Taking advantage of opportunities in a pandemic

With the Covid-19 pandemic showing no sign of abetting, scores of industries have been badly hit, resulting in closures of businesses––not only those with limited resources but even large corporations with global outreach. Hardest hit are those in the  tourism, retail, food, financial services, real estate and transportation industries.

Nobody knows when the virus will subside as vaccines to counter it has not yet been discovered and produced. And even if the vaccines and medicines are developed, it will take some time for the pandemic to settle. Talks of the ‘new normal’ are giving businesspeople nightmares because it mean less customer traffic and limited transactions due to social distancing.

What is the scenario for the consulting industry? With development agencies and community-based financial service providers looking for solutions, we are in a position to respond to their needs. And we have to be very keen in ‘sniffing’ these opportunities since they may not be expressed directly by our partner institutions.

Some of the applied solutions we can provide are the following:

• Study on the impact of Covid-19 on the enterprises and operations of financial service providers;
• Remedial management training for financial service providers (banks, cooperatives and microfinance institutions). Past due accounts will emerge as one of the challenges for financial service providers and we can help them design effective programs to address this;
• Assessment and design of resiliency measures for enterprises. This will allow micro, small and medium enterprises (MSME) to review their systems and install measures that will improve their tolerance for shocks brought about by pandemics, disasters and natural calamities;
• For larger institutions, we can also facilitate strategic realignment process to review their long-term plans and adjust their direction to address pandemic and other emergency situation;
• We can also assist organizations who would like to go digital and pursue e-commerce. With the increasing volume of sales passing through internet platforms, more enterprises are considering adding an internet platform among its channels.

 

Originally published in ACCESS Advisory Newsletter, July 2020.

Empowering people through cooperatives in Myanmar

A tractor-hailing app, an app providing agricultural information on market, prices, weather and other important information and an app linking agri-producers to financial service providers are some of digital technologies featured in the forum Modernizing Myanmar’s Agriculture through Innovation. Organized by the US Agency for International Development (USAID), the forum also featured non-digital technologies. Two case studies on enterprise development were presented including a community development activity – formation of a cooperative.

The cooperative formation project was implemented by the Phyu Sin Saydanar Action Group (PSSAG) in partnership with ACCESS Advisory in 30 villages in northern Hpa-an township, Kayin State. The initiative was supported by USAID and resulted in the formation of the Zwe Kabin Myae Coop with 600 members and an initial share capital of 5.1 million kyats (US$3,400.). Located in a post-conflict area, the cooperative which is undergoing registration process is poised to provide lending services that will energize the local economy.

Zwe Kabin Myae is not the first community-based cooperative formed in Hpa-an. In 2016, an European Union (EU) project facilitated the formation of the Bawa Yay Tauk Myint Coop in Hlaing-bwe. The coop however was greatly affected by the 2018 floods and is facing organizational challenges. Another coop, the Pwint Pwint Lin Lin in Paing Kyone sub-township was formed as a result of the project implemented by the Adventist Relief and Development Agency (ADRA). It has sustained its savings and lending operations with 11 million kyats capital. In its second general assembly meeting later this month, it has declared dividends pay-out to members from the 2.5 million net income it has generated from its operations.

The Karunas Mission Social Solidarity (KMSS), the development arm of the Catholic Church in Myanmar partnered with New Humanity, an Italian funding agency to pilot test formation of savings and credit unions in selected dioceses in 2017. It has successfully formed cooperatives in three areas.

One cooperative is in Shwe Bo Township under the Mandalay diocese, currently undergoing registration. It has generated 9.9 million kyats capital from its initial 172 members. Two other cooperatives were registered and have started providing savings and lending services in their respective areas. As of February, data showed an aggressive drive to extend services to its members. The first is in Nyaung Don, Yangon diocese where 10.2 million kyats share capital was mobilized and a total of 5 million kyats loans were already released benefiting 125 borrowing members. The second registered cooperative is in Tar Baung, Pathein diocese, where the cooperative was able to generate 74.5 million kyats share capital from 662 members. It has extended 55.2 million kyats volume of loans to 312 members.

The formation of self-reliant and sustainable cooperatives exhibited the fact that given the right methodologies, the people can be empowered to initiate development activities that addresses their needs. Help and support from outside of the community will be more relevant if these are matched with what is really needed and the people’ capacity to decide for their own future should not be set aside.

FinTech Hype

 

There is a lot of hype going on about providing access to finance using digital platform. Fintech companies providing loans are either providing loans directly or through peer-to-peer arrangements where loan applications are matched with funders. The companies promised fast service, few requirements and with range of amount from as low as P2,000. to as high as P300, 000.

With a list of fintech companies, I tried applying for personal loans and failed! Summary of the challenges in dealing with fintech companies:
– Cash wagon: after completing all the data requirements and going through the whole process, I received this message: 500, Something went wrong. Try again in four weeks
– Robo cash: the template required the company phone number, but the field was designed for a 12-digit mobile phone number. So when I typed the 7-digit landline, it showed error, and I cannot move on to the next step.
– Asteria: there is a requirement for a bank specified credit score which I do not have
– Loan Ranger: required a Facebook account which I do not have.
– Tala: same with Loan Ranger, a Facebook account is needed and I do not want to open one.
– Quickpera: a long list of requirements more than what traditional banks are requiring
– Cash smart: 2 proof of billing, the problem here is that I live in a place where the bills are in the name of the previous owner of our house. I do not maintain a postpaid mobile phone, so no bills in may name. And they even require two!
– PeraJet: same proof of billing requirements.

Online lending maybe practical for millennial who are familiar with the internet, but it may be a struggle for an ordinary entrepreneur or even a farmer. So talks about fintech as the relevant tool in expanding financial inclusion has still a long way to go.