CGAP, Symbiotics Partner to Monitor COVID-19’s Impact on Microfinance
WASHINGTON, D.C., November 16, 2020 – CGAP and Symbiotics today launched a partnership to track and analyze the performance of hundreds of microfinance institutions (MFIs) across the world over the next six months, in an ongoing effort to shed light on how the COVID-19 pandemic is impacting the microfinance sector.
The COVID-19 pandemic has put the microfinance sector under considerable strain, as economic slowdowns have made it difficult for many borrowers to repay their loans. While CGAP’s earlier research on the crisis helped dispel concerns about an imminent liquidity crisis, there are ongoing concerns about microfinance institutions’ portfolio quality, solvency, and ability to continue serving excluded customers amid pressures of the pandemic.
To help fill the void of publicly available data on how this crisis is playing out, CGAP and Symbiotics – a leading microfinance investment vehicle – will be analyzing data on the performance of the more than 300 MFIs in Symbiotics global portfolio. We will publish our analyses at www.cgap.org/mfi-snapshots as a series of brief reports (“snapshots”) that include key indicators on issues such as portfolio quality, moratoria, disbursements, repayments, and solvency, as well as our insights around key developments and what they mean for the future.
“Since March of this year, we have been carefully monitoring the effects of the COVID-19 pandemic on the microfinance sector through key indicators provided on a monthly basis by our partner MFIs,” said Vincent Lehner, head of markets for Symbiotics. “The collaboration with CGAP brings complementary insights into how the sector is doing. We are pleased to see it get public visibility for the benefit of all those interested.”
The CGAP-Symbiotics partnership launches at a time when the CGAP Global Pulse Survey on Microfinance Institutions is entering its final wave and drawing to a close. Begun in June as a short-term solution to the need for data amid a fast-moving crisis, the pulse survey has provided critical information and analysis to funders and policy makers in the early stages of the COVID-19 pandemic.
“The pulse survey was instrumental in quickly providing data and insights on how COVID-19 affected the microfinance sector. In particular, it played a key role in allaying the financial inclusion community’s fears of a catastrophic liquidity crunch among MFIs and refocusing attention on issues related to solvency and lending behavior. As the survey wraps up, this new partnership with Symbiotics will enable us to continue providing valuable data on an ongoing basis and with a focus on longer-term concerns,” said Peter Zetterli, who led the pulse survey effort for CGAP.
The first snapshot in the CGAP-Symbiotics series is now available. Among its findings is that expiring moratoria and deteriorating loan portfolios appear to be leading many MFIs to adopt conservative lending practices. While this may be prudent from a risk management standpoint, it raises concerns about the sector’s ability to continue serving low-income clients during the crisis.
CGAP is an independent think tank that works to empower poor people, especially women, to capture opportunities and build resilience through financial services. We test, learn, and develop innovative solutions through practical research and active engagement with our partners on building responsible and inclusive financial systems that help move people out of poverty, protect their gains, and advance global development goals. Housed at the World Bank, CGAP is supported by over 30 leading development organizations committed to making financial services meet the needs of poor people.
Symbiotics is the leading market access platform for impact investing, dedicated to financing micro- small and medium enterprises and low- and middle-income households in emerging and frontier markets. Since 2005, Symbiotics has structured and originated some 4,000 deals for over 450 companies in almost 90 emerging and frontier markets representing more than $5.5 billion. These investments have been purchased by more than 25 fund mandates and more than 50 third-party specialized fund managers, forming a growing ecosystem and marketplace for such transactions.