Ugafode and the financial inclusion for refugees

Supported by the Grameen Crédit Agricole Foundation since 2015, UGAFODE Microfinance Limited is a microfinance institution that offers inclusive financial and non-financial services to low income, but economically active populations in Uganda. UGAFODE is one of the three organisations supported by a programme launched by the Foundation, The Swedish International Development Cooperation Agency (Sida) and the UN Refugee Agency to support the financial inclusion of refugees. Thanks to the financial and technical support, UGAFODE opened a branch in Nakivale Refugee Settlement in Uganda. Spotlight on an interview to Shafi Nambobi, CEO of UGAFODE.

1. In a few words, what is UGAFODE Microfinance Limited?

UGAFODE Microfinance Limited began in 1994 as an NGO focused on group credit for women and has since transformed into a Microfinance deposit-taking institution regulated by Bank of Uganda. The institution specifically targets low income but economically active population in the country through 7 urban and 12 rural branches, serving over 110,000 savings customers and 8,000 loan clients. We offer a variety of financial services, which include savings, loans and money transfer services with a loan portfolio of €12.1 million and savings volume of €6 million.

2. UGAFODE received an innovative support from the Grameen Crédit Agricole Foundation, the Swedish International Development Cooperation Agency (Sida) and the UN Refugee Agency in 2019, when it was selected as beneficiary of a programme to support financial inclusion for refugees. Can you explain the initiative and the support UGAFODE received?

Most of the refugees have been discriminated against and denied credit facilities from financial institutions as they are viewed to be too risky, despite being engaged in agriculture plus retail trade and commerce. In March 2020, UGAFODE was the first financial services institution to set up a physical branch in a refugee settlement in Uganda thanks to the programme. Nakivale refugee settlement is the 8th largest in the world hosting over 134,000 refugees from 13 countries. The total project budget is €536,780 with €396,882 coming from Sida and €139,810 contributed by UGAFODE in three years.

Furthermore, the Foundation also granted a new loan of €540,000 in July 2020, of which 50% will be used in the framework of the refugees programme, to lend to refugees and host populations.

3. What are the first outcomes of the project?

Clearly, the project has passed the proof-of-concept stage. Since the opening of the Nakivale’s branch, 505 loans totalling to €383,596 have been disbursed between 2nd March 2020 and 31st December 2020, mainly to support small and medium enterprises and agriculture individual loans. It is important to note that all this has been achieved under Covid-19 crisis. The Portfolio At Risk (PAR) is at 1.65% for 1 day and 0% for 30 days, which is remarkable and appreciated.

Furthermore, we have reach over 5,000 refugees with financial literacy messages and 2,534 clients have opened savings with a total of €65,112. A total of 5,301 refugees have received €776,345 through money transfer services from friends and relatives at the Nakivale branch in the nine months since the branch was opened. We currently employ 21 staff with 8 refugees at Nakivale plus 4 in the Call Centre in Kampala to manage customer complaints in the major refugee languages.

4. How did Covid-19 pandemic affect the project? What measures have been taken to face the crisis?

The project implementation and opening of the branch happened at the beginning of the Covid-19 crisis. Fortunately, as government rendered financial services as essential, the Nakivale branch was able to offer needed services to the settlement clients on a very positive note.

UGAFODE has been able to adjust its policies and procedures to serve refugees within the regulation guidelines. We recruited refugee staff at the Call Centre to provide guidance and information to the clients. We also built a branch extension to provide sufficient space to ensure safety of both staff and customers.

Furthermore, we granted rescheduling options to the clients with loans to support them in this period of crisis. The Grameen Crédit Agricole Foundation and KIVA supported us to face the crisis. The Foundation granted us flexible budget lines within core lines to cater for crisis’ uncertainties. The Branch operates under strict COVID 19 SOPs (Standard Operating Procedures) instituted by the Ministry of Health and Government. We will also be able to buy 3 more motorcycles to enable the branch staff reach out to more clients, easily and faster.

5. What are now the priorities of the project?

There are three priorities :

  1. Scale up financial literacy trainings to raise awareness of at least 8,800 refugees and 8,000 host communities in year 2 and 15,500 refugees and 14,000 host communities in the last year of the project.
  2. Conduct a customer survey to facilitate informed decisions and develop products tailored to refugees.
  3. Roll out the project model to other settlements. After Nakivale, the project is going to be replicated to other refugee settlements at the earliest. Initial feasibility studies have been conducted for Kyaka, Kyangwali and Rwamwanja refugee settlements.

OXUS Kyrgyzstan and its six commandments for the Covid-19 crisis

Interview with Denis Khomyakov, CEO, OXUS Kyrgyzstan

Since the beginning of the Covid-19 crisis, the Grameen Crédit Agricole Foundation has worked on several initiatives to better support the microfinance sector. OXUS Kyrgyzstan is one of the microfinance institutions that has benefited from the Foundation’s response to the crisis. Five questions to Denis Khomyakov, CEO of OXUS Kyrgyzstan (OKG)

The Covid-19 crisis has strongly influenced Kyrgyzstan’s economy and your organisation. What measures have you adopted to cope with it?

The crisis has hit the economy and the health system of Kyrgyzstan hard. With border closures and lockdowns, industry and agriculture declined, and transport services collapsed. Although new activities emerged (such as delivery services), Covid-19 affected the country’s economy and by extension our clients and business.

In this context, we were well prepared at OKG. As early as February, we first protected our staff with home-based work or short time working at 2/3 of the salary; which involved the digitalisation of our activities. In May, we adopted both remote and on-site work, thanks to the required anti-Covid measures foreseen in the Covid-19 Business Continuity Plan (BCP), which quickly became operational.

We always made sure to communicate well. To achieve this, we first set up a Covid-19 Committee consisting of members from different departments and myself to structure communication and define operational measures. Several actions were taken: we organised communication with agencies and clients, established loan restructuring and client support, and decided to negotiate with lenders to obtain a grace period on repayments. We also had regular exchanges with various stakeholders: the governance that guided and advised us, the lenders who have done coordinated actions to ensure the continuity of our activities, and the National Bank that provided us with clarifications on the restructuring and exemptions possibilities.

What was the Foundation’s support to strengthen OKG’s response?

The Covid-19 surveys carried out by the Foundation were well organised and always took place at the right time. The Covid-19 Observatory launched by the Foundation, where the results of the surveys and other useful articles are published, has been valuable to us in assessing our situation and position in the region. The Foundation also led OKG’s group of lenders to implement the coordinated restructuring measures and extensions; at the Foundation’s instigation, with regular monitoring by Julie Serret, a Foundation’s Investment Manager, we acted immediately to prepare for the worst-case scenario and agreed terms with the lenders all together.

Which were the main measures implemented by this group of lenders?

The group of lenders decided to extend all payments payable between May and December 2020 for 12 months. The lenders also simplified reporting by collecting information through a common document, which gave us more time to focus on other issues. They also provided us with tools to create a BCP, to restart the business while protecting staff. As a result, we did not really worry about the liquidity situation. We were able to pay our staff salaries and benefits immediately.

What lessons do you draw from this period for the evolution of microfinance?

Here are my six commandments:

  1. Anticipate. Every business should have a BCP for these kind of events. Having an IT disaster recovery plan is very useful – it helped us a lot in reacting to the crisis and keeping the system running.
  2. Take care of the staff; inform them of the situation and the measures decided.
  3. Make decisions. Do not be too late but think twice.
  4. Inform investors and lenders of the situation and provide forecasts (detailed, even if you do not know how things will develop) for the coming months.
  5. Contact your Board of Directors often. Its composition and experience will enable you to get through any type of crisis.
  6. Be digital. Digital channels are valuable for communicating with clients and staff. Covid-19 has pushed us to think and to be more digital.

What are the prospects for OKG in 2021?

The company continues its development and growth. We plan to open two new branches in rural areas and to serve low-income clients. We plan to introduce tablets to speed up loan disbursement, but also to collect less paper and be more environmentally friendly. We also aim at developing green loans to help combat air pollution and intensive energy use in Kyrgyzstan.

Other initiatives such as our work on customer loyalty and the project to support women entrepreneurs initiated in early 2020 have been slowed down by the health crisis. We will take them up again. We will remain a reliable company for our clients, with a zero-exclusion approach!

The will of microfinance institutions to maintain their activities during Covid-19 crisis

ADA, Inpulse and the Grameen Crédit Agricole Foundation have collaborated to monitor and analyse the effects of the Covid-19 crisis for their partner microfinance institutions worldwide. This monitoring was carried out regularly throughout the year 2020 in order to have a better vision of the situation’s evolution. Through this regular and in-depth analysis, we hope to contribute, at our level, to the construction of strategies and solutions tailored to the needs of our partners, as well as to the diffusion and exchange of information between the different players in the sector.

In summary

The results reported in this article come from the fifth survey jointly (1) conducted by ADA, Inpulse and the Grameen Crédit Agricole Foundation. Responses were collected in the second half of December from 74 microfinance institutions (MFIs) located in 42 countries in Eastern Europe and Central Asia (EAC-28%), Sub-Saharan Africa (SSA-26%), Latin America and the Caribbean (LAC-23%), South Asia (14%), and the Middle East and North Africa (MENA-9%) (2).

At the same time, the major constraint that remained was the difficulty in collecting loan repayments, which implied increasing the portfolio at risk. This last point is still valid at year-end, and three quarters of respondents still report an increase in RAP. In added to this is the deterioration of the epidemiological situation in the world in the fall of 2020, as evidenced by the responses gathered in December 2020. The epidemic containment measures taken according to local contexts may once again have consequences on the activities of MFIs and their clients, and a return to normalcy is not yet on the agenda.

However, these new complications and their implications are not new. Thus, they have limited impact on MFIs’ risk indicators. The stability of the increase in PAR, as well as in recovery levels, does not reflect a further major deterioration in MFIs’ financial situation. This relative balance also corresponds to the MFIs’ state of mind as they approach 2021. Despite an unstable context and all the obstacles it entails, the vast majority of our partners expect their activity to grow in the new year, in terms of both portfolio volume and the number of clients. This confidence, which was already evident in the surveys conducted over the summer, is a further sign of the resilience of these institutions.

1. MFIs are always operating in unstable and difficult conditions.

Our last survey, conducted in October, showed a great improvement in the operating environment for MFIs and a gradual recovery in activity in all regions of the world. However, in a large number of countries, even those that appeared to be managing the virus’ spread well, new, more restrictive measures to contain the epidemic were taken in the last quarter of 2020 in response to the new increase in cases. This deterioration is particularly confirmed by our partners in Europe and Asia, where MFIs in South and Central America, Southern Africa and North Africa are reporting an improvement in the situation.

Comparing the responses of our 38 partners who participated in the October and December (3) surveys in the following paragraphs confirm the observation of a return of certain difficulties for MFIs, and are in line with the general results obtained at the end of the year.

First, the virus continues to rapidly spread in some parts of the world, and MFIs are not exempt from it. Thus, we can note an increase in the proportion of MFIs reporting that clients and staff have been infected with Covid-19. This can be seen in the drop from 47% to 32% (17 to 12 MFIs) of MFIs whose clients and staff are not reached by Covid-19. In October, this category included two thirds of the MFIs in Sub-Saharan Africa (10/15) and the vast majority of those in South Asia (5/6). In December, the share of MFIs in Sub-Saharan Africa was almost stable (9/15), while those in Asia dropped to 50% (3/6). Finally, the category “more than 20% of staff were infected” rose from 0% to 13% (5 MFIs) over the period, with the vast majority in the Europe and Central Asia region (4 MFIs).

In terms of operational constraints, results are relatively stable between the two periods. The list of MFIs indicating that they no longer face operational constraints remains more or less the same (39%), and is concentrated in Central Asia and West Africa. It should be added that collecting loan repayments (42% of the sample) and disbursing new loans (32%) remain the two main difficulties encountered by MFIs.

Difficulty getting in touch with clients, both in branches and in the field, was considered a consequence of the crisis for only 16% (6 MFIs) of this sample in October, and this figure increased in December (24%, 9 MFIs). In detail, it should be noted that the location of MFIs that highlight this constraint has evolved over

the last two months. Thus, they were particularly located in Latin America and the Caribbean and East Africa in October. In December, this point was raised by MFIs in Southeast Asia (3/6), Eastern Europe (2/5) and West Africa (2/8). At the general level of the survey, 30% of the MFIs indicated that they were once again limited in their activities, despite a gradual recovery.

2. Therefore, customers remain exposed

As the MFIs testify through these surveys, the uncertain and particularly unstable context also weighs heavily on MFI clients. Logically, the difficulty in collecting reimbursements for MFIs, for example, is closely linked to the difficulties encountered by the clients themselves. The activity of a large part of them has still not restarted or remains slowed down by the crisis context: our last survey highlighted in particular the tourism and trade sectors as the most affected sectors (4). In December 2020, the proportion of MFIs indicating that more than 90% of their clients have restarted their activity remains in the minority (23%, 17 MFIs). However, 46% (34 MFIs) of MFIs indicate that clients who have resumed their activity represent between 70% and 90% of their portfolio. Only 11% (8 MFIs) of respondents indicated that less than 50% of their clients are able to work again. There are, however, some regional disparities in these results: in South Asia, Europe and Central Asia, and Sub-Saharan Africa, at least 80% of respondents report that more than 70% of clients have returned to work. In the MENA and Latin America and the Caribbean regions, this share decreases to 43% and 41% respectively.

Our partners’ responses also make it possible to continue profiling the customers most affected by the crisis. First of all, it should be noted that a large proportion of the MFIs surveyed rule out the possibility that there is a category of clients that is more affected than the others, whether in terms of gender, location (urban or rural) or age. In detail, 42% (31 MFIs) of respondents believe that all of their clients are impacted identically, and 51% (38 MFIs) indicate that there is no significant difference in repayments based on these criteria. Overall, the idea that there is a difference in exposure to the impact of the crisis according to age is also dismissed. While some MFIs say they see differences according to age categories (-30, 30-50, 50+), none of them stand out.

Among the MFIs that perceive a difference in the impact of the crisis on their clients (36 MFIs), one criterion stands out for the most part: 76% (27 MFIs) believe that the most impacted populations are urban populations. The same proportion claims that this difference is reflected in loan repayments. These responses confirm our previous results for the most affected sectors, which are definitely urban. The fact that the criterion of rurality is hardly mentioned goes in the same direction, and echoes the agricultural sector, revealed during the surveys by our partners as a sector less affected by the crisis linked to Covid-19 than the others, and towards which a certain number of MFIs imagined they wanted to move. Finally, a last characteristic is mentioned by MFIs reporting disparities in the impact of the crisis: 36% (13 MFIs) perceive that women are more affected than men and therefore by default may have more difficulty repaying their loans. It should be noted that a portion of the respondents serve only women clients, which logically makes them the most affected population in the sector.

3. Now well-identified challenges for MFIs

MFIs are now aware of activity levels that are still at half-mast or of the measures implemented by the local authorities to contain Covid-19. In addition, to which they are adapting. Thus, the financial difficulties mentioned by the MFIs are very stable from October to December 2020 and do not highlight any new trends. Two of the four most cited difficulties remain linked to the MFIs’ declining profitability, due to the increase in provisioning expenses (45% of the respondents, 33 MFIs) and the non-collection of interest (55%, 41 MFIs). These two points are closely linked to the most striking difficulty of the crisis for MFIs during this period: the increase in portfolio at risk (74%, 55 MFIs).

In December 2020, 74% (55 MFIs) of respondents indicated that more than 70% of clients were repaying their loans, and 37% reported client repayment levels above 90%. On the other hand, only 9% report that less than 50% of clients are able to repay their loans, which is in line with clients’ recovery levels. These levels are reflected in the level of portfolio at risk of MFIs: in December 2020, 47% of respondents (35 MFIs) indicated that PAR 30 had increased without doubling, 16% that it had doubled, and 12% that it had more than doubled.

Nevertheless, this risk configuration seems to have broadly stabilized in the last quarter of 2020, despite the additional constraints presented above (see Fig. 7). In the common sample for the October and December surveys, we still find a quarter of MFIs that are not affected by this increase in portfolio at risk. At the same time, there are no MFIs added to the list of MFIs whose PAR 30 has more than doubled. Transfers from one category to another over the October-December period are for the vast majority between a stable PAR and a PAR that increases without doubling. This indicates that the deteriorations in the local contexts previously presented would therefore not affect all clients, thus having only a moderate impact on the MFIs’ risk indicators.

This stability coincides with the MFIs’ new objectives at the beginning of the new year. The crisis has disrupted their operations, and has inevitably had an impact on their projections. Thus, 58% of MFIs report having updated their business plans and growth objectives for the coming months and years. On the strength of these crisis gains and a better understanding of the context, the vast majority of MFIs still plan to continue to develop in 2021. Thus, 80% of those surveyed expect their portfolio volume to increase this year, while 15% expect it to stagnate and 5% expect it to decline. In addition, this portfolio increase should also be followed by an increase in the number of clients for 75% of the MFIs expecting growth in the new year. A new hopeful signal, therefore, but also a sign of ambition on the part of institutions determined to continue moving forward in 2021.


(1) The first four surveys of ADA’s partners, Inpulse and the Grameen Agricole Foundation are available here : //, // and //¬
(2) The number of responding MFIs by region is the following: SSA 19 MFIs; LAC 17 MFIs; EAC 21 MFIs, South Asia 10 MFIs; MENA: 7 MFIs
(3) The sample size is 38 MFIs: 6 in South Asia, 10 in Eastern Europe and Central Asia, 6 in Latin America and the Caribbean, 1 in MENA, and 15 in Sub-Saharan Africa.
(4) //; //

[INTERVIEW] The Foundation’s actions to face the Covid-19 crisis

Hélène Keraudren Baube & Edouard Sers, Grameen Crédit Agricole Foundation

To overcome the effects of this unprecedented health and economic crisis, the Foundation has had to innovate, adapt and coordinate with other key players in the sector of inclusive finance and social impact entrepreneurship. Transversal work that involves the whole Foundation team. To find out more, spotlight on the testimonials of two Foundation experts, Hélène Keraudren-Baube, Administrative and Financial Director, and Edouard Sers, Risk, Compliance and Social Performance Director.

1.How has the Covid-19 crisis impacted the internal organisation of the Foundation and that of supported organisations?

Hélène: We used telework overnight, but since it was already a possible modality at the Foundation, the transition was very fluid. In addition to providing the equipment for teleworking, we have also adapted the schedules to take into account the context of confinement with children at home. We have had a very special year, with no field mission for the team based in France since February, as usually investment officers all go on field missions several times a year. The Foundation’s Board of Directors conducted regular updates to monitor the situation and determine the best measures to support the teams and organisations funded. In addition, we spoke on a more regular basis with our governance to keep them informed of developments in the situation and activity.

2. What responses did the Foundation give to deal with it?

Edouard: The Foundation’s first response was to establish a rapid and permanent dialogue with the organisations it supports to understand the effects of the crisis, the measures implemented and their needs. The investment manager teams have remained in very close contact with all the organisations we support, and we have conducted regular surveys with them to understand the impacts of the crisis in the various countries of intervention. In addition, we launched the Covid-19 Observatory in which we regularly publish articles in order to share our analyses and inform stakeholders of developments in the situation. At the same time, we led an international coordination of lenders and inclusive finance players to act in close cooperation, to protect microfinance institutions and their clients and prevent any liquidity shock that would have destabilised the sector.

Hélène: We have adapted our monitoring and analysis tools and our requests for information, particularly with regard to business continuity plans and short-term cash flow plans. On the financial front, we have granted deadline extensions to around 30 Foundation partner organisations, mainly microfinance institutions. These extensions, from 6 to 12 months according to the different cases, took the form of amendments to loan contracts, and revised deadlines. This volume of postponement requests is completely unprecedented and has “stressed” our liquidity. We have refined our projection and monitoring tools to track the financial impact for the Foundation.

3. Regarding the international coalition, what are the first results?

Edouard: Six months after the signing of the Commitment, along with all the signatories, we drafted a joint publication presenting the status of implementation of 10 principles of the Commitment. Among the conclusions of the publication, we can highlight the strong coordination between international funders to agree in terms of extension of deadlines, avoiding a liquidity crisis in the microfinance sector. We have also made progress in the area of ​​technical assistance, including webinars and joint field surveys with end customers. Finally, we have encouraged the coordinated collection of information on staff management and client monitoring of microfinance institutions and are promoting initiatives to strengthen the protection of clients and staff. In 2021, we will pursue our efforts to support the gradual recovery of microfinance institutions supported with technical assistance, appropriate financing and regular exchanges between the various players in the sector.

4. In relation to the Foundation’s donors, what common actions have been taken?

Hélène: We very quickly kept our funders informed of developments, with detailed presentations. Since the strat of the crisis, we understood that the main impact in 2020, for the Foundation, would be on our liquidity management. The requests for extensions from our partners weigh on the Foundation’s cash flow, and we wanted to preserve our ability to support our partners and avoid a liquidity crisis at all costs. To do so, we have asked for extensions of delays from our funders, and envisaged new “special Covid-19” financing lines to support the resumption of the activity of the microfinance institutions that we support.

5. Finally, what are the prospects for 2021? What will the Foundation’s priorities be?

Hélène: After a year 2020 marked by an operating result supported by the growth of the portfolio in previous years and substantial savings in 2020, particularly on travel costs, the year 2021 will be severely impacted by the contraction of the loan portfolio of the Foundation, following the crisis. The Foundation’s activity should continue its gradual and cautious recovery that began in recent months.We believe that the first semester will still be strongly constrained by the pandemic and its consequences, and hope to be able to resume our trips in the field, as close as possible to our partners, beggining from the second half of ther year. It will probably take another year for the Foundation to return to the level of activity it had before the crisis.

Edouard: A large part of the organisations supported have been able to cope with the crisis and are eligible for the funding offered by the Foundation according to standard risk criteria. On the other hand, a significant portion of them still carry a significant risk inherited from 2020 in their balance sheets. It is crucial that we continue to strengthen our support system to offer solutions adapted to the different levels of risk, combining new financing, technical assistance, deadline extension or, more exceptionally, debt restructuring.

At the sector level, lenders coordinated in 2020 in order to avoid a liquidity crisis and we will continue on this path in 2021. This year will also be crucial for investors to support microfinance institutions in accordance with their shareholder responsibility. Finally, we will continue to promote initiatives to protect the clients and staff of microfinance institutions in these times of crisis. For example, we actively participate in the Social Performance Task Force (SPTF) working group to define new certification criteria relating to customer protection in the sector. A permanent dialogue with our partners and coordinated actions will be key factors for the success of our commitments.

Microfinance In India: The Story of Resilience

By Devesh Sachdev, CEO, Fusion


The microfinance model of providing small collateral free loans to the ‘bottom of pyramid’ clients hitherto overlooked by the formal sector, has established itself as an effective & sustainable model for financial inclusion. Financial inclusion has rightfully been the key focus area for policy makers in the last few decades given the sheer size of our population that remained unserved and underserved. It needs no complex analysis to know that if India as a country has to improve its per capita income and graduate people above the poverty line – then access to finance has to be the key.

Despite policy push through the mainstream banking system, few factors acted as impediments to this critical national objective of financial inclusion. First and foremost being the fact that our formal Banking system largely designed its policies and reach (be it brick and mortar or digital) to cater to the urban/semi-urban population with established track record/income and collateral that fit into their defined Risk/Reward matrix as an Asset Class. Secondly, the ‘cost of delivery’ for bite size transactions in BOP market became a dampener for the Banks. Lack of financial literacy also acted as a constraint.

The microfinance model of providing small collateral free loans to the ‘bottom of pyramid’ clients hitherto overlooked by the formal sector, has established itself as an effective & sustainable model for financial inclusion. It was conceptualized to transparently deliver financial services and products at the doorstep of these very customers in a very simple to understand manner. The concept of Joint Liability leveraging social capital combined with doorstep delivery has helped microfinance gain trust & acceptability.

The Microfinance ‘journey’ of the last decade has run on two broad themes. On one side, it has weathered serious setbacks like the one of 2010 Andhra crisis, 2016 Demonetization crisis, the NBFC liquidity and credibility crisis and is currently battling the Covid-19 global pandemic. All these events created a perception in the minds of stakeholders that microfinance per se is a risky asset class because unfortunately for the sector – it has been impacted by such unforeseen events once every 3-4 years.

However, there is another side to the sector which is its brighter side:

  1. Today, the sector serves around 6 crore unique customers with a combined portfolio size of Rs 2,31,000 Crore across 620 districts in 28 states and 8 UTs. This makes it the 2nd largest sector after Mortgages. However, what has been even more commendable is that the sector has grown @30% CAGR in the last 3 years vs the overall Retail Sector’s 17% CAGR
  2. Another highlight of the Microfinance sector has been delivering financial products and services via a prudent amalgamation of ‘Touch and Tech’ at the lowest cost amongst all its global peers. The sector leverages advances in technology to constantly deliver greater transparency, data security and privacy and affordability for its rural customers at their doorstep.
  3. With both reach and operational effectiveness, Microfinance today is a sustainable business model, calibrated to leverage its network to deliver other goods and services to the rural masses contributing to India’s phenomenal growth story
  4. The sector also generates significant employment opportunities not only by hiring from the hinterland but also enabling its customers provide employment opportunities to others via financial support extended.

The sector has demonstrated remarkable resilience across the last decade and this has been made possible due to some key contributory factors:

  • The ‘inherent’ need for such a model in aspirational India where a large unserved /underserved population still needs to be brought onto the financial bandwagon, ensured that Microfinance remained a ‘preferred’ vehicle for both the policy planners and the practitioners across the years
  • The phenomenal support and conducive policy framework provided by the RBI which has been a catalyst in furthering Microfinance’s mission of financial inclusion. The sector has been accorded a special category under the larger NBFC category of RBI – lending it a distinct identity and strong credibility by having country’s first RBI recognised Self-Regulatory Organisation.
  • The functioning of MFIN (the sector association) as an SRO since 2010 has enabled the sector to build its growth on strong pillars. Key pillars of MFIN’s work have been customer protection, industry code of conduct and policy advocacy, all of which contribute towards building of a Responsible Finance ecosystem.
  • Microfinance being a high touch model, it has ensured highest degree of customer centricity and familiarity. Response time in crisis situations is much quicker and the resolutions proposed are very focused. This aspect helped the sector tide over the challenges brought about by Demonetization in 2016 but more recently this model has proven its resilience and sustainability in the ongoing Covid 19 crisis. The frontline soldiers ensured that the wheels of financing kept moving when the customers needed them the most during pre and post lockdown periods. Operating platforms were quickly modified to work on remote basis delivering loan services digitally Field processes were altered to incorporate all health and hygiene guidelines.

The strong bond with customers stood the test of time and brought about a high degree of mutual understanding and cooperation. Most of the financial pundits were proven wrong when the microfinance portfolio delivered better than expected portfolio metrics post Covid and RBI mandated moratorium period.

Today, the Microfinance Sector is partnering with the government to roll out various social schemes be it Shishu loans under Mudra or Pradhan Mantri Svanidhi scheme. The importance of the sector has been recognised by PM in his United Nations General Assembly speech by terming it as instrumental in furthering women entrepreneurship.

As they say “It’s not the number of punches that you land that make you a winner, it’s the fact that you still get up strong after taking a lot of punches and emerge a winner” and this is an apt description of a ‘Resilient’ Microfinance Sector in India thus far ……but the journey has just begun!!


Source: BW Businessworld

COVID-19: a gradual recovery of MFIs in sync with their clients’ recovery

ADA, Inpulse and the Grameen Crédit Agricole Foundation have joined forces to monitor and analyze the effects of the Covid-19 crisis on their partner microfinance institutions around the world. This monitoring is done on a regular basis and will be carried out throughout 2020 in order to obtain better insights of developments. We hope this regular and in-depth analysis will contribute to building strategies and solutions adapted to the needs of our partners, and also to the dissemination and sharing of information among the various players in the industry.

In Summary

The results presented in this article are drawn from the fourth survey [1] in a joint series by ADA and the Grameen Credit Agricole Foundation, Inpulse having chosen to join the initiative one time out of two. Responses were collected between October 1st and October 20th from 73 microfinance institutions (MFIs) in 38 countries in Sub-Saharan Africa (SSA-37%), Latin America and the Caribbean (LAC-25%), Eastern Europe and Central Asia (ECA-18%), Asia (15%) and Middle East North Africa (MENA-4%) [2].

Given that previous surveys had revealed that the main financial difficulty for MFIs was the increase in their Portfolio at Risk (PAR), the new survey took a closer look at how MFI clients and their businesses were doing as this is what MFIs mainly depend on. Above all, the results of this survey confirm the gradual resumption of MFI activity, along with a reduction in most of the operational constraints initially encountered. The major remaining constraint has to do with loan recovery which explains the increase in PAR as the main financial difficulty for MFIs.

This difficulty in loan recovery may be due to external constraints, such as mobility or moratoria imposed by authorities, or to difficulties encountered by the clients themselves whose activities have not yet restarted or are slowed down by the impact of the crisis. Indeed, even if the peak of the health crisis has passed and it has affected to a lesser extent regions such as sub-Saharan Africa or South-East Asia, thus allowing a number of business sectors to restart, it is all too soon to expect a return to normal. Especially, the restrictive measures and the overall economic situation have negatively impacted — and still do — activities in a certain number of industries, thus restricting the sources of income of the populations. Consequently, this affects MFIs and their financial situation which is why it seems crucial to monitor closely how the crisis is experienced by their clients in order to be responsive in adapting to their needs by offering solutions allowing everyone — clients and MFIs alike — to survive this crisis.


The responses collected during the month of October show that most MFIs are gradually resuming their activities (Fig. 1). Only those of some MFIs in Myanmar remain very limited by the constraints represented by containment measures currently in place in the country, as are the activities of a minority of MFIs in sub-Saharan Africa (one MFI in Mali and one in Malawi). In Europe and Central Asia, the share of MFIs having achieved their normal activity level is most significant.


One of the constraints being encountered by MFIs that previous surveys have revealed was that part of their staff and client base were affected by Covid-19. Hence, we focused on the prevalence of the Covid-19 disease among staff and clients. Fig. 2 and 3).

The situation is mixed in this respect: The Sub-Saharan Africa region appears as the least affected with just a small proportion of MFIs reporting that their staff (15%) or their clients (22%) are affected. Moreover, this proportion remains very small (between 0.1 and 5%) with 70% of the region’s MFIs reporting that neither their clients nor their staff have been affected by the virus. On the other hand, the Latin America and the Caribbean region is the most affected, followed by Europe and Central Asia with a larger share of MFIs concerned by the virus (just 11% of MFIs in the LAC region reporting that neither their staff or clients were affected), and it shows a larger prevalence rate for some of those MFIs [3]. Nevertheless, even if the health situation is more problematic in those regions, it still remains for the time being a relatively minor constraint for MFIs.

Moreover, on a global scale a relatively important proportion of MFIs report that they do not encounter any constraints. (Fig.4), mainly in the Europe and Central Asia regions (62%), while those facing some constraints are fewer with every survey, thus showing a gradual recovery.

The major remaining constraint (32% of MFIs in the sample) is about the difficulty in collecting loan repayments. This implies an increase in the portfolio at risk which is the main financial difficulty encountered by MFIs everywhere. It is reported as such by 77% of MFIs while other difficulties show a diminishing pattern in every survey.

This difficulty or impossibility of collecting loan repayments can be explained by mobility constraints, mainly in countries or internal regions where containment measures are still in place, but also by the implementation of moratoriums – be they initiated by authorities or by the MFIs themselves if the clients needed them. Indeed, these moratoriums concerned the majority (84%) of MFIs surveyed in the sample (Fig. 5), and they are still in place for almost a half of MFI clients (48%) in total. Asia is the region where this situation is more frequent (83% of MFIs included in the sample).

Among clients having benefited from a moratorium, those repaying normally their loans once it ended are a minority (Fig. 6). The majority of MFIs (86% of the sample) report that some or all of the clients needed a new moratorium, or even ended up in the portfolio at risk with 39% of MFIs in the sample affected by the latter situation. In Europe and Central Asia, and in Sub-Saharan Africa, more than half of MFIs report a move to their portfolio at risk of part of their clients having benefited from moratoria.


Nevertheless, globally speaking, the majority of MFIs in every region report that at least 70% of clients repay their loans. (Fig. 7). In South and Central Asia and Europe, more than 80% of respondents show repayment levels above 70%. On the other hand, the situation is not as good in Latin America and Caribbean and Sub-Saharan Africa regions: 34% and 45% of MFIs respectively with less than 70% of clients repaying their loans, and 17% and 15% where this proportion is less than 50%.


These repayment levels, being both volatile and lower than the pre-crisis normal, can be explained partially by the fact that not all customers are still able to resume their activities: Once again, excepting the Europe and Central Asia regions, only a minority of MFIs report that 90% or more of their clients have resumed their activity. However, for a majority of MFIs in the sample (54% in total), between 50 and 90% of clients have resumed their activity. The overall trend therefore points towards gradual recovery.

However, even if customers do resume their activities, some sectors are more affected by the crisis than others. The business activity most often mentioned as being most affected is tourism in regions other than sub-Saharan Africa, where it is retail (reported by 48% of MFIs in the region). The services sector is second in most regions except in Asia where the production and crafts sector is more affected. On the other hand, agriculture is reported only once. Overall, the agriculture sector appears to have been less affected than others by the Covid-19 crisis, as our previous work already showed, where a number of MFIs stated that they wanted to focus more on agriculture as it was less affected by the crisis.

When looking at the constraints faced by customers, by sector, it appears that these constraints are specific to each of them (Fig. 10). Regarding the tourism industry, it is the decrease in the number of clients of entrepreneurs working in it that is the main source of difficulty, followed closely by the loss of employment, mentioned by 60% of MFIs who identified tourism as the most affected sector. On the other hand, in other sectors, the loss of jobs by clients does not appear to be among the main constraints identified. The decrease in the number of customers remains one of the major constraints, for the retail sector as well as for services or production and crafts. The same result is found in other surveys directly targeting MFI customers, such as those using the tool developed by SPTF where the reduction in demand is identified as the main reason for the decline in revenues [4]. Finally, the lack of business opportunities is the first constraint for the retail sector (reported by 72% of MFIs identifying this sector as being the most affected), while the difficulty in producing or offering products is typical of the production and crafts sector.

By focusing on the specific constraints faced by their clients depending on their industry, but probably too on other factors, MFIs would thus be able to better anticipate their financial situation in the short term, and respond appropriately to the needs of their different customer segments: This would allow them all to better navigate this crisis. This responsiveness seems to have already been adopted by some MFIs, given that, and beyond the priority given to the repayment of credits or their restructuring, some of them have introduced not only new channels of digital communication and distribution, but also new credit policies or new products (Fig. 11).


[1] The results of the first three surveys of ADA partners, Inpulse and the Grameen Agricole Foundation are available here: // and //
[2] The number of MFIs responding by region is as follows: SSA: 27 MFIs; LAKE: 18 MFIs; EAC: 13 MFIs, Asia: 12 MFIs; MENA: 3 MFIs. In spite of the small number of MFIs participating in the MENA region, we considered useful to share the inputs of MFIs that took the time to respond to these surveys. However, we urge caution in interpreting the results in this region, which might have limited representativity.
[3] As the MENA region is represented by only 3 MFIs in the sample surveyed, the high numbers in this region should be considered with caution.
[4] The results of these surveys are available here: //

Kafo Jiginew, resilient in the face of the Covid-19 crisis in Mali

© RFI Savoirs

The Covid-19 crisis has impacted the activity of Kafo Jiginew, a microfinance institution funded by the Grameen Crédit Agricole Foundation since 2018. Firstly due to the slowdown in international economic activity which impacted the growth of savings, but also in relation to the demand for loans which has also decreased. This panorama was presented by David Dao, Director of Kafo Jiginew, during an interview given on the occasion of the presentation of donations worth 25 million FCFA to the widows and orphans of the Malian soldiers who are part of the membership. of the institution.

The Covid-19 has also affected the Malian cotton sector, largely financed by the institution, which has seen its demand drop on the international market. Credit demands from cotton producers have decreased, which for the institution represents a significant drop in financial income. Another consequence is the increased risk of non-repayment of loans which could weigh on Kafo’s financial profitability in 2020. David Dao, however, expects a positive result for 2020 and asserts that the situation will not weigh on the existence of the institution that is strong.

Kafo Jiginew remains the leader in the microfinance field in Mali with at least 40% of the market share, 430,000 clients and a portfolio worth FCFA 68 billion. Since 2014, the institution has entered a phase of profitability which still continues. In 2015, Kafo Jiginew also initiated a global rating operation with MFR – Microfinanza Rating, an international audit firm that assesses and scores its financial and social performance. These good practices ensure transparency towards international funders such as the Grameen Crédit Agricole Foundation, which will continue to support its partners to face the current crisis.




Signatory organisations report on Covid-19 Pledge implementation and lessons learned

Over the past months, the financial inclusion sector has embarked on a journey to face the Covid-19 crisis. On the field, microfinance institutions have taken measures to face the health risks, lock downs and the economic recession. In the meantime, lenders, investors, support organisations and technical assistance providers had to adapt their intervention principles and coordinate their actions (1). By signing the Pledge on Key principles to protect microfinance institutions and their clients in the COVID-19 crisis (the “Pledge”), 30 organisations committed to complying with some key principles.

Six months after the signature of the Pledge, a working group of signatories (ADA, Cordaid Investment Management, Frankfurt School Impact Finance, Grameen Credit Agricole Foundation, Microfinance Solidaire, SIDI and the Social Performance Task Force) draws lessons from the implementation of the pledge principles. In a common publication, the signatories present the progress on 10 principles mostly related to rollovers and early stages of voluntary debt workouts, as this is what we can observe in the first months of the crisis.


We conclude to a very good coordination between international lenders who have agreed on terms of handshake agreements, avoiding lengthy restructuring discussions in the majority of cases. This prompt reaction has proved instrumental to avoid a liquidity crunch in the sector as most investees have maintained sufficient levels of liquidity. In rare cases when individual non-coordinated behaviors threatened the fair burden sharing amongst international debt providers, peer pressure has been effective.

We have also seen an unprecedented coordination on technical assistance that already resulted in some collaboration between technical assistance providers, such as the organisation of a common webinar on liquidity management, the provision of tools on business continuity and the implementation of field surveys on final clients. Coordination was however not up to our initial objective notably due to need to prioritise issues that were more pressing. Given the important challenges that microfinance institutions will face on the field, we believe that we should pursue our efforts on this front to avoid duplication and steer efficiency.

Our pledge to client and staff protection lives on. We have encouraged initiatives to promote continued client and staff protection in these times of crisis and need to pursue such efforts to make sure that they remain at the center of the table of discussions. Many microfinance institutions will have to turnaround a business intimately linked to the financial health of clients, staff behaviors on the field and staff treatment. For that purpose, we encourage coordinated collection of information on staff treatment and client outcome throughout the crisis and beyond. We also encourage deepening sector initiatives that contribute to efficient reporting under these exceptional circumstances (2).

New debt funding has drastically slowed down during the crisis but has not completely stopped. As some economies begin to restart, many of our investees have shown promising signs of regrowth since July 2020, with significant differences among countries and sectors of activities. Acknowledging the opening of this new chapter, we commit to accompany and consolidate the economic recovery in a timely and responsible manner.

Open Publication


[1] //
[2] The Social Investor Working Group of the SPTF has issued Lenders’ Guidelines for Defining and Monitoring Responsible Covenants in the Covid-19 context.

A resumption of activities under operational and financial constraints

ADA, Inpulse and the Grameen Crédit Agricole Foundation have joined forces to closely monitor and analyze the effects of the COVID-19 crisis among their partners around the world. This monitoring will be carried out periodically throughout the year 2020 with the purpose of evaluating the evolution of the crisis. Through this regular and close analysis, we hope to contribute, in our own way, to the structuring of strategies and solutions tailored to the needs of our partners, as well as the dissemination and exchange of information among the different actors in the sector.(1)

In short

This article is based on the answers provided between July 23rd and August 6th 2020 by 91 partners located in 42 countries, split between Europe, Africa, Asia and Latin America (2). Feedback from these microfinance institutions (MFIs) allows us to observe the continuous evolution of the sanitary crisis linked to the COVID-19 virus. While the measures to reopen borders and to revive the economy have multiplied during the month of July, our partners mention significantly that the virus now directly affects their customers and employees.

In such an uncertain and evolving context, MFIs have been braving the challenges they face for more than a quarter now. With operational difficulties still ongoing, institutions remain vigilant about their portfolios and the risk they carry, which seems to have stabilized overall, albeit at a much higher level than before the crisis. Nevertheless, some signals are encouraging on other issues. For example, the vast majority of MFIs believe that they can survive the crisis without major strategic changes. In addition, it appears that the issue of liquidity has been rather well managed since the beginning of the crisis.

However, the battle against the virus is not won, and its repercussions are particularly strong on the informal sector of the economy. It appears that clients in the informal economy are more affected, particularly as they do not ultimately benefit from the aid measures that states can provide. Nonetheless, MFIs are sensitive to these needs and some of our partners are considering providing specific services to help their clients cope with the crisis.

1. Operational constraints remain relevant for MFIs

In general, our partners are reporting progress regarding the easing of containment measures in their countries, following the first relaxations that took place in some regions of the world in June (notably in Eastern Europe, Central Asia and Sub-Saharan Africa). Comparing the responses of our partners who answered to our July and June surveys (3) (graph below) reflects the improvement of operational difficulties. Moreover, these figures are in line with the general results obtained for the month of July.

MFIs in each region report an improvement in travel opportunities for their staff. However, this remains a major constraint in Latin America and the Caribbean, while less than 20% of MFIs in other areas are affected by this issue. Moreover, even if mobility is improving, meeting clients in the field remains an important issue for more than 30% of MFIs. Finally, with the exception of Latin America, meeting clients in branches seems to be the least problematic solution today.

In fact, while there has been an overall enhancement in interaction with clients in all regions, collecting loan repayments or disbursing new loans at standard pre-crisis levels remains very difficult, with such challenges being encountered by more than 50% of the MFIs surveyed in each region (70% and 66% respectively overall). Such difficulties are ultimately linked to national or local regulatory constraints.

“Though other MFIs start operating their process, we still wait for full release by the regional government” – Partner in Myanmar

Especially as MFIs are still busy restructuring client loans in July (80% of respondents).

“Communication on the postponement of instalments is a barrier to the repayment of loans” – Partner in Senegal

Although we have been observing the singularity of the Latin American zone in the responses collected over the last few months due to a particularly difficult COVID-19 sanitary context, the information we gathered shows that the situation is not settled yet in the other regions.

In fact, doubts about a potential normalization of MFIs’ activities have not been dispelled for now, as the health crisis remains the central issue of the current period and as it persists. The news in July were notably highlighted by the punctual resurgence of a number of cases in some countries. For the first time in our surveys, this is significantly demonstrated by a sharp increase in the proportion of partners who are affected by the health crisis, both among their staff and their clients (see graph below (4)).

Thus, at the global level of the survey, 51% of our partners told us that among their customers, some have contracted COVID-19. Almost a third indicate that this also concerns their employees. Although we do not have data to know the respective proportions of customers and employees concerned, this trend is still meaningful. More specifically, more than three out of four MFIs in Central Asia and Latin America reported having clients infected with the virus (one out of two in June). While Latin America is largely affected on both the client and staff sides, the figures are also slightly higher for the staff of MFIs in Europe and Central Asia. South Asia and Sub-Saharan Africa seem to be generally less affected on this point, but figures encourage us to remain vigilant.

“More than 10 clients have died from Covid-19” – Partner in Honduras

2. MFIs continue to face major financial issues

As we witnessed since the beginning of our surveys, the increase in portfolio at risk and the reduction in outstanding portfolio are the two main direct consequences of the crisis for a microfinance institution. Other financial difficulties are to a lesser extent and are stable from June to July (figure below5). This is the case in all regions except Central America, where our partners who responded to all of our surveys indicate problems and growing fears regarding equity, lack of liquidity or increased expenses.

The details of the analysis show that the contraction of the credit portfolio is a heterogeneous phenomenon. Among all respondents, 39% of Central Asian MFIs indicate that they are suffering from a reduction in their portfolio, compared to 55% in Sub-Saharan Africa, 71% in South Asia and 88% in Latin America during the same period.

On the other hand, it appears that the increase in portfolio at risk is a common problem for all MFIs, regardless of their region or size, and concerns more than 80% of our partners. However, if the PAR 30 of microfinance institutions has deteriorated since the beginning of the crisis, it is no longer undergoing major changes between June and July, although it remains at a much higher level than before the crisis. As shown in the graph below, the PAR30 structure of the partners in the sample of 54 MFIs is stable from one month to the other. Moreover, we observe this trend across all of the surveyed MFIs: between 15 and 20% of the MFIs see their PAR30 decreasing or remaining stable, while around 40% have seen their PAR30 increase without doubling since the end of 2019. Finally, the riskiest cases represent between 30 and 40% of the respondents.

“[It is difficult] to cover the expenses of provisions for doubtful debts” – Partner in the Democratic Republic of Congo

Luckily, all these difficulties should not be too harsh for our partners. When asked about possible strategic changes because of the crisis, 93% of respondents do not anticipate any changes in the short or medium term. Therefore, our partners do not feel concerned by potential sales of a part of their assets, being placed under administrative supervision or being liquidated, which is a sign of a certain confidence in the future.

Finally, the latest information from our partners indicates that a liquidity crisis seems to have been avoided, with 24% of respondents highlighting this problem (compared to almost 40% in our May survey). In details, the proportion of MFIs raising this point in each region does not exceed one third.

The first explanations lead us to the many extensions of maturities granted to MFIs by their foreign and local investors, but also to the reduced levels of disbursements since the beginning of the crisis. We also note the low proportion of MFIs that have suffered from significant withdrawals of savings, which has helped cash management. Among the MFIs reporting this difficulty, most are from Sub-Saharan Africa and Asia and do not show significant additional liquidity needs compared to other MFIs. These different factors influence the liquidity needs of MFIs. Thus, on a global scale, 47% of the respondents have no additional funding needs for 2020. For almost a quarter of the MFIs outside Sub-Saharan Africa, these needs even decreased. Last, only 25% of those surveyed report significant additional needs.

3. In July, the informal sector is exposed

Microfinance institutions are still exposed to the crisis, and so are their clients. In fact, 92% of our partners indicate that clients in the informal economy are either moderately affected by the crisis or are the most affected ones. Like all other entrepreneurs and clients of MFIs, they face reduced activity, but also suffer from the consequences of the major international and national measures to manage the pandemic, for instance in the tourism, textile or cultural sectors… With limited means of relief and a reduced activity that cannot generate sufficient income, they would be more vulnerable. This point is raised overwhelmingly in Central Asia and Latin America (two thirds of respondents from these regions) while in Sub-Saharan Africa, the feedbacks indicate that clients in the informal economy are affected in the same way than those in the formal economy.

“Due to prevailing market and economic conditions, it is hard for the small businesses to revive their usual economic activities to the level they were before COVID-19 crisis” – Partner in Sri Lanka

The reasons given by our partners are mostly about financial matters: the vulnerability of workers in the informal sector would come from the lack of financial support from governments to the sector. This explanation is given by a vast majority of surveyed MFIs (78%), which also note (57%) that clients in this sector do not have access to adapted non-financial services (business development, financial education, health education, etc. ). The lack of insurance services is also underlined by 50% of MFIs. In contrast, the lack of access to savings services is hardly mentioned.

MFIs are already thinking about how to meet the needs of their clients. Thus, 48% of MFIs reporting a vulnerable informal sector say they plan to launch financial education programs, and 33% imagine supporting clients in the management of their activity. However, only a small proportion of them forecasts launching micro insurance products (maximum 11%). MFIs justify such motivations with two main reasons: getting closer and focusing on under-served populations, but also to respond to a demand for adapted offers during a particular period. For some MFIs, this could translate into other initiatives, such as the development of the agricultural segment (still strongly mentioned by MFIs) or by the development of digital solutions for clients. As a partner in Latin America tells us:

“The financial education and business management program is being planned by digital means to introduce customers to the use of social networks to sell their products, since the main problem they have had is that their places of sale have been closed down or customers are not arriving because of the risk of contagion”

The results of this article highlight the operational and financial difficulties encountered by MFIs during this first semester, but also their first steps in understanding the problems and finding solutions. In this context, the future challenges us to continue questioning ourselves about the best recovery actions for each region, how they can be implemented and how the various actors in the microfinance sector can directly and indirectly contribute to its revival.



1 The results of the previous surveys are available here for the first one and here for the second one.
2 The total number of MFIs that responded to the survey for each region is as follows: South Asia (“Asia”) 14, Latin America and the Caribbean (“LAC”): 24, Europe and Central Asia (“ECA”): 18, MENA: 6, and Sub-Saharan Africa (“SSA”) 29 (total: 91 institutions). The small sample from the MENA region does not allow for the monitoring of the figures for the zone.
3 This comparison is based on a sample of 54 MFIs: 12 in Asia, 7 in EAC, 13 in LAC, 22 in SSA.
4 This comparison is also based on the sample of 54 MFIs.
5 This comparison is also based on the sample of 54 MFIs.

Covid-19 affects microfinance institutions of different sizes in different ways

@Designed by pikisuperstar / Freepik

ADA, Inpulse and the Grameen Crédit Agricole Foundation have joined forces to closely monitor and analyse the effects of the COVID-19 crisis among their partners around the world. This monitoring will be carried out periodically throughout the year 2020 with the purpose of evaluating the evolution of the crisis. Through this constant and close analysis, we hope to contribute, in our own way, to the structuring of strategies and solutions tailored to the needs of our partners, as well as the dissemination and exchange of information among the different actors in the sector.

The results presented in this article come from the second wave of a joint (1)survey by ADA and Grameen Crédit Agricole Foundation, Inpulse having decided to join the initiative for odd-numbered waves. The responses were collected from 18 June to 1 July from 108 microfinance institutions (MFIs) based mainly in Latin America and the Caribbean (LAC, 46%), Sub-Saharan Africa (SSA, 29%), Asia (14%) and Eastern Europe and Central Asia (EECA, 10%), with a single MFI from the Middle East and North Africa (MENA) region. This panel of respondents spans a relatively diverse range of MFI sizes, with 49% of Tier 2 MFIs,(2) 35% of Tier 3 MFIs and 16% of Tier 1 MFIs. Figure 1 shows their regional distribution.

Figure 1. Respondents by region and tier

MENA Tier 2

In short:

The latest wave of the survey reveals that the crisis faced by MFIs has laid bare the structural strengths and weaknesses specific to their sizes: the biggest MFIs (Tier 1) appear better equipped to overcome the financial difficulties resulting from the health crisis and epidemic containment measures, as well as to take crisis management measures and make use of the specific measures put in place by local authorities. Smaller MFIs (Tiers 2 and 3), on the other hand, are more likely to offer their clients non-financial services to help them cope with the situation and are eager to continue developing non-financial services in the future. More generally, if they are considering launching new products or services, it is mainly to meet the needs of their clients rather than following their strategy or reducing risks. While big MFIs appear to be more resilient in times of crisis, small ones are also rising to the challenge and staying true to their powerful social mission. This is a real strength for these institutions, which should not be neglected in favour of more autonomous structures during the current crisis.

The biggest MFIS are less exposed to financial difficulties…

Since June, epidemic containment measures have been relaxed in certain regions, particularly Eastern Europe, Central Asia and Sub-Saharan Africa. As a result, the operational difficulties faced by microfinance institutions have ebbed in these regions since May,(3) but they are still very much present in Latin America and the Caribbean, where containment measures are still in place and a higher percentage of MFIs still find it difficult to move around, meet clients in agencies and, therefore, to disburse loans and collect loan repayments, as can be seen in Figure 2. For example: 76% of MFIs in the Latin America and the Caribbean region report that their staff is finding it difficult to move around, compared to 23% in Sub-Saharan Africa.

Figure 2. Operational difficulties faced by MFIs by region:

As explained in our previous article, these operational difficulties are having an impact on the portfolio and its quality in all MFIs. However, the resulting financial difficulties vary by MFI size. Overall, the biggest MFIs are less likely to face these types of problems, with lower percentages of Tier 1 MFIs reporting difficulties in repaying funders (12% versus 22.5% of Tier 2 and 3 MFIs), insufficient equity capital to cope with the crisis (6% versus 29% of Tier 2 and 3 MFIs) or lack of liquidity (2% versus an average of 29% of Tier 2 and 3 MFIs), as can be seen in Figure 3. Tier 1 MFIs appear better equipped to absorb the impact of the crisis on their financial situation.

Figure 3. Financial difficulties faced by MFIs by size

Although an increase in the portfolio at risk is the main difficulty faced by all MFIs, this increase varies by MFI size. Tier 1 MFIs have experienced smaller increases than other MFIs, as can be seen in Figure 4: only 12% of Tier 1 MFIs report that their portfolio at risk at 30 days has doubled or more than doubled compared to end 2019, versus 44% of Tier 2 MFIs and 57% of Tier 3 MFIs. In contrast, 35% of Tier 1 MFIs report a stabilisation or decrease in this indicator, versus 17% of Tier 2 MFIs and 8% of Tier 3 MFI.

Figure 4. Changes in the PAR30 of MFIs compared to end 2019 by MFI size

…and more likely to implement crisis management solutions…

The governments of most countries have taken measures to help microfinance institutions to weather the crisis. However, not all MFIs are benefiting from these measures. While the exact percentages vary from one region to the next, probably due to differences in the communication and implementation of these measures (e.g. MFIs in Asia are more likely to report making use of a certain number of measures), geographic location does not appear to be the sole determining factor for making use of certain government measures: bigger MFIs are also more likely to benefit from them, as can be seen in Figure 5.

Figure 5. Government measures from which MFIs have benefited by MFI size

This size effect is real because it cannot be explained by a specific distribution of MFIs by region. For example, when it comes to rescheduling or cancelling the payment of taxes and the non-provision of loans affected by COVID-19, a regional analysis shows that MFIs in Asia are more likely to benefit from these measures despite Tier 1 MFIs being in the minority in this region. Similarly, when it comes to liquidity lines, MFIs in Sub-Saharan Africa are among the most likely to benefit from them despite Tier 1 MFIs being few and far between in this region. As for the operational and crisis management measures implemented, the types of measures again vary by MFI size (Figure 6): For example, 100% of Tier 1 MFIs in the sample restructured client loans, versus an average of 69% of other MFIs. They are also more likely to engage with supervisory authorities to explore the possibility of suspending prudential regulations during the crisis. In contrast, Tier 3 MFIs are less likely to use their liquidity plans or implement new digital solutions.

Figure 6. Operational and crisis management measures taken by MFIs by size

…while small MFIS continue to focus on their clients’ needs

In contrast, despite facing significant challenges, the smallest MFIs continue to focus on their clients’ needs: for example, they are more likely than Tier 1 MFIs to have surveyed their clients to better understand the impact of the crisis (Figure 7). On the other hand, although they were less likely to disburse emergency loans to their clients, they were more likely to implement measures that went beyond their core business to better meet the needs of their clients during the health crisis. For example, more of these MFIs launched hygiene awareness campaigns on hygiene or provided clients with emergency kits. Bigger MFIs were less likely to offer these types of direct services to clients, instead forging partnerships with specialised

Figure 7. Crisis response measures for clients by MFI size

More Tier 1 MFIs reported interest in launching new products or services in the medium term; as shown above, these MFIs have fewer financial constraints and, therefore, more room for manoeuvre in this regard (Figure 8). More specifically, while few MFIs overall are planning to launch microinsurance products in the future, Tier 1 MFIs are the most likely to do so. They are also more likely to want to increase their focus on agriculture or launch new digital products and services. The smallest MFIs, on the other hand, also want to start offering non-financial services such as financial literacy and business development services.

Figure 8. New products, services or markets that MFIs wish to develop in the medium term, by size

The motivations for MFIs to focus on new markets or develop new products or services also vary by size (Figure 9): Among those that reported wanting to launch at least one new product or service and stated their motivations (76 out of 108 respondents), the desire to meet the new needs of clients and/or follow new market trends was more frequent among Tier 3 MFIs than among MFIs in other tiers. In contrast, there are fewer that base this choice on following their strategic plan or striving to reduce risks.

Figure 9. Main motivations for MFIs to focus on new markets, products or services by size

The focus of the smallest MFIs on their clients’ needs will probably become one of their strong points during this crisis.


(1) The results of the first wave of the survey of ADA, Inpulse and the Grameen Crédit Agricole Foundation’s partners
can be found here: //
(2) Tiers are defined according to the value of their total assets: over USD 50 million for Tier 1, USD 5 to 50 million for
Tier 2 and under USD 5 million for Tier 3.
(3) See the results of the first wave of the survey, available via the above link.