The Alternative Financial Services Association of North Macedonia
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Holders of Fintech in our country – non-bank financial companies can support the population in times of crisis

The projections of the international financial institutions show that the Republic of North Macedonia will face an economic decline of up to 4% due to the situation with the Corona crisis. The unemployment rate is rising, consumption is declining, which will directly affect the reduction of production, which in turn will further reduce the salaries of employees, and definitely reduce the purchasing power of citizens.

The global health crisis is coming to an end, and although it is not yet certain, efforts are being made to stabilize the situation in terms of restrictions on movement and protection and distance measures. But what is certain is that there is an economic crisis on the scene, the effects of which we are yet to see. The current assistance to the most affected sectors presents a temporary injection to keep these sectors alive and is welcomed. But what is needed now is a strategic approach, harm assessment and support plan for all “secondly-affected” economic entities currently facing liquidity problems. Focused support in these industries on the one hand will contribute to their survival in the current period, amortizing additional negative economic effects such as layoffs, reduced taxes, etc., and on the other hand, they will be a key player in the faster recovery of the economy.

These include non-bank financial companies that in our country are holders of the Fintech industry, which although have a modest share of 0.44% of total assets, is an important factor that can offer support to the economy and the population in the coming period. Non-bank financial companies have provided and, most importantly, will continue to provide access to finance for citizens and small businesses that have difficulty accessing financial resources in another way, very quickly and simply, online or in a branch, in the most needed times, which directly affects the quality of life of service users.

However, non-banking financial companies in the current situation belong to the category of “second affected” economic entities, whose business operations are largely affected by active emergency measures – 70% reduced lending opportunities due to the delayed annuities, which directly affects their opportunities and capacity to be the support of small businesses and the population when it is evident that the need for funds to overcome crisis periods is present.

Non-bank financial companies, unlike traditional financial institutions, do not have deposits and cheap sources of financing, on the contrary, non-bank financial companies are financed by their own funds and other sources with a higher financing cost, which is approximately 15%. When all this is added to the limited or completely disabled access to funding sources due to the global economic crisis, the funds necessary for the operational operations of non-banking financial companies are very directly in question.

Therefore, now is the time to see that non-banking financial companies can help the population overcome this crisis, but to do so, funds and focused credit lines are needed that can be redistributed to the population through non-banking financial companies, given that, as previously mentioned, in the current conditions non-banking financial companies do not have the capacity to place funds in the volume as needed and will be needed in the next period of the population.