FinDev COVID-19 Update | 28 Jan - 10 Feb 2021

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Global Update

• A new crisis response roadmap by CGAP provides practical guidance to MFIs on how to navigate crises, drawing from lessons learned from past crises that have affected MFIs in various parts of the world.
• AFI says financial regulators need to look more closely at emerging risks associated with climate change. Financial regulation plays a critical role in disaster risk management, from policies that help financial institutions plan for disasters to measures that support post-disaster economic recovery.
• MFI recovery from the coronavirus pandemic remains fragile. Although the latest Symbiotics data show only a slight increase in portfolio at risk (PAR) 30 in September and October 2020, this may change as moratoria are lifted. In Africa, expiration of moratoria has led to an increase of PAR.

Asia

• Concerns are rising in India about consumer protection and the lack of regulations for fintech or app loans, which have grown in popularity during the pandemic, due to reports of high interest rates, data privacy violations, unethical debt collection practices and most alarmingly, incidents of suicide among customers unable to repay. 
• The countries of Southeast Asia are working to connect their payment systems as the pandemic has accelerated the use of digital payments in the region. Singapore and Thailand have made plans to link up their national payment systems by mid-2021, and Thailand has also set up QR payment linkages with Cambodia, Japan and Laos. 
• The payments platform i2c has partnered with Pakistani fintech TAG to launch a super app which will provide instant payments capability for Pakistan’s unbanked adult population.
• In Thailand, digital savings products have gained traction due to the lockdown and financial relief packages, with several banks and fintechs offering interest-bearing e-savings accounts. While deposit account openings via mobile banking apps doubled during the lockdown, digital deposits still remain a small portion of overall deposits.

Africa

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

• At least 80 percent of MFIs in Sub-Saharan Africa surveyed in December 2020 by Grameen Crédit Agricole Foundation, ADA and Inpulse said that over 70 percent of their clients have returned to work after lockdowns. Also, 74 percent of surveyed MFIs reported an increase in portfolio at risk. 
• According to the Central Bank of West African States’ latest report on the microfinance sector, the portfolio at risk in the West African Monetary Union region rose to 9.1 percent compared with 7.6 percent at the end of September 2019. This sharp increase is linked to a rise in overdue loans related to the COVID-19 crisis. 
• Remittances to The Gambia increased by 78 percent in 2020 from the previous year, whereas they fell by 14 percent in Uganda. The World Bank had predicted a 9 percent drop in Sub Saharan Africa’s remittances in 2020. 
• The telco giant Airtel Africa reported a 34 percent growth in its mobile money revenue between March and December 2020. Airtel Africa has also partnered with remittances providers like MoneyGram, Mukuru and WorldRemit to facilitate remittance transfers. As mentioned in previous updates, the crisis has been a catalyst for telco companies in Africa.

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

Latin America and the Caribbean

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

• In Peru, all citizens will have a digital savings account with Banco de la Nación, the country’s national bank, based on a new law that enables the government to open accounts using National Identity Document (DNI) numbers. The accounts will be used for government transfers and refunds, including those related to COVID-19.
• The female participation rate in the labor force in Latin America and the Caribbean fell by 6 percentage points in 2020, erasing at least 10 years of gender progress, according to a new report by ECLAC. More than 55 percent of women in the region work in the hardest hit sectors, including domestic services and tourism.
• Mexican migrants in the United States will be able to open bank accounts remotely with the state-owned bank Banco del Bienestar, while their families in Mexico will be able to open their own accounts and cash out in pesos. This new policy aims to bring both migrants and remittance recipients into the banking system and facilitate remittance transfers, which are a lifeline for many low-income households in Mexico. 
• The number of people without a bank account in Brazil dropped by 73 percent, driven by government transfers related to COVID-19. The country’s instant payment system, PIX, launched last November, will continue to bring the number of unbanked people down. There are currently 134 million user accounts, with a daily transaction volume between $930 million and $1.12 billion. 
• In Argentina, despite the digital wave propelled by the COVID-19 pandemic, there is still a strong preference for cash. Mercado Libre, the biggest e-commerce platform in the region will offer cash withdrawal services in stores through its digital wallet Mercado Pago and QR code, a service until now reserved for debit cards.

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

Arab World

• Facing a political deadlock, financial crisis, and the pandemic, Lebanon’s economy, which previously had the second highest account ownership rate among the Arab world’s developing countries, has become increasingly cash-based over the past year, with digital payments less and less accepted. The microfinance sector has shrunk over this time as well, primarily due to the deterioration of borrowers’ livelihoods, according to a survey conducted by CGAP and the Lebanese Microfinance Association.
• Morocco’s insurance industry has suffered during the COVID-19 pandemic and regulatory measures to date have focused on temporary short-term fixes. Now, insurance companies are asking the regulator to look into measures to contain the impact of pandemics in the medium and long term.
• Household income in Yemen fell on average by 12.5 percent in 2020 from the previous year, driven by lower remittances and lower incomes due to the contraction of the agriculture and services sectors during the pandemic.
• Egyptian expatriates sent $27.1 billion back home from January to November of 2020, 12 percent more than during the same period in 2019.
• A guarantee from the European Bank for Reconstruction and Development will allow Attijari Bank of Tunisia to extend a $7.4 million loan to MFI Enda Tamweel for on-lending to local MSMEs in need of financial support due to the coronavirus pandemic.
• The European Investment Bank has provided $3.3 million to the Microfund for Women to help finance female microentrepreneurs in Jordan during and after the COVID-19 pandemic.

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