Harare – The Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI) and Comesa say low financial inclusion increases the impact of the COVID-19 pandemic on the vulnerable, and have urged stakeholders to address this salient aspect of the current economic recession.
“Financial inclusion remains a powerful development tool to improve access to finance and support to vulnerable individuals and households during the COVID-19 pandemic-induced crisis. More than a year since the advent of the pandemic, like other parts of the world, the MEFMI region is making every effort to contain the situation. Restrictions to curb the spread of the pandemic remain in place in several countries thus economic activity remains subdued.
“As the pandemic persists, more is still required to promote financial inclusion as measures like physical distancing and lockdowns have a profound impact on the lives of millions of vulnerable people who live on low income and rely on daily earnings to survive. High levels of financial inclusion can help to mitigate the negative effects of economic crisis on poor households thus improving their welfare,” stated MEFMI in a recent statement.
During a High-Level Public-Private Dialogue in July the Chairperson of the Comesa Business Council Mr Marday Venkatasamy underscored the importance of digital financial inclusion.
“Due to the adverse effects that COVID-19 has had in all aspects of our lives, we recognise more than ever, the critical importance of digital financial inclusion to empowering and transforming the lives of all people,” he said.
According to research by Comesa, financial inclusion had gained special significance during the pandemic. A raft of public health measures to save lives together with the slowdown in economic activities following partial or full lockdowns and general economic slowdown, have resulted in job losses for the most vulnerable.
“Increased financial inclusion has been handy in reaching these categories of the population. However, it is also the case that loss of jobs have resulted in loss of financial muscle, and reduction in financial interactions and hence less financial inclusion, making COVID-19 pandemic a double edge sword. Although COVID-19 pandemic threatens the positive trends in financial inclusion recorded in Comesa region in the recent past by depriving households and firms’ livelihoods and business, it has also presented an opportunity for expanding financial inclusion.
“This is by allowing digital finance to be the most convenient way of reaching the end-users through remote services. During the pandemic, digital financial services have ensured that it is possible to remotely save and lend, remotely receive and send money, and remotely insure against financial risks, among other remote (no physical contact) services, all of which have a stimulating effect on financial inclusion now and in the future….
“Financial inclusion remains a policy priority and efforts to reach the unbanked population including the poor, SMEs and rural population should continue across the COMESA region”, the research paper says.