Foundation grants first loan to MLF Zambia

The Grameen Crédit Agricole Foundation is continuing its investments in East Africa and has just granted a first local currency loan equivalent to €250,000 to the microfinance institution MicroLoan Foundation Zambia (MLF Zambia), over a period of three years. This loan is made as part of the program of the African Facility which aims to strengthen small institutions.

MLF Zambia is a microfinance institution established in 2008. Its activities are overseen by the Microloan Foundation, which is headquartered in the United Kingdom. MLF-Z's main activity is to provide low-income women living in predominantly rural areas of Zambia's Eastern, Southern, and Central Provinces with short-term loans of 4 to 6 months for productive purposes. The institution lends exclusively to women.

With this loan, the Foundation now has an outstanding amount of 36.4 million euros in the sub-Saharan African region, or 38% of the outstanding amount monitored by the Foundation.

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Created in 2008, under the joint leadership of Crédit Agricole SA's management and Professor Yunus, 2006 Nobel Peace Prize winner and founder of Grameen Bank, the Grameen Crédit Agricole Foundation is a multi-sector operator that contributes to the fight against poverty through financial inclusion and social impact entrepreneurship. As an investor, lender, technical assistance coordinator and fund advisor, the Foundation supports microfinance institutions and social enterprises in 40 countries.

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

Three Solidarity Banker positions are available

Launched by the Grameen Crédit Agricole Foundation and Crédit Agricole SA, Solidarity Bankers is a skills volunteer program open to Group employees in support of microfinance institutions or impactful businesses. The objective of this program is twofold: it enhances the skills of Crédit Agricole Group employees and provides additional support to the Foundation's microfinance institutions and partner companies. Through this program, the Crédit Agricole Group reaffirms its commitment to supporting employee solidarity initiatives.

Missions to be filled!

1. “Audit / Financial Reporting” mission for Kossam in Senegal

A subsidiary of Laiterie du Berger, Kossam's mission is to develop an inclusive and sustainable dairy sector in northern Senegal. Created in 2019, following a Solidarity Banker mission, Kossam collects milk from 450 local farmers, to whom it provides commercial services (feed, fodder) and provides advice and training. The Solidarity Banker mission [which could be carried out in pairs] aims to support Kossam and the Dairy in strengthening their teams and financial reporting. Depending on the health context, the mission will be carried out in late 2020 or early 2021 in Senegal.

2. “Fundraising” mission in favor of PPSE in Cambodia

Phare Performing Social Enterprise (PPSE) is a Cambodian social enterprise founded in 2013 that produces circus performances and recently launched an animation and graphic design studio. PPSE employs art graduates from PPSA, a non-profit organization that supports disadvantaged children and youth. An Online Solidarity Banker mission will aim to consolidate PPSE's new business plan (developed due to the Covid-19 crisis) and support the fundraising and merger process. The mission is scheduled for the last quarter of the year.

3. “HR” mission in favor of Oshun in Senegal

Founded in 2018, Oshun is a social enterprise that provides quality water services to the most vulnerable populations in rural areas of Senegal. As part of a restructuring process following strong growth, a Solidarity Banker mission is being created to streamline human resources management, recruitment, and management in general. The mission is scheduled for the last quarter of the year in Senegal, but the timeline will depend on the context generated by Covid-19.

How to apply?

To discover the detailed mission offers:

  • Go to the CA Solidaires website “Finding 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.
Contact: Carolina VIGUET
Director of Communications & Partnerships
carolina.viguet@credit-agricole-sa.fr

Foundation grants new loan to Mikra in Bosnia and Herzegovina

 

The Grameen Crédit Agricole Foundation continued its investments in Eastern Europe and Central Asia and has just granted a new local currency loan equivalent to €1.2 million to the Bosnian microfinance institution Mikra, over a three-year period. This is the second loan granted to the institution, following the €1 million loan granted in 2018.

Mikra is a Tier 2 microfinance institution that began operations in 1993. Its mission is to responsibly provide access to financial services to the poorest but economically active population, primarily women (70,213 out of 13,400 clients). The institution provides the poorest working populations with access to affordable, high-quality financial and support services to reduce poverty and encourage entrepreneurship. The institution promotes equality and freedom for Bosnian women, which are necessary prerequisites for their entrepreneurial success and social empowerment.

With this loan, the Foundation now has an outstanding amount of 24 million euros in the Eastern Europe and Central Asia region, representing 25% of the outstanding amount monitored by the Foundation.

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Created in 2008, under the joint leadership of Crédit Agricole SA's management and Professor Yunus, 2006 Nobel Peace Prize winner and founder of Grameen Bank, the Grameen Crédit Agricole Foundation is a multi-sector operator that contributes to the fight against poverty through financial inclusion and social impact entrepreneurship. As an investor, lender, technical assistance coordinator and fund advisor, the Foundation supports microfinance institutions and social enterprises in 40 countries.

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

Supporting financial inclusion for refugees in Uganda

In November 2019, the Swedish International Development Cooperation Agency (Sida), the United Nations High Commissioner for Refugees (UNHCR), and the Grameen Crédit Agricole Foundation launched a three-year program to promote access to financial and non-financial services for refugees and host communities in Uganda. This is a first-of-its-kind program designed to incentivize microfinance investors and microfinance institutions to expand their financial services to refugees.

Within this framework, the Grameen Crédit Agricole Foundation is responsible for managing technical assistance and supporting microfinance institutions so that they can develop a range of products and services adapted to refugee populations. The Foundation also grants loans to institutions to provide them with the resources needed to lend to refugees and host communities.

UGAFODE: First institution funded

The first institution supported under the program is UGAFODE Microfinance Limited. With a €540,000 loan and technical support, UGAFODE opened a branch in the Nakivale refugee camp in Isingiro district, which will help strengthen the resilience and self-reliance of refugees in host communities.

For UGAFODE, this program follows a successful pilot financial inclusion project for refugees in Kampala. Thanks to the support provided through the program and the loan from the Grameen Crédit Agricole Foundation, thousands of refugees will be able to access credit and money transfer services.

Refugees will also receive training in business management, which will provide them with essential skills such as developing business plans, financial management, pricing and marketing.

Funding for other microfinance institutions is currently being explored as part of this program to support refugees and host communities. In total, the program is expected to provide access to financial services and training to nearly 100,000 Ugandan refugees and host communities, including 70,000 women. The project will support the creation and development of small businesses in sectors such as agriculture, crafts, catering, and trade.

For more information about the program, Click here.

A recovery under operational and financial constraints

ADA, Inpulse, and the Grameen Crédit Agricole Foundation have partnered to monitor and analyze the effects of the Covid-19 crisis on their partner microfinance institutions around the world. This monitoring is carried out periodically and will continue throughout 2020 to gain a better understanding of how the situation is evolving. With this regular and in-depth analysis, we hope to contribute, at our level, to the development of strategies and solutions tailored to the needs of our partners, as well as to the dissemination and exchange of information between the various stakeholders in the sector.(1)

In summary

This article is based on responses provided between July 23 and August 6, 2020, by 91 partners in 42 countries across Europe, Africa, Asia, and Latin America (2). Feedback from microfinance institutions (MFIs) shows the continued evolution of the COVID-19 health crisis. While measures to reopen countries and restart the economy increased during the month of July, the health impact of the crisis was mentioned more significantly by our partners, whose clients and employees are ultimately also directly affected.

It is in this uncertain yet evolving context that MFIs have been braving the challenges they have faced for more than a quarter now. With operational difficulties still present, institutions remain vigilant about their portfolios and the risk they carry, which appears to have generally stabilized, albeit at a much higher level than before the crisis. Nevertheless, there are some encouraging signs regarding other issues. Thus, the vast majority of MFIs believe they can survive this crisis without undergoing major strategic changes. It also appears that the issue of liquidity has been managed rather well since the beginning of the crisis.

The battle against the virus is not yet won, however, and its repercussions are particularly strong on the informal sector of the economy. It appears that clients in the informal economy are more affected, particularly because they ultimately do not benefit from the support measures that governments can provide. However, MFIs are sensitive to these needs, and some of our partners are considering providing specific services to help their clients cope with the crisis.

1. Operational constraints still present for MFIs

Overall, our partners are reporting further progress in terms of easing containment measures in their countries, following the initial relaxations of measures in certain regions of the world in June (notably in Eastern Europe, Central Asia and sub-Saharan Africa). Comparing the responses of our partners who responded to our survey for July and June (3) (graph below) reflects this improvement regarding operational difficulties. These results are also in line with the general results obtained for the month of July.

All MFIs report an improvement in travel options for their staff. However, this remains a major constraint in Latin America and the Caribbean, while fewer than 20% of MFIs in other regions are affected. Moreover, while freedom of movement is improving significantly in these regions, meeting clients in the field remains a significant issue for more than 30% of MFIs. Finally, with the exception of Latin America, meeting clients in branches currently appears to be the least problematic solution.

In fact, while there has been an overall improvement in client contact across all regions, collecting loan repayments or disbursing new loans at standard pre-crisis levels remains very difficult, with difficulties encountered by more than 50% of the MFIs surveyed in each region (70% and 66% overall, respectively), with some difficulties being linked to national or local regulatory constraints.

“Although other MFIs are starting to operate again, we are still waiting for permission from the regional government” – Partner in Myanmar

Especially since MFIs are still in the process of restructuring clients' loans in July (80% of respondents).

“Communication on the postponement of deadlines constitutes a brake on the repayment of credits” – Partner in Senegal

And while we have been noting for several months the singularity of the Latin American region in the responses collected due to a particularly difficult COVID-19 health context, the information obtained shows that the situation is not resolved in other regions.

Doubts about a potential return to normal for MFI activities have not been dispelled, as the health crisis remains the central issue of the current period, and it persists. The news in July was notably marked by the occasional resurgence of cases in certain countries. This is reflected very significantly and for the first time in our surveys by a sharply rising proportion of partners who are affected by the health crisis, both among their staff and their clients (graph opposite (4)).
Thus, at the global survey level, 51% of our partners reported in July 2020 that some of their clients had contracted COVID-19, and nearly a third indicated that this also affected their employees. While we do not have data to determine the proportions of clients and staff affected respectively, this trend is nevertheless significant. More specifically, more than three out of four MFIs in Central Asia and Latin America had clients infected with the virus (one in two in June). While Latin America is largely affected on both the client and staff sides, the figures are also slightly up for staff at MFIs in Europe and Central Asia. South Asia and Sub-Saharan Africa appear to be generally more behind on this point, but the figures nevertheless encourage continued vigilance.

“More than 10 clients have died from Covid-19” – Partner in Honduras

2. MFIs continue to face major financial challenges

As we have observed since the beginning of our surveys, the increase in the portfolio at risk and the reduction in outstanding credit are the two main direct consequences of the crisis for a microfinance institution. Other financial difficulties, on the other hand, are in lower proportions and are stable from June to July (figure below (5)). This point applies to all regions except Central America, where our partners who responded to all of our surveys report problems and growing fears regarding issues of equity, lack of liquidity or increased expenses.

The detailed analysis shows that the contraction in outstanding credit is a heterogeneous phenomenon. For example, at the level of all respondents, 39% of MFIs in Central Asia reported suffering from a reduction in their portfolio, compared to 55% in Sub-Saharan Africa, 71% in South Asia and 88% in Latin America during the same period.

On the other hand, it appears that the increase in portfolio at risk is a problem common to all MFIs, regardless of their region or size, and it concerns more than 80% of our partners. However, while the PAR 30 of microfinance institutions has deteriorated since the beginning of the crisis, it no longer undergoes major changes between June and July, while remaining at a level well above that of before the crisis. As shown in the graph below, the structure of the PAR30 of the partners in the sample of 54 MFIs is fairly stable from one month to the next. And this is a trend we see across all respondents: between 15 and 20% of MFIs see a declining or stable PAR30, while around 40% have seen their PAR30 increase without doubling since the end of 2019. Finally, the riskiest cases regularly represent between 30 and 40% of respondents.

“It is difficult to cover the costs of provisions for bad debts” – Partner in the Democratic Republic of Congo

However, all these difficulties shouldn't be fatal for our partners. When asked about possible strategic changes following the crisis, 93% of respondents do not anticipate any in the short or medium term. Our partners therefore do not feel concerned by potential sales of part of their assets, administrative administration, or liquidations, a sign of a certain confidence in the future.

Finally, the latest information from our partners indicates that a liquidity crisis appears to have been avoided, with 24% of respondents highlighting this problem (compared to nearly 40% in our May survey). Moreover, in detail, the proportion of MFIs raising this point in each region does not exceed one-third.

The first explanations lead us first to the multiple deadline extensions granted to MFIs by their foreign and local investors, but also to the reduced levels of disbursements since the beginning of the crisis. It is also worth noting the low proportion of MFIs that have experienced a significant withdrawal of savings since the beginning of the crisis, helping with cash flow management. Among the MFIs that report this difficulty, most come from Sub-Saharan Africa and Asia and do not report significant additional needs compared to other MFIs. These various factors influence the liquidity needs of MFIs. Thus, on a global scale, 47% of the respondents have no additional financing needs for 2020. For nearly a quarter of MFIs outside Sub-Saharan Africa, these have even decreased. Finally, only a quarter of the respondents report significant additional needs.

3. In July, an exposed informal sector

While microfinance institutions are still exposed to the crisis, so are their clients. 92% of our partners indicate that clients operating in the informal economy are either moderately affected by the crisis or the most affected by it. Like all other entrepreneurs and MFI clients, they are suffering from reduced activity, but are also suffering the consequences of major international and national pandemic management measures, for example in the tourism, textile, and cultural sectors. With limited relief resources and reduced activity that cannot generate sufficient income, they would be more vulnerable. This statement is made by a very large majority in Central Asia and Latin America (more than two-thirds of respondents in these regions), while in Sub-Saharan Africa, feedback indicates that clients in the informal economy are impacted in the same way as those in the formal economy.

“Due to current economic and market conditions, it is difficult for small businesses to restart their current economic activities to the level they were at before the COVID-19 crisis” – Partner in Sri Lanka

The reasons given by our partners are primarily financial: the vulnerability of workers in the informal sector is said to stem from the lack of financial support from governments to the sector. This explanation is put forward by a vast majority (78%), who also note at 57% that clients in this sector do not have access to appropriate non-financial services (business development, financial education, health education, etc.). The lack of insurance services is also raised by 50% of these MFIs. On the other hand, the lack of access to savings services is only very rarely mentioned.

MFIs are already thinking about how best to meet their clients' needs. For example, 48% of the MFIs with a vulnerable informal sector say they plan to launch financial education programs, and 33% envision supporting clients in managing their businesses. However, only a small proportion of them envision launching microinsurance products (maximum 11%). MFIs justify these ambitions for two main reasons: to get closer and focus on underserved populations, to strengthen client relationships, but also to meet a demand for adapted and new offerings during a particular period. For some MFIs, this could translate into other initiatives, such as the development of the agricultural segment (always strongly mentioned by MFIs) or the development of digital solutions for clients, to prepare for the world after. As a partner in Latin America tells us:

"We are planning digital financial education and business management programs to introduce clients to using social media to sell their products, as the main problem they have had is that their retail locations were closed."

The findings of this article highlight the operational and financial challenges faced by MFIs during this first half of the year, as well as their initial steps toward understanding the problems and finding solutions. This context challenges us to continue to explore the most beneficial recovery actions for each region, how they can be implemented, and how the various stakeholders, both directly and indirectly, in the microfinance sector can contribute to its recovery. These questions represent significant challenges, but also important elements for considering the necessary solutions.

 

 

 

 

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1 The results of previous surveys are available here for the first and here for the second.
2 The total number of MFIs responding to the survey for each region is as follows: South Asia (“Asia”) 14, Latin America and the Caribbean (“LAC”): 24, Europe and Central Asia (“ECA”): 18, MENA: 6, and Sub-Saharan Africa (“SSA”) 29. For a total of 91 institutions. The small sample size for the MENA region does not allow for tracking of the region’s figures.
3 This comparison is based on a sample of 54 MFIs: 12 in Asia, 7 in EAC, 13 in LAC, 22 in SSA.
4 This comparison again concerns the sample of 54 MFIs.
5 Idem

 

Solidarity bankers: a new mission to be filled in Senegal

Launched by the Grameen Crédit Agricole Foundation and Crédit Agricole SA, Solidarity Bankers is a skills-based volunteer program open to Group employees that supports microfinance institutions and impactful businesses. The program has a twofold objective: to enhance the skills of Crédit Agricole Group employees and to provide additional support to the Foundation's partner microfinance institutions and impactful businesses. Through this program, the Crédit Agricole Group reaffirms its commitment to supporting employee solidarity initiatives.

What are the Solidarity Bankers missions?

Volunteer missions abroad are offered to employees on behalf of microfinance institutions or social impact companies, partners of the Grameen Crédit Agricole Foundation.

The missions are carried out through sponsorship or skills-based volunteering. Airfare and insurance are covered by Crédit Agricole SA. Any internal transportation costs, meals, and accommodation are paid by the beneficiary organization. The Grameen Crédit Agricole Foundation will prepare and coordinate the mission.

Since the launch of the program in 2018, fourteen missions have been carried out, both in sponsorship and skills-based volunteering.

A mission to be filled!

A ten-day HR support field mission is available for Oshun in Senegal for the last quarter of 2020.

Oshun Senegal was founded in March 2018, shortly after its parent company, Oshun, in France. Oshun offers inclusive solutions that provide access to water to the most vulnerable populations while promoting the establishment of a virtuous local community ecosystem. The company stands out for its innovations in rural development, connectivity, and water treatment.

Oshun Senegal has grown from 1 to 20 employees in just over 2 years (June 2018 – August 2020). Oshun Senegal is completing a structuring process, including the recruitment at the end of August of an Administrative and Financial Manager (AFM) whose mission will be to manage all of Oshun Senegal's support functions (accounting, finance, HR, logistics, purchasing) and to enable the company to gain administrative autonomy from the parent company.

Mission objectives:

  • Team organization and training
  • Definition and mastery of HR rules and procedures
  • Implementation of monitoring tools

How to apply?

  • Click on the link opposite “Finding your mission”
  • Type “Grameen Foundation” into the search bar. All Solidarity Banker missions will appear!
  • Click on the offer of your choice, you will find all the information necessary for your application.

Contact

Carolina HERRERA
Director of Communications & Partnerships
carolina.herrera@credit-agricole-sa.fr

The Foundation funds Thitsar Ooyin in Burma for the first time

The Grameen Crédit Agricole Foundation has just granted an initial loan in local currency equivalent to 1.3 million euros to Thitsar Ooyin, to enable this institution to continue its work, particularly among the rural populations of Burma.

Thitsar Ooyin is a microfinance institution based in Hakha, Chin State, a rugged and remote mountainous region in northwest Myanmar. The institution operates in some of the most remote areas of the country. It provides microcredit to the poorest and most disadvantaged rural communities, particularly women. Its methodology has enabled it to build a strong client base despite challenging conditions, making a significant impact on rural livelihoods.

Thitsar Ooyin offers both group and individual loans, primarily to women. To date, the institution has a loan portfolio of €7.3 million and more than 30,000 clients, including 791 women and 92 rural clients. It currently employs more than 100 people in a network of twelve branches located in Chin State and the Sagaing region.

With this loan, the Foundation now has three partners in Burma.

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

The Foundation grants a new loan to Caurie in Senegal

© Philippe Lissac

In July, the Grameen Crédit Agricole Foundation granted a new loan to the microfinance institution Caurie in Senegal, for an amount equivalent to €1.2 million in local currency. This new loan further strengthens a partnership between the Foundation and Caurie that began in 2009.

The Autonomous Cooperative for the Strengthening of Economic Initiatives through Microfinance (CAURIE-MF) was created in 2005 by Relief Services (CRS) and CARITAS Senegal. CAURIE-MF operates in over 60,000 rural areas and across 13 administrative regions of Senegal. To date, the institution has over 80,000 clients, including 97,000 women and 61,000 clients in rural areas.

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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 40 countries.

Faten, the Foundation's partner in Palestine, obtains Smart Certification

 

In June 2020, the Smart Campaign recognized the client protection efforts of Grameen Crédit Agricole Foundation partner FATEN by awarding it Smart Certification. The Smart Campaign is a global initiative that aims to integrate client protection principles into the financial inclusion sector. The Smart Campaign's Client Protection Certification program publicly recognizes institutions that provide financial services to low-income households and whose treatment standards meet the Smart Campaign's seven client protection principles. These principles cover important areas such as pricing, transparency, fair and respectful treatment, and the prevention of over-indebtedness.

The certification program includes a set of rigorous standards against which institutions are assessed by independent third-party assessors accredited by the Smart Campaign. The assessors are specialized rating agencies with extensive experience and have analyzed hundreds of institutions to date.

In 2019, the Smart Campaign had already publicly recognized the client protection efforts of three other microfinance institutions, partners of the Foundation, by granting them Certification: Musoni (Kenya), Chamroeun (Cambodia), and Salym Finance (Kyrgyzstan). These institutions thus joined the nearly 120 other organizations specializing in financial inclusion, in more than 40 countries, certified since the program's launch in January 2013.

For more information on the Foundation's partners, click here. 

Grameen Crédit Agricole Foundation invests again in Moldova

© Philippe Lissac

The Grameen Crédit Agricole Foundation is continuing its investments in Moldova with a loan to the microfinance institution Microinvest. This loan, worth €2 million in local currency, is the first granted to this institution, which provides microcredit and business start-up support to small entrepreneurs in many regions of the Republic of Moldova.

Many of Microinvest's loan recipients are entrepreneurs living in rural areas of this landlocked country between Ukraine and Romania. It is one of Moldova's leading microfinance institutions, headquartered in Chisinau. To date, Microinvest has over 35,000 clients, including 471,000 women and 661,000 clients located in rural areas.

With this investment, the Foundation strengthens its presence in the Eastern Europe and Central Asia region, where it already has 19 partners spread across 10 countries. This region thus represents 26% of the portfolio monitored by the Foundation.

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Created in 2008, under the joint leadership of Crédit Agricole SA's management and Professor Yunus, 2006 Nobel Peace Prize winner and founder of Grameen Bank, the Grameen Crédit Agricole Foundation is a multi-sector operator that contributes to the fight against poverty through financial inclusion and social impact entrepreneurship. As an investor, lender, technical assistance coordinator, and fund advisor, the Foundation supports microfinance institutions and social enterprises in 40 countries.