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Author: e-MFP. "Any sufficiently advanced technology is indistinguishable from magic”, wrote Arthur C. Clarke. Put aside cynicism about the perils of our technology-obsessed culture, focus on how communication and convenience have been changed in recent years, and then – try to imagine how transformational the current technological revolution must be for the financially excluded in low-income countries. The ability to predict the weather; contact vendors or customers; send, save, receive or borrow money affordably and immediately; find new markets – this is magical in all but name. It’s happening so fast, too. The mobile phone and Internet are both barely twenty years old. The internet-connected smartphone – a tool of almost limitless utility – is half that age. What technology has done for the lives of richer consumers in the developed world may be nothing to what it can do for the financially excluded. These were the messages at a joint e-MFP/FIF UK Offsite<1> Session held at Allen & Overy in London on 23rd May. The event was entitled Financial Inclusion through Technology – the theme of the European Microfinance Award 2018 – and served to summarise the process and takeaways of that Award (including via a launch of the new report, Digital Pathways in Financial Inclusion) and bring together a panel of experts to debate the biggest issues in the financial inclusion and technology sector. The event began with a short slide presentation by e-MFP’s Financial Inclusion Specialist (and lead author of the report) Sam Mendelson. Sam opened with a big picture look at ‘why technology matters’: the reduced costs compared to human-intensive traditional microfinance; improvements in communications, information exchange, and the speed and reliability of financial services in remote areas; and the potential to bring into the financial ecosystem previously excluded segments – especially women, rural communities and the very poor – that brick-and-mortar MFI struggle to sustainably reach. The innovations that make these opportunities possible are provided by a diverse range of new entrants into the rapidly-evolving financial inclusion landscape. They can offer, as Sam outlined in his introduction, an equally diverse array of technology-led products and services: credit, savings, insurance, payments or transfers, as well as institution-side delivery solutions and non-financial services. Aurélie Wildt Dagneaux from PHB Development then gave a more detailed overview of the emergence of this new landscape, from the first microfinance institutions of 30-40 years ago to the emergence of mobile money and digital financial services for low-income groups in the last ten years, to the fintech aggregators with their exploitation of new sources of client data. So much of increased access to financial services has been driven by technology, with growth in mobile money usage far outpacing uptake of bank accounts in many markets. Graham Wright of MSC is well known to e-MFP, most recently for his keynote at EMW 2018 in which he exhorted MFIs to ‘digitise or die!’ in the face of the threat from new entrants that risk serving only urban, high-value customers, leaving traditional MFIs with low-value rural clients in an unsustainable business model. However, Graham began on an upbeat note, with a profile of Equity Bank in Kenya, and its remarkable transformation into a digital bank, with 97% of transactions conducted outside branches and a 57% increase in profits. Also profiling what can happen when digital transformation is done well was Audrey Joubert from Advans International, and formerly of Advans Cote d’Ivoire – the winner of the EMA 2018. Audrey presented the Advans CI’s digital credit and savings initiative for cocoa farmers via cooperatives. There are success stories such as these, as well as cautionary tales, that exemplify what the three panelists termed the ‘necessity to digitise’. A 2015 McKinsey report predicted that MFIs that fail to transform will lose 20-60% of profits by 2025. Graham gave examples of the trends underway in some markets of digital lenders, without the core expertise in credit assessment and working with low-income segments, posing existential threats to socially-focused MFIs that are stuck in unsustainable, traditional models. How can this necessity be made real in practice? Aurélie introduced the ‘How to Succeed in your Digital Journey’, a six-part toolkit developed with UNCDF Microlead and Mastercard Foundation, which outlines six overlapping models for digitally transforming financial institutions. These start, as Aurélie described it, with basic operations (use of tablets for credit assessment, for example) via partnerships all the way up to mobile banking. Partnerships are a critical part of digital transformation in financial institutions, as outlined as one of the ‘factors for success’ in Digital Pathways in Financial Inclusion. Advans CI works with various partners such as MNOs Orange and MTN, the latter which enabled Advans CI to implement its own USSD Mobile Banking menu where rural customers can check their balance and carry out transactions from their Advans account to another Advans Account. This channel (the Bank-to-Bank) is used by cooperatives to pay part of the farmers’ crops directly on their savings accounts. Advans CI also offers the farmers a wallet-to-bank and bank-to-wallet transfer service in partnership with MTN, and also offers a withdrawal card offered in partnership with SGBCI from the Société Générale Group. Finally, Advans CI received support from CGAP, both in funding to implement the mobile banking solution, and also TA from CGAP’s digital finance team, including support for a feasibility study and technical implementation of the digital school loan. Aurélie pointed out the importance of partnerships in scaling up, pricing, and how digital transformation is an opportunity for MFIs to sustainably offer individual loans that wouldn’t be possible without efficiency increases. But there are sometimes unforeseeable consequences to such transformations: PHB has worked with MFIs where on the request of clients, they had to re-introduce the group meetings typical of the traditional microfinance model. There remains a need for the human touch and the social cohesion of group lending and savings models that can be lost in a switch to automation and branchless individual banking. Finding a way to innovate without sacrificing what clients want and need may be the biggest challenge of all. The challenges or risks in digital transformation was the final topic for the panel. Graham is a vocal critic of some of the trends underway in the sector, including (with Kenya an example) the proliferation of consumer lenders using poor credit appraisal models (such as airtime top-ups) that lead to high write-offs, ignoring of actual client data, blacklisting of millions of clients for tiny defaults, a failure to protect consumers, endemic multiple borrowing, and barriers to mobile internet access in rural areas exacerbating the digital divide. Audrey gave examples of Advans CI’s own challenges – notably the need for financial and technological education for cash-accustomed clients in how to protect private data and safely use (and trust) mobile banking. So what’s next? A vibrant series of questions from the audience during the panel presentations and after looked for the panellists’ ideas on what needs to be done to address the many challenges ahead. There is unanimity that in key markets, a focus on consumer finance has led to a failure to innovate in serving (M)SMEs – for which the benefits of digital finance can be the greatest. There needs to be support from other stakeholders for digitally transforming FIs, especially in disseminating best practice and helping FIs with a comprehensive digital strategy. Mobile Internet must be brought to rural, more remote clients. Finally, there needs to be a re-focus on what financial inclusion is for. Is it the Findex-type focus on bank account penetration in which there has been considerable success? Or is a focus on access making the sector miss certain blind spots and lose sight of whether technology increases the quality and value of financial services to those who need it most? <1> Offsite Sessions are a new activity developed under our Strategic Plan 2017-2021 which take place in different e-MFP members’ countries and provide e-MFP with opportunities for more frequent touchpoints with its members and external stakeholders besides the European Microfinance Week.

Author: e-MFP. 2019 marks ten editions of the European Microfinance Award, launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs, as a biennial Award – the first of which took place in 2006, and after considerable interest and exposure, became annual after 2014. The Award serves two parallel goals: rewarding excellence, and collecting and disseminating the most relevant practices for replication by others. The Award’s influence and prestige has grown, and its €100,000 prize for the winner (and €10,000 for the runners-up), attracts applications from many organisations that are innovating in a particular area of financial inclusion. As well as the significant prize, an important additional benefit to winners is the exposure that they receive, and the opportunities for expansion and replication that the attention of the sector can provide. To celebrate ten editions of the Award, e-MFP has decided to reach out to the previous winners, for a ‘where are they now?’ blog series, published in the order we receive them throughout 2019, to look at what they have been doing with their initiative since they won, and how the winning of the Award has helped, and what plans they have in store. In 2017, the theme of the Award was Microfinance for Housing, which sought to highlight the role of microfinance in supporting access to better quality residential housing for low income, vulnerable and excluded groups, with no or limited access to housing finance in the mainstream sector. Cooperativa de Ahorro y Préstamo Tosepantomin (Tosepantomin), the 2017 winner, targets rural communities living in marginalised areas, to which it offers savings and loans for housing improvement and house building. The cooperative mainly applies the solidarity group methodology and uses a holistic approach to its housing programme, with technical support that includes architectural planning, elaboration of housing project budgets, and oversight of the construction processes. The programme also promotes ecological and sustainable housing through eco-friendly building techniques, recycling, renewable energy and energy efficiency. e-MFP: How has your initiative evolved since you received the Award? What have been the biggest changes? Tosepantomin: On November 30th 2017, the Tosepantomin Savings and Credit Cooperative was announced as the winner of the European Microfinance Award 2017 on “Microfinance for Housing”. This was a huge moment for our organisation, and in particular, our housing programme. Since then, Tosepantomin has expanded its activities and increased the provision of financial services to its cooperative members. New credit products were created in order to serve Small and Medium Enterprises (SMEs), those who provide public transport services and those who require financing for the purchase and installation of solar panels in their home, via a new credit product called “Yolchicaualis” (meaning ‘strength’ or ‘heart’ energy in the Nahuatl language). The prestige and attention from winning the Award has been a large factor in this development, and has allowed a virtually three-fold expansion of our housing program: while 869 families were served in 2017, with a loan portfolio of US$1.7m, 2,635 were served in 2018, with a loan portfolio of US$5m. Tosepantomin is part of the Union of Tosepan Cooperatives and the Award has helped strengthen the Union’s internal alliance. The General Assembly of the Union of Tosepan Cooperatives named 2019 the “Year of Youth and Recovery of Values”, recognition of the fact that supporting the young is not a problem to solve but an opportunity to transform their reality for the better. e-MFP: What did winning the Award mean to your organisation? Did anything change as a result of winning, both within the specific initiative for which you won and in the organization more broadly? Tosepantomin: In the framework of the Year of Youth and Recovery of Values, Tosepantomin and the Union of Tosepan Cooperatives have launched a program in 2019 that seeks to allocate social investment resources and efforts in order for young people to achieve their social and economic goals. The program has three main elements: Job training. Young people connected with Tosepantomin will be included in the governmental project Jóvenes Construyendo el Futuro (Youth Building the Future), initiated by the Mexican government with the aim to integrate them as trainees for one year in a workplace, with the view to developing the skills and specific competences needed to perform well in a working environment. Life plan training. Young people will be offered a diploma for the creation of ‘life plans’ to revitalise the community, based on principles from Gandhi’s ‘constructive program’ approach. This diploma will be divided into four modules: Cooperative Principles; the ‘Solidarity Economy’; Innovation and Entrepreneurship; and Life and Business Plans. Social Ventures. The main objective of the diploma will be to define life plans, and on this basis, develop social enterprises or initiatives that will lead to permanent jobs. Tosepantomin intends to provide finance for the productive activities resulting from the ventures. It’s hoped that 20 to 30 new cooperatives will be created each year by young people as a result of this. The objective of the present approach is to help the so-called ‘solidarity economy’ – processes that promote common welfare, with the special intention of making young people aspire to improve and transform their life plans into reality within their communities, through social ventures that, crucially, allow them to stay in their area if they choose, rather than be forced to migrate for work. Internally, winning the Award brought enthusiasm and pride among the cooperative members, accentuating the belief that with organisation and effort, one can achieve a great deal. Externally, it enriched Tosepantomin’s housing program through increased linkages and exposure. A collaboration agreement was signed with the foundation Habitat for Humanity, allowing for more significant financing opportunities for members and improvements in the technical assistance offered. e-MFP: Are you aware of any impact your initiative has had on other organisations? Tosepantomin: Tosepantomin became the financial arm of the cooperative movement created in 1977 in the Sierra Nororiental de Puebla region of Mexico, and later became the Union of Tosepan Cooperatives. The Union is composed of eight other cooperatives that all wish to improve the quality of life of the partners’ families in order to improve lives. Tosepantomin has therefore had an impact on its eight cooperative sister organisations, but not only that – our housing program has also influenced other Mexican organisations. Several savings and loans cooperatives as well as civil associations approached Tosepantomin to hear about our experience and share financing and technical assistance strategies. e-MFP: What do you see in the future for your initiative and for this area of practice more generally? Tosepantomin: In the near future, our housing program is seen as the main tool to enhance adequate housing of all cooperative members, their children and grandchildren, with a focus on providing and promoting eco-techniques to use energy and water appropriately, transform agricultural residues in organic fertilisers and produce healthy food products. Tosepantomin will also continue financing sustainable systems such as the organic production of food products used for home consumption, trade or fair trade. This will help our members achieve “Yeknemilis” (‘good life’ in Nahuatl), which remains the main objective of the Tosepan Union of Cooperatives, of which Tosepantomin is a member. The European Microfinance Award is jointly organised by the Luxembourg Ministry of Foreign and European Affairs, the European Microfinance Platform (e-MFP) and the Inclusive Finance Network Luxembourg (InFiNe.lu). For more information on the 2019 Award on "Strengthening resilience to climate change" , visit the Award website.

Author: e-MFP. 2019 marks ten editions of the European Microfinance Award, launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs, as a biennial Award – the first of which took place in 2006, and after considerable interest and exposure, became annual after 2014. The Award serves two parallel goals: rewarding excellence, and collecting and disseminating the most relevant practices for replication by others. The Award’s influence and prestige has grown, and its €100,000 prize for the winner (and €10,000 for the runners-up), attracts applications from many organisations that are innovating in a particular area of financial inclusion. As well as the significant prize, an important additional benefit to winners is the exposure that they receive, and the opportunities for expansion and replication that the attention of the sector can provide. To celebrate ten editions of the Award, e-MFP has decided to reach out to the previous winners, for a ‘where are they now?’ blog series, published in the order we receive them throughout 2019, to look at what they have been doing with their initiative since they won, and how the winning of the Award has helped, and what plans they have in store. In 2010, the theme of the Award was Value Chain Finance, focusing on stimulating and promoting inclusive financial schemes that contribute to the evolution of value chains in developing countries. A value chain is a vertical alliance between different independent enterprises, collaborating to achieve a more rewarding position in the market. Harbu of Ethiopia won for its initiative to finance the soy bean value chain as a response to market demand generated by a shortage of cow milk in Jimma city, in Oromia state. The initiative sought to strengthen horizontal linkages with farmer marketing organisations and vertical linkages with retailers and women's associations that are processing and producing soy milk. The initiative created market opportunities for producer-farmers and employment opportunities for urban women and youth. At the same time, it improved families’ nutrition, especially for children and women. Harbu provided financial services to most of the actors across the value chain, from the individual producers all the way to retailers. e-MFP: How has your initiative evolved since you received the Award? What have been the biggest changes? Harbu: In 2015, the soy milk value chain project was fully handed over to Jimma Kera Women Association, the members of which now run the business. They have a business management team comprising five members who are accountable for the overall management and administration of the project. This includes the managing of the milk processing enterprise and, on top of this, the women’s capacity has grown with the expansion of their individual micro and small businesses. This growth has meant that they can take larger (and more useful) working capital loans than in the earlier stages of the project. The women also continue to collect the raw materials (soya beans) they use for processing the final output from the Farmers Marketing Organization (FMO) as usual. Even while supply is limited, soya bean demand is increasing – from large cafes, bakers, and factories that are using it. The FMO is becoming more productive in response to this, and larger scale soya bean producers are being linked to larger factories like FAFA- the biggest food processing body in Ethiopia Despite the shortage of soya bean grain, the women have also started processing too, meaning they are currently able to produce milk powder in addition to liquid soy milk as a new product line. e-MFP: What did winning the Award mean to your organisation? Did anything change as a result of winning, both within the specific initiative for which you won and in the organisation more broadly? Harbu: As a result of winning the Award, Harbu MFI became better recognised by many local and international development organisations that contributed a lot to the institution’s recent growth, both in terms of general operations as well as specific to the Value Chain initiatives. Currently, Harbu’s financing needs are met by various World Bank-affiliated financial development packages such as WB-WEDP (Women Entrepreneurs Development Program), WB-RUFIP (Rural Financial Intermediation Program), WB-SME (Small & Medium Enterprise Development Program), and WB- RSMEP (Rural Sustainable Micro Energy Program), all programmes managed by Development Bank of Ethiopia (DBE). Besides this, the institution is also backed by International loan fund guarantors such as Rabobank and ING investment groups, which are providing guaranty facilities for Harbu to access funds from local banks for its agriculture and value chain product lines. Harbu is also working with the French company SIDI in the same area of facilitating local bank financing via guaranty. Harbu sees all this support as directly or indirectly a result of winning the 2010 Award, and it has translated into significant growth in the institution’s activities: since 2010, Harbu has grown from 13 to 21 branches, 18,000 to 46,000 clients, deposits from ETB 5.3 million (USD 182K) to ETB 57 million (USD 2 million), and a gross loan portfolio from ETB 13.8 million (USD 475K) to ETB 160 million (USD 5.5 million). With respect to innovation and the respective value chain trajectory, Harbu continues to have a leading position and financing role within the various value chains. Harbu has been included in the Malt Barley Value Chain Program currently promoted by global NGO ICCO Cooperation and funded by MasterCard Foundation to reach 200,000 family farms in four countries within five years timeframe. Harbu’s individual target is 9780 family farms over the course of the program, and it has currently reached 4904 family farms at the three-year mark. The Malt Barley value chain also includes a new initiative with Boortmalt Inc., one of the biggest malting plants in Europe, currently constructing a big malt plant in Ethiopia with capacity of over 60,000 tons of malt per annum. Because of Harbu’s experience in the malt barley value chain, BoortMalt Ethiopia invited Harbu to work with them. Over the 2019 planting seasons, Harbu plans to reach 2,000 smallholder farmers under this relationship, via the opening of a new branch office in the North East of the country. Finally, Harbu’s value chain interventions are not limited to soya bean milk and malt barley alone, but honey too. The Honey Value Chain initiative is under the Food Security & Rural Entrepreneurship (FSRE) program, involving Oxfam GB as promoter, the farmers as honey producers, various local cooperatives as processors, and Harbu as financer. Within this honey program, Harbu has been able to finance 950 family farms under its two rural branch offices. e-MFP: Are you aware of any impact your initiative has had on other organisations? Harbu: Yes, Harbu has shared its rich experience with organisations in Rwanda, and Tanzania as well as various local development organisations. Several of these parties have adopted Harbu’s know-how and begun replicating the same initiative. e-MFP: What do you see in the future for your initiative and for this area of practice more generally? Harbu: Using the same milk producing raw materials (soya bean), Harbu plans to enable women to diversify the product lines. This means, among other things, expanding the powdered milk processing activities and supplying powdered milk as raw material for bakeries, cafes and snack makers that have such high demand for this product. From the farmers’ perspective, Harbu has a plan to facilitate the soybean cleaning and packaging process that helps the FMO deliver sub-processed grains to certain end users such as factories and processors. This enhances the income of the FMOs by adding value to the soya bean grains. The European Microfinance Award is jointly organised by the Luxembourg Ministry of Foreign and European Affairs, the European Microfinance Platform (e-MFP) and the Inclusive Finance Network Luxembourg (InFiNe.lu). For more information on the 2019 Award on "Strengthening resilience to climate change" , visit the Award website.

Author: Elisabeth Rhyne. How should financial institutions approach consumer protection differently when they offer services through smartphones rather than humans? This was the question we posed when the Smart Campaign team first started revising the standards to be applied to digital financial services, especially digital credit. We are very pleased to have launched the new Standards, their accompanying Guidance Document, and the companion Handbook for Regulators. What we didn’t expect, however, was quite how profound the differences would turn out to be. We made significant changes to the standards for all seven Client Protection Principles (the principles themselves remain the same). I want to focus here on the most fundamental: Appropriate Product and Delivery Design. When financial service providers (FSPs) consider tackling client protection, their first thought is often, “We need a Code of Conduct!” That reflexive response shows that FSPs traditionally view protecting clients mainly through the lens of setting and enforcing boundaries on staff behaviour. And traditionally, that made sense. After all, ground zero for protecting clients occurs in the moments when they come face to face with staff. That’s when the client receives product information that is transparent (or not) and is treated (or not) with fairness and dignity. The practice of client protection has centered on defining codes of conduct, incentivising and training staff to follow them, monitoring their adherence, and applying sanctions to breaches. When face-to-face interaction disappears, what happens to consumer protection? When staff are not present, however, the client experience changes. On the one hand, the problem of rogue or substandard staff behaviour disappears, which is good for clients. But so does the helpful staff person who can answer a client’s questions and guide the client to the right product. With digital services, everything the client experiences is pre-programmed and embedded into the user interface upfront, before a single client has clicked on a single screen. Everything is determined in advance, through coding and algorithms, and the sequences roll along without individual human intervention. In this setting, protecting clients is all about good design. But product and delivery design teams in FSPs include a range of people, not all of whom are traditionally alert to client protection: the IT team, the market research and marketing teams, commercial analysts, and possibly outside software developers. Team members come from different disciplines with different training and skills, and they may not even be aware of client protection principles. These teams need guidelines to assist them in integrating protections into the interfaces they ultimately design. For example, designers need to determine whether clients are likely to understand the product information they provide in a setting where they cannot easily ask questions. Those involved in market research and prototype testing need to have client protection issues in the forefront of their minds as they do their work. To do this, they need a “code of conduct” for the design process, and that is how we think about the new standards for Appropriate Product and Delivery Design. We call the approach “Protection by Design,” taking a cue from the concept of Privacy by Design often advocated as a rubric for data privacy. Protection by Design is a vastly different approach to implementing client protection from the old codes of conduct. The focus is what goes into the product, rather than how the staff member behaves with each individual. Protection by Design focuses on anticipating the totality of needs of all clients and incorporates them right from the start. And that brings up another profound difference between traditional client protection practice and the new standards. When the focus is on ensuring that the staff conducts successful interactions with each client, adherence is monitored on an ongoing basis through everyday work. With Protection by Design, and its focus on getting it right in advance for the whole portfolio of clients, the staff stand back and watch the machines do the work. There is no daily staff feedback to tell supervisors whether client outcomes are satisfactory. Thus, in Protection by Design, systems and methods for monitoring client outcomes – through portfolio data and direct client surveys – become essential. We are just at the start of understanding these and other implications of Protection by Design for the practice of client protection. The Smart Campaign looks forward to engaging with members of e-MFP to build out and test robust tools that can enable the approach to be widely applied. We’d like to work out how to incorporate client input and testing during the design process, protocols for algorithm review and other facets of the new approach. Beyond Protection by Design, the revised standards for digital financial services incorporate several other very important changes, some of which are among the hottest issues in the sector today: data privacy, data security, and the thorny question of fairness and responsibility in algorithm-based lending. The Smart Campaign will dig deeper into these issues during the coming year. We would like to thank all those who worked with us in designing the standards, especially MFR and the members of the Fintech Protects Community of Practice. It has been a community effort. In a world that is changing very rapidly, we consider the client protection standards to be a permanent work in progress, anticipating that they will need to be adapted as new developments in financial services occur. At this stage, our hope is that the players in the financial inclusion sector will actively promote and use the new standards to ensure that the sector does right by its clients, no matter what methods it uses to deliver its services. We invite you to review the standards and send us your thoughts. Photo: Will she be protected by good digital product design? A Bolivian client of BancoSol, a Smart-certified institution (source: CFI at Accion) About the Author: Elisabeth Rhyne was Managing Director of the Centre for Financial Inclusion (CFI) at Accion until her retirement in September 2019.

Author: e-MFP. 2019 marks ten editions of the European Microfinance Award, launched in 2005 by the Luxembourg Ministry of Foreign and European Affairs, as a biennial Award – the first of which took place in 2006, and after considerable interest and exposure, became annual after 2014. The Award serves two parallel goals: rewarding excellence, and collecting and disseminating the most relevant practices for replication by others. The Award’s influence and prestige has grown, and its €100,000 prize for the winner (and €10,000 for the runners-up), attracts applications from many organisations that are innovating in a particular area of financial inclusion. As well as the significant prize, an important additional benefit to winners is the exposure that they receive, and the opportunities for expansion and replication that the attention of the sector can provide. To celebrate ten editions of the Award, e-MFP has decided to reach out to the previous winners, for a ‘where are they now?’ blog series, published in the order we receive them throughout 2019, to look at what they have been doing with their initiative since they won, and how the winning of the Award has helped, and what plans they have in store. In 2018, the theme of the Award was Financial Inclusion through Technology. Advans Côte d’Ivoire, part of the Advans Group, is a non-bank financial institution in the Ivory Coast which won for its response to traceability and safety issues faced by cooperatives paying cocoa farmers, as well as low school enrolment due to lack of regular cashflow among farmers, by offering a digital savings and payment solution, with wallet-to-bank and bank-to-wallet transfer services that enable producers’ cooperatives to make digital payments to farmers for their crop revenue. The following is an edited interview with Advans CI. e-MFP: How has your initiative evolved since you received the Award? What have been the biggest changes? Advans CI: Firstly, since Advans CI won the 2018 Award, we have increased our outreach to farmers in Cote d’Ivoire significantly. We strengthened our capacity to reach new areas and better oriented key actions and objectives for our field teams. The number of farmers benefitting from our account and mobile banking service has reached 29,000, with 12,000 farmers opening accounts between January and August 2019 and 260,000 Euros in cumulated deposits after the first semester. Our third digital school loan campaign, which aims to ensure that children go to school even in the low season when cocoa farmers have insufficient funds for school fees, has also got off to a flying start, with 500 loans already disbursed via mobile after only three weeks (disbursements begin in August and run to end September each year). e-MFP: What did winning the Award mean to your organisation? Did anything change as a result of winning, both within the specific initiative for which you won and in the organisation more broadly? Advans CI: At Advans CI, winning the Award was a real motivating factor for our teams, who were very proud to have achieved this level of recognition from the industry. Field staff felt rewarded for all their hard work on the project and are now even more committed to help drive financial inclusion in rural areas. In addition, the media coverage and the reputation of the Award meant that important stakeholders in the cocoa and other value chains heard about Advans and this has facilitated some new partnerships and promising contacts among agri-businesses for the future development of the project. Some potential future partners contacted us following the award: for instance, a chocolate maker heard a lot about our digital school loan and asked us for a presentation for a possible partnership, and other organisations like the Jakobs Foundation are now promoting our products more. Even our current partners were aware of the international recognition the award bestowed on the organisation and our initiative, and this has strengthened our partnerships, such as with our insurance provider with which we have created a special insurance product for farmers. At the Advans Group level, we’ve been able to capitalise on the award to dig deeper into Advans Côte d’Ivoire’s experience using digital services for farmers, this has served as a leverage to fuel further discussions and research into digital financial inclusion for rural populations. This included a group workshop on digital transformation in July, which highlighted the important potential of digital services in rural areas and will continue with a seminar in November in Abidjan on Cote d’Ivoire’s experience. The future workshop will aim to inspire subsidiaries that will work together on an innovation ‘roadmap’ to increase financial inclusion in both urban and rural areas. Other Advans subsidiaries in Tunisia and Ghana have begun to perform studies on possible additional delivery channels for their farmer clients. We’ve also been invited to several panels and events (including the joint e-MFP/Financial Inclusion Forum UK event in London in May) to speak about the project and it’s always a pleasure to share our experience. e-MFP: Are you aware of any impact your initiative has had on other organisations? Advans CI: As explained above, the attention created by the Award around the project has encouraged other affiliates in the Advans Group to explore new channels for outreach, showing them that it is possible to launch this kind of digital solution in rural areas (Advans operates in Cameroon, Ghana, DRC, Nigeria, Tunisia, Pakistan, Cambodia and Myanmar). Several media organisations also shared our story so we had quite a lot of contacts from other companies as potential partners following our win as mentioned above. e-MFP: What do you see in the future for your initiative and for this area of practice more generally? Advans CI: Going forward we’d particularly like to replicate our scheme in other agri value chains in Cote d’Ivoire; not just working with cocoa farmers but also for example with rice and cashew farmers. We also plan to adapt the scheme in other Advans subsidiaries that serve rural clients. In Cote d’Ivoire we are planning to expand our offer to include more financial services for our farmer clients, based on the needs identified in our research, including insurance, trainings and more personalised financial advice and support. This will include launching new delivery channels adapted to rural areas and full digitisation of payments to farmers. In addition we aim to provide a wider range of services to Village Savings and Loans Associations (rural groups of women in needs of savings accounts and group loans) in partnership with the international NGO Care and some new partners. We believe that digital solutions like our mobile banking service are starting to play a key role in accelerating financial inclusion in rural areas, and digital technologies will be increasingly integrated into the customer experience in the years to come. At Advans we aim to take a high-tech and high-touch approach to ensure that our clients fully benefit from our financial services – as with our financial inclusion agents who support farmers in their first steps using the mobile banking solution. Our main concern remains understanding farmer’s needs in order to be able to design and offer services which are in line with their everyday reality (especially important for populations that are more vulnerable or less financially literate) to ensure uptake and regular use. The European Microfinance Award is jointly organised by the Luxembourg Ministry of Foreign and European Affairs, the European Microfinance Platform (e-MFP) and the Inclusive Finance Network Luxembourg (InFiNe.lu). For more information on the 2019 Award on "Strengthening resilience to climate change", visit the Award website.

The following piece originally appeared in NextBillion. “Save money – and money will save you” goes a Jamaican proverb. Variations of this adage exist in countless languages, lauding preparedness, prudence and forethought when managing one’s finances. But the notion goes even further than money. Benjamin Franklin said as much – “By failing to prepare, you are preparing to fail.” It is probably one of the few genuinely universal life tenets. It’s also intuitive. We all have a basic understanding of what savings – or the act of saving – are. You hold back some of what you earn, sacrificing immediate pleasures or opportunities for some future benefit. This benefit can vary from coping with the unknown and unplanned shocks that can throw one’s life into disarray, to more highly planned savings for high-cost but predictable future expenses – a wedding, pregnancy, a deposit for a house, or retirement. Extending these benefits to more of the people who need them most is the topic of the European Microfinance Award 2020 – “Encouraging Effective & Inclusive Savings” – which is now open for applications until April 15. In over 10 editions to date, the €100,000 award has sought to shine the spotlight on organisations innovating in a particular area of inclusive finance. It’s open to providers of all categories and sizes that have demonstrated excellence, creativity and rigour in their initiatives for the vulnerable and financially excluded. Why savings matter This year, savings will be in that spotlight. There are good reasons for this. For much of the past 40 years, the microfinance sector has focused overwhelmingly on credit, which is easier to offer and more profitable for the provider. More often than not, that results in credit being provided as the default financial product when other options – savings or insurance in particular – are both better suited to the particular needs of the client – and come at both lower cost and lower risk. And even though for microfinance institutions (MFIs), total savings deposits are roughly comparable to loans outstanding, these figures conceal the reality of many dormant accounts among lower-income clients, with most deposits drawn from higher-income individuals. While this provides MFIs with flexible, local-currency funding that’s cheaper than foreign debt, it does not serve the poor or the excluded. The provision of savings as a service to this population is still consigned to a much smaller segment of markets and institutions, and remains a rarity in the global financial inclusion ecosystem overall. There is a growing amount of research on the benefits of effective and inclusive savings to clients, providers and society at large. Part of this is because of the enormous number of benefits that savings bring to clients – some of which are highlighted below: Cash-flow smoothing: For the households that comprise the majority of the world’s poor – variations in income and expenses can be one of the heaviest burdens of poverty. Easily accessible savings are the most affordable and suitable means of managing these ups and downs, as well as preparing for the proverbial “rainy day” – without the high cost and risks of emergency credit. Long-term planning: Savings are a perfect fit for most lifecycle events – from birth to schooling to marriage and child-rearing – whose cost and time of arrival (except maybe the final lifecycle event of death) is known well in advance. Gender empowerment: Microfinance and women’s empowerment have been inextricably linked from the start, but few products show the depth of impact that savings can have on this area. Savings as equity creation: Whether the goal is to buy land or invest in an asset, savings are an effective way to increase a household’s net worth and improve its financial well-being. Productive investment: While credit is a key product for business investments, savings can be cheaper, less risky and equally effective – especially for smaller and less time-sensitive investments. Formalisation: Savings can be an important entry point to formal financial services, building a client’s transaction history and creating opportunities to access low-cost credit. Safety and convenience: Besides the usual risks (theft, fire, etc.), cash at home is subject to “leakage,” whether that involves helping out a neighbour or succumbing to a temptation purchase. Saving formally provides motivation to avoid this tendency – an effect seen among all people, everywhere. How real people save Despite the many benefits, savings don’t just happen naturally. Rather, these financial decisions are affected by long-term planning, gut instinct, habits or social pressures. Put together, these variables create savings practices that aren’t well-aligned with the traditional economic view of people as rational actors – nor are they well-matched to traditional savings products like time deposits and current accounts (also called checking accounts). That’s why providers are designing new approaches geared toward the different “mental models” that people employ to help themselves save better. The complex mental models that show up in savings practices are starting to be better understood by the relatively young area of behavioural economics. One important response to these models is commitment savings, which leverages people’s existing mental models and demonstrates substantially higher levels of saving. Other practices, such as clearly denoting the purpose of the savings (for example, health expenditures) can also increase saving activity. Even simpler interventions, like regular text message reminders to save, have also proven effective in increasing savings. The goal of all these efforts is to develop savings products and programs that better fit how real people save, rather than blindly following the established practices that financial institutions are used to. What the 2020 European Microfinance Award is Looking For To highlight these emerging efforts, the European Microfinance Award 2020 invites applications from organisations and programmes that are innovating in the delivery of savings to low-income and excluded populations. There are three main components to this: First, financial and non-financial institutions can encourage savings by lowering barriers (making savings accounts/groups easy to open or join.) But access alone is insufficient. It’s just as important for institutions to show that their savings programme is built with a holistic understanding of clients’ behaviour – to take advantage of incentives, group coordination and teachable moments for awareness-building to promote positive savings behaviour. Second, savings products are effective when they: Are well-matched to clients’ specific goals and needs; Are affordable, accessible, secure and easy to understand; and Take advantage of technological innovations at the client and institution side to expand outreach, lower costs and improve service quality wherever possible. These products are beneficial for the client and sustainable for the institution, and they’re highly transparent in terms, conditions or fees. They are likely to see genuine client usage – in contrast to, for example, programmes that prioritise the opening of many new accounts that end up dormant. And third, savings are inclusive when they reach un(der)banked and excluded segments – with a special focus on women and youth. Successful savings programmes ensure the protection of those most vulnerable to shocks, and do so within a comprehensive client protection framework. They recognise that taking poor clients’ savings is a moral as well as a financial responsibility – to not only safeguard their money, but to do so affordably and with high levels of transparency. Along with the criteria above, the European Microfinance Award 2020 will look for evidence of programmes that promote the development of a “culture” of savings. This concept includes widespread evidence of active usage, high customer value, security and trust, a genuine focus on financial education, and engagement (where relevant) with regulators and policy-makers. All the details about eligibility and the application and evaluation processes are available in the Application Guidelines, supported by a Concept Note for applicants. Round 1 is now open until April 15, and we at e-MFP can’t wait to receive what will surely be a broad and fascinating range of responses from across the inclusive finance sector.

Author: e-MFP . These are frightening and unprecedented days. In response, many are looking for ways to provide relevant, actionable support. News, blogs, and webinars - well-intentioned as they may be - feel like they’re creating information overload. Yet it’s clear that in a rapidly evolving situation, information is critical. At e-MFP, we want to add value and support where we can, especially to our members, and avoid adding to the noise when what everyone needs is focus, clarity and purpose. We’d like to use our core strengths - facilitating exchange, connecting stakeholders and being a clearing-house for discussion - to help the sector (and especially our members) prepare, weather this crisis, and eventually recover and rebuild. In the coming weeks and months, e-MFP will be re-focusing several work streams towards the COVID-19 response. The Financial Inclusion Compass sector-wide survey will be brought forward, and will be specifically focused on how stakeholders are triaging their challenges and what they see as the most critical interventions needed - and by whom. European Microfinance Week will be significantly adapted to focus on this topic. The current European Microfinance Award on Encouraging Effective and Inclusive Savings will collect examples of how savings can increase resilience to the kind of health and financial shocks that microfinance clients and SMEs are about to face. We would like to hear from our members what e-MFP can do to support them, and we stand ready to offer that support where we can. In the meantime, we think it’s worth going back a few years to the 2015 European Microfinance Award, on microfinance in post-disaster, post-conflict areas and fragile states. The winner, Crédit Rurale de Guinée (CRG), won that Award for its response to the Ebola outbreak - an especially pertinent case study for others right now. We published the annual ‘European Dialogue’ on the subject in 2016, entitled Resilience & Responsibility, available (along with various other excellent materials) on the FinDev Gateway COVID-19 Hub and CGAP’s page on lessons from past crises. Within our paper, e-MFP provided case studies of the ten Award semi-finalists. Each of them provide useful insights into how FSPs can respond to challenging contexts. CRG’s is especially useful. CRG is a microfinance bank that established operations in 1989 in Guinea, serving mostly rural members. In December 2013, the most widespread epidemic of the Ebola virus in history began in Guinea and spread to Liberia and Sierra Leone. By May 2015, Guinea had recorded 3596 cases with 2390 deaths. CRG was badly hit: 123 clients and 4 staff died initially, and this was compounded by changes in behaviour and economic downturn, as fear of the disease spread and workplaces were shut down temporarily, particularly in forested areas, resulting in workers unemployed and services to fragile clients being suspended. At the beginning of the outbreak, CRG took health and safety measures directed at beneficiaries and staff. All head office and network branches were equipped with sanitary kits (chlorinated water and soap for hand washing and infrared thermometers). A national awareness raising campaign was delivered on the risks associated with contracting the virus and on prevention, with over 4,000 participating. But perhaps the more relevant lesson from CRG was its response to the clients’ financial needs. A mobile cash transfer service was introduced to reduce the need for dangerous travel in the midst of a deadly epidemic. CRG facilitated savings withdrawals in affected areas, sometimes with transfers from crisis-stricken areas to unaffected ones. To allow clients to access savings, CRG allowed some term deposits to be terminated without penalty. The Macenta and Gueckédou areas (at the centre of the outbreak) saw over EUR 500,000 in cash withdrawals between August and December 2014. Loan rescheduling was offered for those borrowers who could not continue their business operations; a new loan was offered to help them re-start, typically between 60 and 600 Euros, for one year. “A post-disaster or post-conflict context has many effects. It increases the risk of poverty traps over the short and long term. Poor households’ incomes decrease, productivity of economic activities decreases, investments are impaired, market opportunities are reduced, trust and social relations are weakened, and health, housing and shelter conditions are worsened. That is, poverty is not just a household-level consequence of a crisis; but the whole community and economic value chain is affected; the re-establishment of normal socio-economic conditions is undermined. A negative feedback loop of poverty traps can emerge: incomes fall and become more volatile; productivity decreases; markets worsen; infrastructure decays; movement of goods deteriorates; and social cohesion suffers.” - Resilience & Responsibility, p.5. Ebola is a different virus from COVID-19, of course. The latter is a pandemic, whereas Ebola remained regional, and likewise its transmission is very different, which will have implications for how humans can safely interact – and transact. But CRG shows us all that MFIs can be flexible and stay relevant to their clients even under the most difficult circumstances. Whatever the differences in their contexts, CRG and the other institutions profiled in that paper (and many thousands more) are now going to have to face another challenge - a common challenge. At e-MFP, we’re confident that in the weeks and months ahead we’ll see examples of bravery, prescience, generosity and imagination in facing this threat, protecting the most vulnerable clients’ health and livelihoods and keeping these institutions alive. In Resilience & Responsibility we sought to extract several factors that between them cover the approaches those ten institutions took in dealing with their radically different situations. Those nine factors were: Immediate Humanitarian Response; Adapting Core Financial Services; Awareness Building & Psychological Support; Innovating with Products; Planning Ahead; Making Partnerships; Taking Care of Staff; Ensuring Financial Sustainability; and Leading by Example. Detailed examples of how these work in practice can be found in that paper, and we expect that the various responses that emerge in the coming months will share common elements with these. For sure, these lessons can and hopefully will inform what MFIs (and the organisations that support them - MIVs, DFIs, fintechs and TA providers, among others) can do to protect institutions’ and clients’ health and livelihoods. In the coming weeks and months, e-MFP will be sharing our new work and publishing members’ news and ideas on what they think are the principles that should underpin the sector’s COVID response. We’re able and willing to coordinate activities among members if that’s needed and stand ready to support you and the sector in any way we can.

Authors: Daniel Rozas & Sam Mendelson First published in covid-finclusion.org - a new discussion forum and blog for the financial inclusion sector from e-MFP, CFI and SPTF In our first piece in this series - Keeping the Patient Alive - Adapting Crisis Rubrics for a Covid World, we introduced the analogy of the emergency room doctors trying to treat a critically ill patient - a financial services provider (FSP), its staff and clients in lockdown or socially distancing, unable to travel and with incomes collapsing, health expenditures increasing, and some sick or dying. Repayments are close to impossible, and new loan applications are flat. But operational expenses continue, and it’s a race against the clock. In short, this patient is critical. To continue the analogy, ensuring the reciprocal trust and confidence of staff and clients and investors is like treating a patient’s organs, with interventions from pharmacology to surgery to transplant. We’ll get to that, though. For now, the challenges need triage. The patient can’t breathe, so she cannot oxygenate and circulate her blood. This, to come back to our institution, is the critical need for liquidity. We see three broad drivers of (il)liquidity. First, there is the risk of a run on deposits by savers facing income shortfalls and even panic about the institution’s holding enough to pay the savers. Second, there are the operational expenses, mandatory for the functioning of the institution, that it must pay for without repayments of principal and interest from clients. This is a significant risk, but will depend on the underlying health of the institution. If the FSP has enough cash on hand and a reasonable OpEx to assets ratio, there will be ways to get through even months of non-repayments through tolerable cuts to management and staff salaries, made easier by reduced commissions to loan officers. In other words, most well-run FSPs have a few months of breathing space here. The third driver of illiquidity is the maturing of debt to investors. This is the most severe threat to the institution - and in aggregate, to the sector. Investors like to think of themselves here as the proverbial white knights - rushing in to save institutions. But saving them from whom? The answer is from the investors themselves. The average maturity of debt from foreign investors to FSPs is 22 months, meaning that more than a quarter of all foreign debt has to be repaid every six months. If investors lack the flexibility, prescience and resolve to offer broad-based moratoria on these repayments, many FSPs will die right there in the hospital bed. But we’re getting ahead of ourselves. In this paper, we’re going to focus on the first of these issues - the importance of deposits - and then go deeper on the next two, with case studies and external contributions in subsequent posts. Deposits and Liquidity At first glance, deposits represent arguably the most serious and immediate liquidity risk. Savings play a significant role in providing resilience to vulnerable clients, especially during crisis, as the current European Microfinance Award will show. Already in this crisis, savings have emerged as the go-to coping mechanism. But managing deposits during a crisis also poses serious challenges to FSPs, with a run on deposits being the greatest threat of all. The COVID threat to deposits follows a pattern fairly typical for financial crises - part driven by need, and part by fear. Savers facing sudden income shortfalls will seek to withdraw their deposits en masse. That initial wave of withdrawals to meet basic needs could trigger a subsequent and larger wave of withdrawals motivated by fear - fear that the deposits will be inaccessible later, that the institution might close, or more general comfort in a time of stress that having cash in the house is preferable to having it someplace else. There is also an element of herd behaviour creating a negative feedback loop as well: withdrawals lead to more withdrawals, whether needed or not. The pandemic has already seen examples of this with classic (and entirely unnecessary) runs on toilet paper in stores around the world. However, there is one part of the fear that is quite relevant and even appropriate. Many institutions have seen closures forced by social distancing requirements - and these closures have often applied to FSP branches. Worse yet, these closures can be unpredictable and even vary by branch, as described by Shameran Abed during the FaivLive webinar (minute 22). In that environment, it’s entirely rational for a saver to want to withdraw her entire balance if she fears that she may not be able to access it later. Uneven distribution of savings To counter these risks, most FSPs and financial institutions serving low-income households have one important advantage: the highly uneven distribution of deposits. Small accounts held by the poor comprise a major part of total clients, but only a small fraction of the balance. On the other end, a small number of wealthy clients hold the bulk of the balance. In between, there may be a chunk of customers - essentially the middle class - who comprise both a significant portion of the balance and also of outreach. Consider two examples: cooperatives in Bolivia and banks in Pakistan, both of which show these similar trends. As you can see in the graphs below, in Bolivia accounts below $500 comprise 43% of customers (after adjusting for empty or dormant accounts), but only 3% of the total balance. Meanwhile, accounts above $20,000 comprise just 3% of customers, but a full 50% of the balance. In between are the middle-class customers - 54% of customers and 47% of the balance. Banks in Pakistan follow a similar pattern: small savers with balance below 50,000 rupees ($600 USD) comprise 37% of customers, but just 3% of the balance; large accounts above 500,000 rupees ($6,000) comprise just 3% of customers, but 61% of the balance; and middle-class accounts comprise 59% of customers and 33% of the balance. This structure suggests that withdrawals for necessities, which for poor clients may often mean the entire balance, would not put a significant burden on liquidity. The primary risk is to ensure the continuing confidence of the large depositors -- whose deposits need to be maintained at all costs. The experience of “Artemis” in Ghana described in Weathering the Storm is instructive: "As Artemis entered a period of restructuring, which saw massive changes to its loan products and lending procedures, it zeroed in on the need to maintain depositor confidence. Whenever a client raised concerns or mentioned a rumour, she would be visited by the branch manager to allay her fears...and executives took a proactive approach to communicating with large clients…In the end, the FSP pulled off the feat: By the end of the year-long restructuring, not only had it avoided a bank run, Artemis actually increased its total deposits base". While in-person visits are not viable at the moment due to social distancing, proactive outreach by phone or video can be an effective replacement. For middle-class customers, the key is to avoid any reason for them to panic; institutions must focus on having the liquidity on hand to meet a large number of withdrawals, which should reduce the risk of a follow-on panic. So the strategy regarding deposits is almost counter-intuitive. The best thing institutions can do is ensure that clients can safely withdraw their funds, even in the time of social distancing. It’s worth considering waiving withdrawal fees and limits on withdrawal frequency. To reduce likely queuing, FSPs could even consider raising limits on withdrawals at ATMs, to make it easier for these middle-class customers to withdraw significant amounts, even if not their entire balances. All these changes should be actively communicated to clients - as a way of making their financial lives a little bit less precarious in a time of stress. At the same time, FSPs should proactively reach out to their large savers, understand their needs, and provide attractive opportunities to roll over maturing time deposits. This strategy - maximum access for the ‘99%’; tailored attention for the ‘1%’ - has benefits that go beyond liquidity. An institution that successfully pursues it will be seen as especially responsive during the pandemic and will earn long-lasting trust and confidence of its clients. And it may also gain new clients too, for there is evidence that demand for deposits can increase during times of stress. For example, during the civil war in Syria, First Microfinance Institution found that demand for deposits increased, as the risk of keeping cash at home grew. Meanwhile, keeping services open and flexible (for example, allowing early withdrawal for time deposit clients suffering their own liquidity crisis) increased its reputation, ensuring that depositors would continue to trust the institution with their money. Monetary instability Of course the success of this strategy is not guaranteed. Two confounding factors are monetary instability, whether in terms of a depreciation relative to other currencies or in terms of overall inflation. The pandemic has already had a serious impact on the currencies of many countries. Inflation - for example as a result of unsustainable efforts by governments trying to provide support to their people - may yet become a risk. In either case, few factors motivate savers to empty their accounts more than the fear of losing the value of their savings. And that fear affects all savers, small and large alike. FSPs have limited means to react in such situations. If they can offer foreign currency accounts, that helps. But absent that, there is almost nothing the FSP can do to avoid a run. Such situations nearly always mandate active involvement by the country’s authorities, whether the Central Bank or other parts of government. Their response might mitigate or worsen the situation. And in the financial inclusion sector, there’s the additional risk that different institutions might be affected very differently by government actions as a result of their legal status. We will address the role of Central Banks and other authorities in this time of pandemic in a separate article, but for the time being, it’s sufficient to note that, at least when it comes to deposits, their role will be greater than that of any other outside institution. Limits on withdrawals and fresh funding Finally, a crisis of this magnitude inevitably raises the question of explicit limits on withdrawals by depositors. Those may come either from the regulator or the FSP itself seeing no other path. In either case, such withdrawal limits come at the cost of undermining customer confidence - not just during the crisis itself, but for years to come. Such an effort must truly be seen as a last-ditch attempt at survival, after all other options have been exhausted. One such option is emergency liquidity funding, whether from the Central Bank, other government entities or DFIs entrusted with financial sector development and stabilisation. We will address their role, the OpEx and debt issues of liquidity, and how to maintain client and staff confidence in the upcoming articles.

Author: Daniel Rozas. This piece was originally published on covid-finclusion.org Liquidity has been foremost on the minds of just about everyone in the financial inclusion sector. Several essays on this site have delved into the topic. The first article in our liquidity series outlined three drivers for illiquidity: deposit withdrawals, operating costs, and maturing debt, and argues that maturing debt presents the greatest risk. But what does the data say? Here we will dig into that, and investigate just how severe the different elements of the liquidity crunch are to different categories of MFI around the world. We don't have access to sector-wide data reflecting the situation right now. Nobody does. But we can get a good view of what may be happening from historical data collected by MIX Market over many years. Let's start with the most basic question. Assume an MFI is operating under complete shutdown, with no repayments, no new disbursements, and no other inflow or outflow of funds - it's operating entirely from cash reserves. How many months would it be able to survive before the money runs out? Before we look at this - a few preliminaries. Figure 1 shows cash available to cover operations at 100% cost, for 2016 and 2018. You can see that, while MIX data pretty much ends in 2018, after 2016 it deteriorated significantly, with notable reporting gaps. But analysis of where those missing records come from don’t appear to reveal any particular bias in distribution regarding cash, deposits, operating expenses and other data discussed below. For this reason, all subsequent charts will rely on the more robust 2016 data. And realistically, both years are probably equally good at representing the state that the sector was in at the onset of the current crisis. From the 2016 series, we also remove records with missing data, so Figure 2 shows the cash available among all fully reporting MFIs in 2016: The upshot is interesting. Nearly half (46%) of MFIs would have no trouble covering a full year's worth of operations and another 35% would be able to cover at least 6 months. The highest-risk situations, with cash reserves to cover no more than two months of operations, comprise 19% of institutions. Recall, moreover, that this assumes paying the full cost of normal operations - with all the commissions, bonuses, travel and other expenses that would be much lower during a shut-down. Under shut-down scenarios, we could reasonably expect operating expenses to be 20-30% lower than normal, without any salary cuts or staff reductions. Of course this sort of analysis has limitations. While one might assume that debt repayments to investors might be temporarily suspended, an MFI with deposits cannot under any circumstances run down its cash reserves to anything close to zero; how else would it then be able to honour withdrawals from its savers? That analysis is a bit more complex, so for now, let's focus on credit-only institutions, and break them down in Figure 3 by total assets and also by region (East Asia Pacific and Sub-Saharan Africa have too few credit-only MFIs in the dataset and are removed). Again, the colour key shows the number of months of cash available (still at 100% cost) - so green is the most resilient and red the most precarious. Most apparent from Figure 3 is that the smallest institutions have the smallest cash cushion; a third of them would not be able to survive under full shut-down for more than a month. Credit-only MFIs in Latin America look much the same. Meanwhile, among larger MFIs (US$10 million or more in assets), over half could fairly easily cope for nine months or longer. The situation looks even better in South Asia, where the proportion is about two-thirds. Again - these are credit-only MFIs, which don't have to worry about keeping cash to honour any deposit withdrawals. They really could go down close to zero and still survive. But what about those that take deposits? These MFIs have to ensure they have enough cash to operate and still have cash on hand to honour withdrawals. To conduct this analysis, in Figure 4 we use an adjusted version of the Cash Deposit Ratio, first setting aside three months' worth of operating expenses and then examining how much cash would still remain to pay depositors. We also limit this to institutions for whom deposits are a significant funding source, including only those whose deposits are equal to at least 10% or more of total assets. As with operating costs, the analysis here provides a degree of comfort. Figure 4 shows that more than half of institutions can cover 3 months of operating expenses, and still have enough cash to cover at least 20% of deposits. Our earlier analysis of deposits and liquidity pointed out that, absent a total run on the bank (triggered by fear of insolvency, a currency crisis, or similar), most deposit-taking MFIs' should have little difficulty allowing its savers to withdraw whatever they need for ongoing consumption. Assuming that implies an outflow of 5-10% of deposits, just over a quarter (26%) of MFIs would experience difficulty under that scenario. A deeper dive in Figure 5 reveals some notable variations. On the left you see that, among the largest institutions, significantly fewer (19%) would be unable to honour deposit withdrawals above 10%. On the right it’s broken down by region. South Asia stands out as being especially high-risk, with over half (55%) unable to meet that threshold. Other regions show relatively modest variation (MENA is removed due to very few deposit-taking MFIs). Finally, we come to the third and final driver of illiquidity: repayment of maturing debt. To model illiquidity risk, we make two adjustments. First, we set aside three months of operating expenses, and then, for deposit-taking MFIs only, we set aside additional cash to cover 10% deposit withdrawals. We then see how much debt the remaining cash can cover. Figure 6 examines this adjusted cash-to-debt ratio for credit-only and deposit-taking MFIs. Here the picture is more concerning than with the other two drivers of illiquidity. Among credit-only MFIs on the left pie chart of Figure 6, a full 25% would not be able to cover any debt redemption, and only 19% would have the cash to cover redemptions of more than 30% of debt. The previous article in this liquidity series pointed out that on average over a quarter of debt outstanding is redeemed every six months. Were those debt repayments to be enforced, it would push a large majority of MFIs into a liquidity crisis. The picture for deposit-taking MFIs on the right looks only slightly less serious. 26% would not be able to meet any debt redemptions and still have the minimum cash needed for operations and deposits. On the other hand, 48% have enough cash to cover redemption of at least 30% of debt and still be able to meet those operational and deposit needs. Note, however, that these are minimum cash requirements; in a time of crisis, a deposit-taking MFI ought to be maximising its liquidity, not aiming for a minimum threshold. So unless an MFI is really safely covered and has no risk of a liquidity crunch in even the direst of scenarios, it would be wise to limit debt repayments whenever possible. Taken together, these analyses clearly show that liquidity is not a one-size-fits-all problem. Different institutions have different needs and face different risks. A significant number of them have quite a lot of cash on hand and could weather even the most severe scenarios without impacting their liquidity. But others will need substantial help - and in different ways. Triaging the response Like the patient in the emergency room, ensuring liquidity will require triage. Step one is to ensure that debt repayments and redemptions don’t create a liquidity crisis on their own. That halt doesn’t need to be a blanket moratorium; MFIs that have plenty of cash reserves may find it worthwhile to repay some of the excess debt, especially in an environment where demand for new loans is likely to be lower. But crucially, the decision to repay (or not repay) debt should be based on the needs of the MFI, and not those of the investors. Ira Lieberman and Paul DiLeo have an excellent proposal for an effective process to handle such a moratorium, and discussions like it are underway among investors. Effective rescheduling of debt should meet the needs of most MFIs and should be sufficient to see them through the crisis itself. But not all. A significant number of MFIs have headed into this crisis with little cash on hand, some unable to meet more than a couple of months of operations or all but the most modest withdrawals of deposits. While help may be appropriate in some of those cases, it’s also legitimate to ask: why were their cash reserves so low in the first place, particularly if they have deposits? Perhaps it’s reasonable to provide modest emergency funding for a few months, but some will need to be evaluated more deeply, so that funds meant to address a crisis aren’t instead used to undo the earlier mistakes of poorly-run organisations. We should accept that those institutions may not survive the crisis. What next? In short, discussions pertaining to liquidity need to be highly focused on the issues the money is meant to address. For example, IFC has already announced large increases in emergency funding, which includes a substantial amount for financial institutions. But where will that money go? One useful area might be to support the liquidity-preservation efforts of others. A major risk in debt extension and restructuring is the cost of currency hedging - a problem for a large number of loans made in foreign currency. With hedging costs increasing in this volatile financial environment, it would be wrong to force an MFI to choose between absorbing a huge increase in the cost of the hedge or paying off a loan and thus eroding its much-needed liquidity. DFIs can - and should - step up to provide hedging subsidies through TCX (the primary hedge provider in the sector) so that the hedging costs of extended and rescheduled debt are kept stable. There are also other areas where new money may be needed. The biggest, of course, are the households themselves, which have seen their incomes collapse and are suffering. For them, cash grants are absolutely appropriate and should be scaled up wherever possible. In some cases, MFIs may even be useful partners to channel such grants. But it is not the normal role of a financial institution to provide emergency loans to families that, at least now, are not able to repay them. In this environment, the focus must instead be on preserving the institutional capacity to honor deposit withdrawals and be ready to lend when appropriate: to SMEs providing food; to farmers seeking to plant; to healthcare clinics looking to buy critical supplies. But those needs must be clearly identified and MFIs that can make such loans should be given the additional funding to do so, if they need it. Flooding financial institutions with cash just because there is a crisis at hand isn’t the answer - especially if much of that cash flows back out to debt redemptions of other investors. A final point. All the analysis in this paper is based on data that is four years old. New, current data that reflects the market reality will be needed to make decisions about specific markets and institutions. We at e-MFP stand ready to support collection and sharing of such data to inform the sector. But even this analysis, we believe, already provides a useful template for thinking about the complex issues and trade-offs ahead. About the Author: Daniel Rozas is Senior Microfinance Expert at e-MFP

Author: e-MFP. Like many major microfinance markets, the Philippines microfinance sector is suffering from the twin threats of a public health emergency and the mitigation response which entails economic shutdown, both of which disproportionately impact vulnerable population segments and the financial providers that serve them. As part of our efforts to understand the impact of the pandemic on our partners, e-MFP reached out to Alalay sa Kaunlaran, Inc. (ASKI), a good and long-time friend of e-MFP, having been a winner and finalist of the European Microfinance Award on multiple occasions. Via an email exchange, ASKI brought us up to speed on the situation on the ground. On March 16, 2020, through the Executive Order issued by President Rodrigo R. Duterte, the entire island of Luzon was placed under “Enhanced Community Quarantine” due to the increasing cases of COVID-19 in the country. This resulted in total lockdown affecting many cities and municipalities in Luzon including the areas of operation of ASKI. Many establishments, government offices and other private institutions were temporarily closed. Mass/public transportation were not allowed to operate, and people were restricted in going outside their homes and must conduct home quarantine. This situation greatly affected the whole community including the microentrepreneur clients of ASKI. Restricting people’s movement from one village or municipality to the other made access to basic goods difficult and, in some areas, was exacerbated by the rising cost of commodities. Since the March 16 Executive Order, the President last week yesterday extended the “Enhanced Community Quarantine” in some parts of Luzon where there are still an increasing number of COVID cases, until May 15, 2020. Some of ASKI’s offices are affected by this extension. There are also however areas of ASKI’s operations now under “General Community Quarantine” where slowly selected businesses will be allowed to open as well as mass transport but following the guidelines of the “new normal”. As a follow-on to this initial update, ASKI’s President and CEO Mr. Rolando Victoria, sat down with us to discuss their response to the current situation. The following is an edited transcript of the interview. e-MFP: As we saw in the 2019 European Microfinance Award on Strengthening Resilience to Climate Change, ASKI has developed (with the support of Oikocredit, an e-MFP member) a Disaster Risk Reduction Management (DRRM) program for crisis response. How has this helped you in the current situation? Rolando Victoria (RV): As soon as the seriousness of the COVID-19 crisis became clear, we implemented our disaster response program. This had a number of steps. Prior to the lockdown, our disaster management team made sure we had the current contact numbers for all clients, and that these were secure and accessible to staff even when they couldn’t be in the office. We took steps to make reports accessible online. We made sure there was a call-tree, from senior management down to branch managers. We helped set up a daily conference call for the national microfinance association to coordinate communications with and advocacy to the government. Our ASKI Multipurpose Cooperative through its Convenience Store made sure that it has available basic necessities like rice, breads, and other grocery supplies to ensure the continuous flow of goods for the customers. The cooperative also made physical cash available to beneficiaries of the government conditional cash transfer, social amelioration program and savers through the portable POS. Although risky and with restricted people’s movement, ASKI served as a pay-out branch for those needing physical cash to keep or for their purchasing needs in the midst of the crisis. As of now, where lockdown is implemented, a total of Php 4,114,100 (USD 82,282) were paid out by ASKI to 966 customers. ASKI also coordinated with local government units for immediate food distribution specifically rice to those who belong to the poorest of the poor in the communities. It also took the lead in donating food items for front-liners like doctors, nurses, police and military who are in the health care system and community check points. Although limited and on selected areas only due to travel restrictions. We have considerable liquidity challenges, like many microfinance institutions. We have to pay more than 1,000 employees their salaries, not just the 815 permanent staff but also non-permanent workers. The funds for this are coming from our own cash on hand, and all repayments from clients have stopped during this period. We have applied for government programs to subsidise the salaries of staff especially the non-permanent staff, however, there is no assurance yet on the application as of the moment. If the lockdown continues beyond the end of May, we will have significant problems. We also expect, even though now not all clients are able to withdraw savings as the branches are closed, that about 50% of client savings and the resiliency fund will be withdrawn once clients are able to, which puts further liquidity pressures on the organisation. But we continue to focus on confidence and communication. We’re currently instructing managers to get in touch with clients to make clear that ASKI will be there for them for whatever they need when the lockdown is lifted. e-MFP: What kind of support has ASKI received from your investors and funders? RV: ASKI has funding relationships with a broad spectrum of organisations, from local banks to social investors in Europe and development institutions around the world. On the local front, the banks based in the Philippines, which represent a large portion of our funding, have to follow guidelines issued by the Central Bank and comply with the Republic Act 11469 or the Act Declaring the Existence of a National Emergency Arising from the Coronavirus Disease 2019, also known as the “Bayanihan (Filipino term meaning Helping One Another) to Heal as One Act” signed on March 24, 2020. After the lockdown is lifted, we will have to start to restructure loans. Much of this effort has been taken up by our microfinance association, the Microfinance Council of the Philippines (MCPI), which has sought to negotiate cheaper and longer-term loans from a broad group of local banks, as well as agreeing guidelines for member MFIs to provide repayment moratoria to clients. Moreover, MCPI has been in discussions with the Asian Development Bank (ADB) to receive subsidized loans that may be converted into grants to pay operating expenses. There is no agreement yet on either one of these efforts. MCPI also submitted a request for a subsidized loan to USAID via the MCPI-APPEND programme that has been active in the Philippines for many years. MCPI has also sought assistance from different government agencies, though there is no final word on these efforts yet. At the same time, ASKI has worked with both Oikocredit and the Grameen Foundation, and we have been in discussions with both since the start of the crisis. e-MFP: What coordinated efforts are underway in the Philippine sector to address the crisis? RV: We are in virtually constant communication with the networks we belong to - the Microfinance Council of the Philippines (MCPI) and the Alliance of Philippine Partners in Enterprise Development (APPEND). The network has already agreed to propose to the government institutions a possible funding allocation for the rehabilitation of those affected communities. This will be a low interest rehabilitation loan and with a grace period of three months. The network has agreed to impose a loan payment moratorium for 30 days without penalties to all affected clients. The moratorium can be extended if the community quarantine is also extended as indicated in Republic Act 11469. This will obviously have an impact on the financials of the organisation and the situation will affect the Philippine economy as well since many businesses have been forced to close and will struggle to re-open. e-MFP: What do you see as ASKI’s priorities once you get out of the lockdown phase of this crisis and try to support clients to get back on their feet? RV: There are going to be lots of negative impacts on clients and the sector here which we will all have to face. One big factor is the inevitable impact on remittances because of the Philippine diaspora overseas losing income because of lockdowns and economic contractions in their sending countries. We also expect once the lockdown is lifted, there’ll be a large influx of workers back into the country, because of negative opportunities where they’ve been living. They’ll need jobs and support to start a business back home. Currently, we are exploring how to conduct an online training course since face-to-face training will be affected by the “new normal”. We will also push through the implementation of the digital transactions because the crisis gave us an opportunity to really see the importance of shifting to digitalisation. We have already started the initiative, but it is temporarily affected by the lockdown. We also need to plan for how to deal with existing loans to clients, who will need loans to recapitalise their businesses as soon as possible. We might have to consider starting again with lower loans (probably under US$500), and in some cases we’ll provide additional funding, but on a case-by-case basis. This will depend on the purpose of the loan and the sector. For example, we really want to be able to support small farmers to ensure food security for our clients, and one option we’re exploring is how to get cheap funding direct to ASKI from the relevant government department to support small farmers. We’re confident that new credit lines will be approved in the first half of May, negotiated via MCPI and through the efforts of ASKI. In the longer-term, it’s clear that there won’t be any increases in our loan portfolio in 2020, and there will be a need to implement cost-cutting measures too within the organisation. As I said before, we can manage to pay salaries if the lockdown continues until the end of May. Beyond that, there will be liquidity problems, unless we can access new credit lines. Overall, the primary objective at this point is to maintain stability within our portfolio and protect our clients and help get their businesses and livelihoods running again as soon as we can.

Author: e-MFP. As part of our efforts to understand the impact of the COVID-19 pandemic on microfinance markets around the globe, e-MFP reached out to Kashf Foundation in Pakistan, a good and long-time friend of e-MFP, having been a winner of the European Microfinance Award in 2016. Via an email exchange, Roshaneh Zafar, Founder and Managing Director, brought us up to speed on the situation on the ground. e-MFP: What is the current public health and economic situation in your country regarding COVID-19? Roshaneh Zafar (RZ): The novel coronavirus has wreaked havoc in the country. To date 31,728 cases have been confirmed in the country with 691 deaths. The province of Sindh and Punjab have been most impacted by the virus with 12,017 and 11,568 cases respectively. They are followed by KP (4,875), Balochistan (2,061), Islamabad (679) and GB/AJK (442/86). Moreover, as the country grapples with the coronavirus, the economic impact is mounting, with the economy expected to shrink to negative 1-1.5% against an expected growth rate of 2.4% during the current fiscal year. In addition, the imports are expected to decrease by 50-60% and the exports by 10-20%. The employment loss is also estimated at 20%. Furthermore, Kashf Foundation undertook an impact assessment of COVID on most frequently occurring micro enterprise trades such as tailoring, beauty parlor, kiryana (small grocery stores), rickshaw, fruit/veg lending and livestock. The study highlighted that across the sector 55% of the businesses had completely shut down, 23 % have irregular business activity, 19% have regular limited activity while 3% are operating at the same level as before. In addition, the overall loss of income experienced by the sample was 76% i.e. from Rs.22,920 per month to Rs.5,550. Furthermore, the highest loss of income was experienced by beauty parlor owners and cloth traders (96% each), while for dairy businesses and kiryana store owners it was much lower - 48% and 56% respectively. e-MFP: How have you supported clients and staff during this crisis? RZ: In response to COVID-19, Kashf undertook a client’s assessment to understand the short term and medium term challenges faced by our clients. The study highlighted that 46% of the interviewees had financial resources to sustain themselves for only 15 days or less. Moreover, 81% of the clients reported that their top spending priority was rations. Hence, when asked, what support they require from Kashf Foundation, an overwhelming of the majority i.e. 69% stated they wanted ration packages. Therefore, to provide immediate relief, Kashf Foundation was one of the first organizations in the microfinance sector to reschedule all outstanding loans to give temporary relief to our 550,000 clients who have been negatively impacted by the corona virus. The organization also raised awareness regarding COVID-19 and has educated 550000 clients regarding the same over the past 4 weeks through telephonic contact. In addition, the organization has also initiated a food relief program and has distributed food rations to more than 3000 women headed households in poverty stricken districts across Pakistan whose businesses have been severely impacted by the outbreak. Kashf is also designing, developing and rolling out specialized lending programs and business continuity trainings to help its clients rebuild their businesses. At the organizational level, Kashf has designed and implemented SOPs to ensure safety of our staff. Kashf regularly sends emails and videos to its human resource on the preventive measures such as maintaining social distance, regularly washing hands, and wearing mask etc. that should be practiced at home and office to protect themselves from the virus. Moreover, the organization also conducted a training on how to effectively work from home for its employees on its recently launched E-Learning platform. As the lockdown is easing in the country, the organization is also providing its staff with the necessary personal protective equipment such as gloves, masks and hand sanitizers to ensure their safety in the workspace. Moreover, the staff members who may have been exposed to the virus are encouraged to work from home. e-MFP: What coordinated response have policy-makers, financial supervisors or networks taken to protect the financial inclusion sector in your country? RZ: To protect the financial inclusion sector in the country, the State Bank of Pakistan issued a circulation which has allowed one year deferral of principal amount without any penalty for the organization. This circulation has aided the organizations in the sector to have enough liquidity to undertake its operations. In addition, this policy is applicable to the both the organization and its clients in the sector to reduce their financial burden in these testing times. The Pakistan Microfinance Network has also been taking on an active role to lobby with regulators and lenders to assist the sector at this critical juncture, especially regarding liquidity needs. This involves looking the possibility of loan rescheduling, loan guarantee schemes, risk mitigation fund for the sector etc. e-MFP: What kind of support (financial or otherwise) have you received from your investors, funders and any other relevant partners? RZ: The local investors are allowing deferral of amount without penalising the microfinance organizations to ensure they have enough liquidity to undertake their operations. In addition, Kashf Foundation is working with various international and local donors such as Philip Morris, UNDP and Jubilee Insurance etc. to provide immediate relief to women headed households by distributing food rations. At the same, all foreign investors have also been looking at the possibility of injecting fresh capital to ensure that there is adequate liquidity at the level of the institution during the next 18-24 months, as that time period will be critical for getting back to business post COVID. e-MFP: What do you see as the top priorities to support and protect your clients from the economic consequences of the COVID crisis? RZ: To understand the support and protection for our clients from the economic consequences of the COVID crisis, Kashf has undertaken a comprehensive sector wise analysis on the challenges faced by micro entrepreneurs in various trades. The research highlighted to protect and support our clients it is important to roll out COVID response financial products such as Top-up loans Business Loans for Illiquid Businesses, recapitalization loans and/or nano ration loans. Hence, the first priority that of the organization is to provide the necessary financial access to ensure our women micro entrepreneurs have the required capital to rebuild their businesses. In addition, Kashf is also prioritising a “Don’t let Corona Put You Out of Business Trainings” to build the capacities and knowledge of women entrepreneurs to revive their businesses. The training will include topics such as creating/Generating Sales in Low Demand Phase, Increasing Efficiency of Business, Budgeting, Planning and Forecasting to improve margins and return. In addition, the training will also include components on the importance of digital financing and online marketing/virtual sales platforms to build the skills of women micro entrepreneurs to improve the efficiency of their business systems and process. Hence, the organization is undertaking a multi-pronged approach to ensure our women micro entrepreneurs’ don’t only have the necessary capital but also the necessary skills and knowledge to use this capital effectively to revive their businesses. For more on how Kashf Foundation is dealing with the crisis see our video interview: Financial Inclusion Conversations: Learning from the past - a conversation between e-MFP's Sam Mendelson and Kashf Foundation's Roshaneh Zafar

Author: e-MFP. As part of our efforts to understand the impact of the COVID-19 pandemic on microfinance markets around the globe, e-MFP reached out to Kompanion Bank in Kyrgyzstan, a good and long-time friend of e-MFP, having been a winner of the European Microfinance Award in 2014. Via an email exchange, Margarita Cherikbaeva, CEO, brought us up to speed on the situation on the ground. e-MFP: What is the current public health and economic situation in your country regarding COVID-19? Margarita Cherikbaeva (MC): As of morning May 20, there were 1,322 coronavirus infection cases in Kyrgyzstan, 37 cases for the last 24 hours. 949 people recovered (68.3% of the total number of registered COVID-19 cases). Analysis shows a downward trend starting from April 16. An increase was observed from April 5 to 20. The highest numbers were registered on April 11-12. The number of cases has started to decrease since end of April. Regarding the impact of COVID-19 on the economy of the Kyrgyz Republic, the Ministry of Economy projects a 6.8% decline in the annual GDP due to self-isolation. The weakening of national currencies in Q1 2020 may place some pressure on the cost of imported goods, which will be the main reason for rising inflation in 2020. There is a high level of uncertainty in economic prospects. The macroeconomic forecast for Kyrgyzstan highly depends on the pandemic development trends. e-MFP: How have you supported clients and staff during this crisis? MC: The pandemic has had a strong negative impact on medium and small-size businesses that represent about 40% of the country’s economy. In view of the current economic situation caused by COVID-19, the Bank has come up with supporting lending programs to restart businesses and help entrepreneurs maintain the liquidity of their commodities and inventory. To alleviate the financial burden for customers, the Bank has started to provide a 3-month grace period with individual review of loan agreement conditions and repayment schedules. So far, the Bank has offered loan restructuring to 11,700 clients totaling KGS 1 billion 611 million. To ensure an uninterrupted access to financial services and to support customers, the Bank continues to operate in all regions and “hotspots” of the country so that people have access to their bank accounts and have an opportunity to conduct all required transactions. Currently, the Bank is actively working towards a full-scale renovation of its remote banking services and is taking efforts to integrate new solutions together with prominent banks in the CIS. To protect staff, the Bank has arranged special transportation and provided for all required personal protection equipment. The Training and Development Department of Kompanion Bank developed the training on effective remote work that helped employees come to terms with the remote working mode. Further, Kompanion Bank donated KGS 2 million to combat COVID-19 and has been actively sensitizing the population to the safety measures that help reduce the spread of COVID-19. Bank employees supported this initiative and additionally donated their one-day pay to support the vulnerable. e-MFP: What kind of support (financial or otherwise) have you received from your investors, funders and any other relevant partners? MC: Having considered the requests related to the COVID-19 consequences, Kompanion Bank has received new funding conditions from some of its partners and investors. Despite the fact that funds have become more expensive, it’s important that we can have access to liquidity, which is crucial for ensuring the sustainability of banks during this time. e-MFP: What coordinated response have policy-makers, financial supervisors or networks taken to protect the financial inclusion sector in your country? MC: As part of the set of measures supporting the sectors of economy and entrepreneurs (worth KGS 40 billion), the Government has developed an action plan for 2020 to restart economic activity and assist businesses. The plan envisages 21 measures, including 15 financial and fiscal measures to support entrepreneurs and 6 administrative support measures. e-MFP: What do you see as the top priorities to support and protect your clients from the economic consequences of the Covid crisis? MC: Consistent with its Mission, Kompanion Bank provides socially responsible financial services contributing to greater economic and social well-being of clients and communities and environmental protection. In pursuance of the Mission, in 2010, the Bank established a special-purpose in-house Community Training & Support Department consisting of 30 accomplished agronomists and veterinarians. They provide consultations and free trainings to farmers living in the remote regions of the country. The Bank continues to carry out social projects to support people. In addition, we continue to provide deferrals and loan restructurings, as well as move forward with expanding our digital channels to provide tailored services to our customers.