Microfinance providers and platforms agree on principles in the Covid-19 crisis

July 2020. Two groups of microfinance donors and stakeholders publish a set of principles to support the microfinance sector and vulnerable clients during the Covid-19 crisis. The two groups have coordinated their efforts to increase their complementarity and coherence.

Microfinance institutions (MFIs) play an important role in the fight against poverty. They provide low-income populations with financial and non-financial products and services to support income-generating activities. During the Covid-19 crisis, support for the microfinance sector is therefore essential to protect the most vulnerable populations. This requires a collective approach within the sector.

That's why we, the leading microfinance lenders, impact funds, platforms, and networks spanning markets in Africa, Asia, Central Asia, the Middle East, Eastern Europe, and Latin America, have entered into two complementary agreements. These outline a series of principles to support MFIs in avoiding a credit crunch, which would be extremely dangerous for vulnerable microfinance clients. We have published both documents as guides for investment teams, investors, investee entities, and other stakeholders.

• " Key principles to ensure the protection of microfinance institutions and their clients in the context of the Covid-19 crisis » : The agreement is essentially based on the pooling of available information, analyses and forecasts as well as the concerted implementation of shared decisions. The signatories, including lenders, impact funds, platforms and networks, agree to coordinate policies, technical assistance and resources to help microfinance institutions cope with the crisis. The guiding principle will be to protect both microfinance institutions and their clients in order to guarantee the continuity of access to financing under the best possible conditions and ensure the well-being of clients and staff.
• "Coordination agreement between managers of microfinance funds and social impact investment funds in the context of the Covid-19 crisis" This MoU addresses the impact on liquidity flows within financial institutions in the context of the Covid-19 crisis and related measures to prevent its spread. The MoU developed by the MIVs further recognizes the importance of speed and cooperation between lenders and other stakeholders and presents a framework for managing debt rescheduling in relation to Covid.

The signatories of the Pledge and the Protocol acknowledge and express their support for each of the two documents, as they are considered complementary and pursue a similar objective. Other public and private actors in the financial inclusion sector are invited to support, endorse, and act in accordance with the principles presented. In particular, the signatories believe that it is essential for the public sector to align with private sector practices to strengthen the impact investment sector and its social impact on low-income households and small businesses.

The involvement of all stakeholders is vital to strengthening the impact of microfinance. We are committed to continuing to support our partners' efforts to promote financial inclusion worldwide.