Landscaping inclusive climate finance in Kenya and Mozambique

• Feb 26, 2025
• 2 min

MSC, in partnership with ISF Advisors for FSD Kenya, analyzed how inclusive finance and adaptation finance can enhance climate resilience for vulnerable communities. The study identified financial barriers, opportunities, and strategies to strengthen climate finance systems, supporting sustainable livelihood transitions amid increasing climate risks.

Low-income households in Kenya and Mozambique are highly vulnerable to the impacts of climate change, which include increased droughts, floods, and storms. However, the financial systems in these regions are not fully equipped to enable these households to adapt to these climate risks.

MSC sought to understand how inclusive financial services and adaptation finance can enable climate adaptation and resilience for Kenya and Mozambique’s vulnerable populations. We conducted a study to analyze the needs and aspirations that drive livelihood transitions and identify the underlying financial needs. Based on this study, we identified barriers, opportunities, and strategies to strengthen climate finance systems, which can support climate adaptation for low-income households that face increased climate risks.

MSC conducted the project in three phases:

• Phase I: Preliminary research 

We analyzed existing literature on climate hazards, risks, and Kenya and Mozambique’s key development programs and policies. This helped us identify key household segments and livelihood pathways. 

• Phase II: Data collection and stakeholder engagement 

We conducted a demand-side analysis to understand the adaptation strategies, needs, and financial services that smallholder farmers, women, and other vulnerable groups use. Our supply-side analysis mapped the existing financial services ecosystem and assessed the role of formal and informal financial services in climate resilience.

• Phase III: Synthesis and reporting 

We developed practical insights and recommendations to inform future strategies to build an inclusive climate finance system.

MSC’s research uncovered financial barriers to climate adaptation and provided practical recommendations to enhance adaptation finance. The study identified policy and programmatic recommendations based on respective country priorities. We also designed a replicable research framework and taxonomy to enable other countries to analyze sustainable climate finance strategies. 

We conducted this project in partnership with ISF Advisors for FSD Kenya.