DEPARTMENT FOR SCIENCE, INNOVATION AND TECHNOLOGY

Inclusive Green Finance - An evaluation of "Fomenta Maricá", Brazil

Project disclaimer

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Description

This project creates a new collaboration between SOAS (UK) and UFF (Brazil) through a scoping study of the inclusive green finance project "Fomenta Maricá" and a two-day workshop in May 2025 with academics and policymakers. The goal is to evaluate the initiative and potentially suggest improvements and replication in other oil-rich medium-sized cities in Brazil and abroad. Given the negative socio-economic effects of climate change, a green transition strategy is urgent for oil-dependent regions. Maricá is among 485 Brazilian cities that earn royalties from oil exploitation. Maricá's government has led innovative initiatives to re-distribute earnings and foster the local economy. In 2017, it created the first subnational Sovereign Wealth Fund, of which 30% of funds would be allocated to local development projects. In 2020, it launched the programme "Fomenta Maricá", which provides loans to micro- and small enterprises (MSEs). Unlike previous microloans, those funds have higher borrowing limits, low interest rates and longer maturity. The scoping study will analyse existing quantitative data from Maricá's government project "Fomenta Maricá" to understand the profile of borrowers, how they employ the funds and whether they manage to repay the loan fully and on time. We are particularly interested in the disbursement to solar panel installation firms and their application. We will conduct small-sampled qualitative research with borrowers and policymakers to uncover potential challenges and spillovers that might not be grasped by the quantitative information. Given the existing literature, we could assume gender and race barriers and sectoral differences. We also expect challenges from solar panel firms, such as lack of demand and rising business costs. Yet, we could also expect spillover benefits beyond the firm, such as improvements in household well-being and social cohesion. We anticipate that the results can advance existing research on inclusive green finance by providing new evidence of state-led initiatives for sustainable local development. Three Early Career Researchers will form the research team: Thereza B Reis (SOAS), Fernanda Feil and Fernando Teixeira (UFF). Thereza will contribute to the project with her expertise on financial inclusion, Fernanda will contribute with her insights on state-led sustainable finance, and Fernando will contribute with his knowledge about microfinance and subnational Sovereign Funds in Brazil. To consolidate the partnership between SOAS and UFF, we want to organise a 2-day workshop in May 2025 to discuss issues of green finance and financial inclusion. We will organise it through SOAS' Centre for Sustainable Finance and UFF's Financialisation and Development Research Group (FINDE) to promote and strengthen the relationship between those two networks. We expect our preliminary results and workshop to improve Maricá's sustainable development policies, as well as foster similar initiatives for oil-dependent towns in Brazil and beyond. The Global Talent Exchange Award will be essential for the success of the scoping study as it will allow Thereza to conduct fieldwork in Maricá alongside UFF's researchers. Furthermore, it will provide the financing for the workshop, enabling the attendance of participants from outside Rio de Janeiro. Finally, we believe that such connections will allow for future joint research projects and application to larger funds, such as the ESRC-FAPESP grant, which would allow us to expand the research on inclusive green finance to other cities, such as Ilha Bela (São Paulo).

Objectives

This project creates a new collaboration between SOAS (UK) and UFF (Brazil) through a scoping study of the inclusive green finance project "Fomenta Maricá" and a two-day workshop in May 2025 with academics and policymakers. The goal is to evaluate the initiative and potentially suggest improvements and replication in other oil-rich medium-sized cities in Brazil and abroad. Given the negative socio-economic effects of climate change, a green transition strategy is urgent for oil-dependent regions. Maricá is among 485 Brazilian cities that earn royalties from oil exploitation. Maricá's government has led innovative initiatives to re-distribute earnings and foster the local economy. In 2017, it created the first subnational Sovereign Wealth Fund, of which 30% of funds would be allocated to local development projects. In 2020, it launched the programme "Fomenta Maricá", which provides loans to micro- and small enterprises (MSEs). Unlike previous microloans, those funds have higher borrowing limits, low interest rates and longer maturity. The scoping study will analyse existing quantitative data from Maricá's government project "Fomenta Maricá" to understand the profile of borrowers, how they employ the funds and whether they manage to repay the loan fully and on time. We are particularly interested in the disbursement to solar panel installation firms and their application. We will conduct small-sampled qualitative research with borrowers and policymakers to uncover potential challenges and spillovers that might not be grasped by the quantitative information. Given the existing literature, we could assume gender and race barriers and sectoral differences. We also expect challenges from solar panel firms, such as lack of demand and rising business costs. Yet, we could also expect spillover benefits beyond the firm, such as improvements in household well-being and social cohesion. We anticipate that the results can advance existing research on inclusive green finance by providing new evidence of state-led initiatives for sustainable local development. Three Early Career Researchers will form the research team: Thereza B Reis (SOAS), Fernanda Feil and Fernando Teixeira (UFF). Thereza will contribute to the project with her expertise on financial inclusion, Fernanda will contribute with her insights on state-led sustainable finance, and Fernando will contribute with his knowledge about microfinance and subnational Sovereign Funds in Brazil. To consolidate the partnership between SOAS and UFF, we want to organise a 2-day workshop in May 2025 to discuss issues of green finance and financial inclusion. We will organise it through SOAS' Centre for Sustainable Finance and UFF's Financialisation and Development Research Group (FINDE) to promote and strengthen the relationship between those two networks. We expect our preliminary results and workshop to improve Maricá's sustainable development policies, as well as foster similar initiatives for oil-dependent towns in Brazil and beyond. The Global Talent Exchange Award will be essential for the success of the scoping study as it will allow Thereza to conduct fieldwork in Maricá alongside UFF's researchers. Furthermore, it will provide the financing for the workshop, enabling the attendance of participants from outside Rio de Janeiro. Finally, we believe that such connections will allow for future joint research projects and application to larger funds, such as the ESRC-FAPESP grant, which would allow us to expand the research on inclusive green finance to other cities, such as Ilha Bela (São Paulo).

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Location

The country, countries or regions that benefit from this Programme.

Brazil

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