Newsletter #38: The resilience of microfinance in the face of the Covid-19 crisis

The Grameen Crédit Agricole Foundation publishes its Newsletter #38, which highlights the impact of Covid-19 and the actions undertaken by the Foundation and the organisations supported to face it. 2020 marked the world with an unprecedented crisis, but what will also remain at the end of this historic year is the resilience of the inclusive finance sector.

Signs of this resilience are presented in the results of the 5th survey carried out since the beginning of the pandemic by the Foundation, ADA and Inpulse among funded microfinance institutions to know the impact of the crisis on their activities and to better support them. A very large majority of the institutions supported expect their activity to growth in 2021, in terms of portfolio volume and number of clients.

The Foundation has also launched an International Coalition to act in concert with other players of the sector and better assist the supported organisations, both financially and through technical assistance missions in this period of crisis. In this issue of the Newsletter, you will discover the testimony of OXUS Kyrgyzstan, a microfinance institution that has benefited from additional support from the Foundation within the framework of the Coalition.

We also share with you the testimony of Daniel Hoarau, IT Manager of Crédit Agricole La Réunion, who went to Bosnia-Herzegovina to support a microfinance institution as part of a Solidarity Bankers mission, a skills volunteering programme open to all employees of the Crédit Agricole Group in favour of organisations financed by the Foundation.

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Ugafode and the financial inclusion for refugees

Supported by the Grameen Crédit Agricole Foundation since 2015, UGAFODE Microfinance Limited is a microfinance institution that offers inclusive financial and non-financial services to low income, but economically active populations in Uganda. UGAFODE is one of the three organisations supported by a programme launched by the Foundation, The Swedish International Development Cooperation Agency (Sida) and the UN Refugee Agency to support the financial inclusion of refugees. Thanks to the financial and technical support, UGAFODE opened a branch in Nakivale Refugee Settlement in Uganda. Spotlight on an interview to Shafi Nambobi, CEO of UGAFODE.

1. In a few words, what is UGAFODE Microfinance Limited?

UGAFODE Microfinance Limited began in 1994 as an NGO focused on group credit for women and has since transformed into a Microfinance deposit-taking institution regulated by Bank of Uganda. The institution specifically targets low income but economically active population in the country through 7 urban and 12 rural branches, serving over 110,000 savings customers and 8,000 loan clients. We offer a variety of financial services, which include savings, loans and money transfer services with a loan portfolio of €12.1 million and savings volume of €6 million.

2. UGAFODE received an innovative support from the Grameen Crédit Agricole Foundation, the Swedish International Development Cooperation Agency (Sida) and the UN Refugee Agency in 2019, when it was selected as beneficiary of a programme to support financial inclusion for refugees. Can you explain the initiative and the support UGAFODE received?

Most of the refugees have been discriminated against and denied credit facilities from financial institutions as they are viewed to be too risky, despite being engaged in agriculture plus retail trade and commerce. In March 2020, UGAFODE was the first financial services institution to set up a physical branch in a refugee settlement in Uganda thanks to the programme. Nakivale refugee settlement is the 8th largest in the world hosting over 134,000 refugees from 13 countries. The total project budget is €536,780 with €396,882 coming from Sida and €139,810 contributed by UGAFODE in three years.

Furthermore, the Foundation also granted a new loan of €540,000 in July 2020, of which 50% will be used in the framework of the refugees programme, to lend to refugees and host populations.

3. What are the first outcomes of the project?

Clearly, the project has passed the proof-of-concept stage. Since the opening of the Nakivale’s branch, 505 loans totalling to €383,596 have been disbursed between 2nd March 2020 and 31st December 2020, mainly to support small and medium enterprises and agriculture individual loans. It is important to note that all this has been achieved under Covid-19 crisis. The Portfolio At Risk (PAR) is at 1.65% for 1 day and 0% for 30 days, which is remarkable and appreciated.

Furthermore, we have reach over 5,000 refugees with financial literacy messages and 2,534 clients have opened savings with a total of €65,112. A total of 5,301 refugees have received €776,345 through money transfer services from friends and relatives at the Nakivale branch in the nine months since the branch was opened. We currently employ 21 staff with 8 refugees at Nakivale plus 4 in the Call Centre in Kampala to manage customer complaints in the major refugee languages.

4. How did Covid-19 pandemic affect the project? What measures have been taken to face the crisis?

The project implementation and opening of the branch happened at the beginning of the Covid-19 crisis. Fortunately, as government rendered financial services as essential, the Nakivale branch was able to offer needed services to the settlement clients on a very positive note.

UGAFODE has been able to adjust its policies and procedures to serve refugees within the regulation guidelines. We recruited refugee staff at the Call Centre to provide guidance and information to the clients. We also built a branch extension to provide sufficient space to ensure safety of both staff and customers.

Furthermore, we granted rescheduling options to the clients with loans to support them in this period of crisis. The Grameen Crédit Agricole Foundation and KIVA supported us to face the crisis. The Foundation granted us flexible budget lines within core lines to cater for crisis’ uncertainties. The Branch operates under strict COVID 19 SOPs (Standard Operating Procedures) instituted by the Ministry of Health and Government. We will also be able to buy 3 more motorcycles to enable the branch staff reach out to more clients, easily and faster.

5. What are now the priorities of the project?

There are three priorities :

  1. Scale up financial literacy trainings to raise awareness of at least 8,800 refugees and 8,000 host communities in year 2 and 15,500 refugees and 14,000 host communities in the last year of the project.
  2. Conduct a customer survey to facilitate informed decisions and develop products tailored to refugees.
  3. Roll out the project model to other settlements. After Nakivale, the project is going to be replicated to other refugee settlements at the earliest. Initial feasibility studies have been conducted for Kyaka, Kyangwali and Rwamwanja refugee settlements.

OXUS Kyrgyzstan and its six commandments for the Covid-19 crisis

Interview with Denis Khomyakov, CEO, OXUS Kyrgyzstan

Since the beginning of the Covid-19 crisis, the Grameen Crédit Agricole Foundation has worked on several initiatives to better support the microfinance sector. OXUS Kyrgyzstan is one of the microfinance institutions that has benefited from the Foundation’s response to the crisis. Five questions to Denis Khomyakov, CEO of OXUS Kyrgyzstan (OKG)

The Covid-19 crisis has strongly influenced Kyrgyzstan’s economy and your organisation. What measures have you adopted to cope with it?

The crisis has hit the economy and the health system of Kyrgyzstan hard. With border closures and lockdowns, industry and agriculture declined, and transport services collapsed. Although new activities emerged (such as delivery services), Covid-19 affected the country’s economy and by extension our clients and business.

In this context, we were well prepared at OKG. As early as February, we first protected our staff with home-based work or short time working at 2/3 of the salary; which involved the digitalisation of our activities. In May, we adopted both remote and on-site work, thanks to the required anti-Covid measures foreseen in the Covid-19 Business Continuity Plan (BCP), which quickly became operational.

We always made sure to communicate well. To achieve this, we first set up a Covid-19 Committee consisting of members from different departments and myself to structure communication and define operational measures. Several actions were taken: we organised communication with agencies and clients, established loan restructuring and client support, and decided to negotiate with lenders to obtain a grace period on repayments. We also had regular exchanges with various stakeholders: the governance that guided and advised us, the lenders who have done coordinated actions to ensure the continuity of our activities, and the National Bank that provided us with clarifications on the restructuring and exemptions possibilities.

What was the Foundation’s support to strengthen OKG’s response?

The Covid-19 surveys carried out by the Foundation were well organised and always took place at the right time. The Covid-19 Observatory launched by the Foundation, where the results of the surveys and other useful articles are published, has been valuable to us in assessing our situation and position in the region. The Foundation also led OKG’s group of lenders to implement the coordinated restructuring measures and extensions; at the Foundation’s instigation, with regular monitoring by Julie Serret, a Foundation’s Investment Manager, we acted immediately to prepare for the worst-case scenario and agreed terms with the lenders all together.

Which were the main measures implemented by this group of lenders?

The group of lenders decided to extend all payments payable between May and December 2020 for 12 months. The lenders also simplified reporting by collecting information through a common document, which gave us more time to focus on other issues. They also provided us with tools to create a BCP, to restart the business while protecting staff. As a result, we did not really worry about the liquidity situation. We were able to pay our staff salaries and benefits immediately.

What lessons do you draw from this period for the evolution of microfinance?

Here are my six commandments:

  1. Anticipate. Every business should have a BCP for these kind of events. Having an IT disaster recovery plan is very useful – it helped us a lot in reacting to the crisis and keeping the system running.
  2. Take care of the staff; inform them of the situation and the measures decided.
  3. Make decisions. Do not be too late but think twice.
  4. Inform investors and lenders of the situation and provide forecasts (detailed, even if you do not know how things will develop) for the coming months.
  5. Contact your Board of Directors often. Its composition and experience will enable you to get through any type of crisis.
  6. Be digital. Digital channels are valuable for communicating with clients and staff. Covid-19 has pushed us to think and to be more digital.

What are the prospects for OKG in 2021?

The company continues its development and growth. We plan to open two new branches in rural areas and to serve low-income clients. We plan to introduce tablets to speed up loan disbursement, but also to collect less paper and be more environmentally friendly. We also aim at developing green loans to help combat air pollution and intensive energy use in Kyrgyzstan.

Other initiatives such as our work on customer loyalty and the project to support women entrepreneurs initiated in early 2020 have been slowed down by the health crisis. We will take them up again. We will remain a reliable company for our clients, with a zero-exclusion approach!

The will of microfinance institutions to maintain their activities during Covid-19 crisis

ADA, Inpulse and the Grameen Crédit Agricole Foundation have collaborated to monitor and analyse the effects of the Covid-19 crisis for their partner microfinance institutions worldwide. This monitoring was carried out regularly throughout the year 2020 in order to have a better vision of the situation’s evolution. Through this regular and in-depth analysis, we hope to contribute, at our level, to the construction of strategies and solutions tailored to the needs of our partners, as well as to the diffusion and exchange of information between the different players in the sector.

In summary

The results reported in this article come from the fifth survey jointly (1) conducted by ADA, Inpulse and the Grameen Crédit Agricole Foundation. Responses were collected in the second half of December from 74 microfinance institutions (MFIs) located in 42 countries in Eastern Europe and Central Asia (EAC-28%), Sub-Saharan Africa (SSA-26%), Latin America and the Caribbean (LAC-23%), South Asia (14%), and the Middle East and North Africa (MENA-9%) (2).

At the same time, the major constraint that remained was the difficulty in collecting loan repayments, which implied increasing the portfolio at risk. This last point is still valid at year-end, and three quarters of respondents still report an increase in RAP. In added to this is the deterioration of the epidemiological situation in the world in the fall of 2020, as evidenced by the responses gathered in December 2020. The epidemic containment measures taken according to local contexts may once again have consequences on the activities of MFIs and their clients, and a return to normalcy is not yet on the agenda.

However, these new complications and their implications are not new. Thus, they have limited impact on MFIs’ risk indicators. The stability of the increase in PAR, as well as in recovery levels, does not reflect a further major deterioration in MFIs’ financial situation. This relative balance also corresponds to the MFIs’ state of mind as they approach 2021. Despite an unstable context and all the obstacles it entails, the vast majority of our partners expect their activity to grow in the new year, in terms of both portfolio volume and the number of clients. This confidence, which was already evident in the surveys conducted over the summer, is a further sign of the resilience of these institutions.

1. MFIs are always operating in unstable and difficult conditions.

Our last survey, conducted in October, showed a great improvement in the operating environment for MFIs and a gradual recovery in activity in all regions of the world. However, in a large number of countries, even those that appeared to be managing the virus’ spread well, new, more restrictive measures to contain the epidemic were taken in the last quarter of 2020 in response to the new increase in cases. This deterioration is particularly confirmed by our partners in Europe and Asia, where MFIs in South and Central America, Southern Africa and North Africa are reporting an improvement in the situation.

Comparing the responses of our 38 partners who participated in the October and December (3) surveys in the following paragraphs confirm the observation of a return of certain difficulties for MFIs, and are in line with the general results obtained at the end of the year.

First, the virus continues to rapidly spread in some parts of the world, and MFIs are not exempt from it. Thus, we can note an increase in the proportion of MFIs reporting that clients and staff have been infected with Covid-19. This can be seen in the drop from 47% to 32% (17 to 12 MFIs) of MFIs whose clients and staff are not reached by Covid-19. In October, this category included two thirds of the MFIs in Sub-Saharan Africa (10/15) and the vast majority of those in South Asia (5/6). In December, the share of MFIs in Sub-Saharan Africa was almost stable (9/15), while those in Asia dropped to 50% (3/6). Finally, the category “more than 20% of staff were infected” rose from 0% to 13% (5 MFIs) over the period, with the vast majority in the Europe and Central Asia region (4 MFIs).

In terms of operational constraints, results are relatively stable between the two periods. The list of MFIs indicating that they no longer face operational constraints remains more or less the same (39%), and is concentrated in Central Asia and West Africa. It should be added that collecting loan repayments (42% of the sample) and disbursing new loans (32%) remain the two main difficulties encountered by MFIs.

Difficulty getting in touch with clients, both in branches and in the field, was considered a consequence of the crisis for only 16% (6 MFIs) of this sample in October, and this figure increased in December (24%, 9 MFIs). In detail, it should be noted that the location of MFIs that highlight this constraint has evolved over

the last two months. Thus, they were particularly located in Latin America and the Caribbean and East Africa in October. In December, this point was raised by MFIs in Southeast Asia (3/6), Eastern Europe (2/5) and West Africa (2/8). At the general level of the survey, 30% of the MFIs indicated that they were once again limited in their activities, despite a gradual recovery.

2. Therefore, customers remain exposed

As the MFIs testify through these surveys, the uncertain and particularly unstable context also weighs heavily on MFI clients. Logically, the difficulty in collecting reimbursements for MFIs, for example, is closely linked to the difficulties encountered by the clients themselves. The activity of a large part of them has still not restarted or remains slowed down by the crisis context: our last survey highlighted in particular the tourism and trade sectors as the most affected sectors (4). In December 2020, the proportion of MFIs indicating that more than 90% of their clients have restarted their activity remains in the minority (23%, 17 MFIs). However, 46% (34 MFIs) of MFIs indicate that clients who have resumed their activity represent between 70% and 90% of their portfolio. Only 11% (8 MFIs) of respondents indicated that less than 50% of their clients are able to work again. There are, however, some regional disparities in these results: in South Asia, Europe and Central Asia, and Sub-Saharan Africa, at least 80% of respondents report that more than 70% of clients have returned to work. In the MENA and Latin America and the Caribbean regions, this share decreases to 43% and 41% respectively.

Our partners’ responses also make it possible to continue profiling the customers most affected by the crisis. First of all, it should be noted that a large proportion of the MFIs surveyed rule out the possibility that there is a category of clients that is more affected than the others, whether in terms of gender, location (urban or rural) or age. In detail, 42% (31 MFIs) of respondents believe that all of their clients are impacted identically, and 51% (38 MFIs) indicate that there is no significant difference in repayments based on these criteria. Overall, the idea that there is a difference in exposure to the impact of the crisis according to age is also dismissed. While some MFIs say they see differences according to age categories (-30, 30-50, 50+), none of them stand out.

Among the MFIs that perceive a difference in the impact of the crisis on their clients (36 MFIs), one criterion stands out for the most part: 76% (27 MFIs) believe that the most impacted populations are urban populations. The same proportion claims that this difference is reflected in loan repayments. These responses confirm our previous results for the most affected sectors, which are definitely urban. The fact that the criterion of rurality is hardly mentioned goes in the same direction, and echoes the agricultural sector, revealed during the surveys by our partners as a sector less affected by the crisis linked to Covid-19 than the others, and towards which a certain number of MFIs imagined they wanted to move. Finally, a last characteristic is mentioned by MFIs reporting disparities in the impact of the crisis: 36% (13 MFIs) perceive that women are more affected than men and therefore by default may have more difficulty repaying their loans. It should be noted that a portion of the respondents serve only women clients, which logically makes them the most affected population in the sector.

3. Now well-identified challenges for MFIs

MFIs are now aware of activity levels that are still at half-mast or of the measures implemented by the local authorities to contain Covid-19. In addition, to which they are adapting. Thus, the financial difficulties mentioned by the MFIs are very stable from October to December 2020 and do not highlight any new trends. Two of the four most cited difficulties remain linked to the MFIs’ declining profitability, due to the increase in provisioning expenses (45% of the respondents, 33 MFIs) and the non-collection of interest (55%, 41 MFIs). These two points are closely linked to the most striking difficulty of the crisis for MFIs during this period: the increase in portfolio at risk (74%, 55 MFIs).

In December 2020, 74% (55 MFIs) of respondents indicated that more than 70% of clients were repaying their loans, and 37% reported client repayment levels above 90%. On the other hand, only 9% report that less than 50% of clients are able to repay their loans, which is in line with clients’ recovery levels. These levels are reflected in the level of portfolio at risk of MFIs: in December 2020, 47% of respondents (35 MFIs) indicated that PAR 30 had increased without doubling, 16% that it had doubled, and 12% that it had more than doubled.

Nevertheless, this risk configuration seems to have broadly stabilized in the last quarter of 2020, despite the additional constraints presented above (see Fig. 7). In the common sample for the October and December surveys, we still find a quarter of MFIs that are not affected by this increase in portfolio at risk. At the same time, there are no MFIs added to the list of MFIs whose PAR 30 has more than doubled. Transfers from one category to another over the October-December period are for the vast majority between a stable PAR and a PAR that increases without doubling. This indicates that the deteriorations in the local contexts previously presented would therefore not affect all clients, thus having only a moderate impact on the MFIs’ risk indicators.

This stability coincides with the MFIs’ new objectives at the beginning of the new year. The crisis has disrupted their operations, and has inevitably had an impact on their projections. Thus, 58% of MFIs report having updated their business plans and growth objectives for the coming months and years. On the strength of these crisis gains and a better understanding of the context, the vast majority of MFIs still plan to continue to develop in 2021. Thus, 80% of those surveyed expect their portfolio volume to increase this year, while 15% expect it to stagnate and 5% expect it to decline. In addition, this portfolio increase should also be followed by an increase in the number of clients for 75% of the MFIs expecting growth in the new year. A new hopeful signal, therefore, but also a sign of ambition on the part of institutions determined to continue moving forward in 2021.


(1) The first four surveys of ADA’s partners, Inpulse and the Grameen Agricole Foundation are available here : //, // and //¬
(2) The number of responding MFIs by region is the following: SSA 19 MFIs; LAC 17 MFIs; EAC 21 MFIs, South Asia 10 MFIs; MENA: 7 MFIs
(3) The sample size is 38 MFIs: 6 in South Asia, 10 in Eastern Europe and Central Asia, 6 in Latin America and the Caribbean, 1 in MENA, and 15 in Sub-Saharan Africa.
(4) //; //

The Foundation grants a loan to a new partner in Zambia

© Oleksandr Rupeta / Alamy Stock Photo

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

EFC is a microfinance institution founded with the intent to provide working capital solutions for Micro, Small and Medium Enterprises (MSMEs), with a focus on product innovation tailored to meet client’s needs. The institution, which also takes deposits, serves around 3,000 borrowers, 42% of whom are women and 6% of whom live in rural areas.

With this loan, the Foundation now has an outstanding amount of €32 million in the sub-Saharan African region, or 39% of the outstanding amount monitored by the Foundation.


Created in 2008, under the joint leadership of Crédit Agricole SA and Professor Yunus, 2006 Nobel Peace Prize winner and founder of Grameen Bank, the Grameen Crédit Agricole Foundation is a cross-business actor which contributes to the fight against poverty through financial inclusion and social impact entrepreneurship. Investor, lender, technical assistance coordinator and Fund advisor, the Foundation supports microfinance institutions and social enterprises in 39 countries.

For more information on the organisations supported by the Foundation, click here.


[INTERVIEW] The Foundation’s actions to face the Covid-19 crisis

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 coordinate with other key players in the sector of inclusive finance and social impact entrepreneurship. Transversal work that involves the whole Foundation team. To find out more, spotlight on the testimonials of two Foundation experts, Hélène Keraudren-Baube, Administrative and Financial Director, and Edouard Sers, Risk, Compliance and Social Performance Director.

1.How has the Covid-19 crisis impacted the internal organisation of the Foundation and that of supported organisations?

Hélène: We used telework overnight, but since it was already a possible modality at the Foundation, the transition was very fluid. In addition to providing the equipment for teleworking, we have also adapted the schedules to take into account the context of confinement with children at home. We have had a very special year, with no field mission for the team based in France since February, as usually investment officers all go on field missions several times a year. The Foundation’s Board of Directors conducted regular updates to monitor the situation and determine the best measures to support the teams and organisations funded. In addition, we spoke on a more regular basis with our governance to keep them informed of developments in the situation and activity.

2. What responses did the Foundation give to deal with it?

Edouard: The Foundation’s first response was to establish a rapid and permanent dialogue with the organisations it supports to understand the effects of the crisis, the measures implemented and their needs. The investment manager teams have remained in very close contact with all the organisations we support, and we have conducted regular surveys with them to understand the impacts of the crisis in the various countries of intervention. In addition, we launched the Covid-19 Observatory in which we regularly publish articles in order 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 players to act in close cooperation, to protect microfinance institutions and their clients and prevent any liquidity shock that would have destabilised the sector.

Hélène: We have adapted our monitoring and analysis tools and our requests for information, particularly with regard to business continuity plans and short-term cash flow plans. On the financial front, we have granted deadline extensions to around 30 Foundation partner organisations, mainly microfinance institutions. These extensions, from 6 to 12 months according to the different cases, took the form of amendments to loan contracts, and revised deadlines. This volume of postponement requests is completely unprecedented and has “stressed” our liquidity. We have refined our projection and monitoring tools to track the financial impact for the Foundation.

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

Edouard: Six months after the signing of the Commitment, along with all the signatories, we drafted a joint publication presenting the status of implementation of 10 principles of the Commitment. Among the conclusions of the publication, we can highlight the strong coordination between international funders to agree in terms of extension of deadlines, avoiding a liquidity crisis in the microfinance sector. We have also made progress in the area of ​​technical assistance, including webinars and joint field surveys with end customers. Finally, we have encouraged the coordinated collection of information on staff management and client monitoring of microfinance institutions and are promoting initiatives to strengthen the protection of clients and staff. In 2021, we will pursue our efforts to support the gradual recovery of microfinance institutions supported with technical assistance, appropriate financing and regular exchanges between the various players in the sector.

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

Hélène: We very quickly kept our funders informed of developments, with detailed presentations. Since the strat of the crisis, we understood that the main impact in 2020, for the Foundation, would be on our liquidity management. The requests for extensions from our partners weigh 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 do so, we have asked for extensions of delays from our funders, and envisaged new “special Covid-19” financing lines to support the resumption of the activity of the microfinance institutions that we support.

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

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

Edouard: A large part of the organisations supported have been able to cope with the crisis and are eligible for the funding offered by the Foundation according to standard risk criteria. On the other hand, a significant portion of them still carry a significant risk inherited from 2020 in their balance sheets. It is crucial that we continue to strengthen our support system to offer solutions adapted to the different levels of risk, combining new financing, technical assistance, deadline extension or, more exceptionally, debt restructuring.

At the sector level, lenders coordinated in 2020 in order 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 shareholder responsibility. Finally, we will continue to promote initiatives to protect the clients and staff of microfinance institutions in these times of crisis. For example, we actively participate in the Social Performance Task Force (SPTF) working group to define new certification criteria relating to customer protection in the sector. A permanent dialogue with our partners and coordinated actions will be key factors for the success of our commitments.

Microfinance In India: The Story of Resilience

By Devesh Sachdev, CEO, Fusion


The microfinance model of providing small collateral free loans to the ‘bottom of pyramid’ clients hitherto overlooked by the formal sector, has established itself as an effective & sustainable model for financial inclusion. Financial inclusion has rightfully been the key focus area for policy makers in the last few decades given the sheer size of our population that remained unserved and underserved. It needs no complex analysis to know that if India as a country has to improve its per capita income and graduate people above the poverty line – then access to finance has to be the key.

Despite policy push through the mainstream banking system, few factors acted as impediments to this critical national objective of financial inclusion. First and foremost being the fact that our formal Banking system largely designed its policies and reach (be it brick and mortar or digital) to cater to the urban/semi-urban population with established track record/income and collateral that fit into their defined Risk/Reward matrix as an Asset Class. Secondly, the ‘cost of delivery’ for bite size transactions in BOP market became a dampener for the Banks. Lack of financial literacy also acted as a constraint.

The microfinance model of providing small collateral free loans to the ‘bottom of pyramid’ clients hitherto overlooked by the formal sector, has established itself as an effective & sustainable model for financial inclusion. It was conceptualized to transparently deliver financial services and products at the doorstep of these very customers in a very simple to understand manner. The concept of Joint Liability leveraging social capital combined with doorstep delivery has helped microfinance gain trust & acceptability.

The Microfinance ‘journey’ of the last decade has run on two broad themes. On one side, it has weathered serious setbacks like the one of 2010 Andhra crisis, 2016 Demonetization crisis, the NBFC liquidity and credibility crisis and is currently battling the Covid-19 global pandemic. All these events created a perception in the minds of stakeholders that microfinance per se is a risky asset class because unfortunately for the sector – it has been impacted by such unforeseen events once every 3-4 years.

However, there is another side to the sector which is its brighter side:

  1. Today, the sector serves around 6 crore unique customers with a combined portfolio size of Rs 2,31,000 Crore across 620 districts in 28 states and 8 UTs. This makes it the 2nd largest sector after Mortgages. However, what has been even more commendable is that the sector has grown @30% CAGR in the last 3 years vs the overall Retail Sector’s 17% CAGR
  2. Another highlight of the Microfinance sector has been delivering financial products and services via a prudent amalgamation of ‘Touch and Tech’ at the lowest cost amongst all its global peers. The sector leverages advances in technology to constantly deliver greater transparency, data security and privacy and affordability for its rural customers at their doorstep.
  3. With both reach and operational effectiveness, Microfinance today is a sustainable business model, calibrated to leverage its network to deliver other goods and services to the rural masses contributing to India’s phenomenal growth story
  4. The sector also generates significant employment opportunities not only by hiring from the hinterland but also enabling its customers provide employment opportunities to others via financial support extended.

The sector has demonstrated remarkable resilience across the last decade and this has been made possible due to some key contributory factors:

  • The ‘inherent’ need for such a model in aspirational India where a large unserved /underserved population still needs to be brought onto the financial bandwagon, ensured that Microfinance remained a ‘preferred’ vehicle for both the policy planners and the practitioners across the years
  • The phenomenal support and conducive policy framework provided by the RBI which has been a catalyst in furthering Microfinance’s mission of financial inclusion. The sector has been accorded a special category under the larger NBFC category of RBI – lending it a distinct identity and strong credibility by having country’s first RBI recognised Self-Regulatory Organisation.
  • The functioning of MFIN (the sector association) as an SRO since 2010 has enabled the sector to build its growth on strong pillars. Key pillars of MFIN’s work have been customer protection, industry code of conduct and policy advocacy, all of which contribute towards building of a Responsible Finance ecosystem.
  • Microfinance being a high touch model, it has ensured highest degree of customer centricity and familiarity. Response time in crisis situations is much quicker and the resolutions proposed are very focused. This aspect helped the sector tide over the challenges brought about by Demonetization in 2016 but more recently this model has proven its resilience and sustainability in the ongoing Covid 19 crisis. The frontline soldiers ensured that the wheels of financing kept moving when the customers needed them the most during pre and post lockdown periods. Operating platforms were quickly modified to work on remote basis delivering loan services digitally Field processes were altered to incorporate all health and hygiene guidelines.

The strong bond with customers stood the test of time and brought about a high degree of mutual understanding and cooperation. Most of the financial pundits were proven wrong when the microfinance portfolio delivered better than expected portfolio metrics post Covid and RBI mandated moratorium period.

Today, the Microfinance Sector is partnering with the government to roll out various social schemes be it Shishu loans under Mudra or Pradhan Mantri Svanidhi scheme. The importance of the sector has been recognised by PM in his United Nations General Assembly speech by terming it as instrumental in furthering women entrepreneurship.

As they say “It’s not the number of punches that you land that make you a winner, it’s the fact that you still get up strong after taking a lot of punches and emerge a winner” and this is an apt description of a ‘Resilient’ Microfinance Sector in India thus far ……but the journey has just begun!!


Source: BW Businessworld

Microfinance: a tool for a more inclusive economy

Interview with Eric Campos, CEO, Grameen Crédit Agricole Foundation

Probably because it is a very effective lever in the fight against poverty, microfinance is a central topic for rethinking the global economy. The health crisis and its effects on the poorest populations have only reinforced this urgent need for financial inclusion. Spotlight on an interview of Paperjam Luxembourg to Eric Campos, CEO of the Grameen Crédit Agricole Foundation.

Why is microfinance a subject of interest for you?

Today 1.7 billion people, the majority of whom live in rural areas, lack access to funding and the financial sector has a key role to play in addressing this global challenge. The Foundation is one of the Crédit Agricole Group’s levers to promote financial inclusion and the development of rural economies in emerging countries. This was the ambition Crédit Agricole established when it launched the Foundation 12 years ago, along with Professor Yunus, 2006 Nobel Peace Prize laureate: to contribute to the fight against poverty by promoting microfinance and social impact entrepreneurship around the world. The Foundation is a committed player in poor countries in line with the “Raison d’être” of CA Group: “Working every day in the interest of our customers and society”.

Our mission takes on even more significance in the current context. The Covid-19 pandemic particularly hits the most vulnerable populations and microfinance is a lever to strengthen their resilience during the crisis. In this context, we had to adapt our methods of intervention and to innovate. We have set up very regular monitoring with funded institutions to understand the effects of the crisis and their needs. We have also implemented many rollovers to allow these institutions to support their own clients and to accept, themselves, rollovers of microloans. Since March, we have also coordinated an international movement of donors, investors and inclusive finance actors to commit to preventing a liquidity crisis in the sector and providing coordinated responses to cope with the economic effects of the crisis.

Can you present the Grameen Crédit Agricole Foundation and its objectives?

The Foundation is a cross-business player: investor, lender, technical assistance coordinator and fund advisor, the Foundation finances and supports microfinance institutions, enterprises and projects that promote inclusive finance and the development of rural economies around the world.

The Foundation now accompanies and supports 86 partners (74 microfinance institutions and 12 social impact enterprises) in 40 countries with nearly 100 million outstanding loans. The Foundation seeks to promote women empowerment through the economy, 88% of final beneficiaries are women, and primarily targets rural populations: among the 7.3 million clients supported by the institutions the Foundation finances, 84% live in rural areas.

How does the Foundation work with the CA Group today?

The Foundation has set up several partnerships with the Regional Banks and Crédit Agricole entities. We have established cooperation plans with the International Retail Banking in Romania, Egypt, India and Morocco, which allows Group entities to finance microfinance institutions in local currency with the guarantee of the Foundation. We have launched with CA Indosuez Wealth (Asset Management) and CACEIS Bank Luxembourg Branch, the Fund for Inclusive Finance in Rural Areas (FIR), the first microfinance fund of Crédit Agricole to which 21 Regional banks, Crédit Agricole Assurances and Amundi have already subscribed. Finally, since June 2018, along with Crédit Agricole SA we set up “Solidarity Bankers”, a skills-based volunteering programme through which we propose technical assistance missions to CA Group employees on behalf of organisations financed by the Foundation.

Furthermore, in response to the Covid-19 crisis, the Foundation has worked with Crédit Agricole SA, Crédit Agricole CIB, Crédit Agricole Wealth (Asset Management) and other key players in inclusive finance on a Common pledge to protect microfinance institutions and their clients. The commitment, which gathers 30 signatories, is based on a set of principles intended to protect the microfinance sector and their clients from the economic effects of the health crisis. Thanks to this coordinated action, liquidity defaults have been avoided and we have supported partner organisations through technical assistance missions.

What subjects will be addressed in the years to come within the Foundation?

Climate change, demographic growth, food security, digital transformation … there are many challenges at the centre of our concerns. It is urgent to act, to innovate with new means of action, to strengthen cooperation. This belief is at the heart of the Foundation’s actions and of its 2019-2022 Strategic plan. Its objectives are: consolidate the sustainability of organisations that provide essential services with appropriate funding and technical assistance; strengthen the resilience of rural economies by supporting social impact enterprise; and promote inclusive finance within the banking sector, in particular through the partnerships set up with the Crédit Agricole Group.

In response to the Covid-19 crisis, the Foundation will continue to support, alongside its institutional, private and solidarity partners, microfinance institutions and social enterprises with targeted funding and technical assistance to strengthen their resilience in this unprecedented crisis. We will continue to monitor the effects of the health crisis and take action to strengthen the resilience of microfinance and impact entrepreneurship, in concert with other stakeholders.

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Taking the floor: Advocacy for a more inclusive and sustainable economy

For 12 years, the Grameen Crédit Agricole Foundation has positioned itself as a player committed to the fight against poverty by promoting financial inclusion and social impact entrepreneurship. With more than 200 million euros in funding and over 100 organisations supported in some forty countries since inception, the Foundation has been able to build a solid history in the field of inclusive finance, particularly microfinance, financial engineering, financing of family agriculture and support for social entrepreneurship.

To promote good practices and contribute to the advocacy of the sector, the Foundation shares its experience through various publications, organises events and exchanges with other key players in the field of inclusive finance. This is why the Foundation has decided to share its main leading articles published since 2018 in this new publication “Taking the floor: Advocacy for a more inclusive and sustainable economy”.

For this first edition, this document is organised around four chapters with topics that marked our sector:

  • The first chapter contains general reflections on the need to shape a more inclusive economy.
  • The second one shares our various experiences on the development of rural areas, in particular, by supporting impact entrepreneurship.
  • The third chapter presents more specifically the work of the Foundation on the programme for the financial inclusion of refugees launched with the UN Refugee Agency and the Swedish Cooperation.
  • The last chapter focuses on the impact of the global economic crisis generated by the Covid-19 pandemic on microfinance institutions and their clients and the action of the Foundation to coordinate a concerted approach by donors, investors and others microfinance players to support the sector.

The “Raison d’Être” of Crédit Agricole is Working every day in the interest of our customers and society. With this publication, the Foundation fully plays its advocacy role to support microfinance, impact entrepreneurship and to shed light, alongside other key stakeholders, on good practices for a more inclusive, responsible and sustainable economy.

Download the publication here

AFD Group reiterates its support for microfinance by renewing a €10M guarantee to the Foundation

A guarantee of € 10 million has just been granted by the Agence Française de Développement (AFD) Group, represented by its subsidiary Proparco, to the Grameen Crédit Agricole Foundation. This funding will allow the Foundation to pursue its support to microfinance institutions in Sub-Saharan Africa. Proparco has also granted a new € 5 million loan to the Grameen Crédit Agricole Foundation, which will allow it to consolidate its support to its microfinance institutions partners in the exceptional context of the crisis linked to Covid-19.

A historic partnership to support microfinance

The partnership between AFD Group and the Grameen Crédit Agricole Foundation is long standing. One of the emblematic joint projects is the African Facility programme (1) launched in 2013. It allows the Foundation to offer funding and technical assistance suited to small and medium-sized rural microfinance institutions in Sub-Saharan Africa.

AFD also supports the Foundation in the loans it grants to its partner microfinance institutions, through a portfolio guarantee mechanism, the ARIZ guarantee, which covers up to 50% of the loans granted. This mechanism has just been renewed for the sixth time, providing coverage for loans that the Foundation will grant to microfinance institutions in Sub-Saharan Africa over the next two years. Together, AFD and the Foundation have adapted the eligibility criteria, in particular to be able to include less mature microfinance institutions with a very social vocation.

A special Covid-19 funding envelope of € 5M

The health and economic crisis generated by Covid-19 particularly affects the poorest populations. According to the World Bank, the crisis could push 150 million people into extreme poverty by 2021 (2). This issue is at the heart of the action of the Grameen Crédit Agricole Foundation, which, for 12 years now, has contributed to the fight against poverty through financial inclusion and entrepreneurship. The Foundation finances and supports microfinance institutions that serve populations excluded from the traditional banking system, mainly women (88%) and rural populations (84%), in around 40 countries.

“AFD Group is a major partner of the Grameen Crédit Agricole Foundation. It has been with us for many years and allows us to increase our impact, mainly in rural areas of emerging countries. In the context of Covid-19, the Foundation’s mission takes on a very particular significance. We work to enable vulnerable populations to lift themselves out of poverty by providing them access to financial services through socially performing microfinance institutions. The health crisis has strained local economies. Alongside AFD Group, we innovate, adapt and provide reinforced support to these institutions to strengthen their resilience and their capacity to face the economic effects of this global crisis”, says Eric Campos, Managing Director of the Grameen Crédit Agricole Foundation and Head of CSR at Crédit Agricole SA.

“After 10 years of cooperation at the service of financial inclusion, Proparco and the AFD Group are delighted to once again support the Grameen Crédit Agricole Foundation at the heart of this year 2020, which has seen the microfinance institutions supported by the Foundation strongly affected by crisis. A leading player in access to funding particularly for vulnerable populations in rural areas, the Foundation plays a major role in supporting its partner institutions and their clients during this difficult period. The renewal of the portfolio guarantee envelope granted by AFD Group to the Foundation, as well as the financing lines granted in 2020, aim to strengthen the Foundation in its social mission in favour of financial inclusion”, affirms Guillaume Barberousse, Head of Banking and Financial Markets Division at Proparco.

These new mechanisms will strengthen the collective action of AFD Group and the Foundation to promote the resilience of microfinance institutions and their clients in the face of this unprecedented crisis.


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(2) Acces World Bank’s presse release here