FinDev COVID-19 Update | 13 - 26 Aug 2020

FinDev Gateway has created this COVID-19 Update with the latest and most relevant knowledge resources for financial inclusion as they become available. Sign up to receive this update to your inbox as soon as it comes out. 

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Global

• A new analysis of data from CGAP’s Global Pulse Survey shows that about a third of MFIs have more "troubled portfolio" (includes PAR30 and restructured loans) than equity; an equal share of MFIs have said that they anticipate solvency issues in the next six months.  
• As we better understand the impact of the global pandemic on financial institutions, more attention is being paid to recovery measures. The Toronto Centre has introduced new standards for recovery planning for financial institutions. In addition, MSC offers practical steps financial institutions can take to survive and recover from the economic effects of COVID-19.
• The global pandemic could lead to a substantial consolidation in the off-grid solar (OGS) energy sector. Some OGS companies and investors argue that “consolidation can make scaling up access to energy easier”, though it may hurt small distributors, which have an advantage at reaching the last mile customers. Moreover, as MFIs focus on their own survival, the pandemic could weaken partnerships between them and OGS providers.
• Phone surveys are being widely used to collect data during the global pandemic. The Innovation for Poverty Action answers key questions about using phone surveys in research; while they are generally less expensive than face-to-face surveys, response rates are considerably lower. In addition, remote surveys may experience coverage bias as their reach is limited to people who own or have access to a working, connected mobile phone.  

Asia

• An M-CRIL analysis of small finance banks in India finds that the expected liquidity and delinquency issues caused by the pandemic are unlikely to cause serious problems with solvency. The Indian MFI network, MFIN, reported that in July, collections increased to 65-70 percent, from 35-40 percent in April, and are expected to continue to improve in August.
• Remittances to Pakistan in July reached the highest ever amount for one month. The increase is believed to be due to Central Bank policies to encourage remittances during the pandemic, as well as workers having more funds available to send since COVID-19 prevented them from using them for the Muslim pilgrimage, the Hajj.
• A recent report by IFPRI looks at the impact of COVID-19 on agricultural input retailers in Myanmar. While transport restrictions had eased by mid-June, the challenges of farmer demand and payment recovery still remained challenges.
• Belstar Microfinance shared the results of a survey of its customer base in India, where 87 percent of the customers contacted reported either job losses or reduced income due to the pandemic.

Africa

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

• The Bank of Ghana introduced a series of measures targeting MFIs, including providing cash to some institutions, reducing primary reserve ratios and reclassifying overdue loan repayments as current.
• The Confederation of Financial Institutions of West Africa (CIF-AO) and the Federation of the Credit Unions of Burkina Faso (FCPB) announced the switch to a new banking transactional software that will allow users to make deposits, withdrawals and payments remotely. 
• Togo is rolling out a $36 million credit line to support SMEs with a subsidized rate of 5 percent.
• IPA’s RECOVR phone survey in Rwanda reveals that almost 80 percent of respondents have had to dip into their savings “to pay for food, healthcare or other expenses since February 2020.”
• The South African insurer Santam plans to compensate clients for $60 million in damages incurred during the lockdown from late March to early May, most from business interruption in the tourism and catering industries. 
• 69 percent of micro and small enterprises in Zambia reported a drop in business income since the beginning of the pandemic, according to a survey by FSD Zambia and BFA Global.

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

Latin America and the Caribbean

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

• MFIs in Peru began a campaign this month to refinance delinquent loans, with some institutions offering a grace period of up to four months. Half a million MSMEs will benefit from this initiative. 
• The use of digital wallets in Colombia has increased due to the pandemic; there are 15 different digital wallets in the financial market and the number is expected to double by the end of 2020.
• New research by Stanford University and the World Bank suggests that interventions that seek to increase the adoption of e-payments among small retailers should address specific concerns of small retailers rather than offer traditional training that focuses on providing information. The research found that in Mexico, temporary discounts on commission fees and marketing campaigns on e-payments played an important role in e-payments adoption.
• In Argentina, more than 28,000 small enterprises were forced to close in the first six months of the year; the pandemic exacerbated the crisis that the sector was already experiencing.
• Bolivia approved a law that will defer loan repayments until 31 December, in an attempt to offer economic relief to families affected by the pandemic.

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

Arab World

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

• In Sudan, the COVID-19 pandemic has led to a 64 percent increase in person-to-person mobile transfers, according to Omer Omarabi, the General Manager of Electronic Banking Services Sudan. 
• Algérie Poste, the state-owned company responsible for postal service in Algeria, launched on Saturday a new mobile payment service called "Barid pay" to facilitate electronic payments and limit the spread of COVID-19.  
• Facing the COVID-19 pandemic, Qatar has committed to a national fintech strategy to diversify its economy, aiming to make significant investments in blockchain technology and considering a central bank digital currency.
• In the UAE, the number of reopened small and medium-sized businesses on Facebook increased by 14 percent from May 2020, showing continued growth and resilience in the face of COVID-19, according to a new report by Facebook in collaboration with the World Bank and OECD.

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