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Ecuador Confronts Financial Inclusion Challenges Amidst Environmental Threats

Ecuador’s financial system is facing a daunting challenge: ensuring financial inclusion for women while mitigating environmental risks posed by natural disasters. The country’s 410 savings and credit cooperatives, half of which are owned by women, play a vital role in the economy. However, small entrepreneurs face constant threats from floods, landslides, droughts, and earthquakes.

Addressing Financial Inclusion Challenges

As Ecuador’s financial regulator, Superintendencia de Economía Popular y Solidaria (SEPS) has introduced policies to address these challenges. By promoting equal access to credit for women without discrimination, SEPS has made significant progress in reducing the gender credit access gap by 8 percentage points over six years.

Key Statistics

The current gender credit access gap stands at 12.8%, down from 20.8% in 2017.
Over half of Ecuador’s savings and credit cooperatives are owned by women, playing a vital role in the economy.

Championing Sustainable Finance

SEPS has also championed sustainable finance, launching environmental and social risk management (ESRM) guidelines for the credit cooperative sector in 2022. These guidelines encourage financial institutions to commit to social and environmental responsibility and provide a safeguard against credit decisions that could have negative impacts.

ESRM Guidelines

Encourage financial institutions to consider social and environmental factors when making lending decisions
Provide a framework for managing environmental and social risks
Promote transparency and accountability in financial reporting

Ecuador’s experience highlights the importance of integrating social and environmental sustainability into financial inclusion strategies. The country’s involvement in the Alliance for Financial Inclusion’s (AFI) Inclusive Green Finance and Gender Inclusive Finance workstreams has underscored that:

Financial inclusion cannot be achieved without sustainability
Sustainability cannot be prioritized if it excludes those who are most vulnerable, such as women

Collaborative Approach to Achieving Sustainable Financial Inclusion

SEPS’ work with AFI over the past few years has demonstrated that financial inclusion can drive progress on both fronts - increasing access to credit for women and achieving social and environmental sustainability. As a result, Ecuador is now better equipped to address its dual challenges and promote a more inclusive and sustainable financial system.

Conclusion

Ecuador’s experience serves as a model for other countries seeking to balance financial inclusion with environmental sustainability. By prioritizing the needs of vulnerable populations and promoting sustainable finance practices, we can create a more resilient and equitable financial system for all.