NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

By Shannon McCrocklin

Lack of access to financial tools—like credit and savings accounts—inhibit socio-economic mobility for individuals living in poverty across the globe. For approximately the past 40 years, there has been a movement toward financial inclusion for emerging markets such as those found in sub-Saharan Africa, but the progress made thus far is now facing a grim outlook due to the global coronavirus pandemic. In this post, we will explore imminent threats posed to financial inclusion that are anticipated to trickle down as the effects of COVID-19 continue to be felt around the globe.

Economic Impacts Of COVID-19

The economic shocks following the coronavirus pandemic are predicted to disproportionately impact countries with the least robust financial safety nets, which includes the emerging markets found in sub-Saharan Africa, Asia, and Latin America that rely on global trade as a source of income. These same countries often rely on outside funds to grow, yet risk-averse investors are more likely to assist economies that show stronger potential for a quick return on investment—such as those in established nations. For less-established economies, COVID-19 is likely to bring struggle due to decreased demand for exports and decreasing options for external assistance as all countries around the globe begin to feel the economic impacts of the pandemic.

Photo courtesy of Jérémy Stenuit.