The Covid-19 pandemic affected all economies impacting fragile economies and the most vulnerable populations in particular.
The Grameen Crédit Agricole Foundation began to investigate the unprecedented effects of this global crisis on microfinance institutions (MFIs). An initial survey was launched in March 2020 to understand how our MFI partners were adapting to the repercussions of the pandemic that had already had an impact on their activities.
In the following months, the Foundation collaborated with two other major players in inclusive finance, ADA and Inpulse, to extend the scope of this study to more than 100 MFIs in 4 continents: Africa, South America, Asia and Europe. Overall, 6 surveys were conducted since the inaugural questionnaire in March.
You will discover through this report the results of these studies divided into three main parts:
Adapting rapidly to operational constraints
Surveys conducted throughout 2020 revealed three major difficulties: the impossibility of meeting clients in person, difficulties in collecting repayments and complications in disbursing loans.
In an effort to address these difficulties, MFIs acted in a proactive and appropriate manner, showing the great resilience capacity of those organisations. However, all FMIs haven’t been impacted in the same way. This document describes those constraints and the measures that have been implemented.
A significant and sustained financial impact
The operational constraints encountered have inevitably had significant financial repercussions. We observe two major consequences for almost all MFIs: an increase in the portfolio at risk (PAR) due to lower repayments, and a reduction in outstanding loans due to lower disbursements.
Those two consequences fluctuated throughout the year depending on local contexts and other financial difficulties may have arisen in some cases. The analysis of performance indicators, detailed in this document, enables us to see the lasting effect of the crisis.
Prospects for the future
In the face of the crisis, most MFIs have shown resilience. Among the levers envisaged to return to financial stability: increasing the volume of their portfolio and the number of clients, and opening up to new products and services, and even to new markets, in 2021.
You will discover throughout the report other measures MFIs explored to adapt to the crisis, which are reassuring for the future of the sector.
Despite the often positive indicators, we remain vigilant in the face of the current volatile environment. For this reason, we have maintained our approach of regular surveys in 2021, on a quarterly basis.