The Impact Of COVID19: The Future For MFBs

The Impact Of COVID19: The Future For MFBs. What everybody should know is that there is going to be significant financial market disruption post Covid 19. That means massive changes including how the business is done, inability of customer or businesses to make loan repayment, lack of liquids on the part of the MFI to finance all their finical obligations, retrenchment or inability to hire new employees, static remuneration and both participants become concerned about counter-party risk.

I have listen to Economist like Pat Utomi, Richard Eisenberg, contributor at Forbes, Accenture Consulting, China daily Business, USA today and my personal Parler en Public and some experience in MFI. Therefore I make bold to write without dwelling too much on pessimistic side of the coin, they will be critical players, and with the right actions MFBs could significantly moderate the economic damage this crisis is expected to inflict.

Here are some ways MFBs can manage the business impact of Covid 19 and Pitch for a brilliant future

• As borrowers struggle to make scheduled interest and principal payments, MFBs could:

1. Support government actions. The government is trying to combat market inequities through regulation, taxation, subsidies promote and general economic fairness.
2. Initiate credit forbearance and modification programs
3. Prepare for losses
4. Extend credit. Many MFIs have done this already through loan rescheduled
5. Digitize to manage the demand for refinancing. Beyond Credit has been craving for this for some time now, it was rather unfortunate she couldn’t launch before the pandemic.

• While many MFIs branches will stay open as a vital service, customers are and will be increasingly looking to run their financial life through apps and online banking. So microfinance practitioners need to:

1. Educate and train customers on how to use Banking apps and USSD code
2. Minimize physical infection risks, such as going to market collect repayments. MFIs can do collections through agency. BCL is very much into that.
3. Personalize advice to consumers on how to sell and make profit and cultivating saving culture
4. Accelerate digital sales and service plus agency banking

• Cost Control and Innovation.

1. Merge or close down under-perform branches
2. Be flexible with vendors and suppliers. The laptop you bought at 70,000 in January you should think of where and how to buy same at 50,000 without losing the quality
3. Invest in things that will outlive the virus, e.g. treasury bills, new business ideas
4. Innovation. V-banking is doing greatly, guess what they are doing, their customers are also loan officers, they are good example for post Covid 19 future.
5. New business ideas, yes, you hear me right. This because after the pandemic, new business will be birth and those businesses would in the next five to 10 years take the lead. Such business idea will be in ICT, Hospitality and production. Watch out.

Whichever way it goes, MFI or MFB will learn many valuable lessons about their investors, their customers, their own capabilities, and the market as a whole. And the advantage for Beyond Credit Limited is that this is not the first time she is witnessing recession, in fact started business in the hit of 2015 to 2017 recession. So this is another opportunity to for her to reinvent and re-strategies.