Newsletter #39 : The recovery of activities in the microfinance sector

The Grameen Crédit Agricole Foundation publishes its Newsletter #39, which highlights the great resilience shown by its partner institutions to best support vulnerable populations.

The Foundation has been interested in the effects of the Covid-19 crisis on its partner microfinance institutions (MFIs) and conducted a series of surveys for over a year in collaboration with ADA and Inpulse. The results of these studies are summarized in the report “The impact of the crisis on microfinance institutions. Analyses and Perspectives.” that you will discover in this Newsletter.

There is no doubt that the pandemic has had a negative impact on the MFIs activities. However, we are witnessing a gradual recovery of activities in the sector, as KOMIDA can attest. Major actor of microfinance in Indonesia and partner of the Foundation since 2004, KOMIDA has succeeded in pursuing its expansion in rural areas with the opening of 10 additional branches in 2021. The institution continues to support its clients by emphasizing the granting of social-oriented microcredits.

In the section “Views from the field”, we present UGAFODE Microfinance Limited, a Ugandan MFI at the forefront of financial inclusion for refugees. Thanks to the support of the Foundation, the United Nations High Commissioner for Refugees (UNHCR), and the Swedish International Development Agency (Sida), UGAFODE opened in March 2020 a branch office in the Nakivale Refugee Settlement in Uganda. The initial results are very encouraging and the ambition is to expand the project to other regions.

Finally, you will discover the testimony of Jean-Baptiste Bounes, Mergers and Acquisitions Manager at SODICA, who carried out the first Solidarity Bankers mission online in favour of Phare Performing Social Enterprise (PPSE) in Cambodia.

Missions on the field and online are currently to be filled.

Read the Newsletter

(*) Launched by the Grameen Crédit Agricole Foundation and Crédit Agricole SA in June 2018, Solidarity Bankers is a skills volunteering programme aimed at all Crédit Agricole group employees for the benefit of microfinance institutions or impact businesses supported by the Grameen Crédit Agricole Foundation.

Solidarity Bankers : two online missions are to be filled in favor of FATEN and OXUS Kyrgyzstan

© Philippe LISSAC (Godong) / Fondation GCA

Solidarity Bankers is a skills volunteering program launched by the Foundation and Crédit Agricole S.A. in 2018. The program has a twofold objective: on the one hand, support microfinance institutions and social impact enterprises financed by the Foundation with technical assistance, and on the other hand, enhance the skills of Group employees who want to invest themselves in projects with high social impact.

Missions can take place during the Solidarity Banker’s working time and/or during holidays (volunteering).

Currently two online missions are available. The Solidarity Banker will work on this mission at the rate of one day per week during 15 weeks. However, these duration modalities can be modified according to the preferences of the Solidarity Banker, the beneficiary organization and the employer.

  • “Financial Management” mission for FATEN (Palestine)

FATEN is a microfinance institution created in 1995 by the NGO Save The Children. Its mission is to serve the financial services needs of low and middle-income Palestinian entrepreneurs and individuals. The Grameen Crédit Agricole Foundation has been supporting FATEN since 2014 through various senior loans but also through technical assistance in the framework of Solidarity Bankers by CA.

The selected Crédit Agricole expert will support FATEN in updating financial procedures, policies and tools. The Solidarity Banker must know international financial reporting standards and in particular, the latest changes to IFRS 16 and IFRS 9. Fluency in English is mandatory and a good knowledge of Arabic is a plus.

For more information, download the term sheet on ca-solidaires.fr  

  • “Digital Strategy” mission for OXUS (Kyrgyzstan)

OXUS Kyrgyzstan (OKG) is a microfinance institution that provides financial services to the working poor and under-banked in Kyrgyzstan. The institution serves 8,000 active borrowers and manages a portfolio of EUR 6.4 million.

The selected Crédit Agricole expert will support OKG in the evaluation of its digitalization processes and in the construction of a new digital strategy. The Solidarity Banker must have significant experience in IT project management. Fluency in English is mandatory and speaking Russian is an asset.

For more information, download the term sheet on ca-solidaires.fr  

To apply: send your CV and cover letter (or a few lines explaining why you are interested in the mission) to :

Solidarity Bankers : two field missions are to be filled in Georgia and Moldova

Solidarity Bankers is a skills volunteering programme launched by the Foundation and Crédit Agricole S.A. in 2018. The programme has a twofold objective: on the one hand, support microfinance institutions and social impact enterprises financed by the Foundation with technical assistance, and on the other hand, enhance the skills of Group employees who want to invest themselves in projects with high social impact.

Missions can take place during the Solidarity Banker’s working time and/or during holidays (volunteering).

Currently two missions are available on the field :

  • « Marketing » mission for Lazika Capital (Georgia)

 Lazika Capital is a microfinance institution created in 2000 by Oxfam Great Britain in Georgia. Its mission is to facilitate access to financial services for low and middle income entrepreneurs. Lazika Capital is among the leaders in the Georgian microfinance sector and has nearly 14,000 clients.

The selected Crédit Agricole expert will be responsible for evaluating the organisation’s marketing strategy and actions, as well as developing a marketing plan for the end of 2021/2022. The Solidarity Banker must have a solid experience in marketing and a good command of English.

For more information, download the term sheet on ca-solidaires.fr  

  • « Digital Strategy » mission for Smart Credit (Moldava)

Smart Credit is a microfinance institution created in 2010 by 5 local professionals having one same vision: providing financial services to socially disadvantaged people and small entrepreneurs in Moldova. The institution has more than 3,000 active borrowers and manages a portfolio of 4.4 million euros.

The Solidarity Banker will be in charge of helping to build the digital strategy of Smart Crédit. The expert is an employee of the Crédit Agricole Group who is fluent in English and has experience in IT project management.

For more information, download the term sheet on ca-solidaires.fr  

To apply : send your CV and cover letter (or a few lines explaining why you are interested in the mission) to :

 

 

The Foundation publishes its report “The impact of the crisis on microfinance institutions”

The Covid-19 pandemic affected all economies impacting fragile economies and the most vulnerable populations in particular.

The Grameen Crédit Agricole Foundation began to investigate the unprecedented effects of this global crisis on microfinance institutions (MFIs). An initial survey was launched in March 2020 to understand how our MFI partners were adapting to the repercussions of the pandemic that had already had an impact on their activities.

In the following months, the Foundation collaborated with two other major players in inclusive finance, ADA and Inpulse, to extend the scope of this study to more than 100 MFIs in 4 continents: Africa, South America, Asia and Europe. Overall, 6 surveys were conducted since the inaugural questionnaire in March.

You will discover through this report the results of these studies divided into three main parts:

Adapting rapidly to operational constraints

Surveys conducted throughout 2020 revealed three major difficulties: the impossibility of meeting clients in person, difficulties in collecting repayments and complications in disbursing loans.

In an effort to address these difficulties, MFIs acted in a proactive and appropriate manner, showing the great resilience capacity of those organisations. However, all FMIs haven’t been impacted in the same way. This document describes those constraints and the measures that have been implemented.

A significant and sustained financial impact

The operational constraints encountered have inevitably had significant financial repercussions. We observe two major consequences for almost all MFIs: an increase in the portfolio at risk (PAR) due to lower repayments, and a reduction in outstanding loans due to lower disbursements.

Those two consequences fluctuated throughout the year depending on local contexts and other financial difficulties may have arisen in some cases. The analysis of performance indicators, detailed in this document, enables us to see the lasting effect of the crisis.

Prospects for the future

In the face of the crisis, most MFIs have shown resilience. Among the levers envisaged to return to financial stability: increasing the volume of their portfolio and the number of clients, and opening up to new products and services, and even to new markets, in 2021.

You will discover throughout the report other measures MFIs explored to adapt to the crisis, which are reassuring for the future of the sector.

Despite the often positive indicators, we remain vigilant in the face of the current volatile environment. For this reason, we have maintained our approach of regular surveys in 2021, on a quarterly basis.

 

Download the report

The Foundation grants seven new loans in Eastern Europe and Central Asia

Since January 2021, the Grameen Crédit Agricole Foundation has pursued its financing in Eastern Europe and Central Asia and has thus granted seven new loans to its partners.

In Kosovo, the Foundation granted a new loan to the microfinance institution AFK for an amount of €1.5 million over a three-year period. The Kosovo Finance Agency (AFK) is a microfinance institution that aims to improve living conditions in Kosovo by providing access to sustainable financial services to micro and small businesses. AFK aims to promote the development of rural areas as well as women entrepreneurs and minorities. The institution serves 19,300 active borrowers (22% of them women and 51% of them living in rural areas) and manages a portfolio of 36 million euros.

In Moldova, the Foundation granted a new loan to the microfinance institution Microinvest for an amount of €1.4 million over a three-year period. Microinvest provides microcredit and business start-up assistance to small entrepreneurs in many regions of the Republic of Moldova. 70% of its loan portfolio corresponds to loans to private entrepreneurs living in rural areas. The institution has nearly 37,000 clients, 66% of whom live in rural areas and 41% of whom are women.

In Montenegro, the Foundation granted a loan to the microfinance institution Monte Crédit for an amount of one million euros, over a three-year period. Founded in 2005, Monte Credit is a microfinance institution whose mission is to empower rural families to create income and jobs, freeing up economic potential so that communities thrive. The institution has more than 4,000 clients, 54% of whom are women and 51% of whom live in rural areas.

In Kyrgyzstan, the Foundation granted a new loan to the microfinance institution OXUS for an amount in local currency equivalent to €800,000. OXUS Kyrgyzstan is a microfinance institution created in 2006 by OXUS Group and ACTED. It is a responsible company committed to providing financial services to the working poor and the under-banked in Kyrgyzstan. To date, the institution has nearly 8,000 clients, 48% of whom are women and 62% of whom are clients in rural areas.

In Kazakhstan, the Foundation granted a new loan to the Asian Credit Fund (ACF) microfinance institution for an amount in local currency equivalent to one million euros. ACF is a microfinance institution created in 1997 by the American NGO Mercy Corps. ACF’s financial services are designed to promote the development of rural households, the growth of small businesses and home ownership. ACF adheres to a specialised community lending model that offers tailor-made financial solutions, business advice and technical assistance to its clients. To date, the institution has 27,000 clients, 70% of whom are women and 93% of whom are rural areas clients.

Finally, in Tajikistan, the Foundation granted a new loan of an amount in local currency equivalent to €1.2 million to the microfinance institution HUMO. HUMO is a microfinance institution that aims to support vulnerable and underserved populations living in rural areas through financial and advisory services for small businesses. The institution has nearly 73,000 clients, 37% of whom are women and 75% of whom live in rural areas. Also in Tajikistan, the Foundation granted a new loan to the microfinance institution OXUS Tajikistan for an amount in local currency equivalent to one million euros over a three-year period. OXUS Tajikistan mainly targets microentrepreneurs and farmers in rural areas. Its social mission is clear and aims to improve the economic and social conditions of the low-income population who are not served by the banking sector. To date, the institution has over 14,000 clients, 36% of whom are women and 79% of whom live in rural areas.

For more information, click here.

The AFD and the Foundation, a historical and promissing partnership

Rémy Rioux, CEO, Groupe Agence française de développement
[French Development Agency]

A historical partner, the Agence française de développement (AFD) [French Development Agency] has been supporting the Foundation’s activities for over 10 years. Its CEO, Rémy Rioux, shares with us his vision on the impact of the economic and health crisis generated by the Covid-19 pandemic on the African continent and his assessment of the partnership with the Foundation.

— What were the main impacts of the pandemic on the African continent in your opinion and how did the AFD respond to this crisis? What were your key areas of response?

R R: Africa experienced an unprecedented shock in 2020, which, I would like to stress, was totally external to the continent. The continent appeared quite resilient in terms of health, but less so on the economic front. An unprecedented recession, averaging 2.6%, affected more than forty countries simultaneously. Beyond the cyclical impact, the crisis above all raises concerns about a deep weakening of economies and societies.

The Agence française de développement Group (AFD) mobilized very quickly to support its partners. In terms of health, with a €1.2 billion “Common Health initiative”, half of which in Africa, for some fifty projects and nearly €130 million in donations; and on the economic level, with the “Choose Africa” programme to support the entrepreneurial sector and then its strengthening with a Resilience component, bringing the programme to €3.2 billion committed by 2022. Finally, in the wake of the «Finance in Common» Summit, we support African public development banks (a hundred or so of which throughout the continent), to turn them into sustainable growth relays.

— How do you assess the historic partnership with the Grameen Crédit Agricole Foundation?

R R: The AFD Group has been providing the Foundation with portfolio and individual guarantees for more than 10 years and has financed the African Facility, which enables us to support small microfinance institutions for the benefit of disadvantaged populations, particularly in rural areas. The partnership with the Foundation has since 2020 been handled by Proparco, our subsidiary dedicated to the private sector. Beyond the financial partnership, we appreciate the quality of the relationship between our two institutions, which is marked by trust and transparency. The importance of supporting the microfinance sector has been reinforced by the Covid-19 crisis and working with the Foundation constitutes a solid lever for strengthening the sector.

— Can a large institution like yours and an agile player like the Foundation still invent new ways of acting and if so in what priority areas?

R R: The complementary nature of our two institutions and their response methods makes the partnership strong and relevant to several priority areas, namely: support for the development of microinsurance, particularly agricultural microinsurance; assistance to microfinance institutions in improving social performance management; development of the digital offer in the microfinance sector; and green microfinance. The context of the crisis has reinforced the relevance of these areas of response.

The Covid-19 crisis and gender inequalities

© Philippe LISSAC /Godong – Fondation Grameen Crédit Agricole
Miren Bengoa, Director, member of Financial, Risks and Impact Committee,
Grameen Crédit Agricole Foundation & International Action Director, SOS Group

Director of the Grameen Crédit Agricole Foundation since 2020, Miren Bengoa has been, since January 2021, the new International Action Director of the SOS Group. Since 2011, she was at the head of Fondation CHANEL, which supports projects improving the economic and social situation of women. She shares her view on the impact of the Covid-19 crisis on gender equality and the responses to address it.

— What is the impact of Covid-19 on the status of women?

MB: One of the immediate consequences of the Covid-19 crisis is the rise in inequalities between women and men. We have seen during this pandemic an increase in violence against women and girls and a decline in girls’ learning as dropout rates and child marriage increase. Tens of millions more women have fallen into extreme poverty as they lose their jobs at a faster rate than men. Moreover, they suffer from difficulties in accessing new technologies and lack of digital skills.

— In a few words, what is the panorama of gender inequality in the world today?

MB: Current projections indicate that gender equality will not be achieved for another 130 years. In 2020, women represented on average (on a global scale) 4.4% of business leaders, 16.9% of Board members, 25% of parliamentarians and 13% of peace negotiators. Only 22 countries are currently headed by a female head of State or government (UN Women, 2020). We need better representation of women that reflects the diversity and abilities of women and girls.

— How can female entrepreneurship be an answer to the crisis?

MB: Women entrepreneurs have been at the forefront and strongly affected by the decline in economic activity. They are nonetheless also the bearers of innovative solutions and should be supported as much as possible by funders and public authorities. Being strongly involved in responding to community needs, they have been able to adapt their activities to the constraints of the pandemic. This has not been easy: they have sometimes been the first to give up a income generating activity so as to give priority to their families.

— Promoting women empowerment is one of the missions of the Grameen Crédit Agricole Foundation. What should be the priorities to boost this aspiration?

MB: Since its creation, promoting women empowerment has been at the heart of the Foundation’s action: among the 7 million clients of microfinance institutions supported, 73% are women beneficiaries of microcredits to create or develop income-generating activities. Maintaining funding, flexibility in rollovers and frequent analysis of the needs of these institutions are and will be key to enable them to regain a capacity for action in favour of female entrepreneurship.

The Foundation provides four new financings in sub-Saharan Africa

© Didier Gentilhomme (AMZ Zambia)

In recent months, the Grameen Crédit Agricole Foundation has pursued its financing in sub-Saharan Africa with four new loans granted, two of which to new partners.

In Togo, the Foundation granted a new loan to the microfinance institution Assilassimé for an amount in local currency equivalent to € 2.2 million. Assilassimé’s mission is to provide sustainable access to social microfinance services adapted for people experiencing exclusion or extreme poverty, with limited access to the traditional microfinance system. The institution seeks first and foremost to enable them to carry out income-generating activities and improve their living conditions. To date, Assilassimé has over 19,000 clients, 91% of whom are women.

In Zambia, the Foundation granted a new loan to the microfinance institution AMZ for an amount in local currency equivalent to € 1 million. AMZ aims to serve customers who have previously been excluded from the formal financial market, mainly because of their poverty or their place of residence. The products offered are designed to meet their financial needs. The institution has over 80,000 active borrowers, 92% of whom live in rural areas and 56% of whom are women.

In Rwanda, the Foundation granted a first loan to the microfinance institution ASA Microfinance Rwanda for an amount in local currency equivalent to € 500,000. ASA Microfinance Rwanda Plc (ASA Rwanda) is an institution created in 2016 by ASA International. Its mission is to contribute to poverty reduction through economic empowerment by ensuring access to financial services to the disadvantaged community of Rwanda. The institution grants loans according to group and individual methodologies. They mainly finance women who represent more than 95% of its clientele, and mainly operates in rural areas.

Finally, in Kenya, the Foundation also granted a first loan for an amount in local currency equivalent to € 766,000 to the microfinance institution YEHU. YEHU is a microfinance institution whose mission is to fight poverty by empowering poor rural entrepreneurs in Kenya to help them lift themselves out of poverty through better accessibility to sustainable financial services. This includes enabling them to save while giving them access to microloans, which can be used to start or grow their small business. Yehu also offers business training, microinsurance products and other services to improve the lives of its members. To date the institution has 28 000 clients, 96% of whom are women. 76% of its clients live in rural areas.

To date, the Grameen Crédit Agricole Foundation has 89 partners in 39 countries and manages a portfolio of €86 million, 46% of which is located in so-called fragile countries.

For more information, click here.