The COVID-19 pandemic has affected every one of our microfinance partners in different ways. The experience of this twin economic and health crisis differs from person to person, family to family, community to community, country to country. The Whole Planet Foundation team has been checking in with microfinance partners throughout this time so we can be flexible in how we support them within our mandate.
Whole Planet Foundation supports BRAC’s microfinance program in five countries: Myanmar, Liberia, Sierra Leone, Rwanda, and Tanzania.
BRAC is by many measures one of the largest NGOs in the world and has a unique insight into COVID-19’s impact on microbusinesses on a global scale. The organization implements a multi-pronged approach with an aim of addressing the complex challenges of poverty, and their programs include microfinance, health, youth, and other areas. BRAC also has a long history of helping communities stay and rebuild during a crisis. In its COVID response, BRAC has similarly formed a comprehensive COVID response strategy with common elements across all their country programs, anchored by core principles.
Photo at the top of this post courtesy of BRAC: Margaret, client of BRAC Sierra Leone and president of Upper Bush microfinance group in Freetown, Sierra Leone, with soap that she sells.
BRAC’s COVID-19 Response
Bridget Dougherty, Director of Operations at BRAC International Microfinance, shares:
“We balanced consistency vs. adaptation by staying in frequent touch with the CEOs and heads of operations in each country. Initially we had calls two times per week, where CEOs could share and learn from one another, from the Bangladesh team, and the BRAC International colleagues and experts who had managed through the Ebola crisis.”
Their overall strategy has a four-pronged approach:
1) Ensure the safety and security of their staff
2) Community Based Awareness and Infection Prevention and Control
3) Partnering for Response During the Outbreak, and
4) Economic and Social Revitalization.
Data-driven decision making underpins each of these components.
BRAC Tanzania’s COVID-19 awareness training for staff.
On the ground, here’s how the strategy has affected the BRAC microfinance programs in the five countries supported by Whole Planet Foundation: In each country, all microfinance operations were suspended for a period. During the suspension, there were no group meetings, payment collections, or disbursements. BRAC offered a moratorium on principal and interest payments to all clients. Field staff instead focused on raising awareness about COVID-19 prevention and management. BRAC also conducted surveys to collect data on how the pandemic and economic fallout were affecting their clients. This data informed BRAC’s approach to the fourth prong: economic and social revitalization.
A Phased Approach to Restarting Operations
Once health, economic, movement, and regulatory conditions seemed conducive to re-starting microfinance services, BRAC implemented a phased approach following detailed guidelines.
- Phase 1: Start collecting repayments. Disburse loans to repeat clients. Assess and prepare for the next phases, including staff training on guidelines and collecting requests from clients. BRAC reports that repayment rates have been between 93% to 98%, higher than anticipated
- Phase 2: Refinance and reschedule loans for existing clients based on need. Interested clients are offered two options to provide some financial relief as they restart and rebuild their businesses:
- Refinance – Clients can receive a new loan that is combined with the outstanding balance of the old loan, and the total amount will become the new loan principal for a new period: 6, 9, or 12 months.
- Reschedule – Client can reschedule their existing loan, by repaying smaller instalments over a longer period of time for 6, 9 or 12 months, based on their previous track records of repayment. These two options provide clients with financial relief as they re-start and rebuild their businesses.
- Phase 3: Process and disburse new client loans.
Social distancing at BRAC Rwanda’s country office.
By mid-June, all of BRAC’s country programs supported by Whole Planet Foundation restarted operations with Phase 1. Payment realization rates have been higher than expected, at between 93% to 98%. Most of the programs supported by WPF are now in Phase 2 and 3, and in most cases disbursements have been close to or above the target, indicating robust demand for loans and high rate of business resumption. As of August 31, 2020, BRAC has rescheduled 2,035 loans and refinanced 1,492 loans in the WPF-supported countries. Each country program continues to learn about clients’ business challenges, needs, and preferences, which often vary across communities and sector.
Microcredit client businesses can vary based on an entrepreneur’s skills and interests. This microcredit client of BRAC Uganda has chosen raising chickens as her income-generating activity. BRAC has provided financial relief to clients during the COVID-19 pandemic.
The overarching strategy also provided flexibility for contextual variations across each country. For example, in one market, strict curfews were put in place and all businesses were closed with movement prohibited for six weeks. In another, little information was shared about guidelines and number of COVID-19 cases. BRAC was able to leverage its experience in Sierra Leone and Liberia during the Ebola crisis to immediately respond and adapt its operations to the country context. While staff couldn’t see their clients in person, the teams determined the best way to stay in communication i.e. via text messages, phone calls, or Facebook. Regardless of the context, however, BRAC prioritized the health and safety of their staff and clients.
At Whole Planet Foundation, we too seek to balance a global approach and tailored support for our partner. Our partners range from small, early stage companies working in remote refugee settlements to large multinational organization like BRAC. BRAC’s strategy is just one example out of many different ways our partners are navigating this crisis. Each partner will face their own unique sets of constraints when it comes to access to information, funding, internal systems and skillsets, external networks or other resources .