FinDev COVID-19 Update | 22 Apr - 05 May 2021

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Global Update

• The microfinance sector remains resilient, according to a recent analysis by CGAP and Symbiotics. While MFI portfolios grew, the number of borrowers stayed stagnant as microfinance institutions hesitate to onboard new clients during the crisis.
• COVID-19 will lead to a higher increase in inequality compared to previous pandemics and financial crises, according to IMF, which also projects substantial declines in GDP, high unemployment, and an increase in public debt through 2025.

Asia

• India’s central bank announced renewed relief measures for lenders and individual borrowers as the country faces a severe second wave of COVID-19 infections which is affecting rural MFI borrowers and staffers much more than the first wave. The MFI association Sa-Dhan and the association of non-banking finance companies (NBFCs) called for urgent liquidity support from the government. Sa-Dhan also requested that MFI employees and self-help group workers be prioritized in vaccination efforts. 
• Life insurers in India have become reluctant to renew group policies amid the surge in COVID-19 cases and have increased rates for group term life policies.
• Cambodia’s National Bank and the MFI Association are promoting electronic payments as COVID-19 cases in the country rise once again. Nham24, a Cambodian shopping delivery app, reported that cashless payments overtook physical transactions for the first time in recent days. 
• MSMEs in Indonesia reported improved business activity in the first quarter of 2021 compared with the previous one, and are showing optimism according to a survey conducted by Bank Rakyat Indonesia in March and April 2021.
• The government of Kazakhstan announced new relief measures, including tax deferrals and an extension of subsidized interest rates, for SMEs in industries affected by the coronavirus pandemic.
• In the Philippines, deposits rose by 9 percent in 2020 as Filipinos saved more during the pandemic. The number of new businesses, especially online sellers, also went up in the first quarter of 2021, as Filipinos seek new ways to earn income.

Africa

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

• A growing number of small vendors in Kenya’s slums are turning to credit unions and savings groups to access capital, attracted by collateral-free loans at a time when traditional financial institutions are increasing collateral requirements and interest rates to limit their exposure to MSMEs during the economic downturn. 
• Mobile money penetration in Togo reached 62 percent of the population in January 2021, an increase of 7 percent from last April, due largely to the social protection program Novissi, which granted emergency funds to 820,000 people and turned mobile phones into electronic wallets. 
• In Nigeria, microfinance banks recorded an 82 percent increase in lending in 2020. Demand for loans spiked during the COVID-19 lockdowns, with most borrowing happening through mobile phones or email exchange. 
• A quarter of MSMEs in Lagos, Nigeria have had their business negatively affected by a climate shock in the last five years and are now experiencing a slower recovery from COVID-19 compared to peers who did not experience a climate shock, according to a CFI survey.

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.

• Facebook’s WhatsApp payment service relaunched in Brazil after it was suspended nearly one year ago by the Central Bank; 120 million WhatsApp users will be able to send and receive money free of charge.
• Debit card usage in Argentina increased by 33 percent in the first quarter of 2021 compared to the same period last year, driven by changing consumption patterns due to COVID-related closures and a boom in digital payments.
• In just one month, over 10 percent of Bolivia’s BancoSol mobile banking customers signed up for GanaSol, an app that uses gamification to encourage positive savings behaviors for MSMEs. The app aims to help clients regain their financial health and overcome shocks. 
• In Mexico, informal jobs are growing faster than jobs in the formal economy as more people try to compensate for the drop in income due to the pandemic.
• The Central American Bank for Economic Integration (BCIE) approved a $600 million loan to El Salvador to boost the economic recovery of the country whose GDP fell by 7.9 percent in 2020 due to the pandemic.

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 French and Arabic.

• After pausing in 2020 due to the pandemic, the Arab Financial Inclusion Innovation Prize returns for a third edition in 2021 to reward innovative solutions that can make financial services more accessible and affordable for low-income individuals and MSMEs in the Arab world.
• A new partnership between the fintech company PayBy and UAE payment system NT.Payments will give users access to a range of digital financial services, including paying bills, transferring money and converting cash to digital money.
• Financing to microenterprises in Egypt grew by 17 percent in 2020 from the previous year; 62 percent of the 3.1 million beneficiaries were women.
• The global Islamic finance sector is expected to grow between 10 and 12 percent in 2021 and 2022, according to credit rating agency Standard & Boozer, due to an increase in issuing sukuks (Islamic-compliant bonds) and a modest economic recovery in major Islamic financial markets. 

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