Part one of SEDPI’s rapid community assessment showed the economic impact of COVID-19 to microenterprises. Part two was about recommendations to support microenterprises during and immediately after COVID-19.

This is the third and last part which will present long term solutions to systemic problems that will bring access and benefits of government services to low income groups.

Economic impact of COVID-19 to microenterprises

All microenterprises were negatively affected due to COVID-19. Four in every ten remain closed; while the remaining six reported significant or severe weakening of livellihoods. Only 2 of the 6,071 respondents are persons under monitoring which may be a sign of flattening the curve.

Recommendations during and immediately after community quarantine

To sustain and complement the gains of the quarantine, priority and free mass testing to low income groups is needed. This will hopefully flatten and at the same time shorten the curve.

Meashel Ranes, SEDPI member in Rosario, Agusan del Sur, shows relief goods she received. She said this would be enough for 2-3 days consumption for her family of five.

Government should hasten delivery of cash and relief assistance to low income groups to alleviate the burden of low income groups. MFIs could complement barangay level legwork for information dissemination and distribution of government assistance with its vast network and penetration in rural areas.

To ease the economic burden of low income groups, the government should stay true to the intent and spirit of the Bayanihan Act, that prohibit accrual of interest and other fees during the quarantine period.

Immediately after the quarantine period, to help jumpstart the economy, the government could provide pay for work programs; and provide cash assistance to microenterprises through MFIs. It could bailout MFIs to ensure continued delivery of much needed microfinance services to the poor.

The proposed 0% calamity loans of Pag-IBIG and SSS could provide much needed relief to microenterprises and the informal sector. In the longer term, structural challenges could be addressed through providing ease in access to identity documents, broader financial inclusion, and universal disaster insurance.

Recommendations for the long term

Ease in access to identity documents

Access to government basic services starts with identity. The Philippine Statistics Authority should streamline processes for low-income groups to get government identification documents such as birth certificates, marriage certificates, and licenses.

Nueva Segovia Consortium of Cooperatives (NSCC) in Ilocos Sur boasts consolidated assets of PhP5.3Billion and has 400 cooperatives members. Even strong and large cooperatives like NSCC were not spared with COVID-19’s negative economic impact. NSCC requested for moratorium of payments to its creditors, including SEDPI, as early as the first week of the lockdown.

Greater financial inclusion

It is also important to focus more on financial inclusion to make sure that bank accounts are opened for all low-income families so that they can easily access cash transfers and cash relief in times of disaster. This will ensure that funds truly land in the pockets of low-income groups, and could potentially reduce corruption and patronage politics.

Universal disaster insurance

It is also high time to have universal disaster insurance since the Philippines ranks high in the World Risk Index. This will make us better prepared for disasters and pandemics in the future.

The scheme will provide funds to affected communities, especially low income groups, to cope with the disaster and to rebuild livelihoods. Having disaster insurance will eliminate the need for low income groups to beg for government assistance from politicians.

Tap vast network of MFIs

Microfinance institutions are rooted well in communities and have vast networks that penetrate even the most remote areas. This makes them suitable for information dissemination as well as for distribution of government assistance.

Prioritize support and assistance to low income groups

We may be already enjoying the positive effect of the commuity quarantine to prevent the sudden spread of COVID-19. However, its negative economic impact especially to vulnerable sectors such as microenterprises and the informal sector, is undeniable.

The recommendations to support microenterprises during and after the community quarantine are practical and could be implemented. This will channel resources to and empower microenterprises that will help them recover faster from the negative effects of COVID-19.