Zurich-based Simon Gupta serves as our contact for development finance institutions. With Covid-19, the international community is hard-pressed to engage capital to alleviate the pandemic’s impact.
How is Covid-19 impacting your work?
This pandemic and particularly its economic impact is keeping me extremely busy: My partners, development finance institutions and governments from across the globe, are very engaged in mitigating the current crisis in developing countries. Covid-19 has reinforced the mandate of channeling funds to where they are needed in order to still achieve the Sustainable Development Goals. We are looking at ways to support these efforts in emerging economies. For most of my partners, times of crises are times of increased action – and this has a very direct impact on my work as well. It is highly rewarding to contribute to solving the Covid-19 crisis, and the discussions I am having with so many like-minded partners are very encouraging.
What impact are DFIs looking to achieve at this point?
The major objective is to mitigate Covid-19’s negative impact on emerging economies, their companies and their (financial) infrastructure as far as possible. At the moment, the only remedy available to slow the pandemic is social distancing. This ultimately means shutting down the economy which has a tremendously negative impact, particularly in developing countries. DFIs have to think hard and act fast to counterbalance these negative effects at least to some extent.
What can be done to counterbalance the mitigate the economic crisis in developing countries?
We all see the reactions in developed markets: As the economy is basically coming to a full stop, all companies – large and small – need immediate support which can’t be provided by the banking sector alone. Instead, governments come in to cover ongoing costs and provide liquidity to bridge the months of revenue loss resulting from the confinement measures. As most developing countries can’t afford this type of massive support programmes, multilateral organisations and international development banks need to step in and meet this challenge. To do so, scale, speed and effectiveness are crucial.
“Intelligently designed special emergency liquidity measures will be needed to support the real economy and maintain the financial sector infrastructure.”
What is the role of investments into financial inclusion at this point?
In times of crisis, access to finance is more important than ever, making investments into inclusive finance funds even more impactful than under normal circumstances. These funds alone won’t be able to solve the problem, though. Microfinance institutions and SME banks will continue to need liquidity and their financial stability is of uttermost importance when it comes to reboot economies post Covid-19. The immediate need for liquidity for millions of small companies cannot and will not be provided by the banking sector alone, neither in developed nor in developing countries. Intelligently designed special emergency liquidity measures will be needed to support the real economy and maintain the financial sector infrastructure that has been built over the last decades.
How is the crisis impacting you on a personal level?
As home office is the new modus operation basically everywhere, I am discovering that it brings people together on a personal level. When you try to have technical discussions on a facility’s technicalities with children screaming for their favorite toys in the background, this inevitably leads to smiles on both sides and often results in a very personal interaction with the counterparty. After all, Covid-19 is something we all share. I hope that this will also lead to an increased level of solidarity.