The Foundation supports three new partners

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© Didier Gentilhomme

During the first half of 2019, the Grameen Crédit Agricole Foundation funded three new partners in Africa and Central Asia. With these three new partners, the Foundation had 81 supported organizations in 38 countries as of the end of August.

It thus granted an initial loan of an amount in FCFA equivalent to 1.5 million euros to Vital Finance in Benin, a microfinance institution founded in 1998 in Benin. Born from a microfinance project funded by USAID, Vital Finance has acquired solid experience in the field of microfinance and is today one of the largest institutions in the country. Vital Finance is mainly active in peri-urban areas and has 29,000 active clients, including 66% women.

The Foundation also provided a local currency loan equivalent to €1.5 million to the Entrepreneur Financial Centre Zambia (EFC) microfinance institution in Zambia. It is the country's largest regulated deposit-taking microfinance institution. The institution, established by CARE Zambia in 1996 as a microfinance project, aims to provide working capital solutions to micro, small, and medium-sized enterprises (MSMEs), with a focus on innovative, client-driven products. It currently has nearly 4,000 clients, including 441,000 women and 61,000 rural clients.

Finally, the Foundation also granted an initial loan of €890,000 to the microfinance institution Salym Finance in Kyrgyzstan. This institution, created in 2007 by four Kyrgyz entrepreneurs, aims to support the creation and development of income-generating activities and to provide access to financial services to populations excluded from the traditional banking system. Currently, the institution has nearly 12,500 active borrowers, including 53% women and 74% clients in rural areas, and manages a portfolio of €16.5 million.

For more informationinformation.

Microfinance and Retail Banking: Cross-examinations

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By Céline Hyon-Naudin, Grameen Crédit Agricole Foundation

© Didier Gentilhomme

Microfinance is the set of financial services and products accessible to people excluded from the traditional banking system. Today, the microfinance sector has 139 million beneficiaries with total outstanding loans estimated at $114 billion (1). Beyond the objective of promoting financial inclusion, microfinance is constantly adapting and innovating to be a lever for economic development through entrepreneurship.

This financing of entrepreneurship is a key commonality between microfinance and retail banking. Like microfinance, retail banking offers financial solutions to promote income-generating activities. In the Foundation's 10-Year Booklet published last year, we compared figures from institutions supported by the Foundation and those of a small, "average" regional bank (2) and identified several similarities. This article is a spotlight on the common issues identified.

Some elements of comparison

Retail banks and microfinance institutions (MFIs) share certain objectives and operating methods. For example, the sales organization of an MFI is similar to that of a traditional banking network, with a relationship manager overseeing a portfolio. Both operate in the heart of local areas, close to their clients. Microfinance has evolved to diversify its financial offerings, becoming closer to those of a retail bank: loans, savings, money transfers, insurance, mobile payments, investments, reflecting the diverse needs of clients and businesses.

Furthermore, MFIs and retail banks carry out their work by seeking to control their costs and risk, while aiming to generate a positive and resilient economic result, capable of ensuring the sustainability of their mission.

However, the revenue and cost structure differs greatly between the two models. Operating costs (for example, travel expenses for loan officers, who have at least 250 to 300 clients) are high for an MFI: they represent 50 to 60% of expenses.

The composition of revenues also presents structural differences. The amounts and average duration of loans are more modest in microfinance: microcredits are generally less than one year and the average loan (from our partners) is €765 compared to €16,000 for an average regional bank. An MFI's revenue is almost exclusively linked to financing activity, unlike a retail bank, which has more extensive products and is less subject to financing activity. As a result, MFI revenues are essentially driven by the net financing margin: interest income on loans represents 88 to 99% of MFI revenues, a far cry from the 51% of the average regional bank.

Interest rates in the microfinance sector are higher than those in retail banking, largely due to operational costs. However, ethics and the need for impact are driving the sector to optimize its operating costs. The table below compares the costs, revenues, and margins per client of a partner MFI and a retail bank. Although there are significant differences between regions, the margin per client is positive for MFIs. Microfinance remains a viable economic sector, even though MFIs face significant challenges, which are common to retail banking.

Common challenges for microfinance and banking

With 1.7 billion unbanked adults (3), microfinance and banking must continue to innovate to reach them. Two avenues are open to them: digital finance and resilience in the face of climate change.

Digital finance is transforming the world of finance, making it more agile: New technologies offer digital financial services that both improve the operational efficiency of financial institutions and increase the reach of their services. Improving operational processes should help reduce operating costs, develop new distribution channels, and reach new markets. The diffusion of financial services through these new technologies is a pillar of the current financial acceleration. The potential is significant: of the 1.7 billion unbanked adults, one billion own a mobile phone and 480 million have access to the internet (4).

Financing the ecological transition is another shared challenge. Through direct contact with small producers, MFIs strengthen the development of rural economies. Small farmers are already weakened by the small size of their farms (80% have a farm of less than 2 ha) and their limited integration into agricultural sectors (only 7% are formally integrated into commercial value chains). Climate change poses an additional risk, and both MFIs and retail banks must innovate to provide financing better adapted to agricultural cycles and risks and promote new farming practices that encourage resilience and adaptation to climate change. Microfinance and retail banks are also positioning themselves around financial solutions such as those promoting access to green energy intended to promote the ecological transition.

These shared challenges bring together these two branches of the financial system, which play a powerfully inclusive role in economic development and social and environmental progress. There are many synergies to be exploited between microfinance and traditional banking. At its own level, and alongside the Crédit Agricole Group and its partner MFIs, the Foundation will continue to contribute to advancing responsible and inclusive finance.

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(1) The 2018 Microfinance Barometer: http://www.convergences.org/barometre-de-la-microfinance/
(2) The average regional bank is the result of calculations based on figures provided by French regional establishments which made it possible to establish an average profile.
(3) Global Findex 2017
(4) Ibid

Grameen Crédit Agricole Foundation invests in three new countries

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© Philippe Lissac

During the first half of 2019, the Grameen Crédit Agricole Foundation made new investments, including three in new countries. It financed the LAPO microfinance institution in Sierra Leone for the first time, with an equivalent amount of €385,000. LAPO's mission is to provide financial services that meet the needs of economically active people in a profitable and innovative manner. It is an MFI committed to developing the microfinance sector in Sierra Leone based on best practices in microfinance and strengthening the sector with a view to developing a credit culture. To date, the institution has nearly 22,000 clients, including 97.3% women. This clientele is located in rural areas.

The Foundation also secured an initial financing amounting to €500,000 from the Nigerien microfinance institution ACEP Niger. ACEP Niger is an MFI specializing in financing very small businesses in urban areas. It manages loans and savings products for small and micro-enterprises in urban and peri-urban areas that have been rejected by the traditional banking system. In line with its corporate social responsibility priority, ACEP Niger has adopted the SMART Campaign's client protection principles. It thus ensures that its borrowers are protected from over-indebtedness. To date, the institution has nearly 4,000 clients, including approximately 251,000 women. All of ACEP Niger's clientele is located in urban areas.

Finally, the Foundation also granted an initial loan equivalent to €493,000 to VisionFund Rwanda, a microfinance institution and subsidiary of VisionFund International whose mission is to provide financial and non-financial services to disadvantaged rural communities. VisionFund Rwanda primarily serves vulnerable women with children and young people in rural areas and offers them opportunities for economic empowerment. The products offered and the strategy are focused on strengthening and providing financial services to village savings and loan associations and groups. To date, the MFI has nearly 12,000 clients, including 62% women and 85% clients in rural areas.

In the first quarter, the Foundation made three new investments in Asia

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© Didier Gentilhomme

During the first half of 2019, the Grameen Crédit Agricole Foundation made three new investments in Asia, including a guarantee in India in partnership with CA-CIB India.

In Cambodia, Phare Performing Social Enterprise (PPSE) was granted a loan equivalent to €332,000. This partner, in which the Foundation has held a 15.51% stake since 2013, is a social enterprise that creates, produces, and distributes live performances and employs young artists from disadvantaged backgrounds.

In Myanmar, the Foundation also provided a new €1.8 million loan to Vision Fund Myanmar, a microfinance institution that lends small amounts of money to individuals who lack a measurable credit history, assets to secure loans, or access to traditional sources of financing. The institution currently has 183,000 active clients, including over 851,000 women and nearly 521,000 rural clients.

Finally, in India, the Foundation, in partnership with Crédit Agricole CIB India, has set up a guarantee in local currency equivalent to €5.5 million on behalf of Fusion Microfinance Private Ltd. Founded in 1994 in northern India, the institution offers financial products and services to low-income individuals. To date, it has 1.4 million clients, exclusively women, located in 90% in rural areas.

The Foundation and CACIB join forces to support microfinance in India

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© FGCA

The Grameen Crédit Agricole Foundation and Crédit Agricole Corporate and Investment Bank (Crédit Agricole CIB) are partnering to support and finance Indian microfinance institutions that support projects for populations excluded from the traditional banking system. Through this partnership, the Crédit Agricole Group is leveraging its expertise for inclusive finance in India and committing €12 million in financing.

Crédit Agricole CIB will grant loans totaling €12 million in local currency equivalent to Indian microfinance institutions under the guarantee and supervision of the Grameen Crédit Agricole Foundation. The Foundation will handle the origination, processing, and monitoring of financing applications. The loans granted to the institutions will help promote access to financial services for as many people as possible to encourage the development of income-generating activities. Rural populations and women entrepreneurs will be the primary beneficiaries.

Through this partnership, Crédit Agricole CIB is positioning itself as a committed player in inclusive finance in India. "The complementary expertise played an optimal role here, with the Foundation bringing its deep understanding of microfinance issues and Crédit Agricole CIB's Indian branches their proven knowledge of the complex and evolving local banking regulations," said Emmanuel Bouvier d'Yvoire, Senior Country Officer for India at Crédit Agricole CIB. Present in India since 1981, Crédit Agricole CIB has offices in Bangalore, Chennai, Delhi, Mumbai, and Pune.

"Alongside Crédit Agricole CIB, we support institutions that promote the development of rural economies in India. This cooperation demonstrates the Group's commitment to acting every day in the interest of society," said Eric Campos, Managing Director of the Foundation and Director of CSR at Crédit Agricole SA. For the Foundation, this is a great opportunity to work in India, where microfinance is highly developed but where financial exclusion remains a challenge.

The first financing is the granting of a loan of INR 5 million, guaranteed up to 100 % by the Foundation, to the Indian company Fusion Microfinance. This company offers financial products and services to more than 1,254,007 women, mainly in rural areas (86 %), who make up its entire clientele. The institution has a portfolio of €237 million. It is present in 17 Indian states, with a network of 440 branches and 3,695 employees.

New Solidarity Bankers mission in Kyrgyzstan

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© Didier Gentilhomme

At the initiative of the Grameen Crédit Agricole Foundation and Crédit Agricole SA, skills-based volunteering missions labeled "Solidarity Bankers" are offered to Crédit Agricole Group employees on behalf of organizations supported by the Foundation. Since the program's launch in 2018, thirteen missions have been launched.

A new Solidarity Bankers mission is available for OXUS Kyrgyzstan. OXUS is a microfinance institution established in 2006 that provides financial services to people traditionally excluded from the traditional banking system in Kyrgyzstan.

The institution has more than 7,600 active borrowers (551 women and 571 rural borrowers) with a portfolio worth €7.2 million. The Solidarity Banker will be responsible for supporting OXUS in developing a marketing plan and a customer loyalty program. The assignment is scheduled for the fourth quarter of 2019.

How to apply

To discover the detailed mission offers:

  • Go to the CA Solidaires website “Find your mission”
  • Enter "Grameen Foundation" in the search bar. All Solidarity Leave offers will appear!
  • Click on the offer of your choice, you will find all the information necessary for your application.

More information: carolina.herrera@credit-agricole-sa.fr

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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 nearly 40 countries.

The Foundation, partner of the 2019 Microfinance Barometer

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Since 2010, Convergences has published an annual Microfinance Barometer that tracks the main trends in the sector at the international level while giving visibility to microfinance initiatives with a strong social impact and promoting best practices. This year, the Grameen Crédit Agricole Foundation is a partner of the Microfinance Barometer, the 10th edition of which will be launched at the Convergences World Forum, which will take place on September 5 and 6 at the Palais Brongniart in Paris.

With the theme "What are the profitability levels for microfinance?", the 9th Microfinance Barometer presents key figures for the sector and explores the issue of profitability in its many facets. Should microfinance be profitable? If so, can it be while remaining socially responsible? Can it remain true to its aspirations of enabling, through financial inclusion, the escape from poverty of nearly 2 billion people without access to banking services? How can social performance and financial profitability be combined to best serve beneficiaries?

From microfinance institutions to investors, the Barometer compares different perspectives and highlights the strong interdependence between social and economic performance. Through case studies, expert analyses, and interviews with investors, this edition provides an overview of microfinance profitability and provides insights into the dual returns—social and financial—of microfinance.

To download it: here

Launch of the White Paper “Producing my solar electricity”

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©Philippe Lissac / Godong

On Tuesday, July 16, at the Lyon Metropolitan Environment Center, Elisabeth AYRAULT, CEO of CNR, Raphaël APPERT, CEO of Crédit Agricole Centre-est, and Marc JEDLICZKA, director of the HESPUL association, officially launched the white paper "Producing my solar electricity," in the presence of Jacqueline ROISIL, deputy regional director of ADEME.

This guide is aimed at farmers, SMEs, and businesses interested in installing photovoltaic panels. Published by Uni-médias, the white paper consists of around twenty pages to help you better understand this "green" electricity production technology.

Its main objective is to give photovoltaic project leaders the keys to launching and successfully completing their projects. The definition of photovoltaics, its economic models, project partners, and connection conditions are among the 6 sections that make up the book. It is also available in digital.

This practical guide is the result of a joint reflection between CNR and Crédit Agricole Centre-est on their role and usefulness in their region. Together, they recognized that the energy transition could not be achieved without economic players, both large and small, and that it is their responsibility as manufacturers and bankers and insurers to contribute to it. "Supporting the transformation of the economic model of companies, SMEs, and farmers by integrating responses to climate challenges is a duty. This book is proof of the concrete commitment of two regionally recognized players: Crédit Agricole Centre-est and CNR," said Raphaël Appert.

Crédit Agricole Fund for Inclusive Finance in Rural Areas

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©Philippe Lissac/GODONG

In partnership with CA Indosuez Wealth (Asset Management) and CACEIS Bank, Luxembourg Branch, the Grameen Crédit Agricole Foundation launched in September 2018 the FIR (Inclusive Finance in Rural Areas), a compartment of the Grameen Crédit Agricole Fund, the first microfinance fund of the Crédit Agricole group.

2018, launch of the FIR and first fundraising

For over 10 years, the Grameen Crédit Agricole Foundation has been promoting financial inclusion and entrepreneurship by supporting microfinance institutions and social impact businesses. To strengthen its work and multiply its impact, the Foundation, in partnership with CA Indosuez Wealth (Asset Management) and CACEIS Bank, Luxembourg Branch, has launched the Compartment for Inclusive Finance in Rural Areas (FIR), which will enable Group entities to finance microfinance institutions in rural areas in Africa, Asia, and Europe.

The first two FIR fundraising rounds closed in 2018 saw the participation of fifteen Regional Funds (Alsace-Vosges, Centre-est, Centre-France, Champagne-Bourgogne, Charente-Périgord, Franche-Comté, Ille-et-Vilaine, Languedoc, Loire-Haute Loire, Martinique-Guyane, Normandie-Seine, Provence Côte-d'Azur, Réunion, Savoie and Sud Rhône Alpes), as well as those of Amundi and Crédit Agricole Assurance for an amount of close to 8 million euros.

2019, third fundraising and new perspectives

With the last fundraising closed on June 28, 2019, five new Regional Funds (Alpes Provence, Brie Picardie, Finistère, Centre-Ouest and Touraine Poitou) subscribed to the FIR for an amount of 1.6 million euros.

With these resources, the FIR will expand its investments in the form of loans to microfinance institutions operating primarily in Sub-Saharan Africa and South and Southeast Asia. As part of its mandate as advisor to the Fund, the Foundation identifies microfinance institutions, conducts due diligence on the ground, and, once this investigation work has been completed and validated by the CA Indosuez Wealth Investment Committee (Asset Management), also handles the follow-up process.

The loans are intended to refinance credits made to populations traditionally excluded from the banking sector living in rural areas, who constitute the main clientele of the targeted microfinance institutions.

Team seminar between the Foundation and Crédit Agricole SA CSR

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As part of a team seminar held from July 3 to 5, the Grameen Crédit Agricole Foundation and the Corporate Social Responsibility (CSR) department of Crédit Agricole SA decided for the first time to bring together their teams, led by Eric Campos, General Delegate of the Foundation and CSR Director of Crédit Agricole SA. Rich in exchanges and reflections, these three days provided an opportunity to take stock of the different professions and to strengthen the dynamics common to both entities.

Strengthening cooperation between the Foundation and CSR

Over the course of three days spent in the Ardèche village of Voguë, the teams were able to discuss the levers to activate to strengthen the scale of the projects carried out together and the new avenues of work to explore.

First, the two entities each presented their 2019-2022 Strategic Plan. For the Foundation, this is structured around three pillars: strengthening microfinance expertise, developing the resilience of rural economies, and promoting impact finance within the Group. On the CSR Department side, the teams focused on the Group's climate strategy, which provides for the gradual end of investments in coal, first in EU and OECD countries by 2020, then in China in 2030, and finally in the rest of the world by 2050. The common thread of both medium-term plans: supporting more inclusive, responsible, and sustainable finance.

Through working groups, the Foundation and CSR teams were able to define various elements on which they will move forward together in order to create synergies beneficial to both the Foundation and the entire Crédit Agricole group through the CSR Department of Crédit Agricole SA. Sharing expertise, capitalizing on successful joint projects, innovating, there are many possible actions to strengthen the action of the Foundation and the Group in favor of financial inclusion and entrepreneurship with social impact.

Following the Seminar, other meetings are planned to continue this dynamic of sharing and mutual enrichment between the Grameen Crédit Agricole Foundation and the CSR Department and, more generally, the entire Crédit Agricole group.

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