Photo by Thao Vu Xuan, 2016 CGAP Photo Contest Photo by Thao Vu Xuan, 2016 CGAP Photo Contest

COVID-19 (Coronavirus) - Insights for Inclusive Finance

The twin global crises of a health pandemic and economic lockdowns are severely harming the livelihoods of low-income people all around the world; many parts of the financial inclusion ecosystem designed to help them also are at risk. Microfinance institutions and other credit-issuing organizations, including off-grid energy providers and fintechs, are bracing themselves to ride out the economic storm. Investors and donors are looking for ways to provide support, even as their own economies suffer. Mobile money operators, meanwhile, are juggling their important role in getting money into the hands of the needy against challenges from governments that don’t always recognize that cash distribution costs money, agents have to stay open and that shopkeepers must have sufficient liquidity to support their core businesses and those who rely upon them.

In face of these multiple challenges, CGAP is focusing its COVID-19 work on four areas that play a vital role in furthering financial inclusion: the MFI sector; distribution and government-to-person payments; understanding the impact on customers; and guidance for funders and investors.

For the larger financial inclusion community, FinDev Gateway has created the COVID-19 Resource Hub as a collective space for partners to share insights, experiences and lessons learned as we all struggle to manage this unprecedented global crisis.

Blog

CGAP spent time thinking about how we can add unique value to a coordinated crisis response. The work we are doing to combat the effects of coronavirus is refocusing those efforts in new and unanticipated ways.
Photo by Hiba Zeeshan, 2016 CGAP Photo Contest
Publication

A framework for identifying and assessing crisis responses must take account of the special characteristics of microfinance which leads to the question of how regulators should respond. A review of current practice in a range of countries suggests there are six key steps to be taken at the level of regulation and policy.
Blog

Inclusive financial systems are understood to be part of the solution to the coronavirus (COVID-19) crisis, donors are often unclear how most effectively to tailor their interventions. In this Leadership Essay, Michael Tarazi outlines a path forward.
Global survey of microfinance institutions on the impact of COVID-19

How is COVID-19 impacting the portfolio quality of MFIs? Are MFIs facing a liquidity crisis? Is the solvency of these institutions at risk? What is the outlook of MFIs themselves? CGAP is conducting a global, biweekly survey of MFIs to capture the full picture of the scale of the microfinance crisis at global, regional, and national levels, across 39 indicators. We ask all MFIs to sign up and join the CGAP survey here. Your support for this global effort in collecting data will play an important role in ensuring the survival of the sector that is critical to livelihoods of poor people. Please find more details by viewing our FAQ (English, Francais, Español) and reading our press release.

 

 

 

 

 

CGAP's latest on COVID-19 research
BLOG 29 APRIL 2020

Kenya’s Expansion of G2P Becomes Lifeline During COVID-19 Crisis

Kenya offers higher fees to providers that facilitate digital government-to-person payments in underserved areas. Today, this makes it easier to reach hundreds of thousands of low-income people with assistance during the COVID-19 crisis.

BLOG 27 APRIL 2020

Agent Networks: Vital to COVID-19 Response, in Need of Support

Digital payments are central to the global COVID-19 response, but the agent networks that distribute these funds are struggling to remain open. Here are three questions policy makers must answer to ensure agents reach as many people as possible.

BLOG 15 APRIL 2020

COVID-19 Exposes Risks and Opportunities in Kenya's Gig Economy

Gig workers in Kenya report major disruptions to business and depleted savings due to COVID-19 (coronavirus), while platforms signal eagerness to facilitate government-to-person payments or loans to hard-hit workers.

BLOG 09 APRIL 2020

Financial Scams Rise as Coronavirus Hits Developing Countries

As COVID-19 (coronavirus) spreads in developing countries, there has been a surge in financial scams. David Medines writes about what action is needed from governments and financial services providers. 

WORLD BANK BLOG 31 MARCH 2020

Responding to crisis with digital payments for social protection: Short-term measures with long-term benefits

In this blog post, World Bank directors write about the cross-sector, cross-government momentum required to change the G2P payments paradigm to support both the crisis response and long-term financial inclusion and empowerment goals.

BLOG 25 MARCH 2020

COVID-19: How Does Microfinance Weather the Coming Storm?

If the microfinance sector is going to survive the pandemic, we need to treat COVID-19 as the fundamental threat to the industry that it likely is. The millions who rely on inclusive finance to borrow, save and spend money are counting on us.

Lessons from Past Crises

While the public health and economic dimensions of the COVID-19 pandemic are becoming unlike anything we have confronted, earlier crises offer valuable lessons on how health and economic shocks can disrupt the delivery of financial services for the poor and how governments, funders, and financial institutions can respond to these challenges. In an effort to make such lessons more widely accessible, below is a listing of past CGAP research.

The role of microfinance institutions

BLOG SERIES  2015-2016

The Arab World and Financial Inclusion During Crises

This blog series looks at how donors and investors in the Arab World have approached crisis situations, including how they have worked with microfinance institutions to help restore livelihoods.

PUBLICATION AUGUST 2013

Lessons Learned from the Moroccan Crisis

This paper outlines lessons from the rise, fall, and recovery of Morocco’s microfinance sector that may be useful when adapted in other countries. Though the government failed to prevent the crisis, its efforts proved catalytic in the recovery.

PUBLICATION MAY 2009

The Impact of the Financial Crisis on MFIs and Their Clients  

In March 2009, CGAP and MIX surveyed over 400 microfinance institutions about the impact of the 2008 financial crisis. While respondents felt liquidity and credit risk management challenges, interest rates held steady and they remained optimistic.

PUBLICATION  FEBRUARY 2009

The Global Financial Crisis and Its Impact on Microfinance

During the 2008 financial crisis, MFIs clients experienced lower incomes and remittance flows. Yet deposit-taking MFIs were better positioned to keep serving clients than those reliant on international funders amid global liquidity contraction.


To view other relevant research, please visit FinDev Gateway's topic pages on library on COVID-19Refugees, and Disasters and Conflict.


 

Humanitarian crises

CGAP COLLECTION 

Forcibly Displaced Persons and Financial Services: Why and How?

This collection of resources highlights the role of financialservices in humanitarian crises and what have we learned from the Syrian Refugee Crisis in Lebanon and Jordan.

PUBLICATION  

Humanitarian Cash Transfers and Financial Inclusion

Syrian refugees in Lebanon and Jordan receive more than one quarter of their humanitarian assistance in the form of cash and vouchers. Leveraging this aid delivery to connect refugees to the formal financial system requires the host country to have widespread digital financial ecosystem in place and coordination among governments, aid agencies, and financial service providers.

BLOG  10 FEBRUARY 2020

Vulnerable Groups in Lebanon Cite Health as Top Financial Challenge

Even before COVID-19, health shocks were among the most damaging challenges for low-income households in Lebanon. This blog discusses informal coping mechanisms and calls for urgent government and funder support for savings and insurance solutions.

PUBLICATION  APRIL 2017

The Role of Financial Services in Humanitarian Crises

This publication offers a framework for how financial services support sustainable livelihoods during periods of humanitarian crisis, finding that solutions for digital cash transfers and remittances, savings and insurance are especially important.

BLOG SERIES  2017

Financial Services in Humanitarian Crises 

Building on the CGAP, SPF and World Bank Group’s “The Role of Financial Services in Humanitarian Crises” paper, this blog series examines the role financial services play in helping low-income households overcome adversity in times of crisis.


To view other relevant research, please visit FinDev Gateway's topic pages on library on COVID-19Refugees, and Disasters and Conflict.