FinDev COVID-19 Update | 10 - 23 Sep 2020
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- The COVID-19 pandemic is highlighting the need for better customer protection as pressure on borrowers to repay loans is increasing; borrowers from Pakistan to India, Cambodia, and Kenya have reported experiencing pressure from lenders to repay. While customer protection principles exist, more specific guidance is needed on responsible measures MFIs can take during a global pandemic.
- Countries are taking a range of measures to help small businesses during COVID-19, with short-term finance being the most commonly used measure, according to a World Bank analysis. Lower-middle income countries rely on tax-based measures, whereas high and upper-middle income countries have focused on job retention measures such as wage subsidies and cash transfers.
- Donors can play an important role in making social assistance payments more efficient and secure. A new CGAP COVID-19 briefing highlights specific measures donors can take to help build strong payments systems, from supporting gender-sensitive payments methods, to advocating for or cash-in/cash-out network development, and facilitating knowledge exchange among countries.
- Migrant workers from Asia’s developing economies have been sending record amounts of money home during the pandemic, defying earlier predictions of steep drops in remittance flows. However, experts in the region believe a crash is still on the horizon due to the economic decline in Middle Eastern host countries and the end of temporary COVID-19 support measures which may have bolstered remittances initially.
- New M-CRIL Advisory Notes on MFI liquidity in Cambodia and Pakistan illustrate the wide range of experiences in the region. The reports show that the Cambodian microfinance sector has not been substantially impacted by COVID-19, while microfinance banks in Pakistan have faced severe challenges in repayment collections. Data from the Pakistan Microfinance Network shows that new lending fell by over 25 percent in April-June 2020 compared with the first quarter of 2020.
- The creation of a national ID system for the Philippines will make bank account opening easier and help Filipinos take advantage of the “increasingly digital economy,” according to a Central Bank official, who expects the growth in digital financial transactions brought about by the pandemic to continue as long as there is no vaccine.
- Myanmar has also experienced an increase in digital payment usage during the pandemic, as government assistance was disbursed through local digital platforms such as Wave Money and OnePay. Investment in local fintech companies has also increased in the last six months.
- Surveys of MSMEs in the region are revealing the toll the pandemic is taking on local businesses.
- In Indonesia, a CFI-Accion survey shows that business owners’ financial options are dwindling as they sell assets and are unable to continue saving, and women-owned businesses were almost twice as likely to close as men’s.
- In Nepal, over 80 percent of MSMEs have had to take cost-cutting measures such as reducing employees’ working hours or granting leave without pay, according to an IFC survey.
- In China, a CGD survey found that 18 percent of SMEs closed for good between February and May 2020.
- Hormuud Telecom, Somalia’s main mobile operator, reported an increase in the number of month-to-month mobile money transactions since the onset of the pandemic. However, the total value of transactions decreased due to the slowdown of economic activity in the country.
- South Africa launched a COVID-19 Loan Guarantee Scheme last May to provide financial support to businesses. Despite improvements made in July to facilitate the loan application process, many businesses are reluctant to increase their debt exposure given the financial crisis context.
- The Mastercard Foundation and the National Board for Small Scale Industries of Ghana launched Nkosuo, a recovery and resilience program targeting MSMEs affected by the COVID-19 crisis. This program will provide financial assistance through grants and soft loans.
- According to the Nigeria COVID-19 National Longitudinal Phone Survey, conducted by the National Bureau of Statistics with support from the World Bank, an increasing share of households are reducing their food consumption, from 54 percent of households in April/May to 69 percent in July.
- In Mozambique, the government has partnered with development organizations to implement the Post Emergency Direct Cash Transfers Program. This monthly cash transfer (equivalent to $21) will benefit 990,000 new beneficiaries.
For more on Africa, check out the latest Portail FinDev Biweekly Update in French.
Latin America and the Caribbean
The articles and knowledge resources referenced in this section are in Spanish.
- Mastercard announced the “Tech for Good Partnership” with five leading financial services and technology companies in LAC (Bancolombia, Banco Galicia, Citibanamex, Mercado Libre and PayPal). The alliance will support financial and digital inclusion efforts in the region in response to COVID-19.
- A new study from the IDB and the Center for Global Development provides recommendations for the region’s central banks, governments and financial service providers to help mitigate the impacts of the pandemic, including how to deal with solvency and liquidity issues facing financial service providers.
- In Argentina, the payments company Prisma joined forces with big banks to offer a contactless payment solution that relies on token technology and can be used by mobile devices at points of sale, potentially transforming the way payments are made in the country. Other countries in LAC that are exploring and adopting similar solutions are Peru, Brazil and Mexico.
- The Central Bank of El Salvador has approved temporary measures that allow financial services providers and consumers to agree on the best way to restructure mortgages and consumer loans, and refinance or consolidate debts.
- More than 2,000 micro, small and medium enterprises in Bolivia took advantage of a new national Digitalization Plan that provides the internet tools (web pages, emails, georeferencing, etc.) they need to trade their products online and internationally.
For more on LAC, check out the latest Portal FinDev Biweekly Update in Spanish.
- Concerns resulting from the pandemic about handling “dirty” bills have pushed many consumers in Jordan to reconsider the general preference for cash, turning instead to mobile-wallet apps like Dinarak, which saw a sharp rise in users from roughly 300,000 pre-COVID-19 to over 1 million now.
- MoneyGram International has launched a strategic partnership with Attijariwafa Bank Egypt that will facilitate the flow of remittances from customers around the world and give millions of Egyptians additional convenience in quickly accessing funds.
- The Central Bank of Bahrain has asked all banks and microfinance institutions to cancel administrative fees on any requests to postpone loan installments until the end of the year, to help citizens survive the difficulties brought on by the pandemic.
For more on the Arab world and resources in Arabic, check out the latest FinDev Update in Arabic.
New Data Source
View our complete Data Tracker listing most important sources and trackers by the level of their relevance to the sector.
COVID-19 and MSMEs: Data and Analysis to Understand Impact
In June 2020, CFI began a longitudinal survey examining how COVID-19 is impacting MSMEs in four countries: Colombia, India, Indonesia, and Nigeria. Users of this interactive data dashboard can explore how MSME owners are responding to the crisis, and they can dive deeper to view results of the survey based on different market segments – including men and women, firms of different size, and different types of businesses.
Blogs & Opinion
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Reflections on the Future of Financial Inclusion
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