Why Resilience Matters
Development finance* has played an important role in reducing poverty and improving health and education outcomes in many of the world’s most impoverished regions. However, the combination of recent funding cuts and an increasingly volatile macroeconomic environment have created a significant capital gap that impact investors are now rushing to fill.
The need has only been exacerbated by recent macroeconomic shocks that show the precariousness facing many developing economies.
* We define development finance as all capital — public or private — that goes towards spurring economic and/or social development.
The Covid-19 pandemic put pressure on underfunded health systems and disrupted global supply chains for various products and commodities.
The invasion of Ukraine in 2022 caused fuel prices to soar and led to food shortages in countries dependent on Ukraine’s grain and fertilizers.
The war on Iran has had a similar effect, with low-income countries among those hardest hit by the disruption of trade through the Strait of Hormuz.
Each time, a combination of multilateral organizations and private sector investors have stepped in to provide assistance to countries in need – not just out of charity, but out of a recognition that the global system of trade and finance works best when developing economies are in growth mode rather than crisis mode.
Like a clock, this cycle repeats itself every time there is a new disruption to global trade and investment. Crisis. Damage. Recovery.
We know that we can’t predict or control for every potential shock to developing economies and low-income communities. But what we can do is shorten the gap between ‘Damage’ and ‘Recovery’ by helping individuals and households become more resilient to future shocks.
That is what we mean by resilience amidst uncertainty.
For 20 years, we have helped low-income economies increase their resilience by providing customized and appropriate capital to qualifying Financial Service Providers (FSPs) and Small & Growing Businesses (SGBs) – all in service of generating opportunities for sustainable livelihoods for the farmers, women, and entrepreneurs who are the heartbeat of their local economies.
MCE’s experience shows the advantage of an impact-first approach that prioritizes the needs of end-borrowers who are best-positioned to address needs at the micro level. But MCE can’t do it alone – more impact investors should embrace the multiplier effect of catalytic, impact-first capital to help developing economies build resilience and generate more economic opportunities for their people.
MCE Perspectives
MCE’s 2025 impact report
Our 2025 Impact Report includes an update on MCE’s investment, perspectives on key industry trends, and case studies featuring portfolio companies like KosInvest, Avanza Sólido, Grameen Costa Rica, and Cooperativa Laguna de los Cóndores (Coop. LDC).
The Iran War and the transition to clean energy and regenerative farming
The Iran War and adjacent conflicts in the Middle East have provided yet another stress test for the world’s developing economies, with increased fuel and fertilizer prices hitting low-income countries the hardest. These countries are now learning to adapt to geopolitical uncertainty by weaning themselves off fossil fuels and fertilizers, thereby accelerating the transition to clean energy and regenerative agriculture. Impact investors, especially those with a focus on developing economies, have played an important role in helping individuals and households navigate turbulent times. [Published by Camilla Nestor]
El Nino and preparing for extreme weather by investing in climate resilience
Low-income countries are bracing themselves for what scientists agree will be a historic El Nino. While each part of the world will experience this warming period differently, agricultural communities that rely on stable temperatures and rainfall will undoubtedly be among the hardest hit. Fortunately, we’re seeing more farmers taking proactive steps to adapt to both market conditions and the natural environment – often with the help of impact investors like MCE and its partners. [Coming soon!]