COVID-19 and the Burden on Financial Institutions in Developing Countries: The Case of Malawi

How has the outbreak and rapid spread of the COVID-19 pandemic impacted the financial institutions in developing countries? This paper seeks to examine how the pandemic and the resulting government response are having a burden on the financial sector. Existing studies and policy responses have focused on the epidemiology of the disease, how to curb the spread of, and the impact of the pandemic on the health systems, education, and urban informal settlements. There is little attention to the impact of the pandemic on financial institutions, especially in developing countries. The author observes that financial institutions in developing countries were already struggling to recover from a series of international, regional, and national crises before the pandemic and that some of the government response measures aimed at cushioning the population from the economic pinch during the pandemic are making the situation worse. These policies have overlooked the potential role financial institutions in the post-COVID 19 recovery and financial stability in the global south. The paper, therefore, adopts the case of Malawi to assess the impact of the pandemic on the financial sector, it then discusses the significance of the financial sector of economic stability, gaps in the government responses and concludes with policy recommendations that could benefit developing countries in maintaining healthy financial institutions amid the pandemic.