Paper short abstract:

This paper assesses the impact of COVID on borrowers’ livelihoods across the country. It focuses on household-level data collected from rural Punjab in Pakistan and offers policy-related implications and avenues for further research.

Paper long abstract:

Poor households in urban and, in particular, rural areas in many developing countries do not have easy access to basic financial services. Their “systematic exclusion” from formal financial services has led to the evolution of an alternative mode of finance, microfinance, in which financial services are provided not through traditional routes, such as local moneylenders, cooperatives and banks, but through NGOs or microfinance institutions (MFIs).

The COVID-19 pandemic brought untold misery to millions around the world. For those who were already struggling to make ends meet, this was a particularly bad time. This study was conducted to assess the impact of the outbreak, and how the ensuing lockdown resulted in the loss of income for micro-entrepreneurs in rural areas.

The study makes use of cross-sectional data that was collected earlier this year by interviewing around 300 borrower households in the rural areas of the Punjab province of Pakistan. Household characteristics were captured across four dimensions, further segregated into various indicators designed to capture various socio-economic characteristics, such as household income and expenditure, household assets and general living conditions. Findings reveal the true multidimensional nature of poverty and how the pandemic resulted in deepening poverty and widening the gap between the rich and poor, thus leading to even more inequality, in addition to leading to a whole range of socio-economic crises across the affected areas. The paper provides important public policy-related implications and avenues for further research.