A new partnership between the Foundation and Crédit Agricole Egypt

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By Violette Cubier, Grameen Crédit Agricole Foundation

The Grameen Crédit Agricole Foundation and Crédit Agricole Egypt have signed a partnership agreement to structure a loan facility for DBACD, one of the largest MFIs in Egypt. Read the interview with Walie Lotfy, Head of Retail Banking at Crédit Agricole Egypt.

Interview with Walie Lotfy, Head of Retail Banking at Crédit Agricole Egypt

Could you introduce the partnership between Crédit Agricole Egypt and the Grameen Crédit Agricole Foundation?

The project of a partnership between Crédit Agricole Egypt (CA Egypt) and the Grameen Crédit Agricole Foundation (GCA Foundation) was born more than three years ago. However, regulatory constraints prevented us, at the time, from realizing our cooperation. Because CA Egypt, like the GCA Foundation, was convinced of the importance of this partnership and the market potential, we relaunched our project in 2017 around a completely renewed and better structured cooperation scheme, which meets the Group's requirements and regulatory requirements, particularly with regard to compliance issues.

We have partnered to structure a loan facility for microfinance institutions (MFIs). The first transaction, worth EGP 58 million (approximately EUR 2.8 million), was successfully completed for the benefit of a leading MFI in Egypt, the Dakahlya Businessmen Association for Community Development (DBACD).

With this first successful transaction, CA Egypt joins the ranks of banks contributing to the development of microfinance in the country. CA Egypt is thus expanding its range of services by reaching new sectors, in line with the Bank's sustainable growth strategy.

How can the banking sector contribute to the development of microfinance in Egypt?

Historically, the banking sector in Egypt has avoided entering the microfinance sector due to its complexity. As a result, public banks have long dominated this market. However, the Central Bank of Egypt has recently implemented mechanisms to incentivize banks to support the development of microfinance in the country. Moreover, all banks have recognized the vast potential of the microfinance market, not only due to the quality of assets but also the high levels of profitability. Most banks are now competing to lend to microfinance institutions.

In your opinion, what is the added value of the Grameen Crédit Agricole Foundation and what are the prospects for the partnership?

This partnership aligns with the Group's strategy to strengthen synergies between its various entities. It brings mutual benefits to both the GCA Foundation and CA Egypt. For the GCA Foundation, this partnership opens new markets for its expansion. For CA Egypt, being able to rely on the Foundation's knowledge and expertise is a significant support in diversifying its range of services and entering the microfinance market in Egypt while limiting the associated risks. This partnership will allow CA Egypt to gain an edge over competitors lacking this type of expertise.

The partnership also allows the Bank to gain visibility and acquire a better positioning in the microfinance sector, thanks to the reputation of the GCA Foundation which is recognized as one of the benchmark players in the sector.

I believe this collaboration has strong potential. We have learned several lessons from this pilot transaction, and we will continue to optimize the system to develop a more competitive offering and thus increase our impact, while keeping risks under control.

CA-Assurances and the Grameen Crédit Agricole Foundation on a mission to Burkina Faso

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Crédit Agricole Assurances is assisting the Grameen Crédit Agricole Foundation in conducting due diligence on CIF-VIE, one of the leading insurance companies in Burkina Faso, which is of particular interest to the Foundation. This transaction is part of the Foundation's dual ambition: to strengthen its presence in the microinsurance sector and consolidate its ties with Crédit Agricole Group entities.

CIF-VIE: a company with strong potential

CIF-VIE began its operations in Burkina Faso in 2013, with the support of RCPB, the leading Burkinabe microfinance cooperative network, and ADA (a Luxembourg NGO). It aims to improve the protection of policyholders and beneficiaries through a comprehensive range of life, death, and capitalization insurance products in Burkina Faso.

Today, the African company accounts for 61.3 billion euros of the market. With a positive net profit since its creation, CIF-VIE is taking a new step in its growth with a strategic, operational, and financial transformation. Its action plan: open its capital to new shareholders to comply with the new requirements of the Inter-African Conference on Insurance Markets (CIMA); restructure its organization towards greater efficiency and better risk management; and develop its products and expand its distribution network. Its goal by 2020 is to be among the top five insurance companies in Burkina Faso.

The Foundation and CA-Assurances join forces to support microinsurance

The Grameen Crédit Agricole Foundation supports 70 microfinance and social business institutions in more than 30 countries. As an investor, financier, and supporter, it strengthens its contribution to the financial transition by supporting the development of microinsurance in Africa.

Noting CIF-VIE's strong potential, the Foundation, alongside CA-Assurances, carried out a due diligence mission to better understand this structure and assess the possibility of investing in it. Pierre Casal Ribeiro, Microinsurance Expert at the Foundation, led the due diligence mission accompanied by Eduardo Cardoso de Miranda, Creditor Insurance Expert at CA-Assurances, with the support of El-Hadj Diop, Investment Advisor, and Céline Hyon-Naudin, Social Business Investment Officer at the Foundation.

Crédit Agricole Assurances, the leading insurance group in France and the leading bancassurer in Europe, has committed itself alongside the Foundation to a dynamic of social responsibility to promote the skills and convictions of its employees in favor of the common good.

Investing in a more shared economy is the driving force behind this collaboration.

The Foundation publishes its 2017 Integrated Report

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The Foundation is publishing its 2017 Integrated Report, which is a call to design financing, investments, and economic support mechanisms that are more accessible, more transparent, and more inclusive. Alongside other committed stakeholders, the Grameen Crédit Agricole Foundation is taking part in the financial transition toward a fairer, more equitable economy with more widely shared benefits. Its 2017 Integrated Report is a call to design financing, investments, and economic support mechanisms that are more accessible, more transparent, and more inclusive.

With €49.3 million in funding granted in 2017, the Foundation expanded its scope of intervention to 32 countries by supporting 69 microfinance institutions and social business enterprises that assist 3.2 million clients worldwide, of whom 77% are women and 75% live in rural areas. By promoting access to entrepreneurship and seeking to strengthen the resilience of the most vulnerable, the Grameen Crédit Agricole Foundation is committed to the common good.

Download the Integrated Report 2017

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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 SA 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.

Social Business, towards socially useful entrepreneurship

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© CreditAgricole SA/CAPA Pictures/Nicolas Axelrod.

For more equitable access to wealth creation, the Grameen Crédit Agricole Foundation calls for a more responsible capitalism that embodies a new “social contract.”

A pragmatic observation

With its experience as a pioneer investor in Social Business companies, and supported by a detailed assessment, the Grameen Crédit Agricole Foundation notes that social entrepreneurship is, most often, rapidly beneficial for society, but that it takes much longer to reach its financial equilibrium threshold.

Social Business

A social business aims to provide a solution to a societal problem while also seeking to achieve financial profitability. This business model is therefore classic in its financial aspect, but very different because social utility is its primary goal. Profitability is only one means to achieve it sustainably. Its way of creating value does not lie in its ability to meet a market need, preferably with a competitive advantage, but in the pursuit of its social mission, the project of collective utility at the origin of its creation.

A White Paper, seven proposals

In its White Paper, the Grameen Crédit Agricole Foundation sets out seven concrete proposals to improve the effectiveness of social business. From identifying success factors to structuring the social performance of projects, the Foundation presents a unique economic approach.

1. Create the status of a “social utility contract” company

For the Grameen Crédit Agricole Foundation, a social enterprise cannot exist without a contractual act that commits to the societal objectives of the projects.

2. Value social utility to integrate it into the social enterprise's income statement

Valuation would consist of identifying and estimating the social and environmental impacts of the company in order to be able to transcribe them in the form of units of account.

3. Tax-support the development of associations into companies with social utility contracts

Social businesses need to resort to hybrid financing (donation/debt combinations) because the particularly low margins of their economic models generally cannot cover investment costs.

4. Create public-private partnerships in rural areas for access to essential goods

A social enterprise established in a rural environment can perfectly act as a relay for public action and make itself eligible for a suitable PPP format.

5. Disseminate low-tech patents in open source

Open source (royalty-free) low-tech patents are one of the keys to the development of modest and local economies in emerging countries.

6. Use of deconsolidating financial arrangements in agricultural value chains

Developing a relationship of trust through contractualization strengthens and structures the agricultural value chain.

7. Rely on local relays

The Foundation recommends relying on a local investor member on the board of directors. Their presence will facilitate operations and governance.

“Social and Business: two words that, on the surface, are complete opposites. In the old economic paradigm where individualism was triumphant and its consequence, precariousness, widespread, they resonated as a contradiction, a paradox. An idealist's whim. And yet, their meeting, however singular it may be, is a way forward to rethink and redefine a more responsible capitalism and a deliberately inclusive economy.” Eric Campos, General Delegate of the Grameen Crédit Agricole Foundation.

To download the Social Business White Paper: White paper - Social business - BD

The Grameen Crédit Agricole Foundation posted a good performance in 2017

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Since its creation in 2008, the Foundation has committed nearly €200 million in financing. It works with 70 microfinance institutions and social businesses in 28 countries. Women and rural populations represent 76% and 81% of the more than 3 million clients of the institutions that the Foundation supports both in financing and technical assistance. In this support component, the Foundation's teams have led 50 technical assistance missions for 16 partner institutions.

2017 was a year of growth, with positive operating income and a net profit that was also positive, while maintaining a risk profile with no adverse trends. The Foundation thus demonstrated its ability to combine social performance and economic balance. During this year, we refocused on our core business while increasing our capacity to act. In 2017, 44 financing applications were presented to the Investment Committee, for an additional amount of nearly €50 million.

The Foundation has expanded its scope of operations with new partnerships in Montenegro, Kazakhstan, and Burma. 86% of our countries of operation are among the poorest in the world. 48% of funding applications are concentrated in sub-Saharan Africa and 23% in South and Southeast Asia; these two geographic areas each represent 35% of the Foundation's commitments at the end of the year.

Meeting on March 6 and 7 in Luxembourg, the Foundation's directors expressed their satisfaction and congratulated the Foundation's teams for these results, which honor the Institution. The Board of Directors meeting was also an opportunity to outline the avenues for the next medium-term plan for 2019-2023 and to launch a project to create an Investment Fund designed to improve the operational excellence and resilience of our partners.

Committing alongside microfinance institutions, participating in the growth of rural economies, seeing further, acting together for a better shared economy, the Grameen Crédit Agricole Foundation remains focused, humble but active and bold in the service of its founding mission of fighting poverty.

AFD and the Foundation strengthen their support for microfinance in Africa

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The Foundation is strengthening its ties with its institutional partners through a new agreement signed in March 2017 between the Grameen Crédit Agricole Foundation and the French Development Agency (AFD) for a period of 3 years.

A program to strengthen microfinance institutions

The "Take-off Facility for Agricultural and Rural Microfinance in Africa," established in partnership with the French Development Agency (AFD), was renewed in March 2017 for a period of three years. The first phase of the program, carried out between 2013 and 2016, helped strengthen microfinance institutions (MFIs) in Africa and support them towards operational self-sufficiency and financial sustainability.

At the end of December 2017, the program had 18 partners, 15 of which were located in six AFD priority countries[1]. In 2017, seven new partners joined the program, three of which were in two new countries of intervention under the Facility: the DRC and Rwanda. Loan contracts totaling €6,033,000 were approved and €3,707,363 were disbursed.

A second phase to multiply the impact of the project

The second phase of the program will run from 2017 to 2020 and will finance and provide technical assistance to more than twenty MFIs. The new AFD financing is structured around three components: a €6 million loan to develop the Facility's credit activity; a €2.2 million grant to contribute to technical assistance lines; and an ARIZ portfolio guarantee to cover 50,000 million of the loan production granted to MFIs in sub-Saharan Africa.

Since the signing of the second phase in March 2017, five technical assistance protocols have already been signed and 28 technical assistance missions have been completed or are underway. The missions aim to strengthen the risk profile of partner institutions through various themes such as developing a business plan, risk management, and improving the information system. The missions will also focus on measuring and managing social performance, agricultural financing, and green microfinance.

[1] Benin, Burkina Faso, Mali, DRC, Senegal, Togo

Jordan: A partnership for a better shared economy

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The Grameen Crédit Agricole Foundation is providing $2 million in funding to the microfinance institution FINCA Jordan as part of a partnership with CoopMed. This transaction is part of a long-term collaboration between the Foundation and FINCA International.

FINCA Jordan: A decade of action in favor of entrepreneurship

Since 1985, the FINCA International network has been promoting access to finance for low-income people. With 1.9 million clients in over 20 countries, it operates in Africa, the Middle East, Eurasia, Latin America, and the Caribbean. Over the past 30 years, it has supported the entrepreneurial projects of over 4 million borrowers, primarily women.

Founded in 2007 in Jordan, FINCA Jordan MFI has nine branches and 29,000 clients. With an average loan of $1,550, outstanding loans total $29 million. It offers financing tailored to small and medium-sized businesses, as well as solidarity and individual loans.

Tripartite cooperation with impact

FINCA Jordan has become a new partner of the Foundation as part of a partnership between the Grameen Crédit Agricole Foundation and Inpulse, a social impact fund manager. FINCA Jordan, which is both socially efficient and economically viable, has received $2 million in funding.

The Grameen Crédit Agricole Foundation is strengthening its presence in the Middle East through this initiative. Operating in 30 countries, the Foundation continues its efforts to provide access to finance for people traditionally excluded from the banking sector. With this partnership, Inpulse, which has an investment capacity of €58 million, is also strengthening its presence and activities in one of its 14 countries of operation.

This joint venture, funded by two European impact investment players, illustrates the value of partnerships in inclusive finance. Based on a shared set of fundamental values, the Grameen Crédit Agricole Foundation, Inpulse, and FINCA International are pursuing a path forward: a more inclusive economy strengthened by those who believe in the strength and virtue of alliances.

CP-Pret-2M-FINCA-Jordan-CoopMed-FGCA-FINCA

14th Annual World Microfinance Forum

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At the 14th UNIGLOBAL Annual Microcredit Forum in Munich on March 15-16, Jurgen Hammer, Director of Risk and Social Performance at the Gramen Crédit Agricole Foundation, participated in the panel discussion: "Microfinance and Impact Investment: Creating Value and Protecting the Client." The panel included representatives from Incofin, BIO, and KfW.

Jurgen Hammer presented an overview of social performance management in inclusive finance, the development and application of the Universal Standards and the SPI4 assessment tool. He encouraged the sector to apply best practices in responsible and inclusive finance and to measure performance through its Universal Standards and actively manage improvements. His presentation concluded with an example of concrete implementation by the Grameen Crédit Agricole Foundation, which, for the second consecutive year, conducted a social performance assessment of its partners' portfolio in 2017 and a comparison of reference groups for in-depth qualitative analysis.

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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 SA 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.

Green Index or how to link finance and climate

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Green microfinance is a term that arouses curiosity. What does it mean? Are we talking about responsibility, economy, or commitment? How can the convergence of the concepts of "green" and "inclusive" be viable?

To address these challenges, the Green Index was designed in 2016 as a tool to measure the environmental performance of microfinance institutions. Find answers to all your questions in this complete and detailed file produced by the Microfinance and Environment Working Group of the European Microfinance Platform (e-MFP)

The objective of e-MFP is to promote cooperation between European entities active in microfinance in developing countries. e-MFP fosters high-level discussions, communication, and the exchange of information. eMFP's vision is to become the focal point for microfinance in Europe, connected to the Global South through its members.

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Founded in 2006, the e-MFP platform is a growing network of over 120 organizations and individuals active in the field of microfinance. As a multi-stakeholder organization, the network represents the microfinance community in Europe. e-MFP members include banks, financial institutions, government agencies, NGOs, consulting firms, researchers, and universities. The Grameen Crédit Agricole Foundation is a member of e-MFP.

Digital finance, a weapon against exclusion?

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Our partner ADA is taking action with the Digital Finance Initiative (DFI), which aims to facilitate and co-finance the implementation of digital solutions by microfinance institutions in 12 sub-Saharan African countries. Covering a period of five years, from 2017 to 2021, this ambitious project will provide fast, affordable, and secure access to banking services.

Support in 3 steps

1e step: initial priority identification workshop
The DFI workshop brings together MFI senior executives for a week. It aims to give them a comprehensive overview of the various challenges, opportunities, and constraints posed by new technologies. It provides them with the tools to analyze all possible scenarios for integrating digital technology into their strategy and to assess the expected impacts in technical, operational, financial, and regulatory terms. The goal is for participants to emerge from the workshop with clear ideas about the digital strategy they wish to adopt.

2e step: pre-project phase: definition of a digital project
MFIs wishing to pursue the adventure first have their new project validated by their governance. Then, supported by the ADA manager in charge of the "Digital Finance Initiative" project and local consultants, they can launch their action plan. This plan includes the establishment of specifications, the publication of calls for tenders and the selection of technical service providers, the establishment of a schedule, and finally the drafting of a co-financing file that will be submitted to a selection committee, composed of members of the ADA Board of Directors, Deloitte Digital, POST Luxembourg, and LuxFLAG. The file, if approved, is co-financed by ADA (and possibly other donors) up to €70% of the investment costs, up to a ceiling of €100,000.

3e stage: pilot phase: implementation of the digital project
Once the Committee has accepted the application, the project can begin to be implemented with a pilot project involving one or two branches. At this stage, ADA offers the MFI financial support, as well as assistance in all areas impacted by the project: redefinition of procedures, training needs for staff and clients, and risk management. Once the testing phase is complete and conclusive, the MFI rolls out the project across the entire network. This is when ADA's support ends, and the institution is then considered autonomous.

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