COVID-19 FinDev Weekly Update | 08-14 May 2020

FinDev Gateway has created this COVID-19 weekly update with the latest and most relevant knowledge resources for financial inclusion as they become available. Sign up to receive FinDev's weekly update each Friday with a summary of the main issues covered during the week. 

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Weekly Summary

• Pandemics affect low-skilled workers disproportionately, worsening inequality, according to an IMF analysis. To address higher inequality, governments need to invest in social safety nets and policy measures that boost public work programs and offer financing opportunities to sustain employment.
• COVID-19 increases the risk of child labor. A recent report by the International Cocoa Initiative found that child labor tends to increase when households experience a sudden income drop. Whether microfinance helps or hurts efforts to reduce child labor is still an open question that needs more research.  
• Smallholder farmers need financial help now to purchase seeds and fertilizers so that they can produce the food they need, rather than depend on food aid later. Restrictions to limit the spread of coronavirus are disrupting food value chains. An IFPRI analysis finds that curfews and border closings in Africa disrupt food trade and may affect farmers’ access to inputs and fertilizers.
• Financial service providers can help agents manage liquidity for savings groups by teaching them to plan, monitor, and re-balance. A recent CGAP blog shows how agent networks struggle and are often overlooked by policymakers. Declaring them to be essential businesses is one of many steps that can be taken towards helping agents manage liquidity.

Asia

• Digital payments continue to grow across the region, including in India, Pakistan as well as in the Philippines where cash has traditionally been stronger. The Philippines’ leading e-wallet service GCash has seen double-digit growth in new user sign-ups since the quarantine period began on 4 April.
• In Pakistan, the staff of FINCA donated a day’s worth of salary to the country’s COVID-19 relief fund.
• ADB continues to announce loans to countries in the region to support their COVID-19 responses. Mongolia will receive a $100 million loan which will include support to MSMEs, cash transfer schemes and other social protection measures.
• To help address the need for remote digital services amidst the COVID-19 pandemic, the Singapore Monetary Authority is offering fintech companies grants and access to APIX, their cloud-based platform for integrating and testing applications.

Africa

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

• In Togo, the national microfinance association has asked the government for assistance in dealing with a crisis in MFIs’ cash flow caused by the pandemic. In Benin, MFIs are supporting small businesses that have difficulties repaying their loans, following the BCEAO’s new measures which allow businesses to defer loan payment for three months, renewable once. 
• A Nigerian non-profit is keeping track of funding to help fight the coronavirus impact in Africa, calling for transparent and responsible spending. Active in seven countries, the organization is tracking announcements of grants and donations for low-income communities and contacting donors and government agencies for detailed information on spending plans.  
• Digital infrastructure is taking priority in Africa, which may present an opportunity to reduce the digital divide and boost economic growth in the continent. The internet penetration rate is only 34 percent, which creates many challenges for fintech, education, health, access to employment and other social services. 
• Text messages help distribute food supplies to families in Tunisia and help reach displaced persons in the Democratic Republic of Congo.

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

Latin America and the Caribbean

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

• The Economic Commission for Latin America and the Caribbean (ECLAC) has urged governments in the region to provide a basic emergency income to those living in poverty in 2020, which make up 35 percent of the region’s population. The Commission warned that as the pandemic pushes more people into extreme poverty and increases inequality, governments may have to make such transfers permanent and extend them to more people above the poverty line.
• 29 countries in LAC have implemented social protection measures, mostly including cash and food transfers to the poor.
• In Peru, the government is working closely with local financial institutions to deliver cash transfers and is exploring a new scheme to automatically open bank accounts.
• Fear of unemployment in the United States might have rushed Mexican workers abroad to send a record high of remittances to their home country while taking advantage of favorable exchange rates. Inflows to Mexico reached $4.02 billion in March, 36 percent more than the country received the same month in 2019.
• In Argentina - a largely cash-based economy - a fintech called Ualá, recently reported that the demand for its prepaid debit cards increased significantly during the first 35 days of the quarantine; the fintech issued 140,000 prepaid debit cards, double the number of cards it issues monthly.  

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

Arab World

• According to the European Bank for Reconstruction and Development (EBRD)’s regional forecast, the economies of the region are expected to shrink by 0.8 percent this year, with Jordan, Lebanon, Morocco and Tunisia contracting the most.
• Morocco’s Central Bank asked banks to withhold payments to shareholders to better navigate the economic impact from the coronavirus.
• The Egyptian government has requested $9 billion from the IMF and other financial institutions while the Central Bank of Egypt is holding the interest rate steady. Coronavirus cases increased this week in Egypt. Social distancing remains a challenge with over half of the country already poor and vulnerable.
• Starting this week, Palestinian SMEs can access low-cost financing under the Palestinian Monetary Authority’s $300 million sustainability program.
• COVID-19 is aggravating the food security and humanitarian situation in conflict-affected Libya, Syria and Yemen. 

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