This webinar, the first of a 2-part series looking at the impact of COVID-19, was focused on its effect on financial health. The webinar was moderated by Cenfri technical director and insight2impact programme lead Hennie Bester and featured the following panelists: Elisabeth Rhyne, Former Managing Director, Centre for Financial Inclusion, Amolo Ng’weno, CEO of BFA Global, and Paul Gubbins, Research Lead at FSD Kenya.
Prior to the COVID-19 pandemic, Cenfri was working on a new publication which gives an overview of financial health and the policy responses around the world. The explored this topic and the key questions of whether financial health measure more than income and if financial inclusion supports financial health. The report offers recommendations to policy makers on strategies for measuring the financial health of their population.
There are different aspects to financial health, this webinar focused on the concept of resilience – preparedness to meet and recover from financial shocks. World Bank Findex data was used which measured whether people could raise an emergency amount within the next 30 days, and the picture varied dramatically across the globe by country and by region. Sub-Saharan Africa had the lowest ability to raise emergency funds but a wide-spread was seen across the region and Latin American was the second lowest region despite not being the second lowest income region. The data shows there is a large portion of the population within Africa who cannot raise an emergency amount, many of the population are living hand to mouth. When looking at how long adults can survive without income, there is a fall after a week which continues falling. After 3 months only a quarter of people in lower income countries can survive.
The data is collected assuming that you alone are affected by shocks, but not during a global pandemic when all those around you are also experiencing the same shock. It is likely that the current COVID-19 pandemic will result in less resilience that the data shows. When you explore the mechanisms that people use to cope with shocks they are things like working (more), selling items and borrowing from friends/family – but COVID-19 restrictions are likely to mean these three options will be much less possible. BFA’s research conducted since COVID-19 spread and found that few adults put aside money, more than half those surveyed expect COVID-19 to adversely affect their financial well-being, and people have already begun using their saved resources in the lead up to lock down alone.
These are unprecedented times but there are roles that governments, the financial sector and donors can play in order to try to help mitigate and allow economies to recover after the crisis. The panel suggested the following short and longer term ideas:
- Encourage private wealthy individuals/organisation and donors to contribute funds
- To spread any available income widely across the population
- Consider how lock down can be flexed safely within low income countries to allow some economic activity
- Encourage recovery through the delay or writing off debt and opening access to credit
- Introduce policy which support people to achieve financial health
You can download a copy of the slides from this webinar here. The final part of the series will be on 29th April, more information on this will follow shortly.