COVID-19: A resumption of activities under operational and financial constraints

A resumption of activities under operational and financial constraints

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 second joint round of survey in June that gathered the views of 108 MFIs from around the world, ADA, Inpulse and the Grameen Crédit Agricole Foundation present the results of a third round of survey.

The responses were collected between July 23rd and August 6th 2020 by 91 partners located in 42 countries, split between Europe, Africa, Asia and Latin America. Feedback from these microfinance institutions (MFIs) allows us to observe the continuous evolution of the sanitary crisis linked to the COVID-19 virus. While the measures to reopen borders and to revive the economy have multiplied during the month of July, our partners mention significantly that the virus now directly affects their customers and employees.

In such an uncertain and evolving context, MFIs have been braving the challenges they face for more than a quarter now. With operational difficulties still ongoing, institutions remain vigilant about their portfolios and the risk they carry, which seems to have stabilized overall, albeit at a much higher level than before the crisis. Nevertheless, some signals are encouraging on other issues. For example, the vast majority of MFIs believe that they can survive the crisis without major strategic changes. In addition, it appears that the issue of liquidity has been rather well managed since the beginning of the crisis.

However, the battle against the virus is not won, and its repercussions are particularly strong on the informal sector of the economy. It appears that clients in the informal economy are more affected, particularly as they do not ultimately benefit from the aid measures that states can provide. Nonetheless, MFIs are sensitive to these needs and some of our partners are considering providing specific services to help their clients cope with the crisis.

The results of this third round highlight the operational and financial difficulties encountered by MFIs during this first semester, but also their first steps in understanding the problems and finding solutions. In this context, the future challenges us to continue questioning ourselves about the best recovery actions for each region, how they can be implemented and how the various actors in the microfinance sector can directly and indirectly contribute to its revival.
 

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