The Foundation publishes its report “The impact of the crisis on microfinance institutions”

The Covid-19 pandemic affected all economies impacting fragile economies and the most vulnerable populations in particular.

The Grameen Crédit Agricole Foundation began to investigate the unprecedented effects of this global crisis on microfinance institutions (MFIs). An initial survey was launched in March 2020 to understand how our MFI partners were adapting to the repercussions of the pandemic that had already had an impact on their activities.

In the following months, the Foundation collaborated with two other major players in inclusive finance, ADA and Inpulse, to extend the scope of this study to more than 100 MFIs in 4 continents: Africa, South America, Asia and Europe. Overall, 6 surveys were conducted since the inaugural questionnaire in March.

You will discover through this report the results of these studies divided into three main parts:

Adapting rapidly to operational constraints

Surveys conducted throughout 2020 revealed three major difficulties: the impossibility of meeting clients in person, difficulties in collecting repayments and complications in disbursing loans.

In an effort to address these difficulties, MFIs acted in a proactive and appropriate manner, showing the great resilience capacity of those organisations. However, all FMIs haven’t been impacted in the same way. This document describes those constraints and the measures that have been implemented.

A significant and sustained financial impact

The operational constraints encountered have inevitably had significant financial repercussions. We observe two major consequences for almost all MFIs: an increase in the portfolio at risk (PAR) due to lower repayments, and a reduction in outstanding loans due to lower disbursements.

Those two consequences fluctuated throughout the year depending on local contexts and other financial difficulties may have arisen in some cases. The analysis of performance indicators, detailed in this document, enables us to see the lasting effect of the crisis.

Prospects for the future

In the face of the crisis, most MFIs have shown resilience. Among the levers envisaged to return to financial stability: increasing the volume of their portfolio and the number of clients, and opening up to new products and services, and even to new markets, in 2021.

You will discover throughout the report other measures MFIs explored to adapt to the crisis, which are reassuring for the future of the sector.

Despite the often positive indicators, we remain vigilant in the face of the current volatile environment. For this reason, we have maintained our approach of regular surveys in 2021, on a quarterly basis.


Download the report

The Foundation grants seven new loans in Eastern Europe and Central Asia

Since January 2021, the Grameen Crédit Agricole Foundation has pursued its financing in Eastern Europe and Central Asia and has thus granted seven new loans to its partners.

In Kosovo, the Foundation granted a new loan to the microfinance institution AFK for an amount of €1.5 million over a three-year period. The Kosovo Finance Agency (AFK) is a microfinance institution that aims to improve living conditions in Kosovo by providing access to sustainable financial services to micro and small businesses. AFK aims to promote the development of rural areas as well as women entrepreneurs and minorities. The institution serves 19,300 active borrowers (22% of them women and 51% of them living in rural areas) and manages a portfolio of 36 million euros.

In Moldova, the Foundation granted a new loan to the microfinance institution Microinvest for an amount of €1.4 million over a three-year period. Microinvest provides microcredit and business start-up assistance to small entrepreneurs in many regions of the Republic of Moldova. 70% of its loan portfolio corresponds to loans to private entrepreneurs living in rural areas. The institution has nearly 37,000 clients, 66% of whom live in rural areas and 41% of whom are women.

In Montenegro, the Foundation granted a loan to the microfinance institution Monte Crédit for an amount of one million euros, over a three-year period. Founded in 2005, Monte Credit is a microfinance institution whose mission is to empower rural families to create income and jobs, freeing up economic potential so that communities thrive. The institution has more than 4,000 clients, 54% of whom are women and 51% of whom live in rural areas.

In Kyrgyzstan, the Foundation granted a new loan to the microfinance institution OXUS for an amount in local currency equivalent to €800,000. OXUS Kyrgyzstan is a microfinance institution created in 2006 by OXUS Group and ACTED. It is a responsible company committed to providing financial services to the working poor and the under-banked in Kyrgyzstan. To date, the institution has nearly 8,000 clients, 48% of whom are women and 62% of whom are clients in rural areas.

In Kazakhstan, the Foundation granted a new loan to the Asian Credit Fund (ACF) microfinance institution for an amount in local currency equivalent to one million euros. ACF is a microfinance institution created in 1997 by the American NGO Mercy Corps. ACF’s financial services are designed to promote the development of rural households, the growth of small businesses and home ownership. ACF adheres to a specialised community lending model that offers tailor-made financial solutions, business advice and technical assistance to its clients. To date, the institution has 27,000 clients, 70% of whom are women and 93% of whom are rural areas clients.

Finally, in Tajikistan, the Foundation granted a new loan of an amount in local currency equivalent to €1.2 million to the microfinance institution HUMO. HUMO is a microfinance institution that aims to support vulnerable and underserved populations living in rural areas through financial and advisory services for small businesses. The institution has nearly 73,000 clients, 37% of whom are women and 75% of whom live in rural areas. Also in Tajikistan, the Foundation granted a new loan to the microfinance institution OXUS Tajikistan for an amount in local currency equivalent to one million euros over a three-year period. OXUS Tajikistan mainly targets microentrepreneurs and farmers in rural areas. Its social mission is clear and aims to improve the economic and social conditions of the low-income population who are not served by the banking sector. To date, the institution has over 14,000 clients, 36% of whom are women and 79% of whom live in rural areas.

For more information, click here.

The AFD and the Foundation, a historical and promissing partnership

Rémy Rioux, CEO, Groupe Agence française de développement
[French Development Agency]

A historical partner, the Agence française de développement (AFD) [French Development Agency] has been supporting the Foundation’s activities for over 10 years. Its CEO, Rémy Rioux, shares with us his vision on the impact of the economic and health crisis generated by the Covid-19 pandemic on the African continent and his assessment of the partnership with the Foundation.

— What were the main impacts of the pandemic on the African continent in your opinion and how did the AFD respond to this crisis? What were your key areas of response?

R R: Africa experienced an unprecedented shock in 2020, which, I would like to stress, was totally external to the continent. The continent appeared quite resilient in terms of health, but less so on the economic front. An unprecedented recession, averaging 2.6%, affected more than forty countries simultaneously. Beyond the cyclical impact, the crisis above all raises concerns about a deep weakening of economies and societies.

The Agence française de développement Group (AFD) mobilized very quickly to support its partners. In terms of health, with a €1.2 billion “Common Health initiative”, half of which in Africa, for some fifty projects and nearly €130 million in donations; and on the economic level, with the “Choose Africa” programme to support the entrepreneurial sector and then its strengthening with a Resilience component, bringing the programme to €3.2 billion committed by 2022. Finally, in the wake of the «Finance in Common» Summit, we support African public development banks (a hundred or so of which throughout the continent), to turn them into sustainable growth relays.

— How do you assess the historic partnership with the Grameen Crédit Agricole Foundation?

R R: The AFD Group has been providing the Foundation with portfolio and individual guarantees for more than 10 years and has financed the African Facility, which enables us to support small microfinance institutions for the benefit of disadvantaged populations, particularly in rural areas. The partnership with the Foundation has since 2020 been handled by Proparco, our subsidiary dedicated to the private sector. Beyond the financial partnership, we appreciate the quality of the relationship between our two institutions, which is marked by trust and transparency. The importance of supporting the microfinance sector has been reinforced by the Covid-19 crisis and working with the Foundation constitutes a solid lever for strengthening the sector.

— Can a large institution like yours and an agile player like the Foundation still invent new ways of acting and if so in what priority areas?

R R: The complementary nature of our two institutions and their response methods makes the partnership strong and relevant to several priority areas, namely: support for the development of microinsurance, particularly agricultural microinsurance; assistance to microfinance institutions in improving social performance management; development of the digital offer in the microfinance sector; and green microfinance. The context of the crisis has reinforced the relevance of these areas of response.

The Covid-19 crisis and gender inequalities

© Philippe LISSAC /Godong – Fondation Grameen Crédit Agricole
Miren Bengoa, Director, member of Financial, Risks and Impact Committee,
Grameen Crédit Agricole Foundation & International Action Director, SOS Group

Director of the Grameen Crédit Agricole Foundation since 2020, Miren Bengoa has been, since January 2021, the new International Action Director of the SOS Group. Since 2011, she was at the head of Fondation CHANEL, which supports projects improving the economic and social situation of women. She shares her view on the impact of the Covid-19 crisis on gender equality and the responses to address it.

— What is the impact of Covid-19 on the status of women?

MB: One of the immediate consequences of the Covid-19 crisis is the rise in inequalities between women and men. We have seen during this pandemic an increase in violence against women and girls and a decline in girls’ learning as dropout rates and child marriage increase. Tens of millions more women have fallen into extreme poverty as they lose their jobs at a faster rate than men. Moreover, they suffer from difficulties in accessing new technologies and lack of digital skills.

— In a few words, what is the panorama of gender inequality in the world today?

MB: Current projections indicate that gender equality will not be achieved for another 130 years. In 2020, women represented on average (on a global scale) 4.4% of business leaders, 16.9% of Board members, 25% of parliamentarians and 13% of peace negotiators. Only 22 countries are currently headed by a female head of State or government (UN Women, 2020). We need better representation of women that reflects the diversity and abilities of women and girls.

— How can female entrepreneurship be an answer to the crisis?

MB: Women entrepreneurs have been at the forefront and strongly affected by the decline in economic activity. They are nonetheless also the bearers of innovative solutions and should be supported as much as possible by funders and public authorities. Being strongly involved in responding to community needs, they have been able to adapt their activities to the constraints of the pandemic. This has not been easy: they have sometimes been the first to give up a income generating activity so as to give priority to their families.

— Promoting women empowerment is one of the missions of the Grameen Crédit Agricole Foundation. What should be the priorities to boost this aspiration?

MB: Since its creation, promoting women empowerment has been at the heart of the Foundation’s action: among the 7 million clients of microfinance institutions supported, 73% are women beneficiaries of microcredits to create or develop income-generating activities. Maintaining funding, flexibility in rollovers and frequent analysis of the needs of these institutions are and will be key to enable them to regain a capacity for action in favour of female entrepreneurship.

The Foundation provides four new financings in sub-Saharan Africa

© Didier Gentilhomme (AMZ Zambia)

In recent months, the Grameen Crédit Agricole Foundation has pursued its financing in sub-Saharan Africa with four new loans granted, two of which to new partners.

In Togo, the Foundation granted a new loan to the microfinance institution Assilassimé for an amount in local currency equivalent to € 2.2 million. Assilassimé’s mission is to provide sustainable access to social microfinance services adapted for people experiencing exclusion or extreme poverty, with limited access to the traditional microfinance system. The institution seeks first and foremost to enable them to carry out income-generating activities and improve their living conditions. To date, Assilassimé has over 19,000 clients, 91% of whom are women.

In Zambia, the Foundation granted a new loan to the microfinance institution AMZ for an amount in local currency equivalent to € 1 million. AMZ aims to serve customers who have previously been excluded from the formal financial market, mainly because of their poverty or their place of residence. The products offered are designed to meet their financial needs. The institution has over 80,000 active borrowers, 92% of whom live in rural areas and 56% of whom are women.

In Rwanda, the Foundation granted a first loan to the microfinance institution ASA Microfinance Rwanda for an amount in local currency equivalent to € 500,000. ASA Microfinance Rwanda Plc (ASA Rwanda) is an institution created in 2016 by ASA International. Its mission is to contribute to poverty reduction through economic empowerment by ensuring access to financial services to the disadvantaged community of Rwanda. The institution grants loans according to group and individual methodologies. They mainly finance women who represent more than 95% of its clientele, and mainly operates in rural areas.

Finally, in Kenya, the Foundation also granted a first loan for an amount in local currency equivalent to € 766,000 to the microfinance institution YEHU. YEHU is a microfinance institution whose mission is to fight poverty by empowering poor rural entrepreneurs in Kenya to help them lift themselves out of poverty through better accessibility to sustainable financial services. This includes enabling them to save while giving them access to microloans, which can be used to start or grow their small business. Yehu also offers business training, microinsurance products and other services to improve the lives of its members. To date the institution has 28 000 clients, 96% of whom are women. 76% of its clients live in rural areas.

To date, the Grameen Crédit Agricole Foundation has 89 partners in 39 countries and manages a portfolio of €86 million, 46% of which is located in so-called fragile countries.

For more information, click here.

The Foundation continues to support its partners in Asia

© Didier Gentilhomme / Fondation GCA

During the first quarter of 2021, the Grameen Crédit Agricole Foundation completed three new financings in Asia, in particular in Indonesia.

In Indonesia, the Foundation granted a new loan to the microfinance institution KOMIDA for an amount in local currency equivalent to €2.2 million. KOMIDA is a microfinance institution created in 2004 as a foundation to offer financial assistance in the form of savings and loan services as well as non-financial services such as health or family financial management training. The institution, which works exclusively with women, currently serves nearly 720,000 clients.

Also in Indonesia, the Foundation granted a new loan to the microfinance institution MBK for an amount in local currency equivalent to € 5 million. “Mitra Bisnis Keluarga” (MBK) is a microfinance institution regulated by the Indonesian Financial Services Authority (FSA) and licensed as a non-bank finance company. Using the Grameen Bank methodology, MBK provides working capital to low-income women in Java to give them access to formal and profitable financial services (financial inclusion), reduce their vulnerability and improve their lives. To date, the institution serves more than one million clients, exclusively women, 75% of whom below the poverty line.

In Myanmar, the Foundation granted a new loan to Proximity Finance for an amount in local currency equivalent to € 1.4 million. Proximity is a microfinance institution created in Myanmar in 2010 that designs and delivers affordable and income-generating products for rural families. The institution strives to improve the livelihoods of rural Myanmar people by providing innovative financial services tailored to their needs, and uses the dynamism of businesses to create social value. To date Proximity has nearly 200,000 active borrowers, 69% of whom are women and 98% of whom live in rural areas.

To date, the Grameen Crédit Agricole Foundation has 89 partners in 39 countries and manages a portfolio of €86 million, 46% of which is located in so-called fragile countries.

For more information, click here.


Lazika Capital, partner of the Foundation, supports Georgian entrepreneurs

Lazika Capital is a microfinance institution created in 2000 by Oxfam Great Britain in Georgia. Its mission is to facilitate access to financial services for low and middle income entrepreneurs.
Lazika Capital is among the leaders in the Georgian microfinance sector and has nearly 14,000 clients. The agricultural sector represents 52% of its portfolio.

In 2020, in response to the Covid-19 crisis, Lazika Capital provided significant benefits to its clients directly affected by the health and economic crisis. During this period, the Grameen Crédit Agricole Foundation, alongside other lenders, supported Lazika Capital to limit a decline in its liquidity and ensure that the institution could continue to finance its clients. Although the health situation has improved in 2021, the institution remains actively involved in various government programmes to reduce the negative impact of the pandemic and accelerate economic recovery.

Priority to digitalisation

Lazika Capital was the first microfinance institution in Georgia to be allowed, by the National Bank, to offer remote services.

To support entrepreneurs, especially in the agricultural sector, Lazika Capital offers its clients technological improvements to make their products and services more diversified and flexible.
Indeed, the institution uses digital tablets for better application management in the field. This digital offering was particularly useful during the lockdown period, as clients could apply for loans, be informed of their approval and make repayments without visiting a branch.

The positive results achieved in 2020 prove that Lazika Capital is a resilient institution, able to face challenges while continuing to be a successful, reliable and responsible partner in the microfinance sector. The Grameen Crédit Agricole Foundation, on its side, pursues its support to the institution with which it has been working since 2017, in order to continue supporting Georgian entrepreneurship, despite the challenges in this uncertain period.

More information on Lazika here.

Solidarity Bankers: six missions to be filled with the Foundation’s partners

© Godong / Philippe Lissac – Fondation Grameen Crédit Agricole

Two online and four field Solidarity Bankers’ missions are currently available on behalf of the Grameen Crédit Agricole Foundation.

Solidarity Bankers is a skills volunteering programme launched by the Foundation and Crédit Agricole S.A. in 2018 and aimed at all Crédit Agricole Group employees. The programme has a twofold objective: on the one hand, support microfinance institutions and social impact enterprises financed by the Foundation with technical assistance, and on the other hand, enhance the skills of Group employees who want to invest themselves in projects with high social impact.

The missions can take place during the Solidarity Banker’s working time and/or during holidays (volunteering).

Currently, six missions are available, online or in the field:


The experts selected for the online missions will work remotely and will devote the equivalent of one day per week, for 15 weeks, to the mission.

The two online missions are to be filled as soon as possible.

  • “Digital strategy” mission for OXUS (Kyrgyzstan)

OXUS Kyrgyzstan (OKG) is a microfinance institution that provides financial services to the working poor and under-banked in Kyrgyzstan. The institution serves 8,000 active borrowers and manages a portfolio of EUR 6.4 million.

A Solidarity Banker mission is planned from July 2021 to support OKG in the evaluation of its digitalisation processes and in the construction of a new digital strategy. The expert sought is a Crédit Agricole employee with significant experience in IT project management. Fluency in English is essential.

The mission description is available here.

  • “Financial Management” mission in favour of FATEN (Palestine)

FATEN is a microfinance institution in Palestine. The institution has more than 26,000 clients and manages a portfolio of EUR 108 million.

The selected Crédit Agricole expert will support FATEN in updating financial procedures, policies and tools. The Solidarity Banker must be fluent in English and have knowledge of international financial reporting standards and in particular of the latest changes to IFRS 16 and IFRS 9. Fluency or very good knowledge of Arabic is a plus. At a minimum, fluency in English will be required.

The mission description is available here.


The four field missions are to be filled as soon as possible, depending on the current health situation.

  • “Logistical support/purchasing” mission in favour of Oshun (Senegal)

Oshun is a social enterprise that offers inclusive solutions, especially in the form of solar-powered water kiosks, allowing the most vulnerable populations access to clean water. Oshun Senegal is completing a process of administrative and HR structuring and wishes to strengthen its support functions, primarily logistics and purchasing.

The selected Crédit Agricole expert will support Oshun in setting up procedures to simplify and secure logistics, procurement and supply management, and strengthen the staff involved. The mission will last 10 days, first remotely from France and then on the ground in Senegal if health conditions allow. The Solidarity Banker must have solid experience in logistics and procurement management and, ideally, experience in training and coaching in the field of procurement.

The mission description is available here.

  • « LBC-FT » mission for SEF (South Africa)

SEF is a microfinance institution that provides loans through a network of 98 branches in South Africa. The institution has 225,317 active borrowers and manages a portfolio of more than EUR 45 million.

The selected Crédit Agricole expert is responsible for supporting the Quality and Compliance Department and the Training Department in developing relevant training materials on AML/CFT issues for employees. The Solidarity Banker must have at least 5 years of experience in compliance.  The mission will last two weeks, including 10 days in the field.

The mission description is available here.

  • « Marketing » mission for Lazika Capital (Georgia)

Lazika Capital is a Tier 2 microfinance institution in Georgia. The organisation operates through 18 branches in western Georgia.

The selected Crédit Agricole expert will be responsible for evaluating the organisation’s marketing strategy and actions, as well as developing a marketing plan for mid-2021/2020. The Solidarity Banker must have a solid experience in marketing. A good mastery of English is required. The mission will last 20 days, including 10 days in the field.

The mission statement is available here.

  • « Digital Strategy » mission for Smart Credit (Moldova)

Smart Credit is a microfinance institution that provides financial services to socially disadvantaged people and small entrepreneurs in Moldova. The institution has more than 3,000 active borrowers and manages a portfolio of 4.4 million euros.

The Solidarity Banker will be in charge of helping to build the digital strategy of Smart Crédit. The expert is an employee of the Crédit Agricole Group who is fluent in English and has experience in IT project management.

The mission description is available here.

How to apply?

To discover the details of the missions:

  1. Go to the CA Solidaires website: tab “Get involved” then “Solidarity leave“.
  2. Click on the offer of your choice. You will find all the necessary information for your application.

For more information, you can contact:

Microinvest supports investments in the modernisation of Moldovan agriculture

Interview with Dumitru Svinarenco, Chief Executive Officer of Microinvest (Republic of Moldova) about investments in Moldovan agriculture in main facilities of Agri loans.

1. Could you present Microinvest in a few words?

Microinvest is a non-bank credit organization with mixed capital. We managed to prove our major role in the Moldovan financial market by supporting local businesses, agriculture and individuals and directly contributing to the development of the country’s economy.

According to the size of the portfolio, we rank 6th among the banking system, while maintaining the leading position on non-bank credit market in the country. We are different from other financial companies thanks to the customized solutions and important benefits in the lending process that we offer to each client, including agricultural entrepreneurs. We are the only NBFI in Moldova to hold the international quality certificate – SMART, which proves that we are a responsible and trustworthy lender.

2. Agriculture is one of the basic pillars for the Moldovan economy and it is also a priority sector for Microinvest. How did the 2020 drought and Covid-19 affect your clients and your organization?

Every year, the agricultural sector is developing and modernizing thanks to successful entrepreneurs and responsible investments. 30% of our overall LP and more than 40% of our business LP is dedicated to the agri field, to the support of agricultural businesses and farms, which need financial investments for quality agriculture.

The year 2020 had a major impact on the Moldovan agricultural segment, which were directly confronted with the Covid-19 crisis, but also with the unprecedented drought, which led to a season with minimal harvests.

3. What has been your response to support the agricultural sector to cope with these crises?

Microinvest was among the first organizations to cancel the penalties at the beginning of the pandemic, both for business owners and individuals. Throughout this period, our experts have assessed the situation of each entrepreneur. We have been open to come up with solutions for restructuring and extending the terms of loans, without charging fees.

As the pandemic had just started, we continued to lend to farmers so that they could begin the agricultural season as planned. Despite the difficulties, some of our clients have managed to develop successful households and gather great results from the investments made.

4. Microinvest is funded by the Grameen Crédit Agricole Foundation (GCAF) since 2020. How has the Foundation supported your organization during this pandemic?

Microinvest started the interactions with GCAF in 2019 and signed the first loan agreement in May 2020, at the peak of the highest lockdown restrictions imposed by most countries. This first loan from GCAF was an impulse for other lenders, proving that even new lenders believed in our financial stability and in our adequate reaction to crisis. The second loan has already been disbursed in March 2021.
The Foundation maintained transparent communication with us, listened to our needs and supported the search for suitable solutions. We consider GCAF as a reliable partner, therefore we plan to develop and strengthen our cooperation in the future.

5. Which will be your strategic priorities for the years to come? What place have you given to digitalization?

Digitization occupies a special place in our communication and development strategy. We follow a balanced formula: combining digital automation with personal discussions with customers, visits and direct interactions. Entrepreneurs appreciate the expertise and the value of an individual approach which lead to tailer-made financial solutions. At the same time, we tend to go for the massive digitization of retail lines, simplifying the lending process, and thus saving our customer time.

We are confident that agriculture in Moldova is one of the strategic segments for our country. We support individuals and legal entities in their plans for growth and business transformation. In 2021, we came up with a special offer for business clients – unsecured credits up to MDL 1,700,000, so that they can successfully achieve their goals. Both we and the farmers have high expectations for the new agricultural season. A good year will give additional strength to the agricultural sector, but also additional desire to invest in the modernization of agricultural practices, by purchasing new high-performance equipment.

More information on Microinvest.

Persistent credit risk : a threat to the solvency of microfinance institutions ?

ADA, Inpulse and the Grameen Crédit Agricole Foundation joined forces in 2020 to monitor and analyse the effects of the COVID-19 crisis on their partner microfinance institutions around the world. This monitoring was carried out periodically throughout 2020 in order to gain a better vision of the development of the crisis at the international level. We are extending this work this year on a quarterly basis. The conclusions set out in this article follow the first quarter of 2021. With this regular analysis, we hope to contribute, at our level, to the charting of strategies and solutions adapted to the needs of our partners, as well as to the dissemination and exchange of information by and between the different stakeholders in the sector.

In a nutshell

The results presented in the following pages come from the sixth survey (1) of the joint ADA, Inpulse and Grameen Crédit Agricole Foundation series. The responses from our partner microfinance institutions were collected in the second half of April 2021. The 87 institutions that responded are located in 47 countries in Eastern Europe and Central Asia (EECA-25%), Sub-Saharan Africa (SSA-29%), Latin America and the Caribbean (LAC-25%), South and Southeast Asia (SSEA-13%) and the Middle East and North Africa (MENA-8%) (2).

Whereas the general improvement in the local contexts relating to COVID-19 enables microfinance institutions to conduct their activities better, our latest survey shows that MFIs nevertheless had a lot of difficulties in reaching their development goals in the first quarter of 2021. The reasons cited have mainly to do with the difficulties encountered by the customers of the MFIs. Such customers are reluctant to commit to new loans, and if they do, it is for smaller amounts than in the past. At the same time, their risk profile has deteriorated due to the crisis and the MFIs will find it more difficult to finance them.

This general trend of increasing risk has led to a decline in the quality of the portfolio of the MFIs. In 2020, it has ultimately been reflected in the profit and loss accounts of institutions with an increase in provisioning expenses. This is likely to be the case again this year, with additional reserves but also loan write-offs.

In fact, the operations of the MFIs have been reduced or slowed down, generally with a decrease in the level of their equity capital. In point of fact, one in two MFIs, irrespective of size, indicates a need for capital in 2021. Two trends emerge: the MFIs are counting on their current shareholders to cover the losses linked to the crisis. Conversely, international investors are expected to support their development as of this year. The answers provided by our partners therefore underscore the need for recapitalization this year, which will involve all the players in the sector.

1. Disbursement levels are still low notwithstanding the reduction in constraints

Whereas we have seen a gradual but definite reduction in operational constraints for MFIs since the summer of 2020, this phenomenon continues in the first quarter of 2021. 50% of MFIs in all indicate that the measures in place in their countries are less constraining in April compared to the end of 2020. This is particularly pronounced in Sub-Saharan Africa (64% of respondents in the region) and Latin America and the Caribbean (59%). This is to a lesser extent true for MFIs in Europe and Central Asia, where the situation is either improving or stable. Finally, the situation is opposite in South and South-East Asia, with 45% of respondents in the region reporting a more difficult context, with the Cambodian and Burmese situations weighing on results.

Almost half of the respondents overall report that they no longer face any operational constraints in conducting their activities. This is reflected in the resumption of activity by the MFIs: 52% of those in sub-Saharan Africa can work as before the crisis. The vast majority of MFIs in Latin America are gradually resuming their activities since the first difficulties encountered. The situation in Europe and Central Asia is again divided between gradual or almost complete recovery. Conversely, the deteriorated context for MFIs in the SSEA region is reflected in activities that are either still constrained or are again affected by new measures to contain the epidemic.

Despite these continued positive signals on the level of activity of our partners, the expected level of loan disbursement for the quarter is apparently still difficult to achieve. For example, 55% of respondents report that they did not meet their loan disbursement targets in the first quarter of 2021. Only 10% of respondents exceeded their expectations, while 35% managed to meet their targets. The responses do not appear to pertain solely to business recovery: for example, 80% of MFIs in Sub-Saharan Africa did not meet their disbursement targets in the first quarter, while half report a return to near pre-crisis levels of activity.

When the MFIs did not meet their growth targets at the beginning of the year, three reasons stand out to explain this phenomenon. Firstly, the fact that customers are still reluctant to take out new loans (58% of this group), especially in a still rather uncertain context. Secondly, this is explained by the deteriorating risk profile of customers (50%), who are no longer eligible for loans or are eligible for smaller amounts (38%).

The latter two arguments are also mentioned by MFIs that have reached their targets without exceeding them. Nevertheless, this dynamic is partly offset by the fact that institutions have adjusted to the crisis and have put in place products adapted (digital, targeted sectors, etc.) to the current contexts in order to meet demand (47%).

Finally, the trend is quite different for MFIs that have exceeded their disbursement targets: the main factor is the strong demand received (78%), while the adjustment of the offer (33%) and the increase in the amounts requested (22%) support this trend.

2. A persistent high credit risk continues to have a significant impact on institutions’ profitability

In parallel to these loan disbursement issues, credit risk remains the major challenge for 64% of our partner MFIs, as we have noted since the beginning of our survey series. While late repayments by customers may still be the result of ongoing moratoria (20% of respondents, particularly in South and Southeast Asia and Latin America and the Caribbean), the majority of moratoria exits have resulted in a shift from the “moratorium” portfolio to the “at risk” portfolio, either as unpaid loans or as restructured loans. In total, 61% of the respondents indicate that fewer than 90% of their customers are repaying their loans, and 25% are concerned by repayment rates below 70%.

Another major difficulty is the decline in profitability of MFIs since the beginning of the COVID-19 crisis. At the end of Q1 2021, 55% of our partners raise this point. More specifically, we find that a share of the respondents managed to maintain some profitability in 2020, thanks to certain measures (33% – shown in green in the graph below). We then find a group of institutions (49% – shown in orange) for which an impact on profitability has been felt, but without endangering the institution. Finally, a last group stands out (18% – shown in red), in a less favourable position since the losses incurred in 2020 have direct consequences on the institutions’ own funds. For some of these institutions, this even implies that the company’s capital falls below the minimum levels required by the regulator or financiers.


The provisioning of the portfolio at risk turns out to be the main factor impacting on profitability in fact (61%). For some institutions (26%), this may moreover have led to a breach of contract with their funders. At the same time, there are still few massive loan write-offs, as only 13% of respondents have already resorted to debt cancellation to a greater extent than in previous years.

The impact of credit risk on the profitability of the MFIs is nonetheless expected to continue in the coming months. Loan write-offs in high proportions, above the usual standards, should concern 25% of our partners surveyed. At the same time, 24% expect that the provisioning of the PAR, notably through the exit of the moratorium, will continue to have a strong impact on their financial results. Finally, it should be noted that the ageing of the current portfolio at risk could also lead to additional provisioning expenses.

3. Strained equity capital leads to a search for investors

The decline in profitability, which could consequently continue in the near future without any improvement in credit risk, must be analysed for the short and long term. In the short term, controlling the portfolio at risk is a major challenge to avoid a (further) deterioration of profitability. This then has a direct impact on the operations of the MFIs. According to our partners, this observation has led the majority of the MFIs to revise their growth projections downwards (55%) for the coming years. It is also apparent that risk management involves paying particular attention to the type of activity of clients (31% have suspended disbursements to certain sectors – often tourism, international trade, etc.) and to eligibility criteria (29%). This increased caution reflects the current emphasis on risk management.

The other angle of reflection for the longer-term is the solvency of microfinance institutions in the face of declining revenues or losses. A majority of institutions today (61%) have not taken any action regarding their capital since the beginning of the crisis. Where this has been the case, existing shareholders have provided support to the MFIs, while subordinated debt (Tier 2 equity capital) has also been put in place, to a lesser extent.

A very high proportion of these institutions (48%) nonetheless report an equity requirement in 2021. This sizeable proportion shows the extent of support needed within the sector to ensure its development. There is no real archetype of MFI that emphasizes this expectation of capital support in 2021: regardless of the size of the MFI, about half of each Tier category expresses capital needs.

To meet these capital expectations, The types of shareholders that microfinance institutions wish to turn to in order to meet these capital expectations depend on the reason why this support is needed. For example, for institutions that mention a need for equity support in 2021, we find that when an MFI needs help to cover losses, it overwhelmingly turns to its existing shareholders (83% of cases, 10/12). Conversely, when MFIs are looking for support to continue to grow, they will more often turn to international investors (56% of cases, 14/25), beyond the potential contribution of existing shareholders. Finally, it is worth noting that subordinated debt may be favoured over capital injection, as this option is mentioned by 5 institutions.


All of our partners’ responses therefore suggest that the impact of the crisis, through credit risk, logically creates equity needs for a large proportion of entities, as they face either financial losses or a limitation in their ability to recover. While 41% of respondents say they will focus on improving the quality of their portfolio this year, our partners remind us of the essential role that international and existing investors will have to play in maintaining a satisfactory level of capitalisation that is conducive to their development.


(1) The results of the first five surveys are posted on //, // and //
(2) Number of responding IMFs per region: EECA 22; SSA 25; LAC 22; SSEA 11; MENA: 7.
(3) Tier 1 means that the MFI manages a portfolio of over $50 million. Tier 2 applies to portfolios of $5 to $50 million, and Tier 3 concerns portfolios of less than $5 million.