Abstract
What if financial systems aren’t playing a positive role in shaping adaptable pathways but entrenching them deeper into narrow pathways weakening household’s resilience? As climate shocks intensify in sub-Saharan Africa and other developing economies, agriculture still remains a primary source of livelihood vulnerable to shocks. Using fractional logit model to investigate the extent of credit access on livelihood diversification, the results illustrate a shift of concentration towards more agriculture assets and income share by 17 and 37 percentage points. This dual shift suggests the reinforcement of households’ dependence on agriculture related investments for both assets and income generation reflecting a more constrained and narrow diversification and raises a serious concern about the politics of financial inclusion in climate sensitive regions. For credit to facilitate diversification sector linked credit products targeted for non-agriculture economic activities must be made available and policies must aim to pair credit with mandatory non-financial support such as skill training and market access.
Details
Presentation Type
Paper Presentation in a Themed Session
Theme
2026 Special Focus—Unseen Unsustainability: Addressing Hidden Risks to Long-Term Wellbeing for All
KEYWORDS
CLIMATE RESILIENCE, FINANCIAL INCLUSION, LIVEILHOOD DIVERSIFICATION, AGRICULTURE DEPENDENCE
