Covid-19 affects MFIs of different sizes in different ways

Covid-19 affects MFIs of different sizes in different ways

ADA, Inpulse and the Grameen Crédit Agricole Foundation have joined forces to closely monitor and analyse the effects of the COVID-19 crisis among their partners around the world.

Following a first joint round of survey in May that gathered the views of 110 MFIs from around the world, ADA and the Grameen Crédit Agricole Foundation present the results of a second round of survey, Inpulse having chosen to join the initiative every second time. 

The responses were collected from 18 June to 1 July from 108 microfinance institutions (MFIs) based mainly in Latin America and the Caribbean (46%), Sub-Saharan Africa (29%), Asia (14%) and Eastern Europe and Central Asia (10%), with a single MFI from the Middle East and North Africa (MENA) region. This panel of respondents spans a relatively diverse range of MFI sizes, with 49% of Tier 2 MFIs, 35% of Tier 3 MFIs and 16% of Tier 1 MFIs, broken down by region.

The results of this second round reveal that the crisis faced by MFIs has laid bare the structural strengths and weaknesses specific to their sizes: the biggest MFIs (Tier 1) appear better equipped to overcome the financial difficulties resulting from the health crisis and epidemic containment measures, as well as to take crisis management measures and make use of the specific measures put in place by local authorities. Smaller MFIs (Tiers 2 and 3), on the other hand, are more likely to offer their clients non-financial services to help them cope with the situation and are eager to continue developing non-financial services in the future. More generally, if they are considering launching new products or services, it is mainly to meet the needs of their clients rather than following their strategy or reducing risks. While big MFIs appear to be more resilient in times of crisis, small ones are also rising to the challenge and staying true to their powerful social mission. This is a real strength for these institutions, which should not be neglected in favour of more autonomous structures during the current crisis.

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