January 2021 - Fondation Grameen Crédit-Agricole

The Grameen Crédit Agricole Foundation consolidates its partnerships in Europe

January 27, 2021/0 Comments/in News Moldova/by Maria

©FGCA/Godong

During the last quarter of 2020, the Grameen Crédit Agricole Foundation continued its financing from its European partners, thus consolidating its position in a region which represents 18% of its outstanding amount.

In Bosnia and Herzegovina, the microfinance institution Mikra was thus granted a new loan of €1.2 million over a period of three years. Funded by the Foundation since 2019, Mikra's mission is to provide financial services to the poorest but economically active populations. The institution promotes equality for Bosnian women by financing and supporting entrepreneurship projects. To date, Mikra has more than 15,000 active clients, including 68% women and 58% rural clients.

In Moldova, Smart Credit was granted a new loan in the amount of €500,000 in local currency. Smart Credit is a microfinance institution whose objective is to help clients improve their living conditions, particularly socially disadvantaged small entrepreneurs. The institution currently has more than 3,000 active borrowers, including 54% women and 71% rural clients, and manages a portfolio of €3.5 million.

Finally, the Foundation granted a new loan, the second since 2018, to ADVANS Holding for an amount of 800,000 euros. ADVANS, headquartered in Luxembourg, is an international group whose mission is to build a network of microfinance institutions in developing and emerging countries. The Group offers financial and non-financial services to low-income people in nine countries, mainly in sub-Saharan Africa. Through its network, ADVANS serves nearly 800,000 clients and manages a portfolio of approximately 780 million euros.

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The Foundation continues its funding in Kyrgyzstan

January 22, 2021/0 Comments/in News/by Maria

©FGCA/Didier Gentilhomme

In the last quarter of 2020, the Grameen Crédit Agricole Foundation granted a new loan to the microfinance institution Salym in Kyrgyzstan. Founded in 2007, Salym aims to support income-generating activities to improve the living standards of disadvantaged populations. In December, the Foundation granted it a new loan equivalent to €1.3 million in local currency.

The institution, which currently has approximately 14,000 active clients, including 57% women and 76% rural clients, primarily supports low-income individuals from rural or urban areas. It offers its clients various products: housing loans, consumer credit, agricultural credit, and business loans.

With this loan, the Grameen Crédit Agricole Foundation has 18 partners in the Europe and Central Asia region, representing 28% of its outstanding loans. As of the end of December 2020, the Foundation was present in 39 countries, with 85 microfinance institutions and impact businesses, with outstanding loans of 81.2 million euros.

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Created in 2008, under the joint leadership of Crédit Agricole SA's management and Professor Yunus, 2006 Nobel Peace Prize winner and founder of Grameen Bank, the Grameen Crédit Agricole Foundation is a multi-sector operator that contributes to the fight against poverty through financial inclusion and social impact entrepreneurship. As an investor, lender, technical assistance coordinator, and fund advisor, the Foundation supports microfinance institutions and social enterprises in 39 countries.

For more information on the organizations supported by the Foundation, Click here.

The Foundation is securing new funding in sub-Saharan Africa

January 20, 2021/0 Comments/in News/by Maria

©FGCA/Didier Gentilhomme

During the last half of 2020, the Grameen Crédit Agricole Foundation carried out 3 new financings in sub-Saharan Africa, notably in Benin and Malawi, which are in addition to the two loans granted in Zambia to MLF Zambia And EFC Zambia.

In Benin, the Foundation granted a new loan to the microfinance institution ACFB for an amount in local currency equivalent to 305,000 euros. ACFB, a partner of the Foundation since 2017, offers a wide range of financial and non-financial services adapted to the needs of marginalized populations excluded from the traditional financial system. ACFB is a leading institution in promoting women's empowerment and microenterprise development. To date, the institution has more than 32,000 active clients, including 88% women and 95% living in rural areas.

Still in Benin, the Foundation granted a new loan to the microfinance institution COMUBA for an amount in local currency equivalent to 500,000 euros. COMUBA was created in 2000 and offers financial and non-financial services, particularly through group loans. A partner of the Foundation since 2015, the institution has approximately 32,000 active clients, including 90% women.

Similarly, the Grameen Crédit Agricole Foundation granted a new loan to the microfinance institution MLF Malawi, for an amount in local currency equivalent to 284,000 euros. Created in 2002, MLF has nearly 30,000 active clients, exclusively women living in 70% rural areas. The institution offers a wide range of products designed to support agriculture and the development of small businesses.

This new funding was granted as part of the African Facility program launched in 2013 in partnership with the French Development Agency (AFD) and bring the total number of partners in Sub-Saharan Africa to 40, representing 39% of the Foundation's outstanding funds at the end of December 2020.

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Foundation grants loan to new partner in Zambia

January 15, 2021/0 Comments/in News/by Maria

The Grameen Crédit Agricole Foundation continues its investments in East Africa with a first local currency loan equivalent to 1.5 million euros granted to the microfinance institution. Entrepreneurs Financial Center (EFC) in Zambia, over a period of three years.

EFC is a microfinance institution founded with the intention of providing working capital solutions for micro, small, and medium-sized enterprises (MSMEs), with a focus on innovating products tailored to client needs. The institution, which also accepts savings, has approximately 3,000 borrowers, including 42% women and 6% rural clients. With this loan, the Foundation now has an outstanding amount of €32 million in the sub-Saharan African region, representing 39% of the outstanding amount monitored by the Foundation.
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Created in 2008, under the joint leadership of Crédit Agricole SA's management and Professor Yunus, 2006 Nobel Peace Prize winner and founder of Grameen Bank, the Grameen Crédit Agricole Foundation is a multi-sector operator that contributes to the fight against poverty through financial inclusion and social impact entrepreneurship. As an investor, lender, technical assistance coordinator, and fund advisor, the Foundation supports microfinance institutions and social enterprises in 39 countries.

For more information on the organizations supported by the Foundation, Click here.

[INTERVIEW] The Foundation's actions in response to the Covid-19 crisis

January 13, 2021/0 Comments/in News, Covid 19/by Maria

Hélène Keraudren Baube & Edouard Sers, Grameen Crédit Agricole Foundation

To overcome the effects of this unprecedented health and economic crisis, the Foundation has had to innovate, adapt, and collaborate with other key players in the inclusive finance and social impact entrepreneurship sectors. This cross-functional effort involves all of the Foundation's teams. To learn more, we highlight the testimonies of two Foundation experts: Hélène Keraudren-Baube, Administrative and Financial Director, and Edouard Sers, Director of Risk, Compliance, and Social Performance.

1. How has the Covid-19 crisis impacted the internal organization of the Foundation and the organizations it supports?

Helen: We resorted to teleworking overnight, but since it was already a possible option at the Foundation, the transition was very smooth. In addition to providing the equipment for teleworking, we also adapted the schedules to take into account the context of confinement with children at home. We have experienced a very unusual year, with no field missions for the team based in France since February, while the Investment Officers all go on field missions several times a year. The Foundation's Steering Committee held regular updates to monitor the situation and determine the best measures to support the teams and funded organizations. In addition, we have been communicating more regularly with our governance to keep them informed of the evolution of the situation and activity.

2. What responses did the Foundation provide to address this?

Edward: The Foundation's first response was to establish a rapid and ongoing dialogue with the organizations we support to understand the effects of the crisis, the measures taken, and their needs. Our investment management teams remained in very close contact with all the organizations we support, and we conducted regular surveys with them to understand the impacts of the crisis in the various countries where we operate. In addition, we created the Covid-19 Observatory, in which we regularly published articles to share our analyses and inform stakeholders of developments in the situation. At the same time, we led an international coordination of lenders and inclusive finance stakeholders to act together, in consultation, to protect microfinance institutions and their clients and prevent any liquidity shock that would have destabilized the sector.

Helen: We have adapted our monitoring and analysis tools and our requests for information, particularly regarding business continuity plans and short-term cash flow plans. On the financial front, we have granted deferrals to around thirty of the Foundation's partner organizations, primarily microfinance institutions. These deferrals, ranging from 6 to 12 months depending on the case, have been materialized by amendments to loan contracts and revised payment schedules. This volume of deferral requests is completely unprecedented and has put stress on our liquidity. We have refined our projection and monitoring tools to track the financial impact on the Foundation.

3. Regarding the international coalition, what are the first results?

Edward: Six months after signing the Commitment, we and all the signatories produced a joint publication presenting the status of implementation of the Commitment's 10 principles. Among the publication's conclusions, we can highlight the strong coordination between international donors to agree on payment deferrals, avoiding a liquidity crisis in the microfinance sector. We have also made progress in the area of technical assistance, including joint webinars and field surveys with end clients. Finally, we have encouraged the coordinated collection of information on staff management and client monitoring of microfinance institutions and are promoting initiatives to strengthen client and staff protection. In 2021, we will continue our efforts to support the gradual recovery of the microfinance institutions we support with technical assistance, tailored financing, and regular exchanges between the various stakeholders in the sector.

4. In relation to the Foundation's donors, what joint actions have been taken?

Helen: We very quickly kept our donors informed of the evolving situation, with detailed presentations. We understood from the start of the crisis that the main impact for us in 2020 would be on our liquidity management. Requests for deferrals from our partners are putting a strain on the Foundation's cash flow, and we wanted to preserve our ability to support our partners and avoid a liquidity crisis at all costs. To this end, we requested deferrals from our donors and considered new "special Covid-19" financing lines to support the resumption of activity of the microfinance institutions we support.

5. Finally, what are the prospects for 2021? What will be the Foundation's priorities?

Helen: After a year 2020 marked by an operating result supported by portfolio growth in previous years and substantial savings in 2020, particularly on travel expenses, 2021 will be directly impacted by the contraction of the Foundation's loan portfolio following the crisis. The Foundation's activity should continue its gradual and cautious recovery begun in recent months. We believe that the first half of the year will still be heavily constrained by the pandemic and its consequences, and we hope to be able to resume our field trips, as close as possible to our partners, from the second half of the year. It will probably take another year for the Foundation to return to the level of activity it had before the crisis.

Edward: A large proportion of the organizations we support have successfully weathered the crisis and are eligible for the Foundation's funding based on standard risk criteria. However, a significant proportion of them still carry significant risk from 2020 on their balance sheets. It is crucial that we continue to strengthen our support system to offer solutions tailored to different levels of risk, combining new financing, technical assistance, loan deferrals, or—in more exceptional circumstances—debt restructuring.

At the sector level, lenders were able to coordinate in 2020 to avoid a liquidity crisis, and we will continue on this path in 2021. This year will also be crucial for investors to support microfinance institutions in accordance with their responsibility as shareholders. Finally, we will continue to promote initiatives to protect the clients and staff of microfinance institutions during this time of crisis. For example, we are actively participating in the Social Performance Task Force (SPTF) working group to define new certification criteria for client protection in the sector. Ongoing dialogue with our partners and coordinated actions will be among the keys to the success of our commitments.

Microfinance in India: The Story of Resilience

January 11, 2021/0 Comments/in News, Covid 19/by Maria

By Devesh Sachdev, CEO, Fusion

©FGCA

The microfinance model of providing small, collateral-free loans to “bottom-of-the-pyramid” clients previously neglected by the formal sector has emerged as an effective and sustainable model for financial inclusion. Financial inclusion has, understandably, been the primary focus of policymakers over the past few decades, given the portion of our population that has remained unserved and/or underserved. It doesn’t take a complex analysis to know that if India, as a country, is to improve its per capita income and lift people above the poverty line, access to finance must be key.

Despite the policy push through the traditional banking system, few factors have acted as barriers to this national goal of financial inclusion. First and foremost, the fact that our formal banking system has extensively developed its policies and outreach (whether physical or digital) to cater to the urban/semi-urban population with established track records/income and collateral that match their defined risk/reward matrix as an asset class. Second, the “delivery cost” for small transactions in the balance of payments market has become a buffer for banks. The lack of financial literature has also acted as a constraint.

The microfinance model of providing small, collateral-free loans to “bottom of the pyramid” clients previously neglected by the formal sector has emerged as an effective and sustainable model of financial inclusion. It was conceptualized to seamlessly deliver financial services and products to the doorstep of these same clients in a very easy-to-understand manner. The concept of joint liability leveraging social capital combined with direct delivery to the client has helped the microfinance sector gain trust and acceptability.

The ‘journey’ of microfinance over the last decade has revolved around two major themes. On the one hand, it has withstood severe setbacks like the 2010 Andhra crisis, the 2016 demonetization crisis, the NBFC liquidity and credibility crisis, and is currently battling the global Covid-19 pandemic. All these events have created the impression in the minds of stakeholders that microfinance in itself is a risky asset class, as unfortunately for the sector it has been affected by these unforeseen events once every 3 to 4 years.

Fortunately, however, there is a brighter side to the sector:

Today, the sector serves around 60 million unique customers with a combined portfolio size of Rs 23 billion across 620 districts in 28 states and eight union territories. This makes it the 2nd largest sector after mortgage lending. However, what is even more commendable is that the sector has recorded a growth of 30% in the last 3 years compared to 17% for the retail banking sector
Another strength of the microfinance sector has been offering financial products and services through a careful fusion of "Touch and Tech" at the lowest cost among its peers globally. The sector leverages advances in technology to consistently provide greater transparency, data security, confidentiality, and proximity accessibility to its rural clients.
With both reach and operational efficiency, microfinance is today a sustainable business model, calibrated to leverage its network to provide other goods and services to rural populations, thus contributing to the significant growth recorded by India.
The sector also generates significant employment opportunities not only by hiring in the hinterland, but also by enabling its clients to provide employment opportunities to others through extensive financial support.

The sector has demonstrated remarkable resilience over the past decade and this has been made possible by some key contributing factors:

The 'inherent' need for such a model in an aspirational India, where a large unserved/underserved population is yet to be given an opportunity to jump on the bandwagon, has ensured that microfinance remains a 'preferred' vehicle for both policy planners and practitioners over the years.
The significant support and enabling policy framework provided by the Reserve Bank of India has been a catalyst in pursuing the financial inclusion mission of the microfinance sector. The sector has been assigned a special category within the broader category of non-banking financial services by the Reserve Bank, giving it a distinct identity and strong credibility by having the country's first self-regulatory organization recognized by the Reserve Bank.
The operation of MFIN (the industry association) as a self-regulatory organization since 2010 has enabled the sector to build its growth on solid pillars. The main pillars of MFIN's work have been customer protection, the sector's code of conduct, and policy advocacy, all of which contribute to building a responsible finance ecosystem.
Because microfinance is a far-reaching model, it has ensured the highest degree of client-centricity and knowledge. Response time in crisis situations is much faster, and the solutions offered are highly targeted. This aspect helped the sector overcome the challenges posed by demonetization in 2016, but more recently, this model has proven its resilience and sustainability in the current Covid-19 crisis. Frontline soldiers ensured that the wheels of financing kept moving when clients needed them most during the pre- and post-lockdown periods. Operating platforms were quickly modified to operate remotely and provide digital lending services.

The strong bond with clients has stood the test of time and engendered a high degree of mutual understanding and cooperation. Most financial experts were wrong when the microfinance portfolio showed better-than-expected post-Covid portfolio indicators following the moratorium period mandated by the Central Bank.

Today, the microfinance sector is partnering with the government to roll out various social programs, from Shishu loans under the Mudra program to Pradhan Mantri Svanidhi. The importance of the sector was recognized by the Prime Minister in his speech at the United Nations General Assembly, calling it an instrument for promoting women's entrepreneurship.

As they say, “It’s not how many hits you take that makes you a winner, it’s how you always get up stronger despite the hits you take and come out a winner” and this is an apt description of a resilient microfinance sector in India, so far… but the journey has only just begun!

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Source : BW Businessworld