Follow Us


Angel Court, 81 St Clements Street
Oxford, OX4 1AW UK

T: +44 (0)1865 725304

© 2024 Opportunity InternationalOpportunity International United Kingdom is registered as a charity in England and Wales (1107713) and in Scotland (SCO39692).

Finding a Lifeline for the Poor and the Financial Institutions that serve them

By Sam Bickersteth, Chief Executive

The economic impacts of the COVID-19 pandemic are increasing levels of vulnerability and insecurity, and driving many into chronic poverty. Microfinance Institutions - critical actors in provision of wealth creation, employment and safety nets for the poor - are also struggling with the knock-on effects due to increases in the level of deposit withdrawals and loan default rates.

 In a recent article, I highlight the impact of COVID-19 on four key client groups. 

  1. Workers in the urban informal economy. The street is their workplace and their livelihood. Most depend on their ability to travel to town centres every day in order to sell their goods. Due to lockdown measures, many small businesses stopped trading overnight; casual employment options all but disappeared. Women - the majority of the informal workforce - are disproportionally affected because of their additional care and domestic responsibilities.

  2. Refugees. We’ve been interviewing refugees in Nakivale and Kiryandongo camps in Uganda every two weeks since last September. The COVID-19 crisis has caused the income levels of the refugees to plummet. Two weeks after the lockdown, total employment income fell by more than 60% compared to income levels immediately before the lockdown was announced.

  3. Rural households. Travel restrictions have disrupted farmers’ access to inputs such as seeds and fertilisers, and also restricted access to markets. Farm cycle and business disruption is widespread, causing food pileups in some areas and shortages in others. Uncertainty and fear caused by COVID-19 are having an impact on planting decisions.

  4. Schools. Around 90% of the 14,000 affordable private schools supported by our Education Finance programme are currently closed. These schools would normally be educating more than 3.8 million children. Many were receiving a nutritious meal at their schools and, with very limited access to internet, few will be receiving any form of structured learning in their homes. Some may not return to school at all as parents lose their income.

These four groups are all facing a complex array of issues and challenges because of COVID-19. These in turn impact the financial institutions that serve them. And whilst the pandemic is causing increasing loan default and concerns about liquidity for financial institutions everywhere, the challenges facing microfinance institutions serving low income households are especially severe. My article highlights a number of these being experienced by our partners in Ghana and Uganda.

Microfinance institutions can be the lifeline for many of the 1.6 billion people whose livelihoods are at risk because of the pandemic. Supporting financial institutions serving the poor needs to be a priority for Governments and donors. I offer a three-point plan: digitisation; financial support; and, above all, a platform so that the voices can be heard, of the poor, and those who work most closely with them. 

Read the full article here.


Share this article:

Join Us

Sign up to receive a monthly email with all the latest updates, news and inspiring stories from our work around the world.