The current COVID-19 crisis poses an unprecedented challenge to the continuity of microfinance institutions (MFIs), especially small- and medium-sized ones, in a context where financial services are needed more than ever for small businesses.
As the effects of the COVID-19 crisis impact the economy of the Latin American and Caribbean (LAC) region, small and medium microfinance institutions face serious liquidity problems and currency mismatches as their loan portfolio quality deteriorates, their funding sources dry up, and volatile currencies enhance their foreign exchange (FX) risks.
To ensure that microfinance institutions can continue to provide essential financial products and services in the short term, but also to accelerate the post-COVID-19 economic recovery process in Latin America and the Caribbean, Google is supporting Locfund Next—the first permanent regional vehicle, managed by local managers, dedicated to providing financing in local currency and supporting digital transformation to MFIs.
The $8 million in funding from Google, provided through the Inter-American Development Bank’s innovation lab IDB Lab, complements $4.5 million provided by IDB Lab.
