As part of a report on responsible finance, Admical met in April with Eric Campos, Managing Director of the Grameen Crédit Agricole Foundation and CSR Director of Crédit Agricole SA. This was an opportunity to discuss the prospects and challenges of the inclusive finance sector. A spotlight on this interview, available in full on Admical.

What is your assessment of the Foundation's first two terms?

The Foundation is a player in inclusive finance that seeks to reconcile economic profitability and social impact. To this end, it pursues a rigorous investment policy that prioritizes both sustainability and positive social externalities. The Foundation integrates financial and social performance at the heart of its investment process.

In 10 years, the Foundation has provided €200 million in financing to 38 countries, including 40% among the least developed countries with a loss rate of less than 0.6%. €200 million of financing has enabled the financing of between 600,000 and 700,000 microloans. More than 80% of microloan beneficiaries are women, and we operate overwhelmingly in rural areas.

In your opinion, how is the responsible finance sector likely to evolve in the coming years?

Responsible finance is a broad concept that covers several definitions, but can be summarized by the practice of the profession aimed at reconciling financial performance and social, environmental, or societal impact. But in reality, we cannot say that there is responsible finance on the one hand and irresponsible finance on the other. In fact, responsible finance is that which integrates this dual concern and explicitly reports. I believe that this way of integrating the effect or externality could gradually become the general rule, even in so-called traditional finance.

Last October, Amundi, the leading European asset manager, decided to integrate ESG factor analysis into all of its funds under management within three years. By integrating these criteria, Amundi clearly illustrates that non-financial criteria are gradually entering the range of assessment criteria for investment funds. This approach clearly demonstrates the dynamic evolution of finance.

A word about the Foundation's next five-year term. What are its major strategic directions?

Climate change, population growth, digital transformation... many challenges are shaking the world of microfinance. There is an urgent need to mobilize resources, innovate with new means of action, and strengthen cooperation. This conviction is at the heart of the Grameen Crédit Agricole Foundation's actions and its development plan.

The Foundation will continue to adapt to these new challenges by diversifying its expertise and enhancing its intervention methods. These three strategic challenges will guide its actions in the coming years.

Find the full interview with Eric Campos on Admical.

La parution du Plan stratégique 2019-2022 ancre le positionnement de la Fondation autour de trois axes prioritaires : consolider notre expertise et notre offre en faveur de la microfinance, renforcer la résilience des économies rurales et promouvoir l’impact social dans le secteur financier.

Créée en 2008 par l’initiative conjointe des dirigeants de Crédit Agricole S.A. et du Prix Nobel de la Paix 2006 et fondateur de la Grameen Trust, le Pr. Muhammad Yunus, la Fondation Grameen Crédit Agricole s’engage dans la promotion de la microfinance et de l’entrepreneuriat à impact social. Avec plus de 200 millions d’euros de financements accordés en prêts et investissements, une présence dans une quarantaine des pays et un réseau de plus de 100 partenaires soutenus depuis l’origine, la Fondation représente pour le groupe Crédit Agricole un pôle de spécialité unique dans le domaine de la finance inclusive dans les pays émergents.

Over the past ten years, the Foundation has acquired solid experience in financing microfinance institutions and promoting rural economic development. It has developed several projects with Crédit Agricole Group entities and Regional Banks: through cooperation schemes with the Group's international entities, a skills volunteer program, and a social impact investment fund, the Foundation has been able to strengthen its action and multiply its impact.

To address the challenges ahead and make a positive contribution, the Foundation's team developed the 2019-2022 strategic plan in 2018 with the help of the Board of Directors and in consultation with external partners and stakeholders. The three pillars proposed in the strategic plan (strengthening support for MFIs, developing the resilience of rural economies, and promoting social impact in the financial sector) are based on the Foundation's strengths and strategic axes that aim to strengthen its positioning, increase its impact, and balance its business model.

To discover the 2019-2022 strategic plan, click here.

 

By Hélène Keraudren Baube, Grameen Crédit Agricole Foundation

Led by Harvard Business School and ACCION, the Strategic Leadership in Inclusive Finance Program is an intensive five-day course designed to reflect on the sector's progress and challenges. This year, Hélène Keraudren-Baube, Administrative and Financial Director of the Grameen Crédit Agricole Foundation, had the opportunity to participate thanks to a scholarship awarded by InFiNe Luxembourg. Here's a look back at this immersive week.

There were around sixty of us participants, from all continents and, above all, from varied backgrounds: microfinance practitioners, investors and donors, financial service providers, regulators, etc. The program is structured around a series of case studies and guided discussions, with a very large place given to digital finance – a theme that has now become essential for microfinance institutions.

Day 1: Financial inclusion in question

Our first working session aimed to introduce the topic of financial inclusion with case studies on public-private partnerships led by Mastercard in South Africa and Nigeria. Mastercard introduced its cards into government programs to, in the South African case, help dematerialize the payment of government benefits, and in the Nigerian case, provide ID documents to people who did not have them. However, in South Africa, most customers continue to prefer cash and see no real benefit from having a card. In Nigeria, very few people have sought out ID cards, as the process of obtaining them was quite cumbersome and tedious. We thus come to see that pushing technology does not lead to financial inclusion: for inclusion to be effective, solutions must be tailored to end users.

Day 2: Changes in the microfinance sector

Our second day of work focused on the changes we are observing in the traditional microfinance sector. In some markets, such as Peru, we are seeing a shift towards mergers and acquisitions between microfinance institutions. In others, such as Bolivia, we are seeing microfinance institutions having to adapt to regulatory changes. More recently, we are seeing the arrival of digitalization as a new phenomenon to which MFIs must adapt: how is technology affecting internal processes, product distribution, payments, and credit scoring? An interesting discussion that also raised other questions: Are client needs still a priority? Is client interaction preserved?

Day 3: What are the prospects for fintechs?

We continued our training with another series of cases on the arrival of Fintechs in the landscape. We studied an Indian system, where mobile payment providers are growing so much that they have replaced cash in many daily transactions. The corollary is that, in doing so, these operators are collecting masses of data on their customers, leading us to ask ourselves: while creating a digital footprint may seem like a good thing, how can we ensure the responsible use and processing of customer data? In China, we examined a peer-to-peer platform created to allow individuals to finance micro-entrepreneurs. The platform managed to grow very quickly and reach millions of people, going far beyond its initial model. How should we regulate such platforms, which have proliferated in China in recent years?

Fintechs are therefore emerging as disruptors of inclusive finance because they create unprecedented opportunities. They are changing the ecosystem and are capable of evolving rapidly, but if we want Fintechs to be part of financial inclusion, we must put customers at the center of our concerns.

The detailed report by Hélène Keraudren Baube is available on the InFiNe Luxembourg website.