Recognizing the need for collective action in response to COVID-19, the Microfinance Coalition formed to raise the voice of microfinance organizations and the people they serve, and to collaborate on the most pressing needs for the sector. They recently published a blog series on FinDev Gateway which presents the coalition's call to action for investors, donors, and policymakers to support and protect microfinance customers, now and into the future. Do you agree with these calls to action? What would you add or take away? What do you think your organization can or should do to support MFIs respond to this crisis?
A quick summary of the three calls to action:
For investors: There will be a need for rapid response liquidity, near and medium-term debt, and capital investments and subordinated debt. Lenders should collectively commit to not penalize MFIs that have rescheduled or restructured debt in good faith in the current environment when they seek future financing. Development Finance Institutions (DFIs), with their higher risk tolerance and longer-term horizons, should support the sector in the ways that many MIVs and other social investors are unable to do. Read more >>
For donors: The foundational support of donors is once again crucial to preserving and fostering responsible financial inclusion. Donors and MFIs can work together to respond to the needs of the BOP during this crisis through: 1) “Last mile” cash distribution, 2) Partnering in the emergency food and medical response and 3) Onboarding into the digital economy. They should also consider investing as first loss partners in liquidity and guarantee facilities. Read more >>
For policymakers: Policymakers should work closely with MFIs to find the right balance between helping clients in times of stress and preserving the long-term financial viability of the sector. Fiscal stimulus efforts are considered a win-win for both households and firms. Regulators and policymakers should engage directly with local advocacy groups or technical specialists who can provide guidance on how financial sector policies may have differentiated impacts on various categories of institutions, whether they are non-bank financial companies, non-profit organizations, cooperatives or deposit-taking institutions. Read more >>