COVID-19 has been a global pandemic for several months now, with no end in sight, and the virus is wreaking havoc on economic and health systems. Small, open economies such as those in English-speaking Caribbean have been the hardest hit, disproportionately relative to the small number of confirmed cases – just over 1000 cases and less than 50 deaths as of May 25. How can the microfinance sector in the Caribbean navigate this crisis and seize the opportunity to promote the further development of the industry?
COVID19 comes in the wake of a series of hurricanes decimating the economies of several countries in the region, most recently in the Bahamas. The Inter-American Development Bank predicts an extremely bleak period ahead for the Caribbean, and certain reversal of the progress made by countries such as Jamaica in terms of external debt reduction and GDP growth.
As is the case elsewhere, Caribbean countries are working on two fronts to confront the crisis in real time, with no playbook. First, working to contain the virus, with stay-at-home orders, curfews and closing national borders, while at the same time working to save the economy. The decision of Caribbean governments to suddenly close national borders at the end of March has had a devastating impact on micro and small businesses, particularly those either directly or indirectly linked to the tourism industry, which accounts for 30 per cent to 40 per cent of GDP in some countries. Other businesses have been negatively affected by falling oil prices (Trinidad, Guyana) and abruptly interrupted supply chains. Both the scope and speed of the economic decline is unprecedented. In response, countries have unveiled various economic stimulus packages – including tax payment deferrals, low interest loans and grants – to keep businesses afloat, and help maintain employment – coupled in some cases with specific assistance to vulnerable populations.