COVID-19 FinDev Weekly Update | 02 - 08 Jul 2020

FinDev Gateway has created this COVID-19 weekly update with the latest and most relevant knowledge resources for financial inclusion as they become available. Sign up to receive FinDev's weekly update each Friday with a summary of the main issues covered during the week. 

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Global  

• An IMF study introduces a new index of digital financial inclusion. The study, which covers 52 countries and includes insights from 70 fintech firms, banks, and regulators, finds that digital finance is increasing financial inclusion and may contribute to a higher GDP growth.  Many, however, worry about persistent barriers to digital finance for the most vulnerable people, especially women, who are less likely to own phones and may lack the literacy and numeracy skills needed to take advantage of digital financial services.
• Micro and small enterprises (MSEs) are an important source of jobs in emerging markets. A CGAP blog offers several ways in which MSEs can be segmented so that policies aimed at helping them can be more inclusive and effective. At the MIT D-Lab, an "Urgency Index" is helping identify enterprises that need help the most.

Asia

• In Pakistan, Innovations for Poverty Action (IPA) found that microenterprises experienced a 90 percent drop in weekly household income, increasing concerns about food insecurity. About 70 percent of MFI clients interviewed were unable to make the required loan payments and - despite official MFI policy allowing debt restructuring - most clients said MFIs have not reached out to offer repayment flexibility.  
• In Indonesia, the decline in sales volume reduced monthly income by 60 percent for 92 percent of MSME households surveyed by MSC. COVID-19 has also impacted the revenue streams of CICO agents in the country, who have seen both lower transaction volumes and lower ticket sizes of transactions.
• In India, despite a strong push for digital payments, a survey finds that micro-merchants remain skeptical due to numerous barriers, including poor access to and use of technology, slow internet, and inadequate power supply.

Africa

Some articles and knowledge resources referenced in this section are in French.

• New sex-disaggregated data collected by FinMark Trust (FMT) focuses on the impacts of COVID-19 on livelihoods across seven countries in Sub Saharan Africa. Initial findings shared in a recent FinEquity webinar show that the COVID-19 crisis is reducing the resilience of women to shocks. 
• African Central Banks have taken a wide range of measures to mitigate the impact of the pandemic; 27 have reduced their policy rates and offered liquidity support, while 22 have allowed loan deferrals and refinancing. 
• The Grameen Crédit Agricole Foundation, Africa’s MAIN microfinance network, SIDI and the ACTES Foundation have established a consortium to support 50 African MFIs by offering them risk analysis and management tools to help manage liquidity and solvency risk.
• The prospect of recession in Chad threatens the country’s middle class, as the poverty rate is expected to increase from 40 to 43 percent of the population. 

For more on Africa, check out the latest Portail FinDev Weekly Update in French.

Latin America and the Caribbean

Most articles and knowledge resources referenced in this section are in Spanish.

• Latin America is rapidly shifting to a cashless economy. According to a Mastercard survey, two thirds of respondents in the region are using less cash or not using it at all, with Brazilians (53 percent), Mexicans (41 percent) and Colombians (41 percent) leading the way.
• ECLAC forecasts that 2.7 million companies in the region will go out of business, over 96 percent of which are microenterprises, leading to a loss of 8.5 million jobs.
• The Bolivian Central Bank announced that financial institutions cannot charge more than 3 percent annual interest on loans; in addition, loans need to be used for the purchase of national products and services.
• A new regulation in Peru will require financial institutions to offer clients at least one credit card without membership fees.
• The Central American and the Caribbean Microfinance Network, REDCAMIF, launched a financial educational platform that offers sanitary guidelines to help MFIs and their clients cope with the pandemic. 

For more on LAC, check out the latest Portal FinDev Weekly Update in Spanish.

Arab World

• According to a new study, refugees are 60 percent more likely to be financially impacted by COVID-19. The study covers eight large refugee-hosting countries around the world, including Lebanon, Jordan and Iraq and offers recommendations on how countries can protect refugee livelihoods. 
• The Central Bank of Jordan has adopted several measures to protect MSMEs during the pandemic; the Bank launched a $705 million Finance Facilitation Program and has encouraged the use digital transactions. 
• Thousands of migrant workers, most of whom used to work informally in sectors affected by the lockdown, are stuck in Iraq without income or a way back home.
• In MENA, a region particularly vulnerable to climate change, the crisis could be used as an opportunity to make the economy more environment-friendly.

For more on the Arab world and resources in Arabic, check out the latest FinDev Weekly Update in Arabic.