This note discusses the significant risks facing microfinance institutions (MFI) in Myanmar in the wake of the COVID-19 health and economic crisis and the implications for poverty and food insecurity of a serious negative shock to the MFI sector. The note is based on a desk review of the early policy responses in Myanmar, of best practices identified by international and local experts, and online discussions with leaders of MFIs operating in Myanmar. The objective is to make policymakers aware of the crucial role MFIs play in a wide range of economic activities in Myanmar, including food production, processing, trade, and marketing. A serious disruption to the MFI sector has the potential to: • Exacerbate food insecurity through damaging economic resilience in the short-to-medium term, • Lower agricultural output in the critical upcoming monsoon production season, and • Harm the potential for microfinance to contribute to economic recovery.

ဤစာတမ်းငယ်သည် Covid-19 ကျန်းမာေရး�ှင်စီးပွားေရးအကျပ်အတည်းေ�ကာင ့ ် ြမန်မာ�ိုင်ငံ�ှိ အေသးစား ့ ေငွေရး ေ�ကးေရးအဖွဲ�အစည်းများ ရင်ဆိုင်ေနရေသာ �ကီးမားသည့် စွန်စားရမ�များ၊ ့ အေသးစား ေငွေရးေ�ကးေရးက�ကို �ုတ်တရက် �ိုက်ခတ်လာသည့် ြပင်းထန်ေသာ ထိခိုက်မ�များ၏ ဆင်းရဲမွဲေတမ��ှင် စားနပ်ရိက�ာမလံုေလာက်မ�တို ့ ့ အေပါ် သက်ေရာက်မ�များကို ေဆွးေ�ွးတင်ြပြခင်း ြဖစ်ပါသည်။ ဤစာတမ်းငယ်ကို ြမန်မာ�ိုင်ငံ၏ ယခင်မူဝါဒဆိုင်ရာ တံုြပန်မ�များ၊ �ိုင်ငံ ့ တကာ�ှင့် ြပည်တွင်းမှ ပညာ�ှင်များမှ ေဖာ်ထုတ်ထားေသာ အေကာင်းဆံုး လုပ်ထံုးလုပ်နည်းများ�ှင် ြမန်မာ�ိုင်ငံမှ အေသးစားေငွ ့ ေရးေ�ကးေရးလုပ်ငန်းများ၏ ဦးေဆာင်သူများ�ှင် ့ အွန်လိုင်းမှေဆွးေ�ွးမ�များကို အေြခခံ ေရးသားထားပါသည်။ ဤစာတမ်းငယ်၏ ရည်ရွယ်ချက်မှာ စားသာက်ကုန်ထုတ်လုပ်ြခင်း၊ ကုန်သွယ်ြခင်း�ှင့် ေရာင်းချြခင်းများအပါအဝင် ြမန်မာ�ိုင်ငံ၏ စီးပွား ေရးလုပ်ငန်းများစွာတွင် အေသးစားေငွေရးေ�ကးေရး လုပ်ငန်းများ၏ အေရးပါမ�ကို မူဝါဒချမှတ်သူများ သတိထားမိေစရန် ြဖစ်ပါသည်။ အေသးစား ေငွေရးေ�ကးေရးလုပ်ငန်းအဖွဲ�အစည်း များ �ပိုကွဲပျက်ဆီးမ�သည်- • စီးပွားေရး �ကံ့�ကံ့ခံ�ိုင်ရည်�ှိမ�ကို ထိခိုက်ြခင်းအားြဖင် ကာလတို ့ -ကာလလတ်တွင် စားနပ်ရိက�ာ ဖူလံုမ�ကို ပိုမိုဆိုးဝါးေစြခင်း • အေရး�ကီးေသာ လာမည့်မိုးရာသီ စိုက်ပျိုးထုတ်လုပ်ချိန်တွင် စိုက်ပျိုးေရးထုတ်ကုန်များ ေလျာနည်း ့ ေစြခင်း၊ • စီးပွားေရးြပန်လည်ထူ ေထာင်ရန် အေသးစားေငွေရးေ�ကးေရးလုပ်ငန်းများမှ အေထာက်အကူေပး�ိုင် သည့် အလားအလာကို ထိခိုက်ေစြခင်းများ ြဖစ်ေစ�ိုင်ပါသည်။

This Working Paper takes comprehensive stock of the impacts of the first two waves of COVID-19 (in Q2 and Q4 2020) on the microfinance sector in Myanmar. We discuss potential impact pathways, review policy responses to the crisis, and present new quantitative analysis based on a set of surveys with respondents throughout the agricultural value chain. Additionally, we briefly review impacts since the military takeover on February 1, 2021. Overall, various disruptions to the microfinance sector, particularly during peak periods of COVID-19, significantly reduced overall lending from April 2020, onward. These disruptions, along with disruptions to external financing, led to greater informal borrowing, likely greater indebtedness, and lower food security. However, policy responses and financing accommodations to microfinance institutions (MFIs) in Q2 and Q3 2020 cushioned the sector against widespread insolvency. The events since the military takeover are creating new challenges, exacerbating the aforementioned impacts, and raising new risks of MFI insolvency and broader crises around food security, indebtedness, and poverty. Considering these findings, stakeholder recommendations underscore the importance of easing the movement of international and domestic goods. Efforts should be focused on meeting the MFIs’ need for loanable funds through mechanisms such as exchange rate hedging, credit guarantees, and loan enhancement, while continuing to encourage flexibility around existing financing. When the time comes for a full recovery, there should be a focus on facilitating additional financial injections so that MFIs can more effectively restart lending operations.

Between April and October 2020, the International Food Policy Research Institute (IFPRI) and Michigan State University (MSU), with support from the United States Agency of International Development (USAID) and the Livelihoods and Food Security Fund (LIFT), have undertaken analyses of secondary data combined with regular telephone surveys of actors at all stages of Myanmar’s agri-food system in order to better understand the impacts of COVID-19 on the system. These analyses show that the volume of agribusiness has slowed considerably in Myanmar since COVID-19 restrictions were put in place. There is lower demand from farmers for agricultural inputs and mechanization services and lower volumes of produce traded, especially exports to neighboring countries whose borders are closed. All actors in the agri-food system are facing liquidity constraints and experiencing increased difficulties in both borrowing and recovering loans.

Coronavirus disease (COVID-19) has unleashed unparalleled challenges. At the same time, it offers a window to rethink Asia’s most fundamental development policies and strategies to address inequality, socioeconomic vulnerability, and environmental challenges. This publication gathers blogs and short policy pieces contributed by ADB staff and experts in an attempt to tackle immediate challenges and prepare for what may lie beyond the horizon. It covers a broad range of development challenges and highlights the crucial role of rapid adoption of digital technologies, adequate supply of quality infrastructure, disaster risk management, and strengthening regional cooperation for a resilient and sustainable future by shaping post-pandemic conditions.

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Sub-Saharan African countries are facing an unprecedented health and economic crisis that is likely to severely hurt credit quality and raise non-performing loans from already high levels. Banks have a critical role to play not only during the crisis by providing temporarily relief to businesses and households, but also during the recovery by supporting economic activity and facilitating the structural transformations engaged by the pandemic.