Microfinance providers and platforms agree on principles in the Covid-19 crisis

July 2020. Two groups of microfinance donors and stakeholders publish a set of principles to support the microfinance sector and vulnerable clients during the Covid-19 crisis. The two groups have coordinated their efforts to increase their complementarity and coherence.

Microfinance institutions (MFIs) play an important role in the fight against poverty. They provide low-income populations with financial and non-financial products and services to support income-generating activities. During the Covid-19 crisis, support for the microfinance sector is therefore essential to protect the most vulnerable populations. This requires a collective approach within the sector.

That's why we, the leading microfinance lenders, impact funds, platforms, and networks spanning markets in Africa, Asia, Central Asia, the Middle East, Eastern Europe, and Latin America, have entered into two complementary agreements. These outline a series of principles to support MFIs in avoiding a credit crunch, which would be extremely dangerous for vulnerable microfinance clients. We have published both documents as guides for investment teams, investors, investee entities, and other stakeholders.

The signatories of the Pledge and the Protocol acknowledge and express their support for each of the two documents, as they are considered complementary and pursue a similar objective. Other public and private actors in the financial inclusion sector are invited to support, endorse, and act in accordance with the principles presented. In particular, the signatories believe that it is essential for the public sector to align with private sector practices to strengthen the impact investment sector and its social impact on low-income households and small businesses.

The involvement of all stakeholders is vital to strengthening the impact of microfinance. We are committed to continuing to support our partners' efforts to promote financial inclusion worldwide.

Covid-19 Crisis: New Opportunities for Microfinance Institutions

ADA(1), Inpulse(2) and the Grameen Crédit Agricole Foundation are joining forces to closely monitor and analyze the effects of the COVID-19 crisis on their partners around the world. This monitoring will be carried out periodically throughout 2020 with the aim of assessing the evolution of the effects of the crisis as well as the financial needs and adaptation measures implemented by our partners. With this regular and in-depth analysis, we hope to contribute, at our level, to the construction of strategies and solutions adapted to the needs of our stakeholders, as well as to the dissemination and exchange of information between the various actors in the sector for the joint search for global and systematic solutions.

This article is based on responses provided between May 18 and 27, 2020, by 110 partners in 47 countries across Europe, Africa, Asia, and Latin America, 5 regions (3) and 13 sub-regions of the world (4). In our analysis, we focused on very small MFIs (46 %), with less than $5 million in assets (Tier 3), medium-sized MFIs (47 %), with assets between $5 and $50 million (Tier 2), and larger MFIs (more than $50 million in assets, Tier 1) with 7%. (5)

In summary

The current situation leaves no MFI or region of the world indifferent. The COVID-19 crisis has hit most microfinance businesses at their core. All of the institutions surveyed are facing common issues due to the crisis: difficulties with disbursements, collections, and client meetings, among others. These deeply operational activities, closely linked to client contact and meetings, have financial consequences for MFIs. Portfolio management and risk management are the short-term challenges posed by the crisis, according to more than 80% of our partners.

However, marked regional differences emerge from this research. The constantly evolving health crisis does not have the same consequences in all regions of the world, nor the same intensity. On the operational side, for example, the difficulties or impossibility of collecting savings is not an issue for everyone. This concerns 55% of the MFIs surveyed in Sub-Saharan Africa and 60% of those in South Asia, while the subject is rarely or not at all discussed in other regions. This depends in particular on the constitution of the local market, and the capacity of institutions to offer this product to their clients, depending on the legislation in force. Regarding the constraints posed by the crisis, we note that a high proportion of MFIs in Latin and Central America, as well as in Central Asia and the MENA region, report that employees are finding it difficult to travel or meet clients in branches, unlike MFIs in Southeast Asia or Sub-Saharan Africa.

The portfolio at risk is also impacted in different ways depending on the region. Thus, only 17% of MFIs in Central Asia and Europe and Central and Latin America have observed a PAR 30 + R that has more than doubled, while this concerns 41% of MFIs in Sub-Saharan Africa, 27% of those in South Asia and 33% of those in the MENA region. These regions are not left out, however, since they still report an increase in PAR 30 + R. Thus, at the global level, 80% of respondents indicate a deterioration in portfolio quality, which therefore represents a challenge for all MFIs in the short and medium term.

To address these issues, MFI needs also vary. While 60% of respondents expressed additional financing needs, this is less the case for the Europe and Central Asia region. Indeed, 57% of MFIs in this region indicate that they have no additional needs, and 22% consider that their needs have decreased. In contrast, approximately 30% of institutions in the MENA, Sub-Saharan Africa, and Latin and Central America regions see their financing needs as 20% and 50% above what they had anticipated.
The information gathered, however, demonstrates the proactivity of MFIs in the face of the crisis. Across the world, they have made numerous adjustments to adapt to the crisis. Between dedicated committees, continuity plans, and discussions between all stakeholders, institutions have chosen not to remain silent in the face of the consequences of the crisis. Finally, beyond the current economic difficulties, the discussions conducted by most of our partners are also geared toward new opportunities for the future, such as targeting new markets or developing new products. This could contribute to greater flexibility for our partners in the future, although this remains to be confirmed.

The impact of the COVID-19 crisis on the microfinance sector: the perspective of different MFIs around the world

The severity of lockdown measures continues to vary by country. 44% of respondents reported that their country is in almost complete lockdown and restricted movement. 46 % of our partners, primarily those located in Sub-Saharan Africa and Latin and Central America, reported limited lockdown and partial restriction of movement. Finally, only 10 % of our partners, primarily located in Latin America, reported no or very limited lockdown measures. The context in each region is different and largely, or entirely, determined by the actions established by local government authorities. While Europe and Central Asia appear to have greater uniformity in lockdown measures, the situation is not the same in Latin America, where restrictive lockdown measures have been established in some countries while in others, this type of measure has not yet been considered.

Another important aspect to consider is the fact that the development of the pandemic has been gradual in different regions of the world. At the end of 2019, the virus was widespread in China. By March it had been brought under control in Asia, while at the same time, Europe became the new epicenter of the pandemic and the World Health Organization (WHO) declared the virus a “global pandemic”(6). Currently, America and Africa are heavily affected. The evolution of the pandemic in different regions of the world also significantly determines the type of responses provided by our partners, their level of affectation and most certainly the evolution of some of their most relevant indicators. Trends to which we will pay attention in our future investigations and analyses.

The COVID-19 crisis has caused a significant slowdown, or even an impossibility, in carrying out the essential activities of our partners.

82% of our partners reported having difficulty or being unable to collect loan repayments in the usual manner. This difficulty appears to impact partners in all regions, but especially those in the MENA (100%), Sub-Saharan Africa (85%), and LAC (81%) regions. The second most constraining difficulty, highlighted by 80% of our partners, is the inability to meet clients in the field. MFIs in the MENA region continue to be the most affected (100%), followed by those located in the EAC (91%) and LAC (81%) regions. The third difficulty, expressed by 74% of our partners, concerns loan disbursements. This difficulty is a little more exacerbated among partners located in the MENA (89% of partners in the zone), LAC (81%) and SSA (78%) regions.

On the other hand, for 94% of our partners, communication with clients does not seem to pose any particular problem during these times. This may be due, as detailed below, to the significant use of digital systems and digital technologies for remote communication. Similarly, 94% of the MFIs reported that their employees were not infected with the COVID-19 virus, which represents a very satisfactory result of the measures taken at the beginning of the crisis by our partners to protect their staff(7).

MFIs have experienced various financial difficulties due to COVID-19

For 91% of our partners, the increase in portfolio at risk is the greatest financial difficulty they have had to face due to the pandemic. This is a difficulty reported in all regions and by MFIs of all sizes, but it concerns 100TP3T of partners located in the MENA region, 93TP3T of those present in SSA and Asia, and 9% and 86% of those located in the EAC and LAC regions, respectively. The exceptional reduction in portfolio is also a major difficulty for 80% of our partners. This observation is mainly made for 93% of MFIs located in the SSA region and 86% of those present in LAC. The increase in the cost of materials and equipment and the lack of liquidity were difficulties encountered by 46% and 39% of the partners, respectively.

“We believe we may not have enough funds for disbursements by the end of June if the situation on the ground improves” – Partner in South Asia

PAR 30 is already, at this stage, a major concern

80 of our partners reported that their PAR 30 increased due to the COVID-19 crisis. Specifically, for 12 partners, it doubled, and for 25 partners, PAR 30 more than doubled. For 43 partners, it increased without doubling. Partners located primarily in Asia, the Americas, and Central Asia and Europe reported that their PAR 30 increased without doubling, while most partners in Africa reported a more than doubled PAR 30 increase, followed by partners in the MENA region.

Crisis mitigation strategies: from credit restructuring to the use of technological means

Our partners are implementing various financial measures and operations to mitigate and adapt to the effects of the crisis. 75% of them, mainly those located in Asia (87%), have undertaken the restructuring of their clients' loans. Similarly, 65% of our partners have slowed down or stopped loan disbursements. This measure was mainly implemented by partners located in the LAC region (78%) and was much less popular in the MENA region (44 %).

“Analysis of rescheduling requests in order to be able to support customers with emergency loans, but it is on a case-by-case basis” – Partner in West Africa

Another relevant strategy is directing loans to clients in sectors less affected by the crisis, such as agriculture. This is a measure cited by 51% of respondents, primarily those located in Africa and Central Asia. However, 50% of respondents say they prioritize loan repayment.

Additionally, customer communication is a priority strategy for our partners. 73% of them have improved customer communication during this period, and 50% have launched a hygiene awareness campaign for customers, whether via SMS, video, etc.

Finally, it should be noted that technology is an important tool in addressing the crisis. Partners are using existing digital solutions (48%) or new solutions (31%) for communicating with customers and managing financial products and services.

“We intend to improve the use of digital approaches for service delivery, help clients market their products and diversify their businesses (…)” – Partner in South Asia

Human resource management strategies: from hygiene measures to the use of technological means

90% of the partners provided their staff with sanitary equipment. Additional hygiene measures in offices and disinfection were taken by 82% and 70% of the surveyed partners, respectively. The organization of working hours and field travel is indicated as another measure of great importance for MFIs to combat the health crisis. 71% of the partners, mainly those located in the MENA, LAC, and Asia regions, implemented teleworking as much as possible. Similarly, 66% of the partners restricted or prohibited field travel for their teams. Finally, 54% of the surveyed MFIs, mainly located in the MENA region and the Americas, reduced working hours, and 52% of them reduced customer service hours in branches.

The use of digital technology to maintain communication and the ability for employees to work is also relevant in this context, according to our information. Thus, 82% of MFIs use virtual meeting solutions and 57% use an online document sharing solution (mainly those in the MENA and LAC regions). In addition, 46% of respondents have provided their employees with laptops or tablets (especially in the MENA region, up to 78 %).

“We set up two WhatsApp communication groups with the staff, one for Sinhala and one for Tamil. Then, we had regular communication with them during the lockdown.” – Partner in South Asia

Crisis management measures

Our partners can be considered to have implemented two main types of measures to manage the COVID-19 crisis effectively. The first group of measures concerns the development of internal actions for analyzing and monitoring the effects of the crisis: 78% of partners have set up an ad hoc monitoring management committee. These measures were particularly prioritized for partners in the SSA and MENA regions. 75% of partners, mainly those located in Asia and Sub-Saharan Africa, have prepared a business continuity plan. 74% of partners, mainly those in the EAC and MENA regions, have updated their liquidity plan. In addition, 65% of respondents have carried out a worst-case scenario simulation, this approach being implemented more in the MENA region than in Africa.

The second group of measures includes measures aimed at requesting support from third-party entities. 53 partners, particularly those located in the MENA and LAC regions, requested financial support from donors and their financial partners. 52 partners, particularly those located in the MENA region, also negotiated with lenders to arrange loan repayments. In addition, 37 partners, particularly those located in Asia and sub-Saharan Africa, requested technical assistance support from donors and partners. These three approaches were less developed by partners located in the EAC region, whose request for technical assistance was less prominent.

30 of our % partners reported that they had no additional funding needs, and 12 %s indicated that their needs had decreased since the beginning of the crisis. These responses came primarily from partners located in the EAC region.

On the contrary, 58% of the partners indicated that they would need financing for amounts greater than their forecasts. Among them, 28%, mainly those located in Asia and the MENA region, stated that they would need additional funds, between 0% and 20% of their budget. 24%, and mainly those present in the MENA region, stated that they would need 20% to 50% of additional funds. Finally, 6% of the MFIs, particularly those located in Asia, stated that their needs exceed 50% of the forecasted amounts.

Future prospects: new markets and new products

At this stage, a majority of our partners (57%), have expressed their interest in focusing more of their activities towards the agricultural sector. This hypothesis is particularly raised by partners in the Africa, Asia and EAC regions. This may be due both to the increase in client needs in this sector, or to its identification as one of the sectors of activity least affected by the COVID-19 crisis (aspects already considered in the articles developed by Inpulse and the Grameen Crédit Agricole Foundation)(8). This hypothesis will be important to study in our future work since the agricultural sector represents economic, social and environmental issues, such as the concentration of a significant part of our partners' portfolio, but also job creation in certain countries and a potentially negative interaction with ongoing climate change.

Finally, on the other hand, 37 of our % partners plan to launch financial education programs and 27 % plan to focus more on women as clients.

“We plan to promote digital education for female clients (digital culture)” – Partner in South America

These are traditionally addressed sectors in the microfinance sector. However, it should be noted that 25% of our partners have also expressed interest in launching “green” financial products, linked to environmental protection. This interest could demonstrate our partners’ increased awareness of the environmental issues related to their actions. We wonder if this represents a strengthening of green microfinance due to the COVID crisis. Finally, it remains to be seen what type of green products our partners would target in the coming months. These questions will be relevant to our future work.

On the other hand, launching microinsurance products related to hygiene, death risk, health, or environmental risks does not seem relevant to our partners. Furthermore, 22% of respondents indicated that they do not plan to move into new markets or develop new products.

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(1) ADA: //www.ada-microfinance.org/fr
(2) Inpulse: //www.inpulse.coop/
(3) The regions and sub-regions concerned are: Asia (South Asia and Southeast Asia), EAC (Eastern and Southern Europe and Western and Central Asia), LAC (Caribbean, Central America and South America), MENA (Middle East and North Africa) and SSA (Central Africa, Eastern Africa, Southern Africa and West Africa).
(4) The total number of MFIs responding to the survey for each region is as follows: Asia: 15, EAC: 23, LAC: 36, MENA: 9, SSA: 27. For a total of 110 institutions.
(5) This classification corresponds to that traditionally used in the microfinance sector, more information here
(6) Propagation analysis and prediction of the COVID-19 here
(7) According to the articles of Inpulse and the Foundation, these measures were mainly focused on hygiene awareness campaigns and teleworking
(8) Idem

The Foundation launches its new website

 

2020 marks the beginning of a new decade, and the Grameen Crédit Agricole Foundation is approaching it with enthusiasm and a modern approach. Founded nearly 12 years ago, the Foundation now supports 85 microfinance institutions and social impact businesses in emerging countries, particularly in Africa and Asia. To better communicate its work and promote joint initiatives and projects with its partners, the Foundation is publishing a brand new, more modern, dynamic, and user-friendly website.

THE HEADINGS

This new website allows you to discover the Foundation's key figures, activities, and news. A special section is dedicated to Solidarity Bankers, the skills-based volunteer program open to all Crédit Agricole Group employees to support microfinance institutions and social enterprises funded by the Foundation.

QUICK ACCESS

The "Quick Access" menu provides access to projects developed with the Crédit Agricole Group as well as to the platform of organizations supported by the Foundation. The platform maps all partners and dedicates a page to each supported organization to highlight their work and impact. It was created with the financial support of CA Life Insurance Europe (CALIE), which selected the Foundation as a beneficiary project for its 20th anniversary.

This site is yours: administrators, the Grameen network, regional banks and Crédit Agricole entities, donors, technical partners, and supported organizations. It's also our way of paying tribute to you.

[Interview] The FIR promotes the values at the heart of CA Normandie Seine

Interview with Nicolas Denis, Managing Director, CA Normandie-Seine

© Didier Gentilhomme

Launched by the Grameen Crédit Agricole Foundation, the Inclusive Finance in Rural Areas (FIR) fund allows Crédit Agricole Group entities to invest in microfinance and social entrepreneurship in emerging countries. The Normandie-Seine Regional Bank, which contributed €500,000 to the fund, sees it as a responsible approach consistent with its ongoing efforts in its region.

– What objectives does your Fund pursue by investing in the FIR fund?

Nicolas Denis, Managing Director of Crédit Agricole Normandie-Seine : The values of social responsibility are at the heart of our Regional Bank's corporate vision; they are in our DNA. It is natural for us to partner with the FIR fund supported by the Grameen Crédit Agricole Foundation because it promotes these same values. The impact is to combat poverty by providing access to financial services to rural communities in developing countries. This is in line with the actions that the Regional Bank is already carrying out, for example by supporting and financing responsible companies such as the producer of ecological oils Olvea, the manufacturer of sustainable acacia gums Nexira, and the Nutriceps program fighting malnutrition in rural areas.

– What is your view on these new social impact investments?

As a regional bank, our economic activity plays an integral part in the social life of the regions. We play a supportive and accompaniment role in numerous initiatives whose effects are beneficial at the local level. Microfinance and social and responsible entrepreneurship are realities whose development we support. Our bank supports ADIE, a specialist in entrepreneurial microcredit, the Réseau Entreprendre, as well as local initiative platforms for unsecured loans. Similarly, we participate in crowdfunding platforms such as Tubigo, Babyloan, and Miimosa. We are also present alongside AFDI in Normandy, an organization that builds links between French agricultural professionals and projects in Cambodia and Mali, in particular.

– Do these models represent hope, a future?

Personally, I'm struck by how abundant and promising these new models are. When put into practice, crowdfunding and microcredit prove to be much more than new financing avenues. They are also excellent vehicles for information and societal integration of projects that accelerate the connection between an offer and the public. In addition to the FIR fund, this year we are supporting the Femmes & Challenges fund, intended for women entrepreneurs working to promote gender equality. We see it every day: in direct contact with the real economy and society, these approaches are formidable tools for social transformation.

Source : 2019 Integrated Report, Grameen Crédit Agricole Foundation. Download here

New signatories to protect microfinance from the economic effects of Covid-19

In response to the health and economic crisis caused by Covid-19, a group of donors, platforms, and key stakeholders in the inclusive microfinance sector have established a joint commitment: "Key Principles to Protect Microfinance Institutions and Their Clients in the Covid-19 Crisis." At the initiative of the Grameen Crédit Agricole Foundation, this commitment was developed in consensus with all the initial signatories. The objective is to protect both microfinance institutions and their clients to ensure continued access to financing under the best possible conditions and to ensure the well-being of clients and staff.

The commitment aims to guide stakeholders in better supporting microfinance institutions and vulnerable clients during this crisis. The core principles of this commitment are the sharing of available information, analyses, and anticipations, as well as the concerted implementation of shared decisions. The signatories agree to coordinate policies, technical assistance, and resources to help microfinance institutions cope with this unprecedented crisis.

Since its publication in May, six new organizations have signed the pledge. This initiative now has 26 active signatories in Africa, Asia, Eastern Europe, and Latin America: ADA, Alterfin, Azerbaijan Microfinance Association, Bamboo Capital Partners, CERISE, CIDR Pamiga, Cordaid Investment Management, Crédit Agricole CIB India, Crédit Agricole Indosuez Wealth (Asset Management), Crédit Agricole SA, European Microfinance Network, Grameen Crédit Agricole Foundation, FS Impact Finance, GAWA Capital, InFiNe.lu, Inpulse, Kiva, Luxembourg Microfinance And Development Fund, MCE Social Capital, Microfinance African Institutions Network, Microfinance Center, Rabo Foundation, SIDI, SIMA, Social Performance Task Force, and Whole Planet Foundation.

The signatories invite other stakeholders to join this joint initiative. Coordinating efforts to support the actions of microfinance institutions is essential to overcome this crisis.

Download the commitment

Responsible approaches of institutions to the effects of Covid-19

By Grameen Crédit Agricole Foundation

Last April, the Africa's Pulse study, a journal of the World Bank Group, estimated that economic growth in sub-Saharan Africa would fall from +2.4% to a range of between -2.1% and -5.1%, which would constitute the first recession in the region in 25 years. This recession is expected to hit countries dependent on mining and oil exports, while countries without natural resources are expected to show slower but positive growth.

The Grameen Crédit Agricole Foundation, in constant contact with its network of 80 partner microfinance institutions (MFIs) and social enterprises in 40 countries, continues its work of collecting information, analyzing, and sharing its observations. The privileged testimonies of our partners allow us to continue monitoring the crisis and its consequences. In this latest questionnaire, we focused on two specific aspects: the operational adaptations of MFIs and the role of loan officers during this crisis.

In summary

The economic crisis has become a reality for the vast majority of microfinance institutions supported by the Grameen Crédit Agricole Foundation. Almost all of them have implemented massive loan deferral programs to facilitate their borrowers' economic recovery.

The loan officers at these institutions are the primary point of contact between clients and microfinance institutions. They spend nearly half of their working hours reviewing and implementing loan deferral requests.

Institutions quickly adopted programs to reduce their burdens, ensuring the social protection of their employees and safeguarding jobs. Only 12% of them carried out redundancies, which is relatively low compared to national averages. However, institutions are postponing their recruitment programs and a large portion of their investments. They also appear to be seeking to direct their funding toward sectors currently considered less risky. This is particularly the case with agriculture. This observation is recent. It remains to be confirmed and will be closely monitored in our upcoming news updates.

By proactively seeking ways to counter the crisis and ensuring responsible approaches, MFIs are on the right track: today's innovative solutions could also be their successes tomorrow.

Institutions are now focusing on risk treatment

While the health crisis appears to be stalling in countries that have adopted the most effective measures, lockdown exit plans suggest a very gradual recovery in economic activity. Our latest results confirm what we have been observing for several weeks: the remarkable adaptability of microfinance institutions in the face of an unprecedented crisis.

Nearly 90% institutions have established a crisis committee, chaired by the Director General and including the Executive Committee, to oversee various decisions and address the effects of the crisis. This committee generally meets weekly.

“We have created a ‘crisis management team’ composed of members of the executive committee and supported by the chairman of the board whenever necessary. We have a weekly meeting with the board of directors to take stock of the situation and validate key decisions.” – Partner in Myanmar

The effects of the crisis are now being felt by 81% of the partners surveyed, who report an increase in risks to their client portfolio. Responding to this risk is now focusing the bulk of microfinance institutions' efforts, to the detriment of other activities now considered less essential (nearly one in two of them provided this type of service at the beginning of April, compared to one in three today). This reduction in activity aimed at providing non-financial services (awareness campaigns, information campaigns, equipment supply, etc.) is allowing for strong growth in activities dedicated to credit restructuring.

“To support our customers over the coming months, we are proposing the suspension of principal and interest payments to all customers who were not in the at-risk portfolio as of March 1. To date, 75% of the customers contacted have accepted. The process will continue.” – Partner in Ivory Coast

Institutions are adapting financially and operationally

The table below shows the progression of the difficulties encountered and the mitigation measures implemented to address them.

On the financial level

Currency volatility in this context is weighing on institutions' treasuries: 64% of respondents outside the CFA Franc zone are facing a sharp devaluation of their local currency against the dollar. This devaluation directly impacts institutions that have borrowed in this currency, since they themselves receive the vast majority of microcredit interest in local currency.

“The situation is further aggravated by the significant devaluation of the KGS in recent months, which contributes to increasing the cost of currency hedging” – Partner in Kyrgyzstan

The information provided by our partners in this survey also confirms the quasi-mandatory measures taken by MFIs during the crisis: 67% of the MFIs surveyed reduced or stopped microcredit disbursements. A similar proportion of institutions began massively restructuring loans to small borrowers by granting payment deferrals of 3 months, on average. These moratorium periods constitute a truly essential element of crisis management, at all levels. Whether mandated by local regulators or spontaneously proposed by MFIs, they allow borrowers to benefit from a reduction in costs before resuming their activities. Similarly, the numerous processes for deferring investor repayments allow MFIs to conserve precious liquidity in a period of uncertainty. The Grameen Crédit Agricole Foundation, for example, granted numerous payment deferrals in April, in close consultation with other lenders.

The crisis, however, has not affected MFIs' proactivity and is encouraging them to adapt. To this end, some are seeking more resilient sectors in this context of economic crisis. Thus, we noted that 40% of institutions are considering moving into the agricultural sector, whereas this sector was rather neglected because it was considered riskier before the crisis. This point will be particularly monitored in future questionnaires, as this percentage seems to us to mark a notable change in attitude. This new direction is being considered by more than half of MFIs whose agricultural loans do not exceed a third of their portfolio, but also by very rural and agricultural MFIs. It is still too early to say, but the current crisis could encourage institutions to discover traditionally neglected sectors.

“We are moving forward with plans on rural and agricultural financing” – Partner in Sierra Leone

In terms of activity

Regarding activity, the difficulties of team travel are tending to ease somewhat: 55% experienced difficulties in May compared to nearly 80% in April. On the other hand, group meetings are still prohibited, and the ban is growing, which penalizes the institutions' relational processes, primarily with clients who have no alternative to solidarity loans.

“Group meetings were held weekly or bi-weekly for reimbursements and social gatherings. Without a group meeting, you can no longer demand reimbursement.” – Partner in Kenya

On the social front, only 12% of respondents have had to lay off employees since the start of the crisis, which is, however, quite low compared to national averages for growth in unemployment figures. Our partners seem to be following the first principle established by SPTF (1) "Keep staff employed" according to which "today's employees will be tomorrow's assets". For a large number of our partners, parting with employees during a critical period seems like a greater loss than a slight cyclical economic gain. On the other hand, expectations are already weighing on our partners' growth and development projects, since nearly one in two institutions has put these current recruitment projects on hold. This uncertainty is also weighing on organizational projects, with 41% of the MFIs surveyed having decided to postpone this type of internal project.

Staff protection remains a key focus, with 90% MFIs continuing to provide significant resources and remind them of barrier gestures. From the start of the crisis, our partners made rapid decisions to reduce their fixed costs and limit the risk of exposure to the health crisis: mandatory paid leave (52%), teleworking (62%), team rotation, reduced working hours (57%), and reduced branch opening hours (52%). The level of progress in internal digitalization at certain institutions has encouraged these organizational changes. This is particularly the case for our partners in Europe and Central Asia, who benefit from numerous electronic and online tools.

“Most of us at headquarters are working remotely, thanks to our own remote IT system that allows all departments to continue working seamlessly” – Partner in Georgia

The current crisis, which, as we have seen, is limiting MFIs' "business as usual" capabilities, has led us to study the adaptation of the loan officer profession, at the heart of the microfinance business. Some missions remain the same, particularly for MFIs in the least affected countries: loan disbursements (43%), repayment monitoring (38%), or client file analysis (43%).

The restructuring of ongoing loans is taking an increasingly important place in the daily lives of credit officers (43%), with the encouragement to use mobile payments (36%) and the drafting of amendments linked to deferred repayments (31%).

Just as in the retail banking sector, where the relationship manager has demonstrated their importance during times of crisis, loan officers in microfinance institutions are the primary contact for clients. 81% of respondents stated that the essential role of loan officers is to maintain contact with clients and/or credit group leaders.

We maintain contact with all individual clients, group leaders, and village bank presidents through digital and telephone channels. – Partner in Zambia

Strengthen interaction with clients via (smart) phone or other digital devices and carry out collections through the group leader if possible – International MFI Network

This essential and massive approach is all the more important since it is recognized by the Social Performance Task Force (SPTF) in its responsible crisis principles, as being essential in times of customer fragility. It should also be noted that 33% of the MFIs have initiated surveys with their clients to better understand their needs and offer suitable offers and services. For almost half of the MFIs (43%) the advisors also have the role of "health advisor" by reminding people of good hygiene measures, this is particularly the case in West Africa and Europe.

“One of the best investments you can make right now is to maintain close contact with your customers. Many can't make payments, but they're still valuable assets.” – SPTF

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(1) SPTF is a non-profit organization that engages with inclusive finance stakeholders to develop and promote social performance management standards and best practices.

Crédit Agricole and Dai-ichi Life join forces to provide microfinance for women

©Philippe Lissac

May 14, 2020. Among the 1.7 billion unbanked adults worldwide, women are overrepresented: approximately 980 million of them do not have a bank account, which corresponds to 56% of the world's unbanked (World Bank). They are therefore part of the target population for microfinance, which provides a range of financial products and services to people excluded from the banking system.

To support the development of microfinance for women, Dai-ichi Life Insurance Company Limited, the Tokyo branch of Crédit Agricole CIB, and the Grameen Crédit Agricole Foundation have implemented an innovative initiative. Dai-ichi Life Insurance Company has invested 2 billion yen in a 10-year loan scheme, structured by Crédit Agricole CIB, to promote microfinance for women. This initiative will enable the Grameen Crédit Agricole Foundation to support microfinance institutions that support women and social enterprises in rural economies in developing countries.

This is the first-ever loan program of its kind implemented by the Crédit Agricole Group. “This exceptional operation perfectly illustrates the Ambitions of the Group Project 2022. It reaffirms our client-centric model and our efforts to offer them innovative solutions in Asia, while strengthening our commitment to responsible investment,” said Michel Roy, Senior Regional Officer of Crédit Agricole CIB for Asia-Pacific.

With this partnership, Dai-ichi Life Insurance Company strengthens its commitment to impactful investments. “We are honored to financially support the Grameen Crédit Agricole Foundation and its work to promote the financial and entrepreneurial inclusion of women in developing countries. As a responsible institutional investor, Dai-ichi Life will continue to actively engage in ESG investments and contribute to the establishment of a sustainable social framework throughout the world,” said Tetsuya Kikuta, Director and Executive Officer of the company.

For the Foundation, this is a tremendous opportunity to strengthen its work in developing countries. “Alongside Crédit Agricole CIB and Dai-ichi Life, we will increase our support for women’s empowerment through microfinance and female entrepreneurship. We are very proud to be part of this innovative and unique partnership in the history of the Crédit Agricole Group,” commented Eric Campos, CEO of the Grameen Crédit Agricole Foundation.

PAGE – COVID 19

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An international coalition to protect microfinance institutions and their clients in the Covid-19 crisis

©Philippe Lissac

At the initiative of the Grameen Crédit Agricole Foundation, a group of donors and microfinance platforms has developed a set of principles to better support the microfinance sector during the health and economic crisis caused by Covid-19. Grameen Crédit Agricole Foundation, ADA, Alterfin, Cherry, CIDR Pamiga, Cordaid Investment Management, Crédit Agricole CIB India, CA Indosuez Wealth (Asset Management), European Microfinance Network, FS Impact Finance, InFiNe.lu, Inpulse, Luxembourg Microfinance And Development Fund, MCE Social Capital, Microfinance Center, Rabo Foundation, SIDISIMA And Social Performance Task Force are the first signatories of a joint commitment aimed at supporting microfinance institutions and vulnerable clients during this crisis.

Globally, microfinance institutions provide financial and non-financial products and services to more than 140 million low-income clients [1]. Microfinance plays a vital role in financing income-generating activities in both the formal and informal sectors. In the context of the Covid-19 crisis, microenterprises in the informal economy and small businesses are a key component of economic and social recovery. Supporting microfinance institutions in this context is therefore of paramount importance to protect their most vulnerable borrowers.

Faced with these challenges, a group of donors and microfinance platforms have taken up the challenge and established a common commitment: “ Key principles to protect microfinance institutions and their clients in the Covid-19 crisis ". It aims to guide donors and other stakeholders to better support microfinance institutions and vulnerable clients during this crisis. It draws on best practices and tools from the microfinance sector, such as the work carried out by the Social Performance Task Force [2] and the IAMFI Principles on Debt Rescheduling in Microfinance [3].

The fundamental principles of this commitment are the pooling of available information, analyses, and anticipations, as well as the concerted implementation of shared decisions. The signatories agree to coordinate policies, technical assistance, and resources to help microfinance institutions cope with the crisis. The objective is to protect both microfinance institutions and their clients, ensuring continued access to financing under the best possible conditions and ensuring the well-being of clients and staff.

Given that individual obligations and mandates may influence how the commitment's provisions are implemented, this is not a legally binding agreement. It is not a fixed document; it could be improved as needed to better respond to the evolving crisis. Signatories to the commitment will maintain open communication with their peers to share their decisions and adhere to these principles.

The signatories invite other stakeholders to join this joint and committed initiative. The involvement of private, public, and solidarity-based actors is central to monitoring and supporting the actions of microfinance institutions worldwide. Strengthening the impact of financial inclusion is essential to combating poverty in this unprecedented context.

Download the commitment

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[1] Microfinance Barometer 2019
[2] //sptf.info/resources/covid19
[3] Charting the Course: Best Practices and Tools for Voluntary Debt Restructurings in Microfinance, IAMFI, Morgan Stanley, 2011. The document is available on Findev Gateway