In response to the economic effects of the COVID-19 pandemic, regulators in approximately 115 countries directed financial service providers (FSPs) to grant debt moratoria and restructuring to their borrowers. The authors of this paper reviewed surveys, interviews and other materials regarding
Category: Regulation
MICROCAPITAL BRIEF: Via Regulatory Sandbox, Securities and Exchange Commission of Pakistan Approves Digital, Crowdfunding, Robo-advisory, Shariah-compliant Proposals
The Securities and Exchange Commission of Pakistan (SECP), the regulator of non-bank financial institutions in the country, recently introduced a regulatory sandbox, inviting companies to propose pilot tests of novel services. It approved the following six: a digital insurance service
SPECIAL REPORT: European Microfinance Week Closes, Looking to Future of Financial Inclusion: Wooing Regulators, Women Leveraging Loans by Factor of 5, Investor Collaboration, New Customers for MFIs
Claudio 
Gonzalez-Vega, a board member of Spain’s BBVA Microfinance Foundation, spoke of the huge impact of the COVID-19 pandemic at the closing plenary of European Microfinance Week, with life expectancy falling and an estimated 115 million people being pushed into extreme poverty. Despite the difficulties for microfinance institutions (MFIs), he said they may soon find a larger, very appropriate market for their services, given that many of these newly poor people have business experience. Dr Gonzalez-Vega argued that the “pandemic will make microfinance more important,” as – given MFIs’ “intimate knowledge of clients – the role of microfinance will be appreciated in a new light.”
Dina Pons of Belgium’s Incofin Investment Management agreed that microfinance clients have gotten
SPECIAL REPORT: Financial Inclusion for Forcibly Displaced Persons (FDPs) – Part 2: Regulatory Barriers, Segmenting Needs
(This is the companion feature to an earlier piece on a European Microfinance Week conversation on serving refugees.)
Swati Mehta Dhawan of Germany’s Catholic University of Eichstätt-Ingolstadt argued for building up legal frameworks to allow forcibly displaced persons (FDPs) to escape “infinite limbo” by accessing documentation for identification purposes, working legally and integrating with host populations. She offered the example of a person displaced to Kenya, who has been there for 15 years without being allowed to work. Hans-Martin Zademach, also of Catholic University, noted many are “stuck in survival mode,” more in need of a reliable income source than methods for managing money.
However, Ms Dhawan explained that FDPs’ needs for financial services often increase as years go by. A common trajectory is
SPECIAL REPORT: Strong Motivation to Save, “Extreme Resilience During Times of Crisis” Despite Microfinance Institutions’ “Smothering” Loan Offers Pre-pandemic
During the plenary titled “Creating an Environment for Effective and Inclusive Savings” on day two of European Microfinance Week, Stuart Rutherford of the Hrishipara Daily Diaries Project suggested thinking of savings as two separate services – collection and storage. While storage is primary for a person with regular paychecks deposited into a bank electronically, collection is critical for cash earners. This is why the service of a susu worker, who collects deposits frequently door-to-door and then returns “withdrawals” periodically, is so valuable that people are willing to pay fees for it.
Luis Treviño Garza of the Alliance for Financial Inclusion noted that savings is an “important factor for resilience, especially for vulnerable groups.” He added that “from the regulator’s perspective savings is really crucial… above credit.”
Mr Rutherford said that “all the diaries I’ve [collected in Bangladesh] show that poor people have a strong propensity to
SPECIAL REPORT: Lessons, Tools for the Pandemic from Prior Microfinance Crises
Deborah Drake of Accion’s CFI opened a European Microfinance Week session on crises in microfinance by noting that the effect of COVID-19 on the financial inclusion industry “is a different crisis because it is global.” In past crises, which were centered on a single economy, microfinance investors had sufficient capacity to inject into stronger institutions to help them survive. The global nature of the current downturn, however, may exceed the capacity of investors to sustain “worthy” financial services providers (FSPs) in certain markets. “There is inevitable
SPECIAL REPORT: Local Market Data, Resilience During Pandemic, Securitization, Land Title Systems Enable Housing Microfinance, Micro-mortgages
During European Microfinance Week 2020, Maria Claudia Rojas of the Netherlands’ Triple Jump described her firm’s experience managing the MicroBuild Fund it created with US-based Habitat for Humanity in 2012. Compared with Triple Jump’s portfolio as a whole, MicroBuild has maintained higher asset quality, and that margin of superiority has doubled during the COVID-19 pandemic.
Lucie Astier Such of the French government’s AFD explained her agency’s role in providing technical assistance, loans and data to support housing finance in developing countries. Part of this effort involves connecting households and microfinance institutions (MFIs) with reputable builders and suppliers of construction materials. One tool for this purpose is
SPECIAL REPORT: Working with Central Banks to Extend Microfinance to Forcibly Displaced Persons (FDPs)
At Thursday’s European Microfinance Week session on serving forcibly displaced persons (FDPs), Mariam Jemila Zahari of the Alliance for Financial Inclusion (AFI), a Malaysia-based network of financial regulators from 90 countries, described her organization’s work in Afghanistan, Mauritania and Rwanda. The Central Bank of Mauritania, for example, used AFI’s peer-learning model to
SPECIAL REPORT: Minimizing Setbacks for Women, Girls Under COVID-19; Taking Advantage of the Pandemic to Liberalize Regulation, Boost Access to Digital Financial Services
Mary Ellen Iskenderian of the US-based NGO Women’s World Banking (WWB) spoke today, the closing day of European Microfinance Week, about the impact of the COVID-19 pandemic on women and girls. Of the challenges they face, she said “COVID didn’t create these gaps, but it shines a bright light on the fissures, and we don’t want to see these grow larger.” As an example, she cited the strides made in recent years in terms of enrolling girls in primary education. She called this the single most powerful tool for creating development impact. However, one of the first things she has seen families in developing countries doing in response to COVID-19 is taking their daughters out of school.
On the positive side, Ms Iskenderian noted “a silver lining, that
MICROCAPITAL BRIEF: IFC, Ukraine Developing National Financial Inclusion Strategy to Expand Financial Access, Digital Services, Employment, Economic Growth
The International Finance Corporation (IFC), a member of the World Bank Group, recently agreed to work with the National Bank of Ukraine (NBU), the country’s central bank, to develop a financial inclusion strategy for improving digital financial services, expanding access to underserved populations and protecting consumer rights in the country. NBU Chairman Kyrylo Shevchenko said,
MICROCAPITAL BRIEF: Cameroon to Encourage Islamic Financial Services, Microfinance Institutions to Transform into Banks as Part of 10-year National Development Strategy
The government of Cameroon recently released its 2020-2030 National Development Strategy, which includes plans to expand banking, microfinance and Islamic financial services. To boost the number of banks in the country from 16 to as many as 30, the government will engage
MICROFINANCE PAPER WRAP-UP: “Consumer Protection and COVID-19: Borrower Risks as Economies Reopen,” by Elisabeth Rhyne, Published by CGAP
Dr Rhyne has analyzed data collected by CGAP, microfinance investors and financial service providers (FSPs) to consider how FSPs can collect outstanding microloans – including after repayment moratoria – and issue
MICROFINANCE PAPER WRAP UP: “Impact of COVID-19 Pandemic on the Microfinance Sector in Europe: Field Analysis and Policy Recommendations;” by Kinga Dabrowska, Pitor Korynski, Justyna Pytkowska
Based on data collected from 22 European microfinance institutions and industry associations, the authors describe the effects of the COVID-19 pandemic in terms of:
SPECIAL REPORT: European Microfinance Week Registration Open for Virtual Conference; November 18-20, 2020
From 
the European Microfinance Platform (e-MFP): It has been a difficult few months, and during this time we at e-MFP have engaged with our members and friends to mobilize resources and adapt our activities to best mitigate the effects this pandemic brings to our sector and the vulnerable people we as a community serve.
One of our flagship activities is European Microfinance Week (EMW), held annually in November, and with it in mind we have been closely monitoring the public health situation globally. Now more than ever it’s vital to connect and
MICROCAPITAL BRIEF: Brazil Loosens Eligibility Requirements, Streamlines Online Microloan Application to Assist Small Businesses During COVID-19 Pandemic
Brazil’s Conselho Monetário Nacional (CMN), the country’s National Monetary Council, recently raised the revenue limit for firms to be eligible for microloans in an effort to assist more small businesses struggling as a result of the COVID-19 pandemic. The maximum income had been
MICROCAPITAL BRIEF: Code for Responsible Lending Assessment Tool to Incorporate Comprehensive Credit Reporting, Microfinance Institutions to Increase Frequency of Reports to Credit Bureaux
The Code for Responsible Lending (CRL), an initiative serving microlenders in India, recently began developing a new credit assessment tool for evaluating loan applications from low-income households. The tool is intended to help lenders “go beyond multiple/over lending limits and more systematically evaluate the low-income customer
MICROFINANCE PAPER WRAP-UP: “Never Waste a Crisis: How Sub-Saharan African Insurers Are Being Affected by, and Are Responding to, COVID-19;” by Lucia Schlemmer, Kate Rinehart-Smit, Jeremy Gray
This paper analyzes the effect that the COVID-19 pandemic has had on the insurance market in sub-Saharan Africa and the effectiveness of the responses of insurers, brokers and regulators. The authors conducted 32 interviews with representatives of insurers, insurance technology (insurtech) firms, reinsurers, and insurance and broker associations across 18 markets in the region to assess: (1) the impact that the pandemic has had on insurers’ daily internal operations; (2) the impacts on new product development and how the insured move through current processes; (3) the impact on insurers’ and customers’ finances; and
MICROCAPITAL BRIEF: Central Bank of Sri Lanka Plans Mergers of Weaker, Stronger NBFIs; Cutting Number in Half
The Central Bank of Sri Lanka (CBSL) reportedly is working on a plan to merge multiple “ailing” non-banking financial institutions (NBFIs) in the country with “financially stable” firms, given that “nearly half of the sector face[s] severe liquidity issues.” Central Bank Governor W D Lakshman reportedly stated,