How COVID-19 Is Affecting Microfinance
By now, it is clear that the global coronavirus pandemic and the government-mandated lockdowns that have resulted have had an unprecedented impact on the global economy. But perhaps what has not been sufficiently illuminated to date is just how critical the situation has become for those groups most at risk from this downturn. Specifically, lower-income groups in developing countries and emerging economies face not only the prospect of abject poverty in many cases but also the likelihood that their financial systems may not be sufficiently robust to help them through these dark times.
Among the most crucial components of such systems is microfinance, a sector that is typically engaged in providing small-business loans, savings accounts and non-financial support to help boost financial inclusion and entrepreneurship within lower-income communities. In the last 15 years or so, microfinance institutions (MFIs) have received considerable acclaim by reaching out to communities that have been largely ignored by the traditional financial system as well as by focusing on financially empowering women. Indeed, around 80 percent of the currently estimated 140 million global microfinance customers with an outstanding gross loan portfolio of $124 billion are women.
Photo courtesy of Priscilla Du Preez.