What’s the impact of investing during a crisis?
When the COVID-19 pandemic took hold in early 2020, we looked at how we could respond to support the businesses and communities most at risk.
Our technical assistance facility, CDC Plus, responded quickly by setting up two dedicated COVID-19 facilities in March 2020: the ‘Business Response Facility’ and the ‘Emergency Technical Assistance Facility’.
The two facilities have allocated three rounds of funding, supporting 62 projects with $6.6 million as of June 2021. To date, these projects have reached 7,700 businesses in the countries where we invest and indirectly affected 7.3 million customers.
The facilities provided grants and advisory support to help companies adapt their business processes and delivery models and scale up innovative solutions to address the basic needs of vulnerable and underserved people during the crisis. This included supporting the digitisation of businesses in critical service areas such as healthcare and education as well as microfinance institutions, as we knew these were the areas where capital was likely to have the greatest impact and reach customers directly.
Nearly two years on from setting up the facilities, we have examined the impact data from the businesses these facilities supported, to build our understanding of how the businesses have reached, and can reach, vulnerable and underserved populations.
We have published three reports looking at the impact of digital transformation on helping health and education businesses adapt to the pandemic; how microfinance institutions have supported customers during the pandemic; and a joint report with Triple Line evaluating the overall impact of the two facilities.
Our research has shown that digitally-enabled businesses were able to reach three times more customers than other non-digital projects. This was particularly important during the height of the crisis when companies offering critical services were able to do so digitally. In the healthcare sector, digitisation became critical. For example, it meant that businesses could provide self-diagnostic tools and access to telemedicine necessary when human contact had been restricted. In education, it gave not only students a lifeline but also the businesses themselves, which wouldn’t have survived the economic impact of the crisis without introducing digital solutions.
Likewise, microfinance institutions (MFIs) were hit significantly by the onset of the pandemic and subsequent lockdowns. As they predominantly provide finance to low-income groups including women, their customers were some of the worst affected. A survey conducted for one of the reports by 60 Decibels, which involved almost 18,000 clients from 23 financial services providers, found that 85 per cent of respondents saw their main source of income decrease. The financial stress of the pandemic made it more difficult for MFI customers to repay their loans.
In response some began to adapt. For example, Advans, a leading microfinance group, introduced a grace period on loan repayments and emergency loans, which over 120,000 clients took advantage of. The bank also established a digital platform, enabling remote working and helping to improve efficiency. Using the platform to consolidate data meant the team could also more easily compare benchmarks and recognise trends across all their businesses.
What we found from all three reports is that in an emergency situation, such as COVID-19, a quick and streamlined approach proved to be an effective way for funders like CDC to support companies. What is more, digitisation and the use of data enables companies to more effectively identify and respond to customers’ needs across key sectors such as microfinance, health and education. And finally, that the flexibility to adapt is key to any crisis response. In events such as a global pandemic, the ability of funders and businesses to respond to rapidly-changing circumstances can significantly increase the impact achieved.
Read the reports here:
- How are microfinance institutions using technical assistance to address customer needs in the pandemic?
- How did digital transformation enable health and education businesses to adapt to the COVID-19 pandemic?
- Technical Assistance in Turbulent Times
