Frankfurt School COVID-19 Crisis Response

Based on our experience providing technical assistance in the context of economic crises, natural disasters and armed conflicts, as well as  situation analysis conducted with partner institutions worldwide, our expert team developed a conceptual framework for the Frankfurt School COVID-19 Crisis Response for SMEs and Financial Institutions. Our crisis response framework draws on our recent experiences among others from Azerbaijan, Democratic Republic of Congo, Haiti, Lebanon, Pakistan, Sudan, Syria and Yemen.

Frankfurt School’s COVID-19 Crisis Response supports businesses and financial institutions in emerging markets take care of client needs, keep staff healthy and productive and more generally to keep the lights on during the most severe business disruption in generations. Our approach is anchored in a rapid but rigorous assessment of the nature of the crisis, as well as the severity and expected duration of the disruption to business.

With this understanding of the current situation, we encourage immediate actions that can still mitigate some of the impact and ensure operational continuity during lockdowns. These actions revolve around process digitisation, remote working, client communications, asset protection, ensuring liquidity and shoring up the capital base. It is never too late for these immediate actions, because the COVID-19 crisis is far from over. There will be more surges in infections and more business restrictions at least at municipal or regional levels.  

The essence of the FS COVID-19 response is to move beyond simply maintaining an acceptable service level during the disruption. In every crisis, we witness a flight to quality which creates an opportunity for our clients to come out of the COVID-19 recession as a better and more effective organisation. We help our partners plan for the post-crisis phase and come out roaring the day after with the right products, the right delivery channels and a viable, robust balance sheet.

Asset Liability Management

• Funding and capital management & funding strategy

• Treasury & ALM

• Liquidity risk management & liquidity gap analysis

• FX risk

• Interest rate risk

• Contingency funding and liquidity planning

• Support for developing an institutional fact sheet / concept paper to access further funding / institutional support from donors/funding partners

Portfolio Management

• NPL analysis

• Transition matrix analysis

• Vintage curve analysis

• Early Warning System (EWS)

• Loan underwriting, recovery, collection and restructuring

• Loan portfolio analysis and customer segmentation along the lines of loan performance

• Development of “incentive” programmes to stimulate payment performance (restart, maintain)

Risk Management

• Enterprise risk management / Framework ERM

• Stress-testing and scenario analysis

• Debts restructuring and investors communication

HR, Training & Capacity Building

• Reorganise staff structures and profiles as needed

• Reskill employees to adopt new digital tools and processes

• Health & safety measures for staff and clients

Business Continuity Planning

• Business impact analysis

• Board and senior management responsibility 

• Major operational disruptions

• Recovery objectives 

• Cross-border communications

• Testing

• Business continuity management reviews by financial authorities

Recovery and Resolution Planning

Sales, Communication & Marketing

• Development of pro-active commercial communication in times of lockdown and restricted mobility (digital/alternative marketing & communication)

• Revision of the institutional purpose

• Development of a digital strategy with a zero touchpoints approach

• Client maintenance - adapting marketing, sales and alternative distribution channels during the crisis

• Clear and regular internal communication

• Loan portfolio assessment and development of recovery strategies;

• Business model restart programme (develop products, services and outreach to play a meaningful role in the economic reconstruction following the crisis);

• SME strategy development, lending process analysis and enhancement, lending policies in post-crisis context, etc.;

• Fundraising and investment readiness support;

• Talent management due to shifting mind-sets and behaviours due to crisis;

• Developing of value-added service package for FI’s SME clientele in adapting/adjusting their business model/strategy to the new normal by providing access to training, coaching and information; and,

• Other components tailored to the clients’ needs.

Europe (Bosnia & Herzegovina) I The European Fund for Southeast Europe EFSE I 2020

COVID-19 response and stress testing for an MFI

Europe (Georgia) I FMO I 2020

COVID-19 response package for Non-bank Financial Institution

Europe (EU southern neighbourhood countries) I EIB I 2020

EIB TAFIR – COVID-19 response to selected MFIs

Worldwide I The World Bank Group / CGAP I 2020

COVID-19 response for PAYGO off-grid companies