Frequently asked questions

Our FAQs offer answers to some most common questions on the coronavirus.

This information was last reviewed on 15 October 2020.

  • How are Oikocredit’s operations affected by the coronavirus? How is Oikocredit managing the risks arising from the pandemic?

    Oikocredit is continuing its business activities. We aim to continue delivering on our mission to support our partners and the low-income people they serve, at a time when their need for support is even greater. At the same time, we continue to assess the potential impact on the value of our development financing portfolio in order to inform our members and investors about the value of their investment.

    We continue to closely monitor and respond to developments related to Covid-19. We have dedicated groups comprising Oikocredit Managing Board members and internal specialists monitoring:

    • the status of our investments in and loans to our partners in Africa, Asia and Latin America;
    • questions and concerns from our members and investors, as well as investment and redemption flows;
    • our term investment portfolio and other liquid funds; and
    • general developments related to the pandemic, including its impact on the welfare and effectiveness of our staff working across the world.

    Wherever applicable our staff continue to work from home, in compliance with government measures. We also have contingency plans in place to deal with operational events.

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  • How is Oikocredit’s work with its partners affected by Covid-19?

    We continue to be in close contact with our 600+ partner organisations to determine their evolving needs and ascertain how Oikocredit can best help address them, particularly in situations where partners face financial difficulty.

    In Q2 2020, to ease the financial situation of 112 of our partners, we granted payment holidays (extended repayment periods) for outstanding loans representing 19% of our total outstanding loan portfolio. While we continue to categorise such partners as not overdue in their repayments, we recognise this category as also more ‘at risk’ than before the crisis. See also: What effect is coronavirus having on Oikocredit’s performance? 

    In addition to granting payment holidays, we’ve also stepped up our partner communications, using digital channels in place of in-person meetings, to ensure that we understand how partners are affected by the pandemic and can provide appropriate assistance.

    Central to these efforts have been our webinars and online encounters with partners sharing advice on: business continuity and cash flow; ensuring health and safety of staff and clients; understanding impacts on clients; stress testing, risk and scenario planning; and learning from sector leaders. See also: What role does capacity building play in Oikocredit’s response to the pandemic?

    Our partners have responded positively to the support we provide them, especially the smaller institutions, and our support to our partners is ongoing. The external threats are bringing us and our partners closer together.

    Following a period of focusing only on our existing partners, in which we suspended lending to and investing in new partners, we have selectively opened for new partners in Q3. We notice in general that there is lower demand for financing due to subdued economic developments in most countries.

    In addition to our own efforts, Oikocredit also continues to align with other impact investors on how the impact investing community can respond jointly to this challenge and best support our partners. We have so far committed to two joint initiatives:

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  • How are Oikocredit’s partners and their clients affected by the coronavirus?

    For our partners, many of their clients are not able to operate as usual. That means that we as Oikocredit have had to adopt special processes for the assessment and monitoring of our partners, just as our partners have had to do with their clients. See also: How is Oikocredit’s work with its partners affected by Covid-19?

    When a partner asks us for flexibility in servicing our loans, we assess whether this helps the partner to do the same with their clients. And the same goes for refinancing, because we continue not only to support our partners with advice, but also to give them additional funds to manage their businesses. In turn, we expect them to continue offering their services to their clients as much as they can, to as much as possible limit the effects of the coronavirus crisis.

    We continue to monitor the evolving situation across the markets in which we work. We see differences in the sectors and the countries where we are active. The effects of the pandemic have been different, the timing of these effects has been different, and the measures taken by governments have been different. The impacts on Africa, for example, we’re pleased to see are quite limited to date. At the same time, we’re concerned that we haven’t seen the end of the effects there.

    Overall we see less impact in agriculture and in renewable energy than in financial inclusion. That’s not to say that won’t change, but so far agriculture and energy have often been designated by governments as priority sectors, and financial inclusion is exposed to general economic activity that is directly affected by the lockdowns. As measures taken by governments continue to develop, we continue to monitor the situation very closely.

    It is, however, likely that the low-income communities our partners work with will continue to be greatly affected by the pandemic and associated consequences. Accordingly, we believe that our partners and the low-income people they serve will need extra support. We also believe that the support Oikocredit is able to offer has the potential to be even more valuable to them.

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  • What role does capacity building play in Oikocredit’s response to the pandemic?

    As part of our proactive response to the coronavirus crisis, Oikocredit is offering capacity building support to its partners. Initiatives include a webinar series on crisis management during the pandemic, virtual peer exchanges to allow partners to share crisis best practices with one another, and dedicated webpages of resources for partners.

    The creation of our coronavirus solidarity fund also helps our partners provide extra support to their clients.

    Partners and their clients have a duty to comply with new government regulations relating to total or partial lockdown restrictions on mobility and social gatherings, social distancing, and personal protection, sanitation and hygiene. Here we have increased financial assistance to more vulnerable partners and clients through our coronavirus solidarity fund.

    The Oikocredit International Support Foundation created the solidarity fund with an initial sum of € 25,000, which has been augmented with contributions from Oikocredit Stiftung Deutschland and Oikocredit Nederland, reaching € 33,199 of funds disbursed in Q2 2020.

    The fund has helped many partners’ micro and small enterprise clients in the informal sector and in low-income communities with awareness training and the costs of sanitation materials and protective gear, enabling them to keep operating.

    We have broadened the fund’s objectives to include emergency assistance to at-risk partners and their clients in the agriculture sector as well as in inclusive finance.

    We have also re-engineered our ongoing capacity building programmes to run without in-person meetings.

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  • How have Oikocredit’s members and investors been affected by the pandemic?

    Our investors have shown ongoing commitment to Oikocredit. We were able to maintain a stable investment base in Q2 2020 despite the contraction in our portfolio and interest income because of fewer redemption requests from investors than expected at the start of the crisis. See also: What effect is coronavirus having on Oikocredit’s performance?

    Regular dialogue about inflow markets with the Oikocredit support associations has helped maintain our links to investors and has kept investors informed about what Oikocredit is doing to weather this storm.

    Naturally, people are concerned about their financial situation. At Oikocredit, we have seen the impact of this concern only to a limited extent, and although some investors have withdrawn part of their investment or stepped out, others have done the opposite.

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  • At the AGM in June 2020, Oikocredit’s members voted on a 0% dividend for 2019. Why?

    Oikocredit announced an initial dividend proposal of 1% on 19 March, when we published our financial results showing improved performance for 2019. The development of the coronavirus crisis since dramatically changed the global context in which Oikocredit operates, invalidating many of the assumptions used to make the 1% proposal.

    At the cooperative’s AGM on 11 June, Oikocredit’s members voted in support of the Managing Board and Supervisory Board’s revised dividend proposal, which proposed paying no dividend to investors for 2019.

    Not paying dividend to members for 2019 was in the cooperative’s best interests, as it:
    • Allowed Oikocredit to strengthen its general reserves by € 11 million, which would otherwise have been distributed as dividends. This will help the cooperative absorb the financial loss resulting from these adverse economic developments
    • Helps Oikocredit ensure the continuity of the cooperative and the protection of its members’ capital as uncertainty caused by the pandemic continues
    • Allows Oikocredit to be flexible in responding to the needs of the partners it finances, which in turn support low-income people hardest hit by the crisis

    Read the announcement on the dividend decision taken at the annual general meeting >

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  • How are Oikocredit’s staff affected by the coronavirus?

    The health and safety of our employees remains a top priority for us. As a global organisation, we continue to adhere to the public health guidelines issued by the authorities in the countries where we work.

    Wherever applicable, our staff are following advice to work from home and restrict travel. As most of our employees were already able to work from home, we have good infrastructure in place to allow our staff to continue their work remotely using digital tools.

    Our staff have to work differently, for example in monitoring our partners and portfolio and in performing due diligence for new financing, because the Covid-19 pandemic is not a business-as-usual environment. We’ve been supporting our staff in changing the way they work, and we’ve been impressed by how our staff and our partners have been able to adapt in a short time span.

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  • What effect is the coronavirus having on Oikocredit’s performance?

    In Q2 2020, the total outstanding portfolio of loans and equity investments decreased by 6.9% to € 947.1 million, as a result of our decision to focus only on existing partners and to be prudent when partners ask for refinancing. Our net interest income reduced accordingly and we made a net loss overall.

    Member capital declined slightly, by 1.1% to € 1,139.7 million. Net asset value per share reduced from € 213.30 to € 210.94, because of the decrease in income and the relatively stable number of shares outstanding.   

    Overall, the quality of our development financing portfolio at the end of Q2 2020 remained steady, with PAR 90 (the percentage of the credit portfolio with payments at least 90 days overdue) marginally improving from 6.8% to 6.7%. Regionally, the portfolio was less impacted in Africa than in Asia and in Latin America and the Caribbean, where India, Indonesia, Mexico and Ecuador were most affected.

    With the effects of Covid-19 now more evident, Oikocredit made increasing provisions for impairments in Q2 despite the relatively stable performance of the portfolio in terms of PAR 90.

    We monitored our partners’ financial performance and PAR ever more closely and assessed risk in all our markets very regularly. The quarterly result was largely as we had anticipated, with an improved liquidity ratio rising from 21.1% to 25.8% as many partners continued to repay their loans on time.

    We were able to maintain a stable investment base despite the contraction in our portfolio and interest income because of fewer redemption requests from investors than expected at the start of the crisis. Regular dialogue about inflow markets with the Oikocredit support associations has helped maintain our links to investors and has kept investors informed about what Oikocredit is doing to weather this storm.

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  • How has Covid-19 affected Oikocredit’s term investments and other liquid assets?

    Oikocredit’s treasury specialists monitor the assets we keep aside for liquidity management purposes. At the end of 2019, we had a generous liquidity buffer of 19% of total assets. Half of our liquid assets consist of the so-called term investment portfolio. This is a portfolio of investment-grade liquid bonds, which are traded on public markets. Due to being of higher quality, these types of bonds are less vulnerable to fluctuations in the financial markets. The total value of this portfolio has been fairly stable, but volatility that may arise from the ongoing economic uncertainty cannot be prevented. A significant part of the term investments portfolio is invested in “green bonds”, selected to support climate-related or environmental projects.  

    We have also seen additional volatility in foreign exchange rates. While most of the portfolio is hedged, we see some negative effects due to unhedged positions and timing differences in the portfolio.  

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  • How do you expect the coronavirus will affect Oikocredit going forward?

    With a consolidated financial position, and most partners functioning reasonably well, Oikocredit is well prepared to face the challenges of an unpredictable operating and economic environment.

    We will continue to assess the macroeconomic situation in every country where we work, to identify both risks and potential new opportunities for the future.

    We remain committed to helping partners as needed and will be increasingly proactive in developing our organisational resilience, agility and responsiveness. We will continue to run regional, cross-regional and more local webinars and online encounters for partners to foster leadership, mutual learning, positive responses and solidarity, while enhancing support to partners in adapting their business models and developing services and products to address the needs of their clients and to better support clients through the crisis.  

    The task ahead is more a marathon than a sprint, with the economic recovery likely to be slow and potential longer-term negative effects currently uncertain. Meanwhile we continue to improve our internal controls, review our systems and efficiency, and incorporate learning from the first half of the year to respond effectively to what lies ahead.

    The size of our portfolio and income will decrease for a while, and we won’t reach the growth targets defined before the crisis. At this point in time, it seems unlikely that Oikocredit will pay a dividend for 2020.

    That said, with the firm backing we continue to receive from our investors, we’re confident Oikocredit will keep delivering on its mission through this period. We remain close to our markets and ready to assist wherever we can contribute to better outcomes for low-income people.


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