Financial inclusion sector adapts to COVID-19 crisis

Original source: Cordaid

In the COVID-19 crisis, supporting microfinance institutions is of vital importance. After all, small businesses are essential for social and economic recovery. To better support the microfinance sector, Grameen Crédit Agricole Foundation, Cordaid Investment Management, and other key players in inclusive finance, established a set of principles in the form of a pledge.

In this pledge, signatories agreed to coordinate policies, technical assistance, and resources to help microfinance institutions in the most poverty-stricken parts of the world face the COVID-19 crisis. And through them, to protect the most vulnerable borrowers.Microfinance institutions in Africa, Eastern Europe, Latin America, and Southeast Asia have taken measures to face the health risks, lockdowns, and the economic recession.

After several months, a working group evaluated the implementation of this pledge. It found that overall the pledge was followed, but also encourages lenders to continue focusing on client and staff protection in the months and years to come.

FACING HEALTH RISKS, LOCKDOWNS AND RECESSION

The pledge is part of a wider journey the financial inclusion sector has embarked on in the past months to face the Covid-19 crisis. Microfinance institutions in Africa, Eastern Europe, Latin America, and Southeast Asia have taken measures to face the health risks, lockdowns, and the economic recession.

In the meantime, lenders, investors, support organizations, and technical assistance providers had to adapt their intervention principles and coordinate their actions. By signing the Pledge on Key principles to protect microfinance institutions and their clients in the COVID-19 crisis (the “Pledge”), 30 organizations committed to complying with some key principles. Cordaid Investment management is one of them.

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 joint 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.

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