COVID-19 Policy Measures and the Impact on MSMEs
The implications of the pandemic have been broad and far-reaching on low-income populations as well as on the financial service providers (FSPs) that serve them.
CFI’s latest policy brief, “Regulatory Flexibility During the Pandemic: Emerging Lessons,” looks at prudential measures aimed at keeping credit flowing in the economy. These measures were particularly critical to the banking and microfinance sectors, which faced seriously deteriorating borrower repayment capacity, triggered by the uncertain recovery prospects of the global and local economies. A credit crunch would only make matters worse for financial service providers (FSPs) and customers alike.
CFI has also been capturing emerging data every other month on the impact of COVID-19 on the operations of MSMEs in Nigeria, India, Indonesia, and Colombia. Data captured for this research covered different periods in time in each of these markets, as the pandemic ebbed and flowed, and as policy measures were implemented and expired. CFI’s recently published analysis of the first wave of data is organized by nine key insights.
The policy brief takes a close look at the following policy measures:
- Flexibility for forborne loans, such as not requiring re-classification of non-performing loans due to COVID-19
- Reduction of capital adequacy ratios and absolute capital requirements
- Reduction of risk-weighting of MSME loans
- Release of capital buffers
- Reduction of reserve and liquidity requirements
By analyzing both the policy measures and the data on MSMEs, we aim to draw out lessons for policymakers on the measures that are likely to produce positive outcomes — or at least reduce the harms of COVID — on individuals and MSMEs.
CFI’s analysis also draws on interviews with FSPs, policymakers, and other stakeholders around the world and identifies early lessons on the impact of these measures on providers and the flow of credit in these economies.
- Payal Dalal, Mastercard Center for Inclusive Growth
- Rashmi Pillai, FSD Uganda
- Syed Mohsin Ahmed, Pakistan Microfinance Network
- Denise Dias, Financial Regulatory and Supervisory Consultant and CFI Author
- Eric Noggle, Center for Financial Inclusion
Moderator: Mayada El-Zoghbi, Center for Financial Inclusion
Time: 9:00 AM EST / 3:00 PM CET
Date: Thursday, March 18, 2021