Financial health of microfinance institutions
When COVID-19 struck, it did not take long for questions to emerge about whether the worsening economic conditions posed an existential threat to the microfinance sector. Through its global pulse survey of microfinance institutions and subsequent partnership with Symbiotics, CGAP showed that the widespread liquidity crises many feared did not materialize; however, the data did highlight the need to carefully monitor solvency in the longer term as the effects of the pandemic continue to ripple across the industry well into 2021, especially among smaller microfinance institutions. Explore CGAP’s data and analysis in the resources below.
CGAP and Symbiotics partnered to analyze COVID-19's impact on Symbiotics' portfolio of over 300 MFIs in this series of brief papers published between November 2020 and July 2021.
From June to December 2020, CGAP surveyed hundreds of MFIs around the world about how COVID-19 was affecting their performance. View data and analysis from the survey.
Funder alignment
Responding to the COVID-19 crisis effectively will require a coordinated approach among key stakeholder groups — donors, governments, development finance institutions, and private investors — to put the interests of low-income customers at the center of decision-making. CGAP has worked with development finance institutions and other stakeholders since the start of the pandemic, coordinating information on institutions’ perspectives and convening technical discussions on possible ways forward. The resources below summarize the main findings to date.
Microfinance institution responses
CGAP’s consultations with nearly 100 microfinance stakeholders revealed that COVID-19 caught many institutions unprepared, especially those that had not digitized their core operations to facilitate contactless client interactions and payments. In response, CGAP developed a crisis management roadmap for microfinance institutions and a report on debt restructuring that blends the perspectives of institutional creditors and debtors. Resources will be added on the digitization of microfinance, which has taken on increased urgency in the wake of the pandemic.
Regulatory Issues
CGAP is gathering information about actions taken by governments to provide relief to borrowers and lenders, assessing their impact on MFIs and low-income customers, and working to ensure that regulatory responses incorporate best practices.
Framework for regulatory response
COVID-19 BRIEFING JUNE 2020
Microfinance and COVID-19: A Framework for Regulatory Response
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.
CGAP BACKGROUND DOCUMENTS JUNE 2020
Policy, Regulatory, and Supervisory COVID-19 Responses for Microfinance
A set of CGAP background documents examine the impact of the COVID-19 crisis at the country level. These documents provide a snapshot of the policy and regulatory responses adopted by financial authorities in four countries: Peru, India, Pakistan, and Uganda.
Principles for regulatory response
COVID-19 BRIEFING SEPTEMBER 2020
Microfinance and COVID-19: Principles for Regulatory Response
As a result of the COVID-19 outbreak, further policy steps have proven necessary, both within and beyond the financial sector, to mitigate the impacts of the pandemic on businesses and ordinary people. This Briefing applies five guiding principle to country contexts, and specifically addresses what each principle means for regulatory responses to the COVID-19 crisis.
DATA SEPTEMBER 2020
Microfinance & COVID-19: Examples of Regulatory Responses affecting Microfinance Providers
This table provides country examples for regulatory responses identified in the Briefing Microfinance and COVID-19: Principles for Regulatory Response.
Debt restructuring in microfinance
COVID-19 BRIEFING SEPTEMBER 2020
Debt Restructuring in Microfinance
The twin global crises of a health pandemic and economic lockdowns are severely harming the livelihoods of low-income people around the world. Microfinance providers and funders are returning to the negotiating table to respond to liquidity and, possibly, solvency issues facing distressed MFPs.
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