As we navigate the choppy waters of the COVID-19 crisis, various groups within the investor community, including microfinance investment vehicles (MIVs), development finance institutions (DFIs), banks and other private funders, have pledged to coordinate and collaborate their responses in support of microfinance institutions (MFIs) who have been deeply impacted by the crisis. But what does that mean in practice?

We have seen multiple efforts happening simultaneously over the past month. For example, nine MIVs recently signed a memorandum of understanding outlining a coordinated response to COVID-19, particularly with respect to debt refinancing. The Netherlands platform for inclusive finance, NpM, also came out with an investor statement on COVID-19, and a group of stakeholders led by Grameen Crédit Agricole Foundation signed a common pledge of key principles to protect microfinance institutions and their clients affected by the COVID-19 crisis. A recently announced initiative of 14 organizations, the Microfinance Coalition, issued a series of blog posts calling on donors, investors and policymakers to support the microfinance sector. And the Global Impact Investing Network (GIIN) recently established the R3Coalition of impact investors and foundations which will mobilize and coordinate impact investors to fill financing gaps and quickly deploy capital to high-impact investment opportunities.

These initiatives are certainly commendable, but it is nevertheless concerning that many may have overlapping objectives and activities that draw on valuable financial and human resources which could be put to work on a coordinated response effort. In a recent CGAP investor coordination call, a participant poll found that many participants have been on 50 to 100 coordination calls in the past several weeks.

Too Many Cooks in the Kitchen?

The COVID-19 crisis is so vast and the impact so devastating that good intentions are leading to a plethora of responses. The result, however unintentional, is that we now have too many cooks in the kitchen, creating a somewhat frenzied and chaotic environment which may be slowing down our collective effectiveness and response.

I would argue that there is a need for a “master chef,” a central coordinating body that serves not only as a forum for information and data sharing but also works to align the multiple microfinance investor constituencies in their response to the crisis, both in the immediate and longer term. CGAP is already stepping in to fill this role by gathering representatives from the investor constituencies (debt and equity, public and private), each with their own priorities but united in their commitment to supporting MFIs and their clients. This is not the time to test out a multitude of recipes; we need a global effort to agree on a basic framework for action that can be adapted to the individual context of the MFI.

The need for a global framework would not deter from initiatives that require specific local, regional or country responses. For example, the recent coordination in India was effective at lobbying to extend the moratorium instituted by the Reserve Bank of India to non-bank financial companies and not just the banking sector. As so many investors work globally, a coordinated approach will facilitate alignment and expedite action that can then be adapted to specific contexts around the world. Having a central coordinating body will help ensure that the ingredients in the basic recipe (i.e. a response framework) are added and combined in the right order and quantity to optimize the outcome for each market context.

Given the complexity of the investor response to COVID-19, CGAP may prefer to focus its attention on the DFI and donor constituencies, many of whom are CGAP members. Indeed, that is a much-needed role as the DFIs and donors are critical to the response to ensure the survival and resilience of microfinance institutions now and in the long run. But at the same time, it is important to remember that the DFIs are also major shareholders in MIVs, so ongoing alignment among all the investor constituencies will lead to better outcomes for investors, MFIs and their clients.

The Recipe: Immediate Needs for the Investor Response

A central coordinating body will be essential to helping the stakeholders focus on the appropriate steps at each stage of the COVID-19 response. The immediate stage focuses on understanding the needs of specific MFIs, especially their liquidity requirements, and potential actions, such as debt moratoriums on loans to clients as well as debt obligations coming due. The medium-term period would require a shift away from liquidity toward a focus on capital adequacy, capital calls, and inevitably, mergers and liquidations. In the longer term, the focus will be on the future state of the microfinance industry, how operating models will evolve and whether investors’ strategies will shift to respond to their renewed perception of risks.

During this immediate phase, the first step is for the coordinating body to delegate responsibilities through a series of working groups. CGAP recently called a meeting of investors and proposed the creation of three technical working groups, each focusing on one or more priority issues. This type of delegated responsibility is the only way we can address the myriad of issues that the microfinance sector is confronted with today. A coordinating body is essential to the effectiveness of such working groups.

The second critical need is data. How long can MFIs survive under lockdown? Can additional liquidity extend this period? Data collection and analysis are paramount at this stage and coordination of those efforts is critical to avoid duplication of effort and a reporting burden to the MFIs. A data technical group will ensure that stakeholders know which data is being collected by what party and for what purpose. Also, very important is what data – analyzed or not – will be made public and when. Harmonizing data collection and reducing the reporting burden with a standardized template are important goals, but knowledge sharing among stakeholders may be the first line of action.

Time is of the Essence

The inclusive finance sector consists of many different players, requiring an ecosystem response with clear roles and responsibilities. A central coordinating body equipped with the infrastructure to establish clear delegated responsibilities to subgroups will be the only way we can efficiently and collectively step up to the needs of the sector. CGAP has taken the first steps to take on the central coordinating role and many others, including CFI, have stepped up to take on delegated responsibilities. We are slowly but surely moving in the right direction but need to move even faster if we are to avoid distracting, confusing and expensive duplication of effort.

A central coordinating body equipped with the infrastructure to establish clear delegated responsibilities to subgroups will be the only way we can efficiently and collectively step up to the needs of the sector.

Deborah Drake


Deborah Drake


Deborah Drake was a member of CFI’s staff from its inception in 2008 until 2022. Currently, she serves as a consultant to CFI and Accion. In her previous role as vice president of investor engagement and research, Deborah led CFI’s investor engagement and governance efforts to strengthen the inclusive finance ecosystem. She directed the Financial Inclusion Equity Council (FIEC), a membership organization of private entities making equity investments in financial institutions in the developing world. She also led CFI’s research work in the impact investing space.

Before the establishment of CFI, Deborah held multiple leadership roles at Accion focused on developing and implementing financial initiatives to facilitate microfinance institutions’ access to capital. She managed Accion’s $9 million guarantee fund for Latin America and the United States, and led the financial analysis unit, which collected and analyzed data to achieve greater financial transparency and establish international standards of financial performance for microfinance institutions. Deborah also was responsible for the development and delivery of training to microfinance institutions in the areas of transformation, governance, and investment readiness.

Deborah is co-editor of The Commercialization of Microfinance: Balancing Business and Development, and the co-author of Alchemists for the Poor: NGOs as Financial Institutions. Before joining Accion, she was a banking specialist at the World Bank and a commercial banker.

Deborah holds a bachelor’s degree in foreign service from Georgetown University and an MBA from Babson College. She speaks English, Spanish, and Portuguese.

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