In Zimbabwe, while the public appears to not take the pandemic seriously (because of ignorance), its a matter of time before the government initiates a proper lockdown. At the moment informal economic activities are visibly still taking place as evidenced by crowds of people in the usual trading places and I dread to say that a few more weeks from now, the death toll from this irresponsible behavior may be unimaginable. The call by government for people to stay home is not being heeded and this is because the economy is highly informal with a significant portion of the populace living from hand to mouth. The Zim-SA border closes for human traffic in about 10 hours, after this, reality will dawn on the masses. For financial inclusion service providers, we expect a lot of problems going forward:
Default will spike, the mandatory lockdowns mean micro-entrepreneurs will be unable to conduct their day to day trading, this will genuinely reduce household surpluses and as such ability to service loan facilities. The pandemic comes with an associated economic burden as households will groan under the burden of supporting the affected and infected. For the not so honest customers, the pandemic will be an excuse to not honor financial obligations. Loan portfolios will suffer, Loan Officers will be unable to track payments adequately as they will have to work from home or with minimal mobility. In any case, quasi-displacements will occur, remittances will thin as the pandemic is global and is having a more significant impact on the West from whence remittances ordinarily originate. Most FSPs have weak balance sheets that were already reeling from the onslaught from inflation, the same balance sheets are now expected to absorb the losses from heightened loan poor performance, wage bills for minimally productive employees, additional costs of managing the pandemic i.e sanitizers and PPE. Post Covid-19, a number of FSPs will not exist for long especially since new capital has been rarely visiting this market. Lets not forget that the pandemic will not spare critical talent, some of the development finance practitioners viewing or writing this comment will not be around to see the end of this "invisible enemy". In short, for us in Zimbabwe, this could really finish-off an already ailing economy and it sure breaks my heart to say this. We had pre-existing adverse economic conditions and we are likely to be swept away.
In Zimbabwe, while the public appears to not take the pandemic seriously (because of ignorance), its a matter of time before the government initiates a proper lockdown. At the moment informal economic activities are visibly still taking place as evidenced by crowds of people in the usual trading places and I dread to say that a few more weeks from now, the death toll from this irresponsible behavior may be unimaginable. The call by government for people to stay home is not being heeded and this is because the economy is highly informal with a significant portion of the populace living from hand to mouth. The Zim-SA border closes for human traffic in about 10 hours, after this, reality will dawn on the masses. For financial inclusion service providers, we expect a lot of problems going forward:
Default will spike, the mandatory lockdowns mean micro-entrepreneurs will be unable to conduct their day to day trading, this will genuinely reduce household surpluses and as such ability to service loan facilities. The pandemic comes with an associated economic burden as households will groan under the burden of supporting the affected and infected. For the not so honest customers, the pandemic will be an excuse to not honor financial obligations. Loan portfolios will suffer, Loan Officers will be unable to track payments adequately as they will have to work from home or with minimal mobility. In any case, quasi-displacements will occur, remittances will thin as the pandemic is global and is having a more significant impact on the West from whence remittances ordinarily originate. Most FSPs have weak balance sheets that were already reeling from the onslaught from inflation, the same balance sheets are now expected to absorb the losses from heightened loan poor performance, wage bills for minimally productive employees, additional costs of managing the pandemic i.e sanitizers and PPE. Post Covid-19, a number of FSPs will not exist for long especially since new capital has been rarely visiting this market. Lets not forget that the pandemic will not spare critical talent, some of the development finance practitioners viewing or writing this comment will not be around to see the end of this "invisible enemy". In short, for us in Zimbabwe, this could really finish-off an already ailing economy and it sure breaks my heart to say this. We had pre-existing adverse economic conditions and we are likely to be swept away.