FinDev COVID-19 Update | 05 - 18 Nov 2020

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Global Update

• CGAP invites MFIs to complete the final wave of the Global Pulse Survey on Microfinance Institutions. Going forward, CGAP will continue providing insights through a new partnership with Symbiotics by analyzing performance data on more than 300 MFIs in the Symbiotics global portfolio. The first snapshot of such data published this week shows that MFIs are on a steady rebound since May, although that may not last. With client relief from moratoria waning, portfolio at risk appears to be growing. MFIs are taking a more conservative approach to lending by focusing on larger loan sizes which may limit access for some clients.
• According to Grameen Crédit Agricole Foundation,  debt providers, investors and other support organizations are applying the principles they committed to in May to support the MFI sector. These conclusions are based on a recent analysis of 70 cases of debt rollover requests from MFIs, which found that lenders, in most cases, coordinated among themselves and applied handshake agreements, avoiding lengthy restructuring discussions.  In turn, MFIs are expected to act responsibly towards clients and staff. On this related topic, CGAP is hosting a webinar featuring leaders in the MFI sector to learn more about how MFIs are managing debt moratoria and loan adjustments to alleviate pressure on clients’ finances.
• A recent FSD paper examines the potential drivers of financial resilience using data from the 2014 and 2017 Global Findex. The author finds that borrowing for consumption and for health are negatively associated with financial resilience. “At the country level, income inequality and unemployment substantially lower the likelihood of financial resilience while higher government spending raises it.”  

Asia

• As the pandemic has prompted more Filipinos to use digital wallets, the country is gearing up to better support fintechs. The Philippine Central Bank plans to take advantage of fintech as part of its strategy to increase financial inclusion to 70 percent by 2023, and the Philippine Stock Exchange has plans to adjust its listing rules in a way that could facilitate the listing of local fintechs.
• In Myanmar, the MFI Maha shared how they have responded to the needs of their clients during the COVID-19 crisis. The institution focuses on consumer protection - through cash discounts, surveys to stay attuned to clients’ evolving needs and modifying staff incentives to ensure fair and respectful treatment of clients.
• 77 percent of Malaysian businesses are adapting to COVID-19 by accelerating digitalization plans, including introducing digital payments and launching digital products, according to a survey by Microsoft and International Data Corporation (IDC) Asia Pacific.
• Across East Asia and the Pacific, women were more likely to lose their jobs than men, according to high-frequency phone surveys conducted by the World Bank from May to June. In India as well, the pandemic has sharpened the gender divide in the workforce, where the already low work participation rate for women decreased from 9.15 percent in December 2019 to 5.8 percent in August 2020.

Africa

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

• In Somalia, a high mobile money penetration rate of 72 percent in IDP (internally displaced people) camps is helping humanitarian organizations transfer funds safely to beneficiaries and curbing the spread of coronavirus. The UN agency FAO is working with domestic telecom providers to deliver cash transfers through mobile phones.
• The microfinance association of Senegal is considering lowering interest rates in order to support entrepreneurship during the pandemic. Currently, the average interest rate applied by MFIs is 15 percent. 
• The second round of World Bank’s Uganda High-Frequency Phone Survey on COVID-19 (July-August 2020) reveals that about 20 percent of households had to borrow money since March. The main reasons were employment shocks and loss of assistance from relatives. Most of them borrowed from friends, relatives or neighbours, while access to loans through formal financial institutions remained low (12 percent of households). 
• UNDP and UNCDF launched a program for MSMEs in Togo that seeks to increase their resilience to shocks. 92 percent of businesses in Togo recorded a drop in sales between February and March 2020, the service sector being the most affected. 
• As schools look to reopen in Kenya, households struggle to cover the cost of education. Loss of income and remittances led many households to use their savings to buy food or medication. 

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.

• A new edition of the Global Microscope 2020 released this week by The Economist Intelligence Unit explores the important role of financial inclusion in LAC’s economic response and recovery from the COVID-19 pandemic. 19 out of the 21 LAC countries included in the Microscope were able to provide emergency relief funds to low-income households during a period of closures and confinements; 11 of those distributed those funds quickly and safely via financial accounts and digital wallets. 
• The Association of Supervisors of Banks of the Americas (ASBA) says that the public and private sectors should work together to promote resilience, innovation and inclusion in the region’s financial system. The association outlines policy actions to increase crisis preparedness, address rising credit risk and preserve financial stability in the region in three new studies released recently.
• More than 100 practitioners from LAC came together to discuss the barriers to women’s financial inclusion in the region during the FinEquity Annual Meeting. Participating organizations agreed upon an agenda going forward, committing to work on the following areas: developing financial education programs with a gender lens, identifying social norms and regulatory barriers that limit or prevent access to and use of financial services by women, and increasing women’s representation in leadership positions in the sector.
• Peru’s historic Central Market of Lima joined the digital wallet initiative, “Billetera digital: Pago seguro,” which aims to promote the use of contactless payments and other more secure payment methods in food markets in the capital city. The campaign includes three of the most active digital wallets in the country: Bim, Yape and Tunki, which are also being used to deliver COVID-19 stimulus payments.
• In Nicaragua, the microfinance network ASOMIF estimates a 12.8 percent decline in the sector’s loan portfolio and a drop of 13.4 percent in the number of clients they serve by the end of the year, as a result of the COVID-19 crisis.
• Grameen Costa Rica is the first cash-free microfinance institution in the country, certified by the Central Bank of Costa Rica. The institution, has provided financing and training to more than 27,000 low-income women entrepreneurs and has managed to automate the banking processes for most of its clients. 

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

Arab World

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

• The use of digital finance continues to increase across the region. Egyptian e-payment and banking technology platform Fawry’s profits went up by 90 percent during the first nine months of this year compared to the same period last year, largely due to the COVID-19 pandemic. In Bahrain, electronic real-time fund transfers jumped seven-fold last month, indicating an increasing adoption of digital banking during the coronavirus pandemic. Similarly, Abu Dhabi Islamic Bank reported last month that up to 94 percent of banking transactions, including fund transfers, are now conducted digitally as a result of the pandemic. This strong increase in digital services continues even after the phased re-opening of the UAE economy.
• In Tunisia, the microfinance institution Enda Tamweel raised close to $10 million on the bond market. 
• The United Nations Relief and Works Agency for Palestine Refugees, which supports 5.7 million Palestinian refugees in the Middle East, announced it has run out of money to pay the salaries of 28,000 staff members in November and still needs at least $70 million to continue its education, health, and financial services during the pandemic.

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