale movements of capital (licit and illicit), and their impacts on resource distribution and resilience in Africa. She asks ‘how can capital be ‘anchored’ to improve gains for national and local economies, especially in emerging economy contexts with weaker bargaining power?’ The speaker for the session, Elijah Munyi, discussed the implications for national investment and growth of different financing models in the history of Kenya’s public debt. 

FSD facilitated two sessions. The first session, Digital Technology: the democratization of markets or the new Goliath? Discussed the effects of digital technology in shaping the distribution of finance and resources and what this might mean for resilience. We invited Julie Zollmann to discuss her work on labour platforms and e-commerce. Drawing from the example of uber in Kenya, Zollmann argues that without the structural transformation that strengthens labour markets and enables capital to be distributed more equitably, technology can exacerbate inequality, facilitating the concentration and capture of economic resources. Our other speaker, Will Ruddick, talked about his work with community currencies. In areas where these have been piloted, community currencies have played a significant role in supporting resilience during the COVID-19 pandemic where economic restrictions slowed down trade and exchange of goods and services with impacts on household welfare and access to basic needs. More generally, his work shows the potential for community currencies to build resilient foundations for local communities through facilitating vibrant local exchange and investment, thus enabling communities to engage more productively with wider markets. 

The second session: The social substrate of economic flows focused on the relationships, social structures and institutions that shape resource flows; and what can we learn from this about the way our economies work. Our first speaker, Isabelle Guerin, discussed how the production and exchange of economic goods and services is only possible through social relations. This is particularly the case in developing economies where formal contracts are weak and state-based social protection is lacking. Guerin illustrates her argument through examples of formal and informal finance, where social relations play a central role especially in credit markets. She concludes by pointing out that COVID-19 has not only undermined access to income and material wealth, but also the social relations that underpin access to wealth, with long-term implications for resilience. Our second speaker, Awa Ambra Seck, discussed her PhD work on the influence of social structures (age grades and clans) on resilience, in relation to the (re)distribution of government cash transfers in northern Kenya and Uganda. She finds that the egalitarian vs hierarchical social structures redistribute wealth in different ways, with implications for risk pooling and resilience. 

Now more than ever in the face of global climate and disease shocks, there is a heightened interest in re-thinking our models of economic development not just with respect to growth, but also in terms of their effects on resilience. Bringing together an inter-disciplinary group of academics and practitioners, the 2020 Frontiers of Development Symposium invited us to probe the influence of infrastructure, technology, social relations and financial instruments (for example in the structuring of public debt), in terms of their potential for distributing resources more effectively to support economic resilience. 

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