When I thought of documenting my ideas on how the current pandemic would affect how we do business in the microfinance subsector, I initially thought it was too early as we were yet to even enter the woods talk less of being out. However, when I heard of the miracle recovery of the Chinese economy and how over 90% of its business has been opened, I decided that there was no better time to talk about how to conduct our business post COVID-19 pandemic than now.
First, the microfinance subsector is still an infinitesimal part of the nation’s gross domestic product standing at less than 1%. While this portend great opportunity and headroom, it also smacks off the impact any occurrence there can have. The microfinance industry is the key driver of financial inclusion. It is the financial system of the poor and lowly. It is also presumably the go to place for those who want to have a feel of quick financial services.
The unbanked in Nigeria is about 40% of the population while the poor constitute about 33.1%. These statistics call for concern and explains why we should focus on life after COVID-19.
I have identified the following key activities that will never remain the same going by its adoption during the pandemic.
1. Cash Collection: Cash is the primary commodity of an MfB. Officers go to traders in the market to make collection. No one can tell the route of any cash collected. All manner of technics is currently being used to ensure cash collected were sanitised and free to handle including the use of hand dryer. Bank notes collected came out in good form after this treatment making counting, sorting and storage easy. Should this continue, currency mutilation would be a thing of the past.
2. Rotational or Remote work culture: Most companies devised several means to reduce the exposure of staff to the virus while at work. This ingenuity led to the decision to make staff work in groups on rotational or shift basis not only to reduce exposure but to maintain social distancing. More than half of several workforce are working from home. To keep the already burgeoning cost of running a MfB down, this model may just have come to stay with a little fine tuning.
3. Forbearance: The MfBs are one aggressive institution that has zero tolerance for default. Remedial response time is fast and prompt since repayment cycles are short-usually daily or weekly. The leverage to structure micro loans along repayment capacity for covid 19 affected individuals, households and business may now become a reality for industry players and a common practise going forward.
4. Human Capital welfare: COVID-19 is a leveller. The risk of contracting it through those you neglect while paying attention to your self makes your effort worthless. So to stay safe, you need to ensure that everyone around you is safe. The use of hand sanitisers, gloves, masks and to some extent providing free vitamin and zinc based suplements to staff was a welcome idea. Every staff sure enjoyed the attention they got this period and wish it would continue.
5. Staff Customer relationship: Some staff dealt with the customer that they hitherto saw daily using alternative communication channels driven by Information Technology. They could maintain their relationship through the period without physical contact. This had a direct impact on overheads. The short comings experienced by non IT compliant MfBs is likely to spike new request and on boarding post pandemic.
The above are just teasers of what I figure would be the aftermath behaviour in the microfinance subsector post COVID -19. When we are finally done with this pandemic, life would be better for it.
See you next week.