News

The Foundation grants seven new loans in Eastern Europe and Central Asia

Since January 2021, the Grameen Crédit Agricole Foundation has pursued its financing in Eastern Europe and Central Asia and has thus granted seven new loans to its partners.

In Kosovo, the Foundation granted a new loan to the microfinance institution AFK for an amount of €1.5 million over a three-year period. The Kosovo Finance Agency (AFK) is a microfinance institution that aims to improve living conditions in Kosovo by providing access to sustainable financial services to micro and small businesses. AFK aims to promote the development of rural areas as well as women entrepreneurs and minorities. The institution serves 19,300 active borrowers (22% of them women and 51% of them living in rural areas) and manages a portfolio of 36 million euros.

In Moldova, the Foundation granted a new loan to the microfinance institution Microinvest for an amount of €1.4 million over a three-year period. Microinvest provides microcredit and business start-up assistance to small entrepreneurs in many regions of the Republic of Moldova. 70% of its loan portfolio corresponds to loans to private entrepreneurs living in rural areas. The institution has nearly 37,000 clients, 66% of whom live in rural areas and 41% of whom are women.

In Montenegro, the Foundation granted a loan to the microfinance institution Monte Crédit for an amount of one million euros, over a three-year period. Founded in 2005, Monte Credit is a microfinance institution whose mission is to empower rural families to create income and jobs, freeing up economic potential so that communities thrive. The institution has more than 4,000 clients, 54% of whom are women and 51% of whom live in rural areas.

In Kyrgyzstan, the Foundation granted a new loan to the microfinance institution OXUS for an amount in local currency equivalent to €800,000. OXUS Kyrgyzstan is a microfinance institution created in 2006 by OXUS Group and ACTED. It is a responsible company committed to providing financial services to the working poor and the under-banked in Kyrgyzstan. To date, the institution has nearly 8,000 clients, 48% of whom are women and 62% of whom are clients in rural areas.

In Kazakhstan, the Foundation granted a new loan to the Asian Credit Fund (ACF) microfinance institution for an amount in local currency equivalent to one million euros. ACF is a microfinance institution created in 1997 by the American NGO Mercy Corps. ACF’s financial services are designed to promote the development of rural households, the growth of small businesses and home ownership. ACF adheres to a specialised community lending model that offers tailor-made financial solutions, business advice and technical assistance to its clients. To date, the institution has 27,000 clients, 70% of whom are women and 93% of whom are rural areas clients.

Finally, in Tajikistan, the Foundation granted a new loan of an amount in local currency equivalent to €1.2 million to the microfinance institution HUMO. HUMO is a microfinance institution that aims to support vulnerable and underserved populations living in rural areas through financial and advisory services for small businesses. The institution has nearly 73,000 clients, 37% of whom are women and 75% of whom live in rural areas. Also in Tajikistan, the Foundation granted a new loan to the microfinance institution OXUS Tajikistan for an amount in local currency equivalent to one million euros over a three-year period. OXUS Tajikistan mainly targets microentrepreneurs and farmers in rural areas. Its social mission is clear and aims to improve the economic and social conditions of the low-income population who are not served by the banking sector. To date, the institution has over 14,000 clients, 36% of whom are women and 79% of whom live in rural areas.

For more information, click here.

The AFD and the Foundation, a historical and promissing partnership

Rémy Rioux, CEO, Groupe Agence française de développement
[French Development Agency]

A historical partner, the Agence française de développement (AFD) [French Development Agency] has been supporting the Foundation’s activities for over 10 years. Its CEO, Rémy Rioux, shares with us his vision on the impact of the economic and health crisis generated by the Covid-19 pandemic on the African continent and his assessment of the partnership with the Foundation.

— What were the main impacts of the pandemic on the African continent in your opinion and how did the AFD respond to this crisis? What were your key areas of response?

R R: Africa experienced an unprecedented shock in 2020, which, I would like to stress, was totally external to the continent. The continent appeared quite resilient in terms of health, but less so on the economic front. An unprecedented recession, averaging 2.6%, affected more than forty countries simultaneously. Beyond the cyclical impact, the crisis above all raises concerns about a deep weakening of economies and societies.

The Agence française de développement Group (AFD) mobilized very quickly to support its partners. In terms of health, with a €1.2 billion “Common Health initiative”, half of which in Africa, for some fifty projects and nearly €130 million in donations; and on the economic level, with the “Choose Africa” programme to support the entrepreneurial sector and then its strengthening with a Resilience component, bringing the programme to €3.2 billion committed by 2022. Finally, in the wake of the «Finance in Common» Summit, we support African public development banks (a hundred or so of which throughout the continent), to turn them into sustainable growth relays.

— How do you assess the historic partnership with the Grameen Crédit Agricole Foundation?

R R: The AFD Group has been providing the Foundation with portfolio and individual guarantees for more than 10 years and has financed the African Facility, which enables us to support small microfinance institutions for the benefit of disadvantaged populations, particularly in rural areas. The partnership with the Foundation has since 2020 been handled by Proparco, our subsidiary dedicated to the private sector. Beyond the financial partnership, we appreciate the quality of the relationship between our two institutions, which is marked by trust and transparency. The importance of supporting the microfinance sector has been reinforced by the Covid-19 crisis and working with the Foundation constitutes a solid lever for strengthening the sector.

— Can a large institution like yours and an agile player like the Foundation still invent new ways of acting and if so in what priority areas?

R R: The complementary nature of our two institutions and their response methods makes the partnership strong and relevant to several priority areas, namely: support for the development of microinsurance, particularly agricultural microinsurance; assistance to microfinance institutions in improving social performance management; development of the digital offer in the microfinance sector; and green microfinance. The context of the crisis has reinforced the relevance of these areas of response.

The Covid-19 crisis and gender inequalities

Miren Bengoa, Director, member of Financial, Risks and Impact Committee,
Grameen Crédit Agricole Foundation & International Action Director, SOS Group

Director of the Grameen Crédit Agricole Foundation since 2020, Miren Bengoa has been, since January 2021, the new International Action Director of the SOS Group. Since 2011, she was at the head of Fondation CHANEL, which supports projects improving the economic and social situation of women. She shares her view on the impact of the Covid-19 crisis on gender equality and the responses to address it.

— What is the impact of Covid-19 on the status of women?

MB: One of the immediate consequences of the Covid-19 crisis is the rise in inequalities between women and men. We have seen during this pandemic an increase in violence against women and girls and a decline in girls’ learning as dropout rates and child marriage increase. Tens of millions more women have fallen into extreme poverty as they lose their jobs at a faster rate than men. Moreover, they suffer from difficulties in accessing new technologies and lack of digital skills.

— In a few words, what is the panorama of gender inequality in the world today?

MB: Current projections indicate that gender equality will not be achieved for another 130 years. In 2020, women represented on average (on a global scale) 4.4% of business leaders, 16.9% of Board members, 25% of parliamentarians and 13% of peace negotiators. Only 22 countries are currently headed by a female head of State or government (UN Women, 2020). We need better representation of women that reflects the diversity and abilities of women and girls.

— How can female entrepreneurship be an answer to the crisis?

MB: Women entrepreneurs have been at the forefront and strongly affected by the decline in economic activity. They are nonetheless also the bearers of innovative solutions and should be supported as much as possible by funders and public authorities. Being strongly involved in responding to community needs, they have been able to adapt their activities to the constraints of the pandemic. This has not been easy: they have sometimes been the first to give up a income generating activity so as to give priority to their families.

— Promoting women empowerment is one of the missions of the Grameen Crédit Agricole Foundation. What should be the priorities to boost this aspiration?

MB: Since its creation, promoting women empowerment has been at the heart of the Foundation’s action: among the 7 million clients of microfinance institutions supported, 73% are women beneficiaries of microcredits to create or develop income-generating activities. Maintaining funding, flexibility in rollovers and frequent analysis of the needs of these institutions are and will be key to enable them to regain a capacity for action in favour of female entrepreneurship.

The Foundation provides four new financings in sub-Saharan Africa

In recent months, the Grameen Crédit Agricole Foundation has pursued its financing in sub-Saharan Africa with four new loans granted, two of which to new partners.

In Togo, the Foundation granted a new loan to the microfinance institution Assilassimé for an amount in local currency equivalent to € 2.2 million. Assilassimé’s mission is to provide sustainable access to social microfinance services adapted for people experiencing exclusion or extreme poverty, with limited access to the traditional microfinance system. The institution seeks first and foremost to enable them to carry out income-generating activities and improve their living conditions. To date, Assilassimé has over 19,000 clients, 91% of whom are women.

In Zambia, the Foundation granted a new loan to the microfinance institution AMZ for an amount in local currency equivalent to € 1 million. AMZ aims to serve customers who have previously been excluded from the formal financial market, mainly because of their poverty or their place of residence. The products offered are designed to meet their financial needs. The institution has over 80,000 active borrowers, 92% of whom live in rural areas and 56% of whom are women.

In Rwanda, the Foundation granted a first loan to the microfinance institution ASA Microfinance Rwanda for an amount in local currency equivalent to € 500,000. ASA Microfinance Rwanda Plc (ASA Rwanda) is an institution created in 2016 by ASA International. Its mission is to contribute to poverty reduction through economic empowerment by ensuring access to financial services to the disadvantaged community of Rwanda. The institution grants loans according to group and individual methodologies. They mainly finance women who represent more than 95% of its clientele, and mainly operates in rural areas.

Finally, in Kenya, the Foundation also granted a first loan for an amount in local currency equivalent to € 766,000 to the microfinance institution YEHU. YEHU is a microfinance institution whose mission is to fight poverty by empowering poor rural entrepreneurs in Kenya to help them lift themselves out of poverty through better accessibility to sustainable financial services. This includes enabling them to save while giving them access to microloans, which can be used to start or grow their small business. Yehu also offers business training, microinsurance products and other services to improve the lives of its members. To date the institution has 28 000 clients, 96% of whom are women. 76% of its clients live in rural areas.

To date, the Grameen Crédit Agricole Foundation has 89 partners in 39 countries and manages a portfolio of €86 million, 46% of which is located in so-called fragile countries.

For more information, click here.

The Foundation continues to support its partners in Asia

During the first quarter of 2021, the Grameen Crédit Agricole Foundation completed three new financings in Asia, in particular in Indonesia.

In Indonesia, the Foundation granted a new loan to the microfinance institution KOMIDA for an amount in local currency equivalent to €2.2 million. KOMIDA is a microfinance institution created in 2004 as a foundation to offer financial assistance in the form of savings and loan services as well as non-financial services such as health or family financial management training. The institution, which works exclusively with women, currently serves nearly 720,000 clients.

Also in Indonesia, the Foundation granted a new loan to the microfinance institution MBK for an amount in local currency equivalent to € 5 million. “Mitra Bisnis Keluarga” (MBK) is a microfinance institution regulated by the Indonesian Financial Services Authority (FSA) and licensed as a non-bank finance company. Using the Grameen Bank methodology, MBK provides working capital to low-income women in Java to give them access to formal and profitable financial services (financial inclusion), reduce their vulnerability and improve their lives. To date, the institution serves more than one million clients, exclusively women, 75% of whom below the poverty line.

In Myanmar, the Foundation granted a new loan to Proximity Finance for an amount in local currency equivalent to € 1.4 million. Proximity is a microfinance institution created in Myanmar in 2010 that designs and delivers affordable and income-generating products for rural families. The institution strives to improve the livelihoods of rural Myanmar people by providing innovative financial services tailored to their needs, and uses the dynamism of businesses to create social value. To date Proximity has nearly 200,000 active borrowers, 69% of whom are women and 98% of whom live in rural areas.

To date, the Grameen Crédit Agricole Foundation has 89 partners in 39 countries and manages a portfolio of €86 million, 46% of which is located in so-called fragile countries.

For more information, click here.

Lazika Capital, partner of the Foundation, supports Georgian entrepreneurs

Lazika Capital is a microfinance institution created in 2000 by Oxfam Great Britain in Georgia. Its mission is to facilitate access to financial services for low and middle income entrepreneurs.
Lazika Capital is among the leaders in the Georgian microfinance sector and has nearly 14,000 clients. The agricultural sector represents 52% of its portfolio.

In 2020, in response to the Covid-19 crisis, Lazika Capital provided significant benefits to its clients directly affected by the health and economic crisis. During this period, the Grameen Crédit Agricole Foundation, alongside other lenders, supported Lazika Capital to limit a decline in its liquidity and ensure that the institution could continue to finance its clients. Although the health situation has improved in 2021, the institution remains actively involved in various government programmes to reduce the negative impact of the pandemic and accelerate economic recovery.

Priority to digitalisation

Lazika Capital was the first microfinance institution in Georgia to be allowed, by the National Bank, to offer remote services.

To support entrepreneurs, especially in the agricultural sector, Lazika Capital offers its clients technological improvements to make their products and services more diversified and flexible.
Indeed, the institution uses digital tablets for better application management in the field. This digital offering was particularly useful during the lockdown period, as clients could apply for loans, be informed of their approval and make repayments without visiting a branch.

The positive results achieved in 2020 prove that Lazika Capital is a resilient institution, able to face challenges while continuing to be a successful, reliable and responsible partner in the microfinance sector. The Grameen Crédit Agricole Foundation, on its side, pursues its support to the institution with which it has been working since 2017, in order to continue supporting Georgian entrepreneurship, despite the challenges in this uncertain period.

More information on Lazika here.

Solidarity Bankers: six missions to be filled with the Foundation’s partners

Two online and four field Solidarity Bankers’ missions are currently available on behalf of the Grameen Crédit Agricole Foundation.

Solidarity Bankers is a skills volunteering programme launched by the Foundation and Crédit Agricole S.A. in 2018 and aimed at all Crédit Agricole Group employees. The programme has a twofold objective: on the one hand, support microfinance institutions and social impact enterprises financed by the Foundation with technical assistance, and on the other hand, enhance the skills of Group employees who want to invest themselves in projects with high social impact.

The missions can take place during the Solidarity Banker’s working time and/or during holidays (volunteering).

Currently, six missions are available, online or in the field:

ONLINE MISSIONS

The experts selected for the online missions will work remotely and will devote the equivalent of one day per week, for 15 weeks, to the mission.

The two online missions are to be filled as soon as possible.

• “Digital strategy” mission for OXUS (Kyrgyzstan)

OXUS Kyrgyzstan (OKG) is a microfinance institution that provides financial services to the working poor and under-banked in Kyrgyzstan. The institution serves 8,000 active borrowers and manages a portfolio of EUR 6.4 million.

A Solidarity Banker mission is planned from July 2021 to support OKG in the evaluation of its digitalisation processes and in the construction of a new digital strategy. The expert sought is a Crédit Agricole employee with significant experience in IT project management. Fluency in English is essential.

The mission description is available here.

• “Financial Management” mission in favour of FATEN (Palestine)

FATEN is a microfinance institution in Palestine. The institution has more than 26,000 clients and manages a portfolio of EUR 108 million.

The selected Crédit Agricole expert will support FATEN in updating financial procedures, policies and tools. The Solidarity Banker must be fluent in English and have knowledge of international financial reporting standards and in particular of the latest changes to IFRS 16 and IFRS 9. Fluency or very good knowledge of Arabic is a plus. At a minimum, fluency in English will be required.

The mission description is available here.

FIELD MISSIONS

The four field missions are to be filled as soon as possible, depending on the current health situation.

• “Logistical support/purchasing” mission in favour of Oshun (Senegal)

Oshun is a social enterprise that offers inclusive solutions, especially in the form of solar-powered water kiosks, allowing the most vulnerable populations access to clean water. Oshun Senegal is completing a process of administrative and HR structuring and wishes to strengthen its support functions, primarily logistics and purchasing.

The selected Crédit Agricole expert will support Oshun in setting up procedures to simplify and secure logistics, procurement and supply management, and strengthen the staff involved. The mission will last 10 days, first remotely from France and then on the ground in Senegal if health conditions allow. The Solidarity Banker must have solid experience in logistics and procurement management and, ideally, experience in training and coaching in the field of procurement.

The mission description is available here.

• « LBC-FT » mission for SEF (South Africa)

SEF is a microfinance institution that provides loans through a network of 98 branches in South Africa. The institution has 225,317 active borrowers and manages a portfolio of more than EUR 45 million.

The selected Crédit Agricole expert is responsible for supporting the Quality and Compliance Department and the Training Department in developing relevant training materials on AML/CFT issues for employees. The Solidarity Banker must have at least 5 years of experience in compliance.  The mission will last two weeks, including 10 days in the field.

The mission description is available here.

• « Marketing » mission for Lazika Capital (Georgia)

Lazika Capital is a Tier 2 microfinance institution in Georgia. The organisation operates through 18 branches in western Georgia.

The selected Crédit Agricole expert will be responsible for evaluating the organisation’s marketing strategy and actions, as well as developing a marketing plan for mid-2021/2020. The Solidarity Banker must have a solid experience in marketing. A good mastery of English is required. The mission will last 20 days, including 10 days in the field.

The mission statement is available here.

• « Digital Strategy » mission for Smart Credit (Moldova)

Smart Credit is a microfinance institution that provides financial services to socially disadvantaged people and small entrepreneurs in Moldova. The institution has more than 3,000 active borrowers and manages a portfolio of 4.4 million euros.

The Solidarity Banker will be in charge of helping to build the digital strategy of Smart Crédit. The expert is an employee of the Crédit Agricole Group who is fluent in English and has experience in IT project management.

The mission description is available here.

How to apply?

To discover the details of the missions:

1. Go to the CA Solidaires website: tab “Get involved” then “Solidarity leave“.
2. Click on the offer of your choice. You will find all the necessary information for your application.

For more information, you can contact: cecile.delhomme@credit-agricole-sa.fr

Microinvest supports investments in the modernisation of Moldovan agriculture

Interview with Dumitru Svinarenco, Chief Executive Officer of Microinvest (Republic of Moldova) about investments in Moldovan agriculture in main facilities of Agri loans.

1. Could you present Microinvest in a few words?

Microinvest is a non-bank credit organization with mixed capital. We managed to prove our major role in the Moldovan financial market by supporting local businesses, agriculture and individuals and directly contributing to the development of the country’s economy.

According to the size of the portfolio, we rank 6th among the banking system, while maintaining the leading position on non-bank credit market in the country. We are different from other financial companies thanks to the customized solutions and important benefits in the lending process that we offer to each client, including agricultural entrepreneurs. We are the only NBFI in Moldova to hold the international quality certificate – SMART, which proves that we are a responsible and trustworthy lender.

2. Agriculture is one of the basic pillars for the Moldovan economy and it is also a priority sector for Microinvest. How did the 2020 drought and Covid-19 affect your clients and your organization?

Every year, the agricultural sector is developing and modernizing thanks to successful entrepreneurs and responsible investments. 30% of our overall LP and more than 40% of our business LP is dedicated to the agri field, to the support of agricultural businesses and farms, which need financial investments for quality agriculture.

The year 2020 had a major impact on the Moldovan agricultural segment, which were directly confronted with the Covid-19 crisis, but also with the unprecedented drought, which led to a season with minimal harvests.

3. What has been your response to support the agricultural sector to cope with these crises?

Microinvest was among the first organizations to cancel the penalties at the beginning of the pandemic, both for business owners and individuals. Throughout this period, our experts have assessed the situation of each entrepreneur. We have been open to come up with solutions for restructuring and extending the terms of loans, without charging fees.

As the pandemic had just started, we continued to lend to farmers so that they could begin the agricultural season as planned. Despite the difficulties, some of our clients have managed to develop successful households and gather great results from the investments made.

4. Microinvest is funded by the Grameen Crédit Agricole Foundation (GCAF) since 2020. How has the Foundation supported your organization during this pandemic?

Microinvest started the interactions with GCAF in 2019 and signed the first loan agreement in May 2020, at the peak of the highest lockdown restrictions imposed by most countries. This first loan from GCAF was an impulse for other lenders, proving that even new lenders believed in our financial stability and in our adequate reaction to crisis. The second loan has already been disbursed in March 2021.
The Foundation maintained transparent communication with us, listened to our needs and supported the search for suitable solutions. We consider GCAF as a reliable partner, therefore we plan to develop and strengthen our cooperation in the future.

5. Which will be your strategic priorities for the years to come? What place have you given to digitalization?

Digitization occupies a special place in our communication and development strategy. We follow a balanced formula: combining digital automation with personal discussions with customers, visits and direct interactions. Entrepreneurs appreciate the expertise and the value of an individual approach which lead to tailer-made financial solutions. At the same time, we tend to go for the massive digitization of retail lines, simplifying the lending process, and thus saving our customer time.

We are confident that agriculture in Moldova is one of the strategic segments for our country. We support individuals and legal entities in their plans for growth and business transformation. In 2021, we came up with a special offer for business clients – unsecured credits up to MDL 1,700,000, so that they can successfully achieve their goals. Both we and the farmers have high expectations for the new agricultural season. A good year will give additional strength to the agricultural sector, but also additional desire to invest in the modernization of agricultural practices, by purchasing new high-performance equipment.

More information on Microinvest.

COVID-19 : The Foundation’s governance during the health crisis

Spotlight on the interview with Sylvie Lemmet, Chairman of the Finance, Risks and Impact Committee, Jérôme Brunel, Chairman of the Compliance and Internal Control Committee, and Bernard Lepot, Chairman of the Investment Committee.

Looking back on the outbreak of the crisis, could you tell us how you perceived it at the time?

Bernard Lepot: We all understood as early as March that we were in unknown territory for an indefinite period of time, with systemic consequences that were difficult to grasp. All continents were affected, including Africa and Asia, where we have most of our activities. The risk of serious difficulties for our partners was likely, with possible large provisions for the Foundation. Despite this lack of visibility, the Board had to define the Foundation’s position quickly, which we summarise as follows: support for our existing partners and consultation with other international lenders.

Sylvie Lemmet: Last March, we were completely in the dark. We felt that the crisis was going to hit developing countries hard and that we were going to face potential bankruptcies and losses for the Foundation. We were worried for our partners.

Jérôme Brunel: I feared that the impact of the pandemic, which I thought would affect developing or less developed emerging countries more strongly (though this has not been confirmed) would weaken the solidity of the Foundation’s counterparties, leading to a substantial amount of provisions. This has not materialised up to now thanks to the resilience of the organisations supported and the coordination and joint actions of the various stakeholders in the inclusive finance sector.

What has been the role of the Committee you chair in this context?

JB: The Compliance and Internal Control Committee has played its role by adapting the internal control system to the increase in Covid-19 risks, organising training on debt restructuring methods, adapting the provisioning policy and collecting more information on the end clients of our counterparties. But to be honest, it was the Finance, Risks and Impact Committee that had the primary role in mobilising the Foundation’s governance to deal with the consequences of the pandemic.

SL: The Finance, Risks and Impact (FRI) Committee already includes the Chair of the Compliance and Internal Control Committee among its members. Last year, we immediately felt the need to make the link with the Investment Committee, and its Chair also sat on the FRI Committee. The development of governance with this ad hoc committee has been extremely positive. It enabled us to build together, and with the Foundation’s Management Committee, a good understanding of the overall situation (the impact on the portfolio, liquidity and margin) and an intervention doctrine, which we developed as the crisis progressed. The objective is to provide the necessary oxygen to our partners while monitoring the risk of default.

BL: Once the roadmap was established, the Investment Committee continued to meet every month, but by videoconferencing, with a reduced number of new projects of course, but with close monitoring of the maturity extensions granted to microfinance institutions that requested them and, more generally, enhanced risk monitoring. The Board also decided to set up an ad hoc committee consisting of the three chairmen of the specialized committees to examine and discuss possible adjustments to the Foundation’s strategy. This body met several times to exchange views with the teams and to provide input to the Board before decisions were made.

What lessons have you learned from this experience one year later, and what prospects do you see for the Foundation in 2021?

SL: One year on, I am above all reassured by the quality of the men and women who make up the Foundation’s executive team and who have been able to respond to an unprecedented situation with great flexibility, professionalism and commitment. We were able to control the financial risks without abandoning our partners in difficulty, and to test the resilience of the organisations we supported, which reassures us as to their quality and as well as the resistance of the microfinance sector to shocks. This is a point that needs to be explored in order to gain a better understanding of the mechanisms that have been implemented locally and the real social impact behind the good financial performance. We all hope for a return to a less chaotic situation and the resumption of activities in 2021. We will have to learn the lessons of remote instructions and juggle with an activity that seems to be picking up though travel remains limited. The pandemic is not yet behind us, but I hope it will remain under control in the countries in which we operate.

JB: The health crisis has shown, first, the solidity of the commitments undertaken by the Foundation, i.e. the judicious choice of its counterparts. Secondly, the quality of the response of the team and its Managing Director to adapt to this unprecedented context, helped by the mobilisation of its Board and its specialised committees. Finally, the Foundation’s commitment to continue its lending activity despite this «hostile» environment and to support microfinance institutions through an international initiative to harmonise the policies of other lenders and a precise dialogue with each of the borrowers.

BL: One year on, it is worth underscoring the remarkable mobilisation and adaptation of the Foundation’s teams, with great collaboration between the various functions. We should also note the great resilience of our portfolio to date, which has perhaps exceeded our expectations. Good information/involvement on the part of the Board has enabled it to express its full support and solidarity with the Foundation’s strategy and actions. Things are still very uncertain for 2021, with perhaps a better visibility in the 4th quarter, but again nothing is certain. Let’s hope that 2021 will be a year of transition that will enable us to resume our development activities in 2022.

Download the 2020 Integrated Report here.

In 2020, the Foundation strengthened its technical assistance activity

By Violette Cubier, TA Manager, Grameen Crédit Agricole Foundation

We continued to develop our third business line in 2020, namely technical assistance for our partners. Our technical assistance missions have contributed to the institutional strengthening and resilience of our partners in this time of crisis.

The Foundation supports its partners through various technical assistance programmes. This support covers a variety of issues such as operations and human resources management, governance, financial management, strategic planning, digitalisation of operations and products, launch of new services, risk management and social and environmental performance management.

The Foundation mobilised to provide close support to its partners throughout 2020. The technical assistance missions were adapted to respond to the priorities and emergencies that the partners had to face (liquidity management and portfolio quality, business continuity plans), but also to support them in their business recovery, their strategic reflections and the transitions necessary to face the crisis (digitalisation, strengthening of activities in rural areas). We also set up joint actions with other actors such as SIDI and the Fefisol fund, with whom we have organised training for some fifty organisations in Africa.

The year 2020 was also marked by a strong development of our technical assistance activities, with an increase in existing programmes and the launch of new programmes. The latter enabled the Foundation to extend the geographical areas of operation in technical assistance and to address more actively key issues such as the development of rural economies, adaptation to climate change or the financial inclusion of refugees.

The coordination of technical assistance activities is now a major focus of the Foundation’s operation for contributing to the institutional strengthening of its partners and supporting them in their economic, ecological and digital transitions, thereby increasing their impact on the ground.

More information: //www.gca-foundation.org/en/technical-assistance

Download the 2020 Integrated Report here

Persistent credit risk : a threat to the solvency of microfinance institutions ?

ADA, Inpulse and the Grameen Crédit Agricole Foundation joined forces in 2020 to monitor and analyse the effects of the COVID-19 crisis on their partner microfinance institutions around the world. This monitoring was carried out periodically throughout 2020 in order to gain a better vision of the development of the crisis at the international level. We are extending this work this year on a quarterly basis. The conclusions set out in this article follow the first quarter of 2021. With this regular analysis, we hope to contribute, at our level, to the charting of strategies and solutions adapted to the needs of our partners, as well as to the dissemination and exchange of information by and between the different stakeholders in the sector.

In a nutshell

The results presented in the following pages come from the sixth survey (1) of the joint ADA, Inpulse and Grameen Crédit Agricole Foundation series. The responses from our partner microfinance institutions were collected in the second half of April 2021. The 87 institutions that responded are located in 47 countries in Eastern Europe and Central Asia (EECA-25%), Sub-Saharan Africa (SSA-29%), Latin America and the Caribbean (LAC-25%), South and Southeast Asia (SSEA-13%) and the Middle East and North Africa (MENA-8%) (2).

Whereas the general improvement in the local contexts relating to COVID-19 enables microfinance institutions to conduct their activities better, our latest survey shows that MFIs nevertheless had a lot of difficulties in reaching their development goals in the first quarter of 2021. The reasons cited have mainly to do with the difficulties encountered by the customers of the MFIs. Such customers are reluctant to commit to new loans, and if they do, it is for smaller amounts than in the past. At the same time, their risk profile has deteriorated due to the crisis and the MFIs will find it more difficult to finance them.

This general trend of increasing risk has led to a decline in the quality of the portfolio of the MFIs. In 2020, it has ultimately been reflected in the profit and loss accounts of institutions with an increase in provisioning expenses. This is likely to be the case again this year, with additional reserves but also loan write-offs.

In fact, the operations of the MFIs have been reduced or slowed down, generally with a decrease in the level of their equity capital. In point of fact, one in two MFIs, irrespective of size, indicates a need for capital in 2021. Two trends emerge: the MFIs are counting on their current shareholders to cover the losses linked to the crisis. Conversely, international investors are expected to support their development as of this year. The answers provided by our partners therefore underscore the need for recapitalization this year, which will involve all the players in the sector.

1. Disbursement levels are still low notwithstanding the reduction in constraints

Whereas we have seen a gradual but definite reduction in operational constraints for MFIs since the summer of 2020, this phenomenon continues in the first quarter of 2021. 50% of MFIs in all indicate that the measures in place in their countries are less constraining in April compared to the end of 2020. This is particularly pronounced in Sub-Saharan Africa (64% of respondents in the region) and Latin America and the Caribbean (59%). This is to a lesser extent true for MFIs in Europe and Central Asia, where the situation is either improving or stable. Finally, the situation is opposite in South and South-East Asia, with 45% of respondents in the region reporting a more difficult context, with the Cambodian and Burmese situations weighing on results.

Almost half of the respondents overall report that they no longer face any operational constraints in conducting their activities. This is reflected in the resumption of activity by the MFIs: 52% of those in sub-Saharan Africa can work as before the crisis. The vast majority of MFIs in Latin America are gradually resuming their activities since the first difficulties encountered. The situation in Europe and Central Asia is again divided between gradual or almost complete recovery. Conversely, the deteriorated context for MFIs in the SSEA region is reflected in activities that are either still constrained or are again affected by new measures to contain the epidemic.

Despite these continued positive signals on the level of activity of our partners, the expected level of loan disbursement for the quarter is apparently still difficult to achieve. For example, 55% of respondents report that they did not meet their loan disbursement targets in the first quarter of 2021. Only 10% of respondents exceeded their expectations, while 35% managed to meet their targets. The responses do not appear to pertain solely to business recovery: for example, 80% of MFIs in Sub-Saharan Africa did not meet their disbursement targets in the first quarter, while half report a return to near pre-crisis levels of activity.

When the MFIs did not meet their growth targets at the beginning of the year, three reasons stand out to explain this phenomenon. Firstly, the fact that customers are still reluctant to take out new loans (58% of this group), especially in a still rather uncertain context. Secondly, this is explained by the deteriorating risk profile of customers (50%), who are no longer eligible for loans or are eligible for smaller amounts (38%).

The latter two arguments are also mentioned by MFIs that have reached their targets without exceeding them. Nevertheless, this dynamic is partly offset by the fact that institutions have adjusted to the crisis and have put in place products adapted (digital, targeted sectors, etc.) to the current contexts in order to meet demand (47%).

Finally, the trend is quite different for MFIs that have exceeded their disbursement targets: the main factor is the strong demand received (78%), while the adjustment of the offer (33%) and the increase in the amounts requested (22%) support this trend.

2. A persistent high credit risk continues to have a significant impact on institutions’ profitability

In parallel to these loan disbursement issues, credit risk remains the major challenge for 64% of our partner MFIs, as we have noted since the beginning of our survey series. While late repayments by customers may still be the result of ongoing moratoria (20% of respondents, particularly in South and Southeast Asia and Latin America and the Caribbean), the majority of moratoria exits have resulted in a shift from the “moratorium” portfolio to the “at risk” portfolio, either as unpaid loans or as restructured loans. In total, 61% of the respondents indicate that fewer than 90% of their customers are repaying their loans, and 25% are concerned by repayment rates below 70%.

Another major difficulty is the decline in profitability of MFIs since the beginning of the COVID-19 crisis. At the end of Q1 2021, 55% of our partners raise this point. More specifically, we find that a share of the respondents managed to maintain some profitability in 2020, thanks to certain measures (33% – shown in green in the graph below). We then find a group of institutions (49% – shown in orange) for which an impact on profitability has been felt, but without endangering the institution. Finally, a last group stands out (18% – shown in red), in a less favourable position since the losses incurred in 2020 have direct consequences on the institutions’ own funds. For some of these institutions, this even implies that the company’s capital falls below the minimum levels required by the regulator or financiers.

The provisioning of the portfolio at risk turns out to be the main factor impacting on profitability in fact (61%). For some institutions (26%), this may moreover have led to a breach of contract with their funders. At the same time, there are still few massive loan write-offs, as only 13% of respondents have already resorted to debt cancellation to a greater extent than in previous years.

The impact of credit risk on the profitability of the MFIs is nonetheless expected to continue in the coming months. Loan write-offs in high proportions, above the usual standards, should concern 25% of our partners surveyed. At the same time, 24% expect that the provisioning of the PAR, notably through the exit of the moratorium, will continue to have a strong impact on their financial results. Finally, it should be noted that the ageing of the current portfolio at risk could also lead to additional provisioning expenses.

3. Strained equity capital leads to a search for investors

The decline in profitability, which could consequently continue in the near future without any improvement in credit risk, must be analysed for the short and long term. In the short term, controlling the portfolio at risk is a major challenge to avoid a (further) deterioration of profitability. This then has a direct impact on the operations of the MFIs. According to our partners, this observation has led the majority of the MFIs to revise their growth projections downwards (55%) for the coming years. It is also apparent that risk management involves paying particular attention to the type of activity of clients (31% have suspended disbursements to certain sectors – often tourism, international trade, etc.) and to eligibility criteria (29%). This increased caution reflects the current emphasis on risk management.

The other angle of reflection for the longer-term is the solvency of microfinance institutions in the face of declining revenues or losses. A majority of institutions today (61%) have not taken any action regarding their capital since the beginning of the crisis. Where this has been the case, existing shareholders have provided support to the MFIs, while subordinated debt (Tier 2 equity capital) has also been put in place, to a lesser extent.

A very high proportion of these institutions (48%) nonetheless report an equity requirement in 2021. This sizeable proportion shows the extent of support needed within the sector to ensure its development. There is no real archetype of MFI that emphasizes this expectation of capital support in 2021: regardless of the size of the MFI, about half of each Tier category expresses capital needs.

To meet these capital expectations, The types of shareholders that microfinance institutions wish to turn to in order to meet these capital expectations depend on the reason why this support is needed. For example, for institutions that mention a need for equity support in 2021, we find that when an MFI needs help to cover losses, it overwhelmingly turns to its existing shareholders (83% of cases, 10/12). Conversely, when MFIs are looking for support to continue to grow, they will more often turn to international investors (56% of cases, 14/25), beyond the potential contribution of existing shareholders. Finally, it is worth noting that subordinated debt may be favoured over capital injection, as this option is mentioned by 5 institutions.

All of our partners’ responses therefore suggest that the impact of the crisis, through credit risk, logically creates equity needs for a large proportion of entities, as they face either financial losses or a limitation in their ability to recover. While 41% of respondents say they will focus on improving the quality of their portfolio this year, our partners remind us of the essential role that international and existing investors will have to play in maintaining a satisfactory level of capitalisation that is conducive to their development.

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(1) The results of the first five surveys are posted on //www.gca-foundation.org/observatoire-covid-19/, //www.ada-microfinance.org/fr/crise-du-covid-19/ and //www.inpulse.coop/news-and-media/
(2) Number of responding IMFs per region: EECA 22; SSA 25; LAC 22; SSEA 11; MENA: 7.
(3) Tier 1 means that the MFI manages a portfolio of over $50 million. Tier 2 applies to portfolios of $5 to $50 million, and Tier 3 concerns portfolios of less than $5 million.

Solidarity Bankers mission in favor of Oshun Senegal

A new logistical support/purchasing mission in favor of Oshun Senegal is to be filled. The mission will last 10 days, including 4 remote and 6 field days in France and Senegal from June 2021, first remotely from France and then on the ground in Senegal if health conditions allow it.

Solidarity Bankers is a skills volunteering programme launched by the Grameen Crédit Agricole Foundation and Crédit Agricole S.A., open to all Crédit Agricole Group employees. The objective is twofold: on the one hand, to provide technical assistance to microfinance institutions and social impact enterprises financed by the Foundation, and on the other hand, to value the skills of Group employees who want to invest themselves in projects with strong social impact. The missions can be conducted during the working time of the Solidarity Banker (sponsorship by the employer of the Solidarity Banker) AND / OR during the holidays (volunteering).

Founded in March 2018, Oshun is a social enterprise that offers inclusive solutions, particularly by way of solar-powered water kiosks, allowing the most sensitive populations an access to clean water while fostering the establishment of a local community and virtuous ecosystem. Oshun Senegal is completing a process of administrative and HR structuring and wishes to strengthen its support functions, especially in logistics and purchasing.

The selected Crédit Agricole expert will support Oshun from June 2021 in setting up procedures to simplify and secure logistics, purchasing and supply management and to strengthen the staff concerned. The Solidarity Banker must have a solid experience in logistics and purchasing management and, ideally, a training and coaching experience in the purchasing field.

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How to apply?

To see the detailed offers of the missions:

1. Go to the CA Solidaires website “Finding your mission“
2. Enter in the search bar: “Grameen Foundation”. All the Solidarity Bankers offers will appear!
3. Click on the offer of your choice. You will find all the information you need for your application.

More information: cecile.delhomme@credit-agricole-sa.fr

Cross views: 2020, a year marked by the Covid-19 crisis

Jean-Marie Sander, Chairman of the Grameen Crédit Agricole Foundation until March 2021 and
Raphaël Appert, Chairman, Grameen Crédit Agricole Foundation, as of March 2021 and Vice-Chairman of Crédit Agricole SA and
Fédération Nationale du Crédit Agricole [National Federation of Crédit Agricole]

Just over 30 years ago, Michel Serres shared with us the need for a «Natural Contract» similar to the «Social Contract» which called for a reconciliation between man, nature and the living. 2020 was a terrible year for fragile economies.

The sound health of the Foundation, which has adapted to the economic effects of this crisis throughout the year, is not a mirror image of the dramas that have played out and are still playing out in the territories of our partners, where social shock absorbers are almost non-existent. Faced with the pandemic and its impact on daily life, family solidarity was often the rare relief very low-income populations could rely on.

Although its anthropocentric origin has yet to be demonstrated, this health crisis beckons us to become aware that we are part of nature, reminds us of our humility in the face of the natural order, and entrusts us with the task of not only developing but also of maintaining humanity.

The economic effects of the pandemic have affected the whole world but more particularly vulnerable populations: according to World Bank figures, 150 million people could be pushed rapidly into extreme poverty. For our part, we will avoid complacency about a probable ability to regain a semblance of economic growth, which we all know will not reach the most fragile populations quickly and evenly.

In this economic recovery, the Foundation will mobilise all its efforts in 2021, as there is still much to be done to try and change the mechanism that creates inequalities in the face of tragedy. We shall to that end have to rely on our professionalism, our determination and the values that guide our daily action.

It was with this ambition that we created the Foundation with Professor Yunus in 2008. It is still with this same ambition that we will continue to commit ourselves in the months to come.

The Foundation publishes its 2020 Integrated Report

The Grameen Crédit Agricole Foundation publishes its 2020 Integrated Report which traces the highlights and key figures of this year marked by the health and economic crisis linked to Covid-19. Thanks to close monitoring and collaboration with its partners and other players in the inclusive finance sector, the Foundation ended the year with solid results.

As of December 31, 2020, the Foundation followed an outstanding portfolio to €81.2 million in favour of 75 microfinance institutions and 12 social enterprises in 39 countries. Women entrepreneurship and the development of rural economies remain at the heart of the Foundation’s action: 73% of the 7.3 million beneficiaries of the institutions supported are women and 85% live in rural areas.

Since the beginning of the crisis, the Foundation has carried out surveys of the organisations supported to understand the impact of the crisis and better meet their needs[1]. The Foundation also initiated a global coordination with other actors around the key principles to protect microfinance institutions and their clients in the face of the crisis. To date, 30 donors, investors and platforms have signed the engagement of the Coalition.

Thanks to this permanent dialogue with its partners and peers, the Foundation has implemented several measures adapted to support the sector. It has thus granted rollovers to 29 partners, mainly microfinance institutions, for a total amount of €9.4 million. In 2020, the Foundation also supported the organisations through 93 technical assistance missions[2], on priority topics such as business continuity plans but also on issues such as digitisation which is essential for the resumption of their activities.

The Foundation was able to count on the support of its funders to strengthen its action in 2020. It obtained funding from Proparco, the European Investment Bank (EIB) and Crédit Agricole CIB to establish a Covid-19 envelope and support the economic recovery of its partners.

In 2020, the Foundation also worked alongside the Crédit Agricole Group. Via a new cooperation scheme with Crédit Agricole Romania, new funding granted thought the FIR –A CA’s microfinance fund–, and a skills volunteering programme called Solidarity Bankers, the Foundation and Crédit Agricole have stepped up their actions for financial inclusion of the most vulnerable populations. A mission that will remain a priority during 2021 which represents a year of recovery.

Download the Report

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[1] The results of the surveys and other resources are published in the Foundation’s Covid-19 Observatory: //www.gca-foundation.org/en/covid-19-observatory/

[2] More information on the Foundation’s technical assistance offer: //www.gca-foundation.org/en/technical-assistance/

Grameen Crédit Agricole Foundation’s role to respond to the crisis

Soukeyna Ndiaye Bâ has been a Director of the Foundation’s Board since its creation. Engaged in the promotion of women entrepreneurs for more than 20 years, she is also Executive Director of INAFI (International Network of Alternative Financial Institutions) a global network of organisations that support microfinance programmes. Abdul Hai Khan is a Foundation’s Director and the Managing Director of Grameen Trust. He is also Board member of diferent microfinance and social business organisations in Australia, Bangladesh, China, France, India, Kosovo, Italy, USA and Yemen.

1/ Directors of the Foundation, you are also both international experts and microfinance practitioners. Can you share with us your analysis of the crisis and more particularly on the territories that you know well?

Soukeyna Ndiaye Bâ: In Africa, the current toll is close to 100,000 deaths and more than 3.7 million people infected, but these figures do not reflect the reality in the continent because there is no mass screening due to a lack of resources. Because of restrictions and border closures to contain the pandemic, the economic crisis has not spared the African continent. In this context, small-scale entrepreneurs, smallholder farmers and informal sector workers are directly afected. On the front line: women, both in rural and urban areas, who are very active in the informal sector. In Senegal, for example, about 94% of women entrepreneurs operate in the informal sector. In rural areas, in addition to the gravity of the economic situation, the already alarming health precariousness and dificulty in accessing healthcare may worsen.

Abdul Hai Khan: Current death toll in Asia is approximately 417,000, while the number of infected cases stands at more than 26 million. Schools in East Asia and the Pacific have been completely closed for more than 25 million children for almost an entire year. Covid-19 has slowed growth in East Asia and the Pacific (EAP) as it has significantly reduced economic activity, including tourism and trade. Growth in the AEP region, excluding China, is forecast to slow to 1.3% in 2020 from 4.7% in 2019. Millions of households have been afected by the loss of jobs and income (including remittances), while they still have to cover basic expenses or service debt. Consequently, the percentage of poor people has increased.

2/ How do microfinance and social business mitigate the efects of the economic crisis?

AHK: By improving access to essential services, microfinance institutions and social businesses strengthen the resilience of low-income populations, including small-scale entrepreneurs from the formal and informal sectors and smallholder farmers. They are therefore essential to protect the most vulnerable populations, severely afected by the efects of the economic and health crisis during the Covid-19 pandemic. To cope with this pandemic, many microfinance institutions have innovated and increased their support to their clients. For example, they have restructured loans to better support the most afected clients and accelerated their digital transformation, by introducing or improving cashless transactions through mobile banking channels and by creating virtual branches.

3/ What is the outlook for the years to come?

AHK: The magnitude of the damage that Covid-19 pandemic has brought in the world is huge. However, it ofers us a unique opportunity to improve, or even redefine, our economic structures by relaying on social and environmental consciousness. We should not call it a ‘recovery’ programme but a ‘reconstruction’ programme. In this comprehensive reconstruction plan, social entrepreneurship can play an essential role, as it can be a lever to transform unemployed people into entrepreneurs. Financial inclusion can help economic recovery go hand in hand with social development.

SB: The world is threatened with recession and food and social crisis. Building the «after Covid» world must therefore be multi-sectoral and focused on innovation. We must learn from the problems encountered during this crisis: better assess and anticipate risks, strengthen our socio-economic models and rethink our public policies to better protect the most vulnerable populations. Women entrepreneurs will have a key role to play in boosting the economy. Supporting female entrepreneurship will be a lever for women empowerment and the development of rural and urban economies. Digital will be a major tool to encourage entrepreneurship, modernise, develop and innovate.

The Grameen Crédit Agricole Foundation signs the Climate Manifesto

Following the official launch of the French Coalition of Foundations for the Climate on November 18, the Grameen Crédit Agricole Foundation signed, alongside 80 other organisations, the Manifesto of the new French Coalition of Foundations for the Climate (CFFC).

Launched by the Centre Français des Fondations and its partners, the Climate Coalition brings together foundations and endowment funds with a common goal:  act together in the fight against climate change. The Coalition will promote the good practices of signatories, produce work on engagement of the philanthropic sector and mobilise human and financial resources to support initiatives to address the climate crisis.

The Foundation and its action in favour of the resilience of rural economies

Through funding to microfinance institutions and investments in enterprises located in rural areas, with a strong social and environmental impact, the Grameen Crédit Agricole Foundation is positioning itself as an actor that promotes the resilience of rural economies in the face of climate change.

With a portfolio of € 87 million as of March 2021, the Foundation mainly supports organisations that contribute to rural development in Africa, Asia and Europe. Thus, out of the 7.3 million beneficiaries of funded microfinance institutions, 85% live in rural areas. In addition, the Foundation supports, through technical assistance, enterprises that promote more sustainable agricultural practices.

With the signing of the Manifesto but also the membership of the French Centre for Funds and Foundations (CFF), the Grameen Crédit Agricole Foundation reaffirms the inclusion of the climate issue in its practices and strategy, and calls for other actors of the inclusive finance sector to commit to this global issue.

Online Solidarity Bankers missions to be filled

Three online Solidarity Bankers missions are currently to be filled. Solidarity Bankers is a skills volunteering programme launched by the Grameen Crédit Agricole Foundation and Crédit Agricole S.A., open to all Crédit Agricole Group employees. The objective is twofold: on the one hand, to provide technical assistance to microfinance institutions and social impact enterprises financed by the Foundation, and on the other hand, to value the skills of Group employees who want to invest themselves in projects with strong social impact.

The missions can be conducted during the working time of the Solidarity Banker (sponsorship by the employer of the Solidarity Banker) AND / OR during the holidays (volunteering). For the 3 missions below, the Solidarity Bankers will devote a total of 15 working days to the mission. Each selected expert will work remotely and devote the equivalent of one day per week, for 15 weeks, to the mission.

“Digital Strategy” missions in favour of OXUS (Kyrgyzstan)

OXUS Kyrgyzstan (OKG) is a microfinance institution that provides financial services to working poor and underbanked people in Kyrgyzstan. The institution serves 8,000 active borrowers (48% of whom are women and 62% live in rural areas) and manages a portfolio of €6.4 million. The average outstanding loan is €798.

A Solidarity Banker mission is planned for July 2021 to support OKG in the evaluation of its digitalisation processes and the drafting of a new digital strategy. The expert sought is a Crédit Agricole employee with experience in IT project management, fluent in English (knowledge of Russian is a plus).

“Financial management” mission in favour of FATEN (Palestine)

FATEN is a microfinance institution based in Palestine. The institution serves 26,244 active borrowers (34% of whom are women and 68% live in rural areas) and manages a portfolio of €108 million.

The selected Crédit Agricole expert will support FATEN in updating financial procedures, policies and tools. The Solidarity Banker must be fluent in English and have knowledge of international standards relating to financial reporting and in particular, the latest changes to IFRS 16 and IFRS 9. The mission is to be filled as soon as possible.

“Digital Strategy” mission in favour of Smart Credit (Moldova)

Smart Credit is a microfinance institution that provides financial services to socially disadvantaged people and small entrepreneurs in Moldova. The institution has over 3,000 active borrowers (54% of whom are women and 69% are clients in rural areas) and manages a portfolio of €4.4 million.

The Solidarity Banker will help build the digital strategy of Smart Credit. The expert is an employee of the Crédit Agricole group who is fluent in English and with experience in IT project management. The mission is to be filled as soon as possible.

How to apply?

To see the detailed offers of the missions:

1. Go to the CA Solidaires website “Finding your mission“
2. Enter in the search bar: “Grameen Foundation”. All the Solidarity Leave offers will appear!
3. Click on the offer of your choice. You will find all the information you need for your application.

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

KOSSAM and the digital payment for farmers in Senegal

Supported by the Grameen Crédit Agricole Foundation, CA Franche Comté and Amundi, Kossam SDE is a subsidiary of Laiterie du Berger that aims to structure and strengthen the dairy industry in Senegal. In February 2020, Kossam SDE successfully launched the dematerialisation of the “payroll” for more than 850 farmers contributing to the improvement of their living and working conditions. Spotlight on the interview for Portail FinDev of Jonathan Michaud (former Solidarity Banker of CA Franche Comté) Director for the past 3 years of Kossam SDE) and Mamadou Fall, his Deputy Director, who shed light on this transformation.

1. What used to be a typical payroll day before the transition to digital payroll?

Jonathan Michaud & Mamadou Fall: Until February 2020, all farmers were paid in cash during one or two specific paydays. Farmers used to travel to the factory in Richard Toll to collect the money due to them. Firstly, the cash payment was inconvenient for the farmers. They had to arrive early in the morning and sometimes wait all day in high temperatures. In addition, farmers were forced to come to Richard Toll on a specific day to get paid, without being able to make it fit in with their other travel. It was also laborious for Kossam SDE, as the teams had to handle cash for two days with some pressure linked to the waiting time of the farmers, which can lead to errors.

In November 2019, the Kossam SDE team decided to digitalise and the first digital payroll took place in February 2020.

2. What are the concrete benefits of digitalisation for farmers?

JM & MF: We have identified 5 benefits for farmers:

• Time saving. Today, a farmer no longer has to wait hours to receive the payment.
• Security. Everyone knew which day the farmers received their pay, which could potentially create a context of insecurity with risks of theft.
• Flexibility. Now all farmers receive their money on the same date, but collect it when they want.
• Cost. The majority of farmers do not live in Richard Toll and travelling there has a cost. They can now optimise the cost of their journey by deciding the day they will collect their money.
• Traceability. Each farmer is identified in our database with his/her telephone number and identity card. We can therefore be sure that it is the farmer who is receiving the money, as we know which telephone number the funds are being sent to.

3. What solution have you put in place with Wizall Money to pay farmers?

JM & MF: The vast majority of our farmers do not have a smartphone. They have a basic phone that can only receive and send calls and SMS. We therefore opted for a code sent directly to the farmers’ phones. With this code and their ID, farmers go to the Wizall Money kiosk of their choice to withdraw their money. The beneficiaries (farmers) pay the costs associated with this service.

The introduction of this solution has clearly removed a considerable number of constraints for farmers, including time and organisation. In addition, we feared that farmers would be reluctant to pay for their money. However, the question of cost was not mentioned. On the contrary, it costs them much less than paying for transport to Richard Toll on a specific day of the month. We have not had any complaints in this regard.

4. More than a year after the digitisation was implemented, where do you stand? What is the next step?

JM & MF: The digitisation of the payroll was implemented just before the Covid-19 hit Senegal in March 2020, where drastic measures were quickly taken: curfews, forbidden gatherings, etc. Without digitisation, farmers would not have been able to move and would not have been paid.

Today, we are moving on to the second and final stage of payroll transformation. Indeed, there are 2 disadvantages to the SMS codes that our farmers receive on their phones: you need to have your own phone, which is not the case for all our farmers, and you also need a network. The main problem was that some people never received the code, so we had to keep paying them in cash.

To deal with this situation, we have provided all our farmers with an individual NFC card. The payment will be sent to this card in an electronic purse. Farmers can then go to a Wizall Money kiosk, hand over their card, enter their PIN and withdraw all or part of their money. There are no more network constraints and no more obligation to withdraw all the money paid in. This major innovation allows us to enter into new uses and services that are a form of micro-savings and passive savings.

From now on, we will be working on various subjects that digitalisation will enable us to tackle more effectively and with greater peace of mind: access to health insurance, development of savings and financial education.

Full interview in French on FinDev

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(1) The Grameen Crédit Agricole Foundation and Crédit Agricole Franche Comté, shareholders of Laiterie du Berger, supported the creation of Kossam SDE as part of a technical assistance mission Solidarity Bankers, a skills volunteering programme of the Crédit Agricole Group. An agricultural engineer from the Regional Bank, who led the mission in 2018, left for 3 years to coordinate the launch of Kossam SDE. He is Jonathan Michaud, today General Manager of Kossam SDE.

Solidarity Bankers missions to be filled in Georgia, Kyrgyzstan and South Africa

Launched in June 2018 at the initiative of the Grameen Crédit Agricole Foundation and Crédit Agricole SA, Solidarity Bankers is a skills volunteering programme aimed at all Crédit Agricole Group employees in favour of microfinance institutions and social impact businesses supported by the Foundation. Three new missions are to be filled in 2021 in Georgia, Kyrgyzstan and South Africa.

“Marketing Strategy” mission in Georgia

Lazika Capital, one of the leading microfinance institutions in Georgia. Established in 2000, Lazika provides financial services to low-income people, smallholder farmers and microentrepreneurs. The organisation operates through 18 branches, mainly in rural areas of Georgia (70% of active borrowers are rural).

The Solidarity Bankers mission aims to support Lazika in the development of a marketing plan for mid-2021-2022. If the health context allows it, the mission will be carried out in June or July 2021 in Georgia. If not, the mission will be postponed.

“Social and environmental performance” mission in Kyrgyzstan

Salym is a microfinance institution that provides affordable loans and deposits to support income-generating activities of low-income populations in Kyrgyzstan. The organisation currently has 23 branches across Kyrgyzstan and serves over 18,000 active borrowers, 52% of whom are women and 70% of whom live in rural areas.

A two-week Solidarity Bankers mission is planned to support Salym in managing its social and environmental performance. If the health context allows it, the mission will be carried out in September or October 2021 in Kyrgyzstan. If not, the mission can be carried out online.

“AML-CFT” mission in South Africa

SEF is a microfinance institution established in 1992 that provides financial and non-financial services to poor people in South Africa. The institution has 225,317 active borrowers (100% of women in living rural areas).

A Solidarity Bankers mission is to be filled to support SEF in the framing and training of its key employees on the risks associated with money laundering and the financing of terrorism. The field mission will take place in South Africa over a two-weeks period, if the sanitary conditions linked to Covid-19 allow it.

Two online missions are still available

A first “digital / IT” mission is available to support Smart Credit, a microfinance institution funded by the Grameen Crédit Agricole Foundation in Moldova. The mission of the Solidarity Banker will be to help build the digital strategy of Smart Credit. A second “financial management” mission is to be filled in favour of FATEN, a microfinance institution located in Palestine. The Crédit Agricole expert will support FATEN in updating financial procedures, policies and tools. These missions will be carried out remotely at the rate of one day per week, for 15 weeks.

How to apply?

To access the detailed offers of the missions:

1. Go to the CA Solidaires website “Find a project“
2. Enter in the search bar: “Grameen Foundation”. All the Solidarity Bankers’ offers will appear!
3. Click on the offer of your choice. You will find all the information you need to apply.

Further information: carolina.viguet@credit-agricole-sa.fr

OSHUN steps up its action to promote access to water in Senegal and Burkina Faso

More than 2 billion people around the world lack access to safely-managed drinking water services (*). In Sub-Saharan Africa, 40% of the population does not have access to water, mainly in rural areas and 135 million people, mainly women and girls, travel more than 30 minutes per day to have access to drinking water.

It is in that context that OSHUN, created at the end of 2017 and a partner of the Grameen Crédit Agricole Foundation since 2018, deploys an innovative water access solution in rural areas. Through an economic model based on local entrepreneurship, OSHUN provides accessible quality water services at water kiosks, running on solar energy. These kiosks are managed by local entrepreneurs working as franchisees and integrate a digital component that optimizes their good management. This service, which is expected to develop widely in West Africa, has started in rural and peri-urban areas of Senegal and Burkina Faso.

Today, in addition to the kiosks, OSHUN is also working on installing water treatment systems in schools and health centres funded by public, private and solidarity partners. In collaboration with the NGO Marseille Provence Afrique Coopération, OSHUN has installed, since 2018, 120 water treatment systems in schools and health centers in Senegal. To date, this project serves around 40,000 beneficiaries with access to free drinking water. In addition to the installation and maintenance of equipment, OSHUN, in conjunction with community relays, sets up public awareness activities to help change behaviours. In the same spirit, the German Cooperation Agency for development (GIZ) has just ordered a turnkey project to OSHUN for the installation of 30 devices in health posts located in areas without electricity in Senegal.

In Burkina Faso, OSHUN is strengthening its action alongside the Société du Canal de Provence (SCP) as prime contractors in the rehabilitation of water pumps and the installation of water kiosks in 27 villages in the municipality of Bobo Dioulasso (second largest city in the country). Thus, the populations will be able to have access in the same place to raw water for domestic use and treated water for consumption. This project, which is to be completed in April 2021, will reach nearly 70,000 beneficiaries.

More information on OSHUN here.

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(*) Nations Unies

The Grameen Crédit Agricole Foundation acts for financial inclusion in India

With about 190 million adults without a bank account, India has –after China– the second-largest unbanked population in the world (World Bank). The microfinance sector has become a key instrument to fight financial exclusion in the country by providing financial and non-financial services to people excluded from the banking system. The sector has shown spectacular development: it reaches 60 million borrowers, for a total portfolio of 27 billion euros.

To support the development of microfinance in India, Grameen Crédit Agricole Foundation has granted a loan of 3 million euros over 3 years to Pahal Financial Services Private Limited, an Ahmedabad (Gujarat) based microfinance institution. Since its creation in 2011, Pahal has served nearly 750,000 customers, mainly women borrowers, across 167 branches with total assets under management of 81 million euros. Today, Pahal is one of the fastest growing microfinance institutions in India thanks to innovative and diverse product offering for low-income people.

“With this new partnership, the Grameen Crédit Agricole Foundation strengthens its action in favour of financial inclusion and women empowerment in India. This funding is our first direct exposure in India, using the External Commercial Borrowing channel recently opened by the Reserve Bank of India. The company has shown in many occasions its resilience and we trust that Pahal, its clients and the whole industry are recovering fast from this crisis”, said Caroline Brandt, Senior Investment Manager at the Foundation.

“Grameen Credit Agricole Foundation’s  debt line is a validation of Pahal’s business model and displays the resilience of the microfinance sector in India”, said Kartik Mehta, Co-Founder and Managing Director. “We at Pahal are determined to be a part of financial inclusion agenda for the vulnerable sections of the society. This money will be used to onlend to the women borrowers of Pahal”, added Purvi Bhavsar, Co-Founder and Managing Director.

The Foundation’s financial support comes at a time when the microfinance sector is emerging out of the Covid-19 crisis. After lockdown relaxation, the anticipated microcredit demands are expected to trigger swift recovery of the sector. Pahal, in partnership with the Foundation, will support its borrowers to help them restart their businesses.

SINAPI Aba and its work for women entrepreneurship in Ghana

Launched by the Canadian government in 2017, the FINEDEV (Financial Inclusion for Enterprise Development) programme promotes business development through financial inclusion in Ghana. The programme is implemented by Sinapi Aba Savings and Loans, a non-bank financial institution supported by the Grameen Crédit Agricole Foundation.

FINEDEV aims to improve access to finance, financial education and entrepreneurial training for small and medium enterprises (SMEs), women and vulnerable groups in Ghana. For Sinapi, the focus is on women entrepreneurship as 70% of its clients are women.

Networking and entrepreneurship training

The programme is based on two strands of action. The first is networking through events and training for women entrepreneurs. Through these meetings, participants have the opportunity to share their experience, learn about entrepreneurship and connect with other local women entrepreneurs. Since the beginning of the programme, Sinapi has organised 310 networking events and 447 trainings for more than 30 000 participants.

A second strand is the “Women Mentorship” programme. It brings together women entrepreneurs who have already received business training from Sinapi Aba, with less experienced women. Each “mentor” woman advises and supports other women entrepreneurs in building their businesses. The programme has already brought together 156 participants, including 52 mentor women and 104 coached entrepreneurs.

With FINEDEV, Sinapi is strengthening its action in favour of women’s financial inclusion in an innovative and sustainable way. Initially planned for a period of 4 years, FINEDEV has been extended for another year and is expected to end in 2022. After the official end of the project, Sinapi Aba plans to continue supporting its clients’ projects by maintaining its mentoring and networking activities for women.

[Covid-19] The Grameen Crédit Agricole Foundation in 2020

Eric Campos, Grameen Crédit Agricole Foundation

In 2020, the Foundation supported 80 microfinance institutions and social enterprises in 39 countries around the world. With the Covid-19 pandemic, the Foundation established a permanent dialogue with all the partner organisations and adapted its financial and technical support. The Foundation also coordinated with other key players of the inclusive finance sectors to develop commun solutions and better protect the microfinance institutions and their clients. Spotlight on an interview to Eric Campos, Managing Director of the Foundation, and some key figures of the activity in 2020.

The Covid-19 crisis has affected the microfinance sector around the world

Eric Campos: 2020 has been a very challenging year for the partners of the Grameen Crédit Agricole Foundation, microfinance institutions and social environmental impact enterprises. Very trying because the final beneficiaries, who are very dependent on sectors such as trade, agriculture and craft, had to deal with lockdown measures and therefore had the greatest difficulty in developing their income generating activities.

The Foundation has adapted itself to better support entrepreneurs in the field

EC: The Foundation’s teams focused on all actions that could allow these institutions, these enterprises to save time and adapt to the economic effects of this crisis. At the international level, we coordinated an agreement with international funders to avoid a liquidity crisis in the microfinance sector. At the Foundation level, we have granted a number of rollovers, we have supported institutions and enterprises by organising technical assistance missions to enable them to improve on risk management and on treasury management. We have been present throughout this year, alongside our long-standing partner institutions of the Foundation.

What prospects for 2021?

EC: In 2021, we are still in a crisis context. We are seeing some small signs of economic recovery in about a third of the countries in which the Foundation operates. In 2021, the Foundation will strengthen its technical assistance programme. We will continue to finance our partners, to support them, and we are cautious but confident in the economic recovery that we are already starting to see. Our commitment: help our partners get through this global crisis.

One Year On: What a Year of Surveys Tell Us About Covid-19 and microfinance

Maxime Borgogno, Grameen Crédit Agricole Foundation

Spotlight on the interview of Maxime Borgogno for FinDev. Maxime is Investment Manager for the Asia and Central Europe region at Grameen Crédit Agricole Foundation.

Since the beginning of the pandemic, Grameen Crédit Agricole Foundation has been monitoring how the microfinance sector is responding to the crisis caused by Covid-19. One year later, what have you learned?

Maxime Borgogno : While the immediate consequences microfinance institutions (MFIs) faced were an increase in portfolio at risk and a reduction in their portfolio, the operational crisis did not lead to a total failure of the sector as feared at the beginning. In fact, we have seen many MFIs proactively adapting to the new context: they took adequate management measures while maintaining a responsible approach with their clients. Only a small proportion of surveyed institutions had to lay off staff during the crisis, and the ones in the most affected countries have successfully transitioned to remote systems. Most MFIs implemented loan restructuring to relieve affected clients. Some, especially in Southeast Asia, provided customers with emergency kits (food, sanitary equipment, etc.). They even explored new opportunities such as digital channels for loan repayment to adapt to the situation.

In general, MFIs remain optimistic about the future, based on a good understanding of current challenges and the experience built in 2020. While the crisis is not over and there are still challenges ahead, the sector has the capacity to meet them.

What are some of the key challenges that lie ahead? Why do you think the sector has the capacity to overcome them?

MB: The situation remains unpredictable and depends on the country. A MFI may come to face significant operational constraints very quickly, which will limit its activity. The latest data shows that nearly 75% of MFIs are facing a higher risk portfolio than before the crisis. Therefore, they will have to find a balance between carefully managing this risk while continuing to disburse new loans to their clients. It is now clear that the Covid-19 crisis has disrupted certain sectors, companies’ structures and ways of doing business. MFIs will need to account for these major changes in their strategy for the coming years.

Over the past year, we have seen MFIs remain fully committed to their social mission. They have proven their resilience and capacity to adapt during an unprecedented crisis. With poverty levels increasing due to the crisis, the mission of microfinance is more relevant than ever.

How did you monitor the situation over the past year?

MB: We launched the first monthly survey in March 2020 with 75 MFIs we support. The objective was to gather first impressions on the situation as well as the potential impact on their activities and their clients. In June 2020, we joined forces with ADA and Inpulse to expand the reach of the survey to more than 100 MFIs, including in Latin America and the Caribbean, where the Foundation does not have a presence. Since September, we have moved towards a quarterly format to avoid overloading the institutions in a period of resumption of their activities. The next survey will be in March.

The survey results, as well as other articles related to the Covid-19 crisis, are available on The Covid-19 Observatory, a space created by the Foundation at the onset of the pandemic.

Microfinance institutions often don’t have the capacity to respond to surveys, especially when they have a major crisis to deal with. What helped you to continue gathering data among them?

MB: From the very beginning, we chose not to ask MFIs detailed financial information, but rather to gather their impressions and observations on the impact of the crisis. We deliberately kept the number of questions low and made sure they were as clear as possible. We also avoided requesting the same information they send us in their regular monthly reports.

We insist on a high level of communication with our partners, so we share the results of the surveys with them as soon as they are available and remain open to their feedback in this process. Comments from our respondents have helped us to adapt the wording of the questions and the content of the questionnaire. We believe that their involvement in the process is a key motivator for our partner MFIs to continue participating in the survey.

How do you see this crisis shaping the future of microfinance? Are you worried about the future of the sector?

MB: 2020 was a historic year that demonstrated the resilience of the microfinance sector. MFIs innovated and strengthened their services to protect their clients. At the same time, lenders and other stakeholders coordinated among themselves to adopt the most suitable measures to support MFIs. The last survey we conducted on the impact of the Covid-19 crisis reveals that most institutions expect their activity to grow in 2021, in terms of both portfolio volume and number of clients.

However, many of the most affected institutions will need support from their shareholders and lenders. As credit risk gradually translates into losses in 2021, the responsiveness of investors will be fundamental and is a forthcoming topic for the Foundation’s Covid-19 Observatory.

The crisis is not yet behind us, but we are encouraged for the future of the sector. Digital transformation, coordination between stakeholders and innovation will be essential to strengthen the resilience and impact of microfinance.

Source: FinDev

SSNUP programme finances its first agricultural project in Senegal

To support small-scale farmers, the Swiss Agency for Development and Cooperation and the Luxembourg Directorate for Development Cooperation and Humanitarian Action, under the coordination of ADA, have launched the SSNUP (Smallholder Safety Net Upscaling Programme). With a budget of €55 million over 10 years, the programme aims to sustainably strengthen the safety nets of smallholder farmers in Africa, Latin America and Asia by stimulating the development of agricultural value chains.

The programme draws on the technical assistance knowledge and expertise of impact investment funds already active in this area. The Grameen Crédit Agricole Foundation is one of the impact investors in charge of the SSNUP implementation. It will provide its expertise in technical assistance to the organisations it supports – microfinance institutions and social enterprises– in order to design and develop financial and non-financial solutions for agricultural risks mitigation and transfer of the different value chain actors.

An impact agricultural project in Senegal

The first organisation supported by the Foundation within the programme is SFA (Sénégalaise des Filières Alimentaires), a social enterprise that works for the development of an inclusive rice value chain in Senegal. Created in 2013, SFA produces white rice from paddy cultivated by small producers in the Senegal River Valley. It provides them with technical support through training on best agricultural practices and facilitates their access to the market and to financing by putting them in relation with local lenders.

Despite the technical support provided by SFA, the small-scale producers’ yields remained below their potential. This is mainly because farmers are still reluctant to implement the agricultural practices promoted by SFA without experiencing their positive effects first.

The SSNUP will strengthen this technical support for producers through a technical assistant mission with a budget of €11,000. This 6-month project aims to create 20 demonstration fields in SFA’s operation areas, in which best agricultural practices will be implemented. These reference fields will allow training some sixty producers on the best practices to optimise their production and to demonstrate to all producers in the area the positive impacts of these practices on agricultural yields and production quality. Exchange sessions and training led by the trained producers will enable them to share their learning with over 2,000 small-scale producers.

The expected results of this project are based on 3 pillars: capacity building of the trained farmers; increasing production and its quality for the trained farmers; increasing the income of the trained farmers and their households. This high impact project will contribute directly to the rice value chain development and food security in Senegal.

Survey on the financial inclusion of people with disabilities in Cambodia

In Cambodia, at least 10% of the population have some form of disability, and are often victims of social and economic exclusion and stigma. Strengthening their ability to use financial services can contribute to breaking the cycle between disability and poverty. In this context, a study was carried out by Chamroeun Microfinance Plc and Good return to better understand the needs and obstacles faced by people with disabilities in accessing financial services.

The results of the study show the link between disability and exclusion and the still untapped opportunities to break this cycle. Indeed, while only 30% of the 513 respondents have used financial services, over 50% are considering a future loan, mainly for entrepreneurial activities, and 90% see the benefits in attending financial education training.

This study will help structure the “Education & Access: Responsible Service for People with Disabilities” project under the Australia-Cambodia Cooperation for Equitable Sustainable Services (ACCESS) Programme which aims to improve access for people with disabilities to responsible finance.

Supported by the Grameen Crédit Agricole Foundation since 2010, Chamroeun Microfinance Plc is a Cambodian microfinance institution that provides financial services to the poorest populations and also offers them training and support services. It now serves nearly 43,000 clients, 81% of whom are women and 65% of whom live in rural areas.

Access the study here

The impact of Credit Agricole’s FIR Fund in 2020

FIR (the Fund for Inclusive Finance in Rural Areas) is a Crédit Agricole impact fund which promotes financial inclusion in developing countries by financing rural microfinance institutions. As at 31 December 2020, FIR registered subscriptions from 21 Regional Banks , Amundi and CA Assurances for a total of €9.75 million, supporting 5 microfinance institutions that serve nearly 80,000 low-income people in Africa, Asia and Europe.

In 2020, due to the Covid-19 crisis, a close follow-up was carried out with the organisations financed by the FIR in order to adjust the support to each organisation. Among the measures, an international coalition was created, at the initiative of the Grameen Crédit Agricole Foundation -FIR’s advisor-, to protect microfinance institutions and their clients against the consequences of the crisis.

Around thirty investors and key players of the sector, including CA Indosuez Wealth (Asset Management) -FIR’s manager-, have committed themselves to this coalition and are coordinating the granting of maturity extensions, technical assistance and information sharing in order to avoid a liquidity crisis in the sector and strengthen the resilience of microfinance institutions in this complex period.

The full report is available here (in French)

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(*) Crédit Agricole Assurance, Amundi et 21 Caisses régionales (Alpes Provence, Alsace-Vosges, Brie Picardie, Centre-est, Centre-France, Centre Loire, Centre-Ouest, Champagne-Bourgogne, Charente-Périgord, Finistère, Franche-Comté, Ille-et-Vilaine, Languedoc, Loire-Haute Loire, Martinique-Guyane, Normandie-Seine, Provence Côte-d’Azur, Réunion, Savoie, Sud Rhône Alpes et Touraine Poitou).

New Solidarity Bankers missions available to Crédit Agricole employees

Launched in 2018 by the Grameen Crédit Agricole Foundation and Crédit Agricole S.A, Solidarity Bankers is a skills volunteering programme open to Crédit Agricole Group employees in favour of microfinance institutions and social impact enterprises supported by the Foundation. Two new online missions are to be filled in favour of microfinance institutions in Moldova and Palestine.

TYPES OF SOLIDARITY BANKERS MISSIONS

There are two types of missions: missions abroad and online missions. They can take place during the employee’s working time (sponsored by the employer of the Solidarity Banker) AND / OR during vacation (volunteering).

Between 2018 and 2020, 20 missions were launched, of which 13 were carried out and seven are in progress, both as skills-based sponsorship and volunteering missions. This is a great success, which demonstrates the commitment of employees and the Group to support projects with a social impact.

TWO MISSIONS TO BE FILLED

A first “digital / IT” mission is available to support Smart Credit, a microfinance institution funded by the Grameen Crédit Agricole Foundation in Moldova. The mission of the Solidarity Banker will be to help build the digital strategy of Smart Credit. The selected Crédit Agricole expert will work remotely and devote the equivalent of one day per week, for 15 weeks, to the mission. Smart Credit provides financial services to socially disadvantaged people and small entrepreneurs in Moldova. The institution has over 3,000 active borrowers (54% of women and 69% of clients living in rural areas) and manages a portfolio of €4.4 million.

A second “financial management” mission is to be filled in favour of FATEN, a microfinance institution located in Palestine. The Crédit Agricole expert will support FATEN in updating financial procedures, policies and tools. He / She will work remotely one day a week, for 15 weeks. FATEN provides financial services to low-income Palestinian entrepreneurs and individuals. In December 2020, the institution served 26,244 active borrowers (34% of women and 68% of rural clients) and managed a portfolio of €108 million.

HOW TO APPLY?

Submit your application on the CA Solidaires website here.

Contact

Carolina VIGUET
Head of Communication & Partnerships
carolina.viguet@credit-agricole-sa.fr

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.

Access the Newsletters

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. Moreover, 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)
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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.

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(1) The first four surveys of ADA’s partners, Inpulse and the Grameen Agricole Foundation are available here : //www.gca-foundation.org/observatoire-covid-19/, //www.ada-microfinance.org/fr/crise-du-covid-19 and //www.in¬pulse.coop/news-and-media/
(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) //www.gca-foundation.org/espace-medias/#covid-19-une-reprise-des-imf-progressive-au-rythme-de-celle-de-leurs-clients; //www.ada-microfinance.org/fr/crise-du-covid-19/fiche-crise-covid-19/2020/11/4e-vague-enquetes

Travel diary of a Solidarity Banker in Bosnia-Herzegovina

By Daniel Hoarau, IT Manager, Crédit Agricole de la Réunion

Launched by the Grameen Crédit Agricole Foundation and Crédit Agricole S.A. in 2018, Solidarity Bankers is a skills-based volunteering programme open to all Crédit Agricole Group employees in favour of microfinance institutions and social impact enterprises supported by the Foundation. Discover the interview of Daniel Hoarau, Solidarity Banker of Crédit Agricole Reunion, who left for Bosnia in 2020 to support Partner Microfinance Foundation (Partner MKF).

A dream of discoveries

Once upon a time, an employee of the CA Regional Bank of Reunion Island dreamed of committing to a solidarity project and discovering other cultures and companies. An employee and friend told him about the Grameen Crédit Agricole Foundation and its Solidarity Bankers programme. This is the beginning of my story as a Solidarity Banker. I applied and was selected to support Partner MKF, a microfinance institution in Bosnia, in structuring its IT system.

Partner is a local microcredit organisation that offers banking products and services to people excluded from the traditional banking system. Today, Partner has more than 40,000 clients, 46% of whom are women and 86% live in rural areas. It is an organisation funded by the Grameen Crédit Agricole Foundation since 2019.

The mission preparation was marked by regular exchanges with the teams of Partner and the Foundation. I was also able to study several documents and evaluate the existing IT infrastructure as well as the first evolution plans considered by the institution. I was ready for my mission in the field.

Departure for Bosnia

The departure is announced, after several adjournments due to the Covid-19, thanks to the determination of the Foundation and the logistic teams of Crédit Agricole SA. Covid-19 test planning obliges, the flight plan is set up: Saint-Denis, Paris, Vienna, Sarajevo, Tuzla: a 24 hour trip, departure on 31/10 at 25°C, arrival on November 1^st in Tuzla at only 10°C.

First contact on arrival: Salih, the driver, or when two English beginners meet. Arrived safely, the light: Ivana, the interpreter in charge of guiding me, thanks to her all becomes simple and fluid. She will be the marker of the whole mission.

The next day, I discovered Partner: the teams and the welcome are wonderful; they all give me confidence and allow breaking the ice both literally and figuratively. The mission is short and we have to be efficient. Multiple interviews with different department managers (information system, human resources, compliance and credit) are followed by an audit of the technical installations, an analysis of user needs and the preliminary scoping of the project. Over the days, the light shines and the recommendations appear. The last step is a review meeting with Partner’s management: analyses are presented and the IT structure evolution plan is validated.

Bosnians have a very different work routine: it starts at 8 am, breakfast break at 10 am, no lunch break between 12 and 2 pm and work ends at 5 pm. This leaves the opportunity for many convivial moments organised by Partner. Dinners, moments of discovery of the Bosnian culture, customs, and even the ascension of a local mountain gave even more meaning to my mission!

Back to Reunion Island

After another 24-hour adventure for the return flight, I arrived to Reunion Island. I have finalised my 34-page report, which aims at lighting up Partner’s decisions for the framing of its system and infrastructure.

I come back enriched by this experience with teams committed to the company’s values: Responsibility, Fairness and Honesty. Values shared by Crédit Agricole Reunion, Crédit Agricole SA and the Foundation that have made this experience possible.

“When you want to build a ship, do not begin by gathering wood, cutting boards, and distributing work, but awaken within the heart of man the desire for the vast and endless sea”, Antoine de Saint-Exupéry.

I wish to thank all the people from Crédit Agricole Reunion, who contributed to make this mission possible; Jasmin Smigalovic, Selma Jahic and all the Partner teams, without forgetting Ivana Bilić the interpreter, for their welcome; Caroline Brand and Carolina Viguet from the Grameen Crédit Agricole Foundation for their support in the mission; and Aurélie Cacciotti from Crédit Agricole SA for the logistical support.

The Grameen Crédit Agricole Foundation consolidates its partnerships in Europe

During the last quarter of 2020, the Grameen Crédit Agricole Foundation continued its financing with its European partners, thereby consolidating its position in a region that represents 18% of its outstanding portfolio.

In Bosnia and Herzegovina, the Mikra microfinance institution was granted a new loan of €1.2 million over a three-year period. Financed by the Foundation since 2019, Mikra’s mission is to provide financial services to the poorest but economically active populations. The institution promotes equality for Bosnian women by financing and supporting entrepreneurship projects. To date, Mikra serves over 15,000 active clients, 68% of whom are women and 58% of whom live in rural areas.

In Moldova, Smart Credit was granted a new loan for an amount, in local currency, equivalent to €500,000. Smart Credit is a microfinance institution whose objective is to help clients improve their living conditions, especially socially disadvantaged small entrepreneurs. The institution currently has over 3,000 active borrowers, 54% of whom are women and 71% of whom live in rural areas, and manages a portfolio of €3.5 million.

Finally, the Foundation granted a new loan, the second since 2018, to ADVANS Holding for an amount of €800,000. ADVANS, whose headquarters are located in Luxembourg, is an international group whose mission is to build a network of microfinance institutions in developing and emerging countries. The Group provides financial and non-financial services to low-income people in nine countries, mainly in Sub-Saharan Africa. Through its network, ADVANS serves nearly 800,000 customers and manages a portfolio of approximately €780 million.

For more information, please click here.

The Foundation pursues its financing in Kyrgyzstan

In the last quarter of 2020, the Grameen Crédit Agricole Foundation granted a new loan to the Salym microfinance institution in Kyrgyzstan. Created in 2007, Salym aims to support income-generating activities to improve the standard of living of disadvantages populations. The Foundation granted the institution a new loan of an amount in local currency equivalent to €1.3 million.

The institution, which currently has around 14,000 active clients, 57% of whom are women and 76% of whom live in rural areas, mainly supports people with limited incomes from rural areas or the urban fringes. Different products are offered to customers: home loans, consumer loans, agricultural loans and business loans.

With this loan, the Grameen Crédit Agricole Foundation has now 18 partners in the Europe / Central Asia area, which represents 28% of its outstanding loans. At the end of December 2020, the Foundation was working in 39 countries, with 85 partners, microfinance institutions and social impact businesses, and managed assets of €81.2 million.

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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.

The Foundation grants new financing in Sub-Saharan Africa

During the last half of 2020, the Grameen Crédit Agricole Foundation granted three new fundings in sub-Saharan Africa, in particular in Benin and Malawi, which add to the two loans granted in Zambia to MLF Zambia and EFC Zambia.

In Benin, the Foundation granted a new loan to the ACFB microfinance institution for an amount in local currency equivalent to €305,000. ACFB, partner of the Foundation since 2017, offers a wide range of financial and non-financial services adapted to the needs of marginalised populations excluded from traditional financial systems. ACFB is a benchmark institution for the promotion of women’s empowerment and the development of microenterprises. To date, the institution has over 32,000 active clients, 88% of whom are women and 95% of whom live in rural areas.

Also in Benin, the Foundation granted a new loan to the microfinance institution COMUBA for an amount in local currency equivalent to €500,000. COMUBA was created in 2000 and offers financial and non-financial services notably through group loans. Partner of the Foundation since 2015, the institution has around 32,000 active clients, 90% of whom are women.

Likewise, the Grameen Crédit Agricole Foundation granted a new loan to the microfinance institution MLF Malawi, for an amount in local currency equivalent to €284,000. Created in 2002, MLF has nearly 30,000 active clients, exclusively women 70% of whom live in rural areas. The institution offers a wide range of products to support agriculture and small business development.

These new financings were granted within the framework of the African Facility programme launched in 2013 in partnership with the French Development Agency (AFD) and bring the total number of partners in Sub-Saharan Africa to 40, which represents 39% of the Foundation’s portfolio as of December 2020.

For more information, please click here.

The Foundation grants a loan to a new partner in Zambia

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.

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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!!

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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.

Source : Paparjan.lu 

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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(1) //www.gca-foundation.org/en/technical-assistance/african-facility/
(2) Acces World Bank’s presse release here

ZEP-RE and ACRE Africa: a partnership to reinforce agricultural insurance in Africa

ZEP-RE, an African leading reinsurance company will acquire a 56% controlling stake in ACRE Africa (Agriculture and Climate Risk Enterprise Ltd.), a social impact company supported by the Grameen Crédit Agricole Foundation since 2014. CA Indosuez Wealth (Asset Management), the Management company of the Grameen Crédit Agricole Fund that holds an equity stake in ACRE Africa, validated the equity operation.

ACRE Africa provides crop insurance services to smallholders, and consulting services to development organisations and insurance regulators associations in Kenya, Tanzania and Rwanda. This agreement paves the way to expand agricultural insurance in favour of smallholder farmers in Africa as it will reinforce ACRE Africa’s wide range of products and technology platforms for agriculture and microinsurance. “Our goal is to expand insurance coverage and improve financial inclusion throughout Sub-Saharan Africa. The safety nets we are building will make a large number of disadvantaged smallholders more confident in farming», declared George Kuria, CEO of ACRE Africa, at the signing ceremony.

ZEP-RE (PTA Reinsurance Company) is a regional organisation that promotes development and integration within the Common Market for Eastern and Southern Africa (COMESA) through insurance and reinsurance business trade. It is based in Kenya, with regional and country offices in Zimbabwe, Ivory Coast, Uganda, Zambia, Ethiopia, Sudan and the Democratic Republic of Congo.

As shareholder of ACRE Africa, the Grameen Crédit Agricole Foundation is excited about the cooperation between ZEP-RE and ACRE Africa. “The COVID-19 pandemic emphasizes the importance of microinsurance in helping low-income rural people build resilience. ZEP-RE’s expertise and its alignment with ACRE Africa’s mission of advocating smallholder farmers will open a new chapter for ACRE Africa to enter new markets, to increase its social influence and to help strengthen the rural microinsurance industry”, affirmed Eric Campos, CEO of the Foundation.

Another important partnership was announced in parallel. With the financial support of Chainlink Community, ACRE Africa and Etherisc (designer of online insurance platforms) will develop a platform for 250,000 smallholder farmers to insure them against climate change risks in Kenya. The outlook for ACRE Africa and the smallholder agricultural insurance in Africa is encouraging.

More information on ACRE Africa

COVID-19: a gradual recovery of MFIs in sync with their clients’ recovery

ADA, Inpulse and the Grameen Crédit Agricole Foundation have joined forces to monitor and analyze the effects of the Covid-19 crisis on their partner microfinance institutions around the world. This monitoring is done on a regular basis and will be carried out throughout 2020 in order to obtain better insights of developments. We hope this regular and in-depth analysis will contribute to building strategies and solutions adapted to the needs of our partners, and also to the dissemination and sharing of information among the various players in the industry.

In Summary

The results presented in this article are drawn from the fourth survey [1] in a joint series by ADA and the Grameen Credit Agricole Foundation, Inpulse having chosen to join the initiative one time out of two. Responses were collected between October 1st and October 20th from 73 microfinance institutions (MFIs) in 38 countries in Sub-Saharan Africa (SSA-37%), Latin America and the Caribbean (LAC-25%), Eastern Europe and Central Asia (ECA-18%), Asia (15%) and Middle East North Africa (MENA-4%) [2].

Given that previous surveys had revealed that the main financial difficulty for MFIs was the increase in their Portfolio at Risk (PAR), the new survey took a closer look at how MFI clients and their businesses were doing as this is what MFIs mainly depend on. Above all, the results of this survey confirm the gradual resumption of MFI activity, along with a reduction in most of the operational constraints initially encountered. The major remaining constraint has to do with loan recovery which explains the increase in PAR as the main financial difficulty for MFIs.

This difficulty in loan recovery may be due to external constraints, such as mobility or moratoria imposed by authorities, or to difficulties encountered by the clients themselves whose activities have not yet restarted or are slowed down by the impact of the crisis. Indeed, even if the peak of the health crisis has passed and it has affected to a lesser extent regions such as sub-Saharan Africa or South-East Asia, thus allowing a number of business sectors to restart, it is all too soon to expect a return to normal. Especially, the restrictive measures and the overall economic situation have negatively impacted — and still do — activities in a certain number of industries, thus restricting the sources of income of the populations. Consequently, this affects MFIs and their financial situation which is why it seems crucial to monitor closely how the crisis is experienced by their clients in order to be responsive in adapting to their needs by offering solutions allowing everyone — clients and MFIs alike — to survive this crisis.

1. THE RECOVERY OF MFIS IS STILL CONSTRAINED BY THE DIFFICULTY IN COLLECTING LOANS

The responses collected during the month of October show that most MFIs are gradually resuming their activities (Fig. 1). Only those of some MFIs in Myanmar remain very limited by the constraints represented by containment measures currently in place in the country, as are the activities of a minority of MFIs in sub-Saharan Africa (one MFI in Mali and one in Malawi). In Europe and Central Asia, the share of MFIs having achieved their normal activity level is most significant.

One of the constraints being encountered by MFIs that previous surveys have revealed was that part of their staff and client base were affected by Covid-19. Hence, we focused on the prevalence of the Covid-19 disease among staff and clients. Fig. 2 and 3).

The situation is mixed in this respect: The Sub-Saharan Africa region appears as the least affected with just a small proportion of MFIs reporting that their staff (15%) or their clients (22%) are affected. Moreover, this proportion remains very small (between 0.1 and 5%) with 70% of the region’s MFIs reporting that neither their clients nor their staff have been affected by the virus. On the other hand, the Latin America and the Caribbean region is the most affected, followed by Europe and Central Asia with a larger share of MFIs concerned by the virus (just 11% of MFIs in the LAC region reporting that neither their staff or clients were affected), and it shows a larger prevalence rate for some of those MFIs [3]. Nevertheless, even if the health situation is more problematic in those regions, it still remains for the time being a relatively minor constraint for MFIs.

Moreover, on a global scale a relatively important proportion of MFIs report that they do not encounter any constraints. (Fig.4), mainly in the Europe and Central Asia regions (62%), while those facing some constraints are fewer with every survey, thus showing a gradual recovery.

The major remaining constraint (32% of MFIs in the sample) is about the difficulty in collecting loan repayments. This implies an increase in the portfolio at risk which is the main financial difficulty encountered by MFIs everywhere. It is reported as such by 77% of MFIs while other difficulties show a diminishing pattern in every survey.

This difficulty or impossibility of collecting loan repayments can be explained by mobility constraints, mainly in countries or internal regions where containment measures are still in place, but also by the implementation of moratoriums – be they initiated by authorities or by the MFIs themselves if the clients needed them. Indeed, these moratoriums concerned the majority (84%) of MFIs surveyed in the sample (Fig. 5), and they are still in place for almost a half of MFI clients (48%) in total. Asia is the region where this situation is more frequent (83% of MFIs included in the sample).

Among clients having benefited from a moratorium, those repaying normally their loans once it ended are a minority (Fig. 6). The majority of MFIs (86% of the sample) report that some or all of the clients needed a new moratorium, or even ended up in the portfolio at risk with 39% of MFIs in the sample affected by the latter situation. In Europe and Central Asia, and in Sub-Saharan Africa, more than half of MFIs report a move to their portfolio at risk of part of their clients having benefited from moratoria.

Nevertheless, globally speaking, the majority of MFIs in every region report that at least 70% of clients repay their loans. (Fig. 7). In South and Central Asia and Europe, more than 80% of respondents show repayment levels above 70%. On the other hand, the situation is not as good in Latin America and Caribbean and Sub-Saharan Africa regions: 34% and 45% of MFIs respectively with less than 70% of clients repaying their loans, and 17% and 15% where this proportion is less than 50%.

2. THE RECOVERY OF MFI CLIENTS IS FACING CONSTRAINTS

These repayment levels, being both volatile and lower than the pre-crisis normal, can be explained partially by the fact that not all customers are still able to resume their activities: Once again, excepting the Europe and Central Asia regions, only a minority of MFIs report that 90% or more of their clients have resumed their activity. However, for a majority of MFIs in the sample (54% in total), between 50 and 90% of clients have resumed their activity. The overall trend therefore points towards gradual recovery.

However, even if customers do resume their activities, some sectors are more affected by the crisis than others. The business activity most often mentioned as being most affected is tourism in regions other than sub-Saharan Africa, where it is retail (reported by 48% of MFIs in the region). The services sector is second in most regions except in Asia where the production and crafts sector is more affected. On the other hand, agriculture is reported only once. Overall, the agriculture sector appears to have been less affected than others by the Covid-19 crisis, as our previous work already showed, where a number of MFIs stated that they wanted to focus more on agriculture as it was less affected by the crisis.

When looking at the constraints faced by customers, by sector, it appears that these constraints are specific to each of them (Fig. 10). Regarding the tourism industry, it is the decrease in the number of clients of entrepreneurs working in it that is the main source of difficulty, followed closely by the loss of employment, mentioned by 60% of MFIs who identified tourism as the most affected sector. On the other hand, in other sectors, the loss of jobs by clients does not appear to be among the main constraints identified. The decrease in the number of customers remains one of the major constraints, for the retail sector as well as for services or production and crafts. The same result is found in other surveys directly targeting MFI customers, such as those using the tool developed by SPTF where the reduction in demand is identified as the main reason for the decline in revenues [4]. Finally, the lack of business opportunities is the first constraint for the retail sector (reported by 72% of MFIs identifying this sector as being the most affected), while the difficulty in producing or offering products is typical of the production and crafts sector.

By focusing on the specific constraints faced by their clients depending on their industry, but probably too on other factors, MFIs would thus be able to better anticipate their financial situation in the short term, and respond appropriately to the needs of their different customer segments: This would allow them all to better navigate this crisis. This responsiveness seems to have already been adopted by some MFIs, given that, and beyond the priority given to the repayment of credits or their restructuring, some of them have introduced not only new channels of digital communication and distribution, but also new credit policies or new products (Fig. 11).

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[1] The results of the first three surveys of ADA partners, Inpulse and the Grameen Agricole Foundation are available here: //www.ada-microfinance.org/fr/crise-du-covid-19 and //www.gca-foundation.org/en/covid-19-observatory/
[2] The number of MFIs responding by region is as follows: SSA: 27 MFIs; LAKE: 18 MFIs; EAC: 13 MFIs, Asia: 12 MFIs; MENA: 3 MFIs. In spite of the small number of MFIs participating in the MENA region, we considered useful to share the inputs of MFIs that took the time to respond to these surveys. However, we urge caution in interpreting the results in this region, which might have limited representativity.
[3] As the MENA region is represented by only 3 MFIs in the sample surveyed, the high numbers in this region should be considered with caution.
[4] The results of these surveys are available here: //app.60decibels.com/covid-19/financial-inclusion#explore

Kafo Jiginew, resilient in the face of the Covid-19 crisis in Mali

The Covid-19 crisis has impacted the activity of Kafo Jiginew, a microfinance institution funded by the Grameen Crédit Agricole Foundation since 2018. Firstly due to the slowdown in international economic activity which impacted the growth of savings, but also in relation to the demand for loans which has also decreased. This panorama was presented by David Dao, Director of Kafo Jiginew, during an interview given on the occasion of the presentation of donations worth 25 million FCFA to the widows and orphans of the Malian soldiers who are part of the membership. of the institution.

The Covid-19 has also affected the Malian cotton sector, largely financed by the institution, which has seen its demand drop on the international market. Credit demands from cotton producers have decreased, which for the institution represents a significant drop in financial income. Another consequence is the increased risk of non-repayment of loans which could weigh on Kafo’s financial profitability in 2020. David Dao, however, expects a positive result for 2020 and asserts that the situation will not weigh on the existence of the institution that is strong.

Kafo Jiginew remains the leader in the microfinance field in Mali with at least 40% of the market share, 430,000 clients and a portfolio worth FCFA 68 billion. Since 2014, the institution has entered a phase of profitability which still continues. In 2015, Kafo Jiginew also initiated a global rating operation with MFR – Microfinanza Rating, an international audit firm that assesses and scores its financial and social performance. These good practices ensure transparency towards international funders such as the Grameen Crédit Agricole Foundation, which will continue to support its partners to face the current crisis.

Source: Bamada.net

The Foundation publishes its Impact Newsletter

The Grameen Crédit Agricole Foundation publishes its Impact Special Newsletter which presents the evolution of the figures for the Foundation’s direct and indirect impacts and an “Impact Focus” with the first results of the international coalition, initiated in May 2020 by the Foundation, to protect microfinance institutions and their clients in the context of the Covid-19 crisis. These results attest to real cooperation and coherence of action between the 30 signatory organisations of the pledge. Due to the prompt action taken, liquidity defaults have so far been avoided and technical assistance, coordinated and focused on essential actions, has made it possible to support institutions during all these period.

We also present the joint interview of the Directors of Crédit Agricole Normandie-Seine and Center-France, two Regional banks that have invested in the Inclusive Finance in Rural Areas Fund (FIR), the first microfinance fund of Crédit Agricole which reinforces the action and the Group’s impact in favour of financial inclusion.

You will discover the key figures of Solidarity Bankers, the Crédit Agricole Group’s voluntary skills programme implemented in favour of organisations funded by the Foundation, as well as a travel diary from a Solidarity Banker of Crédit Agricole SA who conducted a mission in Senegal for the benefit of SFA, a social enterprise supported by the Foundation.

Download the Newsletter # 37 Impact Special here.

Signatory organisations report on Covid-19 Pledge implementation and lessons learned

Over the past months, the financial inclusion sector has embarked on a journey to face the Covid-19 crisis. On the field, microfinance institutions have taken measures to face the health risks, lock downs and the economic recession. In the meantime, lenders, investors, support organisations and technical assistance providers had to adapt their intervention principles and coordinate their actions (1). By signing the Pledge on Key principles to protect microfinance institutions and their clients in the COVID-19 crisis (the “Pledge”), 30 organisations committed to complying with some key principles.

Six months after the signature of the Pledge, a working group of signatories (ADA, Cordaid Investment Management, Frankfurt School Impact Finance, Grameen Credit Agricole Foundation, Microfinance Solidaire, SIDI and the Social Performance Task Force) draws lessons from the implementation of the pledge principles. In a common publication, the signatories present the progress on 10 principles mostly related to rollovers and early stages of voluntary debt workouts, as this is what we can observe in the first months of the crisis.

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We conclude to a very good coordination between international lenders who have agreed on terms of handshake agreements, avoiding lengthy restructuring discussions in the majority of cases. This prompt reaction has proved instrumental to avoid a liquidity crunch in the sector as most investees have maintained sufficient levels of liquidity. In rare cases when individual non-coordinated behaviors threatened the fair burden sharing amongst international debt providers, peer pressure has been effective.

We have also seen an unprecedented coordination on technical assistance that already resulted in some collaboration between technical assistance providers, such as the organisation of a common webinar on liquidity management, the provision of tools on business continuity and the implementation of field surveys on final clients. Coordination was however not up to our initial objective notably due to need to prioritise issues that were more pressing. Given the important challenges that microfinance institutions will face on the field, we believe that we should pursue our efforts on this front to avoid duplication and steer efficiency.

Our pledge to client and staff protection lives on. We have encouraged initiatives to promote continued client and staff protection in these times of crisis and need to pursue such efforts to make sure that they remain at the center of the table of discussions. Many microfinance institutions will have to turnaround a business intimately linked to the financial health of clients, staff behaviors on the field and staff treatment. For that purpose, we encourage coordinated collection of information on staff treatment and client outcome throughout the crisis and beyond. We also encourage deepening sector initiatives that contribute to efficient reporting under these exceptional circumstances (2).

New debt funding has drastically slowed down during the crisis but has not completely stopped. As some economies begin to restart, many of our investees have shown promising signs of regrowth since July 2020, with significant differences among countries and sectors of activities. Acknowledging the opening of this new chapter, we commit to accompany and consolidate the economic recovery in a timely and responsible manner.

Open Publication

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[1] //www.covid-finclusion.org/investors

[2] The Social Investor Working Group of the SPTF has issued Lenders’ Guidelines for Defining and Monitoring Responsible Covenants in the Covid-19 context.

Sinapi Aba wins Best Bank for Women Entrepreneurs Award

Sinapi Aba, has been adjudged the Gold Winner for the Best Bank for Women Entrepreneurs 2020 for the Global SME Finance Awards. Launched in 2018, the Global SME Finance Awards was set up to recognise the commitments and distinguished achievements of financial institutions and Fintech companies in delivering outstanding products and services to their SME clients.

Sinapi Aba is a microfinance institution created in 1994 in Ghana by Opportunity International to serve as an incubator that provides business development and income generating opportunities to economically disadvantaged people who can thereby improve their living conditions. Sinapi is a partner of the Foundation since 2018. Trough savings and loan products, Sinapi Aba promotes entrepreneurial development, particularly women entrepreneurship that represents 78% of its clients. The institution also contributes to the development of rural areas, as 76% of its clients launch income-generating activities in rural areas.

Sub-Saharan Africa is one of the main regions supported by the Grameen Crédit Agricole Foundation. In Ghana, where the Foundaiton started to intervene in 2018, the Foundation finances the microfinance institution Sinapi Aba, with a loan in local currency equivalent to €931,000.

More information on Sinapi Aba here.

The Foundation grants a new loan to OXUS Tajikistan

The Grameen Crédit Agricole Foundation granted a new loan to the microfinance institution OXUS Tajikistan. The loan, for an amount equivalent to € 465,000 euros, is the 4th granted to this Tajik institution which mainly targets microentrepreneurs and farmers in rural areas. Its social mission is clear and aims to improve the economic and social conditions of the low-income population who are not served by the banking sector.

With this new loan, the Foundation has an outstanding portfolio of € 24.5 million in the Eastern Europe and Central Asia region for a total of 19 partners in 10 countries. This represents 26% of the total outstanding portfolio monitored by the Foundation at the end of September 2020.

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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 40 countries.

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

Crédit Agricole’s Solidarity bankers in images

Launched in June 2018 at the initiative of the Grameen Crédit Agricole Foundation and Crédit Agricole S.A., Solidarity bankers is a skills volunteering programme open to all Crédit Agricole Group employees on behalf of microfinance institutions or social impact enterprises supported by the Foundation.

The aim of Solidarity Bankers is twofold: on one hand, it values the skills of Crédit Agricole Group employees who wish to get involved in solidarity projects and, on the other hand, it strengthens the support for microfinance institutions and companies financed by the Grameen Crédit Agricole Foundation.

Two years after its launch, discover the testimonials and highlights of the missions in Senegal and Cambodia in 3 video clips that present the results of the programme.

First destination: Senegal

The programme’s first mission is emblematic: the mission led by Jonathan Michaud, an agricultural engineer from Crédit Agricole Franche Comté, in Senegal for La Laiterie du Berger. With the support of the Regional Bank, the Solidarity banker left for 2 years to help La Laiterie to structure the dairy industry in Senegal. Today, he is Director of KOSSAM SDE, the Dairy’s subsidiary created as a result of his mission, which contributes to structuring the milk sector in Northern Senegal by providing material resources and training to breeders and developing an innovative model of pilot “mini-farms”. It supports 1,230 local breeders, who have seen their income increase by more than 50% between 2018 and 2019.

Another mission was carried out in Senegal in 2020. Michèle Kouam, IT Project Manager at Crédit Agricole SA, left at the beginning of the year to support the Société Sénégalaise des Filières Alimentaires (SFA). Her mission was to work on digitizing the rice collection of SFA, a company that produces white rice from paddy grown by small farmers in the Senegal River Valley. By enabling access to credit, providing technical support and guaranteeing a fair price, SFA currently supports 3,200 small farmers and promotes the development of an inclusive rice sector in Senegal.

Heading to Cambodia

A final mission completes this record in images: the mission of François Galland, Head of International HR at Crédit Agricole SA, to the microfinance institution Chamroeun. François worked for 2 weeks on Chamroeun’s Human resources strategy. The institution offers financial products and services to more than 33,000 low-income people in Cambodia, who are also supported with a range of training and social support services.

What’s next?

Since the launch of the programme, 20 missions have been launched, 12 of which have been carried out. For the first missions launched in 2020, the selection process has been finalized, but two mission are still to be filled in Morocco and Egypt.

With Solidarity Bankers, the Regional Banks and Crédit Agricole entities in France and abroad are stepping up their actions in favor of inclusive finance and strengthening the human and social projects of the Group/PMT 2022 Strategy.

See the video of the 3 missions

Solidarity Bankers and Plastic Odyssey: missions to be filled in Egypt and Morocco

THE PLASTIC ODYSSEY ADVENTURE

Every minute, 19 metric tons of plastic enter our oceans and 80% of marine pollution comes from coastal towns and cities in the world’s poorest countries. In the face of this global challenge, Plastic Odyssey aims to make recycling plastic waste into a profitable business that creates new jobs.

The project is based on a round-the-world voyage aboard a boat that acts as an ambassador for open-source recycling technologies. The boat will be making stops in emerging countries where these solutions will be used to recycle available waste to help create and grow plastic recycling microbusinesses. The expedition is due to set sail at the end of January 2021.

Crédit Agricole S.A., CA Regional Banks and subsidiaries support the project since 2018 by financing the construction of a prototype boat and the expedition with €1.2 million over 5 years. Grameen Crédit Agricole Foundation supports Plastic Odyssey in the development of its business model and the project of structuring a social impact recycling branch during the expedition.

MISSIONS TO BE FILLED IN EGYPT AND MOROCCO

Plastic Odyssey will start its journey through the Mediterranean Sea, and needs to update its knowledge of the plastic waste value chain and to identify partnerships opportunities with social entrepreneurs. In the framework of the Solidarity Bankers Programme, Crédit Agricole SA and Grameen Crédit Agricole Foundation, publish two missions to support Plastic Odyssey’s development. The missions are open only to Crédit Agricole employees based in Egypt and Morocco.

The Solidarity Bankers’ objectives will be to identify the key actors of the plastic recycling value chain in Egypt and Morocco, to analyze the business model of targeted social enterprises and their success factors and to identify development opportunities for Plastic Odyssey.

The duration of each mission is one day per week for sixteen weeks, which can be during the Solidarity bankers’ working time (skill-based sponsorship by the Solidarity bankers’ employers) and/or holidays (volunteering). The missions can be done in pairs or by a team of expert of Crédit Agricole based in Egypt and Morocco. The mission in Egypt will take place from the last quarter 2020 and the mission in Morocco in the first quarter 2021.

APPLY TO THE MISSION IN EGYPT
APPLY TO THE MISSION IN MOROCCO

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(1) Alpes Provence, Aquitaine, Atlantique Vendée, Charente-Maritime Deux-Sèvres, Finistère, Nord de France, Normandie-Seine and Provence Côte d’Azur
(2) CA Assurances, CACEIS, Crédit Agricole CIB, CA Immobilier, BforBank, CAMCA Mutuelle, Crédit Agricole Poland and Crédit Agricole Italy

RENACA, finalist for European Microfinance Award 2020

In the Covid-19 pandemic, encouraging savings activity is critical in providing resilience to vulnerable people. Savings allows, among other things, consumption smoothing in the face of income volatility, minimises the impact of financial and other shocks, encourages long term planning and offers opportunities for productive investment.

The European Microfinance Award 2020 (EMA 2020) will reward with a €100,000 prize the organization that better encourages effective and inclusive savings. Among 70 applications from 37 countries, three finalists were announced: Buusaa Gonofaa Microfinance, Muktinath Bikas Bank and RENACA, partner of Grameen Credit Agricole Foundation. These organisations offer savings products and services based on a genuine understanding of clients’ needs and behaviour, reach under-served populations, and ensure that the savings are accessible, affordable and useful.

RENACA is a union of cooperatives in Benin supported by the Foundation since 2013, which targets low income and vulnerable populations  in rural areas. RENACA offers a wide range of saving products (‘tontine’ doorstep models, term deposits and demand deposits) and promotes community savings and credit groups. Its savings offer is supported by a mobile application and the use of tablets, for secure and trustworthy client transactions. RENACA also provides financial education and other non-financial services.

After the announcement of the finalists, the Luxembourg Minister for Development Cooperation and Humanitarian Affairs, Mr. Franz Fayot, said: “The extraordinary response to this year’s Award is strong evidence of the impressive reputation it has gained for rigour and quality as well as for the exposure benefits that those who do well in the process can reap. The diverse applications highlight not only how important responsible inclusive financial services are during crises, but also how especially savings can strengthen resilience of vulnerable communities”.

The winner will be chosen by a High Jury and announced on November 19th at an online ceremony during EMW 2020.
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More information on e-MFP

New programme to strengthen smallholder households

SSNUP (Smallholder Safety Net Upscaling Programme)

In collaboration with the Swiss Agency for Development and Cooperation and the Luxembourg Directorate for Development Cooperation and Humanitarian Action, ADA is launching a new program to support small farmers in Africa, Latin America and Asia. SSNUP (Smallholder Safety Net Upscaling Programme) will run for ten years with a budget of 55 million euros.

The program will draw on the technical assistance expertise of impact investment funds to design, test and develop financial and non-financial solutions for the mitigation and transfer of agricultural risks of different actors in value chains.

A partnership to strengthen the technical assistance offer

Based on its experience in the management of technical assistance programs, the Grameen Crédit Agricole Foundation was selected as one of the impact investors in charge of setting up the SSNUP.

The Foundation will thus coordinate technical assistance missions for the organizations it supports – microfinance institutions and social enterprises – on various themes such as the development of new financial and non-financial products/services for small producers, agricultural microinsurance and the digitalization of operations. The SSNUP expands the Foundation’s offer of technical assistance and represents a tremendous opportunity to strengthen its impact on the organizations it supports in Africa and Asia and on the small producers supported by its organizations in the field.

In addition to the Foundation, four impact investors have joined SSNUP: Incofin, Oikocredit, responsAbility and Symbiotics. Other actors will be invited to join the program as it develops.

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For more information: ADA.

Event: Lidia, entrepreneur supported by Solidarity Cents

SOLIDARITY CENTS

Launched in 2018 by the Grameen Crédit Agricole Foundation, Crédit Agricole SA and CA Centre-est, Solidarity Cents aims to finance entrepreneurial projects by mobilizing Crédit Agricole employees, who are invited to make a donation of 50 cents when they pay for their meals in the restaurants of Crédit Agricole Campuses.

Entrepreneurs du Monde, NGO financed also by Fondation Crédit Agricole Solidarité et Développement, has been the beneficiary of the operation since the first edition. The NGO has already received €15,651 to strengthen the ICI (Incubation, Creation, Inclusion) programme, which supports entrepreneurship projects for refugees, single parents and homeless people in Lyon. In 2 years, more than 100 people have been guided to structure their entrepreneurial projects.

2020 will be the 3^rd and final year of support for Entrepreneurs du Monde, which will receive an additional €11,000 in subsidies.

MEETING LIDIA

To close the 3^rd edition of Solidarity Cents, the Foundation and Crédit Agricole welcome Lidia, an Italian entrepreneur supported through the operation, to CA Campus in Montrouge on October 29^th, 2020.

Arrived in France 12 years ago, Lidia is an Italian entrepreneur, mother of 3 children and beneficiary of the RSA. Thanks to the support of Entrepreneurs du Monde through ICI programme, she was able to create her own catering service. The next step: bringing an old grocery store to life in Lyon, in a street steeped in history with Italy.

Come to share with Lidia and taste her culinary specialties!

Event reserved exclusively for employees of the Crédit Agricole Group.

To register, contact carolina.viguet@credit-agricole-sa.fr

The Foundation grants a first loan to MLF Zambia

The Grameen Crédit Agricole Foundation pursues its investments in Sub-Saharan Africa and has just granted a first loan in local currency equivalent to € 250.000 to the Zambian microfinance institution MicroLoan Foundation Zambia (MLF-Zambia), over a of three-year period. This loan has been granted within the framework of the African Facility programme which aims at reinforcing smal microfinance institutions.

MLF Zambia is a microfinance institution that was established in 2008. Its activities are overseen by the Microloan Foundation which has its headquarters in the UK. MLF-Z’s main activity is providing low-income women living in predominantly rural areas of Eastern, Southern and Central Provinces of Zambia with short-term loans of between 4-6 months for productive purposes. The institution lends exclusively to women.

With this loan, the Foundation now has an outstanding amount of € 36.4 million 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 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 40 countries.

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

Three Solidarity bankers missions are available

Launched by the Grameen Crédit Agricole Foundation and Crédit Agricole S.A, Solidarity bankers is a skills volunteering programme open to Group employees for microfinance institutions or impact businesses. The objective of this programme is twofold: it is a way of acknowledging the skills acquired by Crédit Agricole group employees and provides additional support to microfinance institutions and partner companies of the Foundation. Thanks to this scheme, the Crédit Agricole group reiterates its commitment to support employees’ solidarity initiatives.

Missions to be filled!

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

A subsidiary of Laiterie du Berger, Kossam’s mission is to develop an inclusive and sustainable dairy industry in Northern Senegal. Created in 2019, after a Solidarity Bankers mission, Kossam collects milk from 450 local breeders, to whom it provides market services (food, fodder), advice and training. The Solidarity bankers mission [which could be carried out by 2 Solidarity bankers] aims to support Kossam and Laiterie du Berger in strengthening the financial team and reporting. Depending on the health context, the mission will be carried out at the end of 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 created in 2013 that produces circus shows and has recently launched an animation and graphic design studio. PPSE employs art graduates from PPSA, a non-profit organization that supports underprivileged children and youth. An online Solidarity bankers mission will aim to consolidate the new PPSE business plan (developed in response to the Covid-19 crisis) and to support a fundraising and merger process. The mission is planned for the last quarter of the year.

3. “Human resources” mission in favor of Oshun in Senegal

Created in 2018, Oshun is a social enterprise that provides quality water services for the most vulnerable populations in rural Senegal. As part of a structuring process after a strong development, a Solidarity bankers mission will help simplify Human resources management, recruitment and general management. The mission is planned for the last quarter of the year in Senegal, but the calendar will depend on the context generated by the Covid-19.

How to apply?

• Click on the link “Find a project“
• Enter in the the search bar: “Fondation Grameen”. All the Solidarity bankers missions will appear!
• Click on the offer of your choice, you will find all the information requested for your application.

Contact: Carolina VIGUET
Head of Communication & Partnerships
carolina.viguet@credit-agricole-sa.fr

The Foundation grants a new loan to Mikra in Bosnia-Herzegovina

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

Mikra is a Tier 2 microfinance institution founded by Catholic Relief Services (CRS) that started operations in 1993. Its mission is to provide responsible access to financial services to the poorest but economically active population, mainly women (70.2% of its 13,400 clients). The institution offers the poorest gainfully employed population access to affordable and quality financial and support services in order to reduce poverty and encourage entrepreneurship. The institution promotes the equality and freedom of Bosnian women, which are necessary preconditions for the success of their businesses and their social emancipation.

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

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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 40 countries.

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

Supporting financial inclusion of 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 programme to promote access to financial and non-financial services for refugees and host communities in Uganda. This is a unique programme designed to inspire microfinance investors and microfinance institutions to extend their financial services to refugees.

Within this framework, the Grameen Crédit Agricole Foundation is in charge of managing technical assistance and support for microfinance institutions so that they develop a range of products and services tailored to refugee populations. The Foundation also grants loans to institutions to provide them with the necessary resources for loans to refugees and host communities.

UGAFODE: First funded institution

The first institution supported under this programme is UGAFODE Microfinance Limited. Thanks to a loan equivalent to € 540,000 and the technical support provided, UGAFODE has opened an agency in the Nakivale refugee camp, in the district of Isingiro, which will help strengthen the resilience and autonomy of refugees in the host communities.

For UGAFODE, this programme follows a successful pilot financial inclusion project for refugees in Kampala. Thanks to the support offered under the programme, 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 entrepreneurial management that will equip them with essential skills such as developing business plans, financial management, pricing and marketing.

Funding for other microfinance institutions is being analysed within this programme to support refugees and host communities. In total, nearly 100,000 Ugandan refugees and hosts are expected to be able to access financial services and training through the programme, 70% of them women. The project will support the creation and development of small businesses in sectors such as agriculture, crafts, catering and commerce.

For more information on the programme, click here.

A resumption of activities under operational and financial constraints

ADA, Inpulse and the Grameen Crédit Agricole Foundation have joined forces to closely monitor and analyze the effects of the COVID-19 crisis among their partners around the world. This monitoring will be carried out periodically throughout the year 2020 with the purpose of evaluating the evolution of the crisis. Through this regular and close analysis, we hope to contribute, in our own way, to the structuring of strategies and solutions tailored to the needs of our partners, as well as the dissemination and exchange of information among the different actors in the sector.(1)

In short

This article is based on the answers provided between July 23rd and August 6th 2020 by 91 partners located in 42 countries, split between Europe, Africa, Asia and Latin America (2). Feedback from these microfinance institutions (MFIs) allows us to observe the continuous evolution of the sanitary crisis linked to the COVID-19 virus. While the measures to reopen borders and to revive the economy have multiplied during the month of July, our partners mention significantly that the virus now directly affects their customers and employees.

In such an uncertain and evolving context, MFIs have been braving the challenges they face for more than a quarter now. With operational difficulties still ongoing, institutions remain vigilant about their portfolios and the risk they carry, which seems to have stabilized overall, albeit at a much higher level than before the crisis. Nevertheless, some signals are encouraging on other issues. For example, the vast majority of MFIs believe that they can survive the crisis without major strategic changes. In addition, it appears that the issue of liquidity has been rather well managed since the beginning of the crisis.

However, the battle against the virus is not won, 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 as they do not ultimately benefit from the aid measures that states can provide. Nonetheless, 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 remain relevant for MFIs

In general, our partners are reporting progress regarding the easing of containment measures in their countries, following the first relaxations that took place in some regions of the world in June (notably in Eastern Europe, Central Asia and Sub-Saharan Africa). Comparing the responses of our partners who answered to our July and June surveys (3) (graph below) reflects the improvement of operational difficulties. Moreover, these figures are in line with the general results obtained for the month of July.

MFIs in each region report an improvement in travel opportunities for their staff. However, this remains a major constraint in Latin America and the Caribbean, while less than 20% of MFIs in other areas are affected by this issue. Moreover, even if mobility is improving, meeting clients in the field remains an important issue for more than 30% of MFIs. Finally, with the exception of Latin America, meeting clients in branches seems to be the least problematic solution today.

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

“Though other MFIs start operating their process, we still wait for full release by the regional government” – Partner in Myanmar

Especially as MFIs are still busy restructuring client loans in July (80% of respondents).

“Communication on the postponement of instalments is a barrier to the repayment of loans” – Partner in Senegal

Although we have been observing the singularity of the Latin American zone in the responses collected over the last few months due to a particularly difficult COVID-19 sanitary context, the information we gathered shows that the situation is not settled yet in the other regions.

In fact, doubts about a potential normalization of MFIs’ activities have not been dispelled for now, as the health crisis remains the central issue of the current period and as it persists. The news in July were notably highlighted by the punctual resurgence of a number of cases in some countries. For the first time in our surveys, this is significantly demonstrated by a sharp increase in the proportion of partners who are affected by the health crisis, both among their staff and their clients (see graph below (4)).

Thus, at the global level of the survey, 51% of our partners told us that among their customers, some have contracted COVID-19. Almost a third indicate that this also concerns their employees. Although we do not have data to know the respective proportions of customers and employees concerned, this trend is still meaningful. More specifically, more than three out of four MFIs in Central Asia and Latin America reported having clients infected with the virus (one out of two in June). While Latin America is largely affected on both the client and staff sides, the figures are also slightly higher for the staff of MFIs in Europe and Central Asia. South Asia and Sub-Saharan Africa seem to be generally less affected on this point, but figures encourage us to remain vigilant.

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

2. MFIs continue to face major financial issues

As we witnessed since the beginning of our surveys, the increase in portfolio at risk and the reduction in outstanding portfolio are the two main direct consequences of the crisis for a microfinance institution. Other financial difficulties are to a lesser extent and are stable from June to July (figure below5). This is the case in all regions except Central America, where our partners who responded to all of our surveys indicate problems and growing fears regarding equity, lack of liquidity or increased expenses.

The details of the analysis show that the contraction of the credit portfolio is a heterogeneous phenomenon. Among all respondents, 39% of Central Asian MFIs indicate that they are 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 common problem for all MFIs, regardless of their region or size, and concerns more than 80% of our partners. However, if the PAR 30 of microfinance institutions has deteriorated since the beginning of the crisis, it is no longer undergoing major changes between June and July, although it remains at a much higher level than before the crisis. As shown in the graph below, the PAR30 structure of the partners in the sample of 54 MFIs is stable from one month to the other. Moreover, we observe this trend across all of the surveyed MFIs: between 15 and 20% of the MFIs see their PAR30 decreasing or remaining stable, while around 40% have seen their PAR30 increase without doubling since the end of 2019. Finally, the riskiest cases represent between 30 and 40% of the respondents.

“[It is difficult] to cover the expenses of provisions for doubtful debts” – Partner in the Democratic Republic of Congo

Luckily, all these difficulties should not be too harsh for our partners. When asked about possible strategic changes because of the crisis, 93% of respondents do not anticipate any changes in the short or medium term. Therefore, our partners do not feel concerned by potential sales of a part of their assets, being placed under administrative supervision or being liquidated, which is a sign of a certain confidence in the future.

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

The first explanations lead us to the many extensions of maturities granted to MFIs by their foreign and local investors, but also to the reduced levels of disbursements since the beginning of the crisis. We also note the low proportion of MFIs that have suffered from significant withdrawals of savings, which has helped cash management. Among the MFIs reporting this difficulty, most are from Sub-Saharan Africa and Asia and do not show significant additional liquidity needs compared to other MFIs. These different factors influence the liquidity needs of MFIs. Thus, on a global scale, 47% of the respondents have no additional funding needs for 2020. For almost a quarter of the MFIs outside Sub-Saharan Africa, these needs even decreased. Last, only 25% of those surveyed report significant additional needs.

3. In July, the informal sector is exposed

Microfinance institutions are still exposed to the crisis, and so are their clients. In fact, 92% of our partners indicate that clients in the informal economy are either moderately affected by the crisis or are the most affected ones. Like all other entrepreneurs and clients of MFIs, they face reduced activity, but also suffer from the consequences of the major international and national measures to manage the pandemic, for instance in the tourism, textile or cultural sectors… With limited means of relief and a reduced activity that cannot generate sufficient income, they would be more vulnerable. This point is raised overwhelmingly in Central Asia and Latin America (two thirds of respondents from these regions) while in Sub-Saharan Africa, the feedbacks indicate that clients in the informal economy are affected in the same way than those in the formal economy.

“Due to prevailing market and economic conditions, it is hard for the small businesses to revive their usual economic activities to the level they were before COVID-19 crisis” – Partner in Sri Lanka

The reasons given by our partners are mostly about financial matters: the vulnerability of workers in the informal sector would come from the lack of financial support from governments to the sector. This explanation is given by a vast majority of surveyed MFIs (78%), which also note (57%) that clients in this sector do not have access to adapted non-financial services (business development, financial education, health education, etc. ). The lack of insurance services is also underlined by 50% of MFIs. In contrast, the lack of access to savings services is hardly mentioned.

MFIs are already thinking about how to meet the needs of their clients. Thus, 48% of MFIs reporting a vulnerable informal sector say they plan to launch financial education programs, and 33% imagine supporting clients in the management of their activity. However, only a small proportion of them forecasts launching micro insurance products (maximum 11%). MFIs justify such motivations with two main reasons: getting closer and focusing on under-served populations, but also to respond to a demand for adapted offers during a particular period. For some MFIs, this could translate into other initiatives, such as the development of the agricultural segment (still strongly mentioned by MFIs) or by the development of digital solutions for clients. As a partner in Latin America tells us:

“The financial education and business management program is being planned by digital means to introduce customers to the use of social networks to sell their products, since the main problem they have had is that their places of sale have been closed down or customers are not arriving because of the risk of contagion”

The results of this article highlight the operational and financial difficulties encountered by MFIs during this first semester, but also their first steps in understanding the problems and finding solutions. In this context, the future challenges us to continue questioning ourselves about the best recovery actions for each region, how they can be implemented and how the various actors in the microfinance sector can directly and indirectly contribute to its revival.

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1 The results of the previous surveys are available here for the first one and here for the second one.
2 The total number of MFIs that responded 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 (total: 91 institutions). The small sample from the MENA region does not allow for the monitoring of the figures for the zone.
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 is also based on the sample of 54 MFIs.
5 This comparison is also based on the sample of 54 MFIs.

Solidarity bankers: a new mission in Senegal

Launched by the Grameen Crédit Agricole Foundation and Crédit Agricole S.A, Solidarity Bankers is a skills volunteering programme open to Group employees for the benefit of microfinance institutions or impact businesses. The objective of this programme is twofold: it is a way of acknowledging the skills acquired by Crédit Agricole group employees and provides additional support to microfinance institutions and impact companies supported by the Foundation. Thanks to this scheme, the Crédit Agricole group reiterates its commitment to support employees’ solidarity initiatives.

What are the Solidarity bankers missions?

International volunteer assignments are available to employees on behalf of microfinance institutions or social impact companies supported by the Grameen Crédit Agricole Foundation.

The missions are carried out within the framework of philanthropy or volunteer work. Crédit Agricole S.A. covers airline ticket and insurance. The beneficiary institution pays any internal transport costs, catering and accommodation expenses. The Grameen Crédit Agricole Foundation will prepare and coordinate the mission.

Since the programme was launched in 2018, fourteen missions have been carried out, both in volunteering and in skills sponsorship.

A mission to fill!

A ten-day field mission in terms of HR support is to be provided to Oshun in Senegal for the last quarter of 2020.

Oshun Senegal was created in March 2018, shortly after its parent company Oshun in France. Oshun proposes inclusive solutions allowing the most sensitive populations access to water while promoting the establishment of a virtuous and community-based local ecosystem. The company distinguishes itself by its innovations in terms of 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 process of structuring with the recruitment at the end of August of an Administrative and Financial Manager (AFM) whose mission will be to manage all the support functions of Oshun Senegal (accounting, finance, HR, logistics, purchasing) and allow the company to gain administrative autonomy from the parent company.

Mission objectives:

• Organization and training of the team
• Definition and mastery of HR rules and processes
• Implementation of monitoring tools

How to apply?

• Click on the link “Find a project“
• Enter in the the search bar: “Fondation Grameen”. All the Solidarity bankers missions will appear!
• Click on the offer of your choice, you will find all the information requested for your application.

Contact

Carolina HERRERA
Head of Communication & Partnerships
carolina.herrera@credit-agricole-sa.fr

The Foundation finances for the first time Thitsar Ooyin in Myanmar

The Grameen Crédit Agricole Foundation has just granted a first loan in local currency equivalent to € 1.3 million to Thitsar Ooyin, in order to enable this microfinance institution to continue its action, particularly with rural populations in Myanmar.

Thitsar Ooyin is a microfinance institution based in Hakha, Chin State, a rugged and isolated mountain area in northwest Myanmar. This institution is active in some of the most difficult to access regions of the country. It provides microcredits to the poorest and underprivileged communities in rural areas, and in particular to women. Its methodology has enabled the institution to build a solid client base despite difficult conditions, thus creating a significant impact on the livelihoods of rural populations.

Thitsar Ooyin offers both group and individual loans, mainly to women. To date, the institution has a loan portfolio of € 7.3 million and has over 30,000 borrowers, 79% of whom are women and 92% of whom live in rural areas. It currently employs over 100 people through a network of twelve branches located in Chin State and Sagaing region.

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

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

The Fondation grants a new loan to Caurie in Senegal

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

The Coopérative Autonome pour le Renforcement des Initiatives Economiques par la MicroFinance (CAURIE-MF) was created in 2005 by Relief Services (CRS) and CARITAS Senegal. Over 60% of CAURIE-MF’s activity develops in rural areas and in 13 administrative regions of Senegal. To date, the institution serves over 80,000 clients, 97% of whom are women and 61% of whom live in rural areas.

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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 40 countries.

Faten, partner of the Foundation in Palestine, awarded with the Smart Certification

In June 2020, the Smart Campaign recognised the action of FATEN, partner of the Grameen Crédit Agricole Foundation, in terms of customer protection by granting the institution the Smart Certification. The Smart Campaign is a global initiative to incorporate strong client protection principles into the financial inclusion industry. The Smart Campaign’s Client Protection Certification programme publicly recognizes those institutions providing financial services to low-income households whose standards of care uphold the Smart Campaign’s seven Client Protection Principles. These principles cover such important areas such as pricing, transparency, fair and respectful treatment and prevention of over-indebtedness.

The certification programme contains a rigorous set of standards against which institutions are evaluated by independent, third-party raters that are licensed by the Smart Campaign. The raters are established, specialized rating agencies with extensive experience, having analyzed hundreds of institutions to date.

In 2019, the Smart Campaign already publicly recognised the action of three other microfinance institutions, partner of the Foundation, as Client Protection Certified for meeting strong standards of client care: Musoni (Kenya), Chamroeun (Cambodia) and Salym Finance (Kyrgyzstan). These institutions have thus joined almost 120 others in over 40 countries that have been certified since the programme was launched in January 2013.

For further information about Grameen Credit Agricole Foundation partners, please click here.

The Grameen Credit Agricole Foundation invests again in Moldova

The Grameen Credit Agricole Foundation is pursuing its investments in Moldova with the granting of a loan to the microfinance institution Microinvest. This loan, in local currency equivalent to € 2 million, is the first one granted to this institution which grants microcredits and support for business creation to small entrepreneurs in many regions of the Moldova Republic.

Many of the beneficiaries of Microinvest loans are entrepreneurs living in rural areas, in this landlocked country between Ukraine and Romania. It is one of the main MFIs in Moldova with its head office located in Chisinau. To date, Microinvest serves over 35,000 active borrowers, of which 47% are women and 66% are clients located in rural areas.

With this investment, the Foundation consolidates its presence in the region of Eastern Europe and Central Asia, where it already has 19 partners in 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 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 40 countries.

A Solidarity banker in Kenya

By Eva Hoglund, CFO at EFL (Poland)

Launched by the Grameen Crédit Agricole Foundation and Crédit Agricole SA in June 2018, Solidarity Bankers is a skills volunteering programme aimed at all Crédit Agricole group employees for the benefit of microfinance institutions or impact businesses supported by the Grameen Crédit Agricole Foundation. Read the interview with Eva Höglund, Crédit Agricole’s Solidarity banker, who left for Kenya in 2019 to support Musoni, a microfinance institution funded by the Foundation.

Beginning of the adventure

When I discovered the Solidarity bankers mission in favour of Musoni, a microfinance institution in Kenya, it was immediately obvious to me: it was made for me. The objective of the mission was to accompany Musoni in the implementation of a strategic planning and monitoring system. Not only it was a beautiful solidarity and sharing mission, in a country that I did not know, but I also had the impression that the qualities and experience requested were a description of my own professional career. I immediately gathered as much information as possible about Musoni and the Grameen Crédit Agricole Foundation.

Soon after I applied, I was informed that my application had been accepted and I immediately started preparing my mission. The Grameen Crédit Agricole Foundation team was very supportive during this first phase: together we established the mission’s objectives and agenda. This was followed by reading sessions of Musoni’s presentation documents and strategic plan.

During the summer preceding the mission, I also had numerous exchanges and conference calls with Musoni to ensure that we shared the objectives and had a common vision of the working method to be followed. From my point of view, good preparation is essential and this phase was the key to the success of my mission.

Heading to Kenya

On 26 October 2019, departure for Kenya for a 15-day field mission. I was leaving for a mission in line with my skills and knowledge of the microfinance sector, but in a structure and cultural context different from my daily life. It was therefore not without a little apprehension that I landed in Nairobi. The welcome I received from David Camara, Investment Advisor at the Foundation, who I had previously met in Montrouge, was reassuring.

On Monday morning, we started with the meeting to launch the field mission with all Musoni’s employees who were going to contribute to establishing the strategic planning and monitoring mechanism. The presence of Stanley Munyao, CEO of Musoni, and David, representing the Foundation, was important to underline the importance of the project. Musoni gave itself all the means to succeed by sending Amina Jaberney, a consultant who was going to accompany me during my field mission in order to ensure afterwards the operational implementation once my mission was over.

During the first week, Amina and I conducted interviews with Musoni’s management, as well as agencies’ employees. We compiled the key points to remember and translated them into vectors consistent with Musoni’s mission and vision. The second week consisted of validating and ensuring the adherence of Musoni’s teams to the proposed strategic management system. In order to ensure that the mission was going according to expectations, we held Steering Committees with the CEO every 2 days. On my last day in the field, we were able to present a complete set of the system validated by Musoni’s management.

Back to Paris

Once my mission was over, Amina took over with Judy Ndungu, Musoni’s Human Resources Director. The final implementation meeting, gathering all the employees, was held on 13 July 2020. The performance evaluation of the first half of the year will be carried out based on our work. What a satisfaction!

I am very pleased to have taken this opportunity offered by Crédit Agricole and the Grameen Crédit Agricole Foundation. This assignment will remain an unforgettable experience. It allowed me to experience from the inside how a microfinance institution operates in a fast-changing market. I met some very nice people and I am proud of the result we were able to achieve, together, in such a short period.

Newsletter #36 to download here

The Foundation publishes the Newsletter N.36

The Grameen Credit Agricole Foundation publishes its Newsletter N.36. The end of July marks the fifth month of the global health and economic crisis. All countries have been affected but, like the impact of extreme weather events, the health crisis is profoundly unequal in that it affects the most vulnerable populations most severely.

Since the end of February, the Grameen Crédit Agricole Foundation’s teams have been working on several major initiatives. First, we have established a rapid and ongoing dialogue with the organisations we support so that we can understand the effects of the crisis, the measures taken and their needs accordingly. Secondly, 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. At the same time, we led an international coordination of lenders and players in inclusive finance to act together, in consultation, to prevent any liquidity shock that would have destabilized the sector. Finally, we regularly published articles on the Covid-19 Observatory and on social networks to share our analyses and inform stakeholders.

Five months after the beginning of the crisis, we feel that this first wave has been well managed by the microfinance institutions, which have all shown great professionalism. We would also like to highlight the remarkable support and attentiveness of our own financiers: Agence Française de Développement, Proparco, the European Investment Bank, Crédit Agricole and its entities Crédit Agricole CIB and Amundi. The sector’s remarkable resilience has undoubtedly been strengthened thanks to these concerted and convergent actions between donors and microfinance institutions operating in all parts of the world.

In this edition of the Newsletter, you will discover, among other things, details of the International Coalition coordinated by the Foundation in response to the Covid-19 crisis and two projects that we launched during this complex period: the new website and the Foundation’s first Impact Report. This new website and this Report are yours: administrators, the Grameen network, the Regional Banks and Crédit Agricole entities, donors, technical partners and supported organisations. It is also our way of paying tribute to you.

We continue to monitor closely the effects of the health crisis and our mobilization, on which you know you can count, is constant.

Download the Newsletter N.36 here.

The cooperative capital company: a model for the “World after” Coronavirus

By Éric Campos , CEO, Grameen Crédit Agricole Foundation & Bagoré Bathily, Chairman and CEO, Laiterie du Berger

The global shock of 2020 shows the absolute necessity to rethink our economic system. Health and climate emergencies no longer leave us any choice. Without structural change, the risks of social, political or environmental tensions will become more and more important every day.

We would like to submit the idea of a socially different model of company for the collective discussion: the cooperative capital company, a company whose capital remuneration is shared by and between shareholders and employees thanks to an arrangement under which employees receive part of the dividends directly when there is a payout. The ownership of capital is a factor of exclusion of populations, particularly with regard to the younger generations — the labour force. If we wish to build a sustainable and harmonious future, it is crucial to resolve the issue of a fair redistribution of the value created by growth and therefore by the company.

Today, capital is owned by the shareholders and leveraged by the employees. Their fates are inextricably related, yet no direct link really exists between them. We think it is possible to bring them together by establishing a convergence of their interests, thanks to new rules where employees become usufructuaries of part of the company’s capital. The shareholders provide the funds, the employees deliver the added value. And finally, everyone deserves their share.

The idea is there. It may sound iconoclastic but it is realistic in fact, i.e. a company whose dividends are now shared between shareholders and employees in a fundamental way by giving employees a share in the use of the capital.

This is what we call the cooperative capital company. In order to become one, the company must include a special provision in its articles of association that allows for employees to receive a share of the profits if dividends are triggered. It thus grants them a place as usufructuary shareholder. For their part, the shareholders remain equity holders and owners of the shares, but with the difference that they opt to become bare owners for a specific part of the capital, the yield value of which they transfer to the collective wage earners. To that end, they must accept a reduction in the nominal value of their share – for example through the effect of a capital increase by issuing securities – and transferring the difference to those who “manufacture growth” —  the employees. Idealistic? Astonishing? Bizarre? Far from it.

The shareholder-investor must admittedly bear a certain “cost.” He is asked to pay a sort of “ticket of admission” to productive capital. But there is nothing confiscatory about this. With no loss of ownership, he opts to invest in another form of value: human beings. His wager is that, supported by reinforced cohesion, the company will be able to grow better and be better valued in the long term. It is an entrepreneurial reasoning of dynamic reconciliation.

Such a system has many advantages. For employees, it obviously provides direct access to a new channel for redistributed value in a spirit of socially equitable cooperation. This is essential in a global context where the gap between the richest and the middle classes has been widening steadily in recent decades.

For shareholders, there is an innovative pre-emptive role so that labour value can be included in the creation of capital wealth, thus giving investment an entrepreneurial and societal dimension beyond its financial purpose. It has been shown that investments that are steered in environmental, social and governance terms (ESG criteria) have performance potential – and above all a future.

Finally, for companies, and in particular those whose projects are part of a corporate social responsibility mission, this is an instrument of resilience. They put themselves in the position of no longer considering employment as an adjustment variable but rather as a legitimate, structuring gene. By accepting to put shareholders and employees on equal footing, a new balance and a promising dialogue will be established. It is, in a way, the City that enters the Company.

The cooperative economy has long been a response to the excesses of the times it goes through. Its longevity can be explained by its capacity to adapt and hybridize. It has sprung many branches. Our proposal is a current translation, a step aside, a bud on the tree.

The cooperative capital company goes far beyond the mechanisms of profit-sharing and employee participation, which consist of paying a bonus linked to the enterprise’s performance or representing a share of its profits. Cooperative capitalism acts on the cornerstone of the company and its capital, by having the stakeholders share responsibilities. The wage earners join the ranks of shareholders whose governance is part of a process of openness and convergence of interests, without sacrificing their prerogatives. Transparency in terms of social and environmental impact is imperative for the cooperative capital company, whereby the instrument consists of the measurement and control of what is known as extra-financial performance as well as the publication thereof.

We can see in social businesses or mission-based enterprises in which we intervene as managers or directors the extent to which the concern for economic inclusion pushes the company to combine its interests with those of its ecosystem. This is true in many places around the world where we are involved, particularly in sub-Saharan Africa, where we work with livestock farmers and agri-food chains. Economic inclusion is unquestionably a way to pursue in order to restore to human societies the enlightened paths and hope they need. There is no utopia in such vision, but the free and civic conviction that the world cannot be built otherwise than with and for each other.

Read the complete article here

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Éric Campos is the General Manager of the Grameen Crédit Agricole Foundation, a foundation specializing in microfinance and social entrepreneurship, and Head of CSR at Crédit Agricole S.A. Bagoré Bathily is the founding Chairman and Chief Executive Officer of La Laiterie du Berger, a social business that promotes the dairy industry in Senegal.

(Co-editor: Julien Foulc)

Covid-19 affects microfinance institutions of different sizes in different ways

@Designed by pikisuperstar / Freepik

ADA, Inpulse and the Grameen Crédit Agricole Foundation have joined forces to closely monitor and analyse the effects of the COVID-19 crisis among their partners around the world. This monitoring will be carried out periodically throughout the year 2020 with the purpose of evaluating the evolution of the crisis. Through this constant and close analysis, we hope to contribute, in our own way, to the structuring of strategies and solutions tailored to the needs of our partners, as well as the dissemination and exchange of information among the different actors in the sector.

The results presented in this article come from the second wave of a joint (1)survey by ADA and Grameen Crédit Agricole Foundation, Inpulse having decided to join the initiative for odd-numbered waves. The responses were collected from 18 June to 1 July from 108 microfinance institutions (MFIs) based mainly in Latin America and the Caribbean (LAC, 46%), Sub-Saharan Africa (SSA, 29%), Asia (14%) and Eastern Europe and Central Asia (EECA, 10%), with a single MFI from the Middle East and North Africa (MENA) region. This panel of respondents spans a relatively diverse range of MFI sizes, with 49% of Tier 2 MFIs,(2) 35% of Tier 3 MFIs and 16% of Tier 1 MFIs. Figure 1 shows their regional distribution.

Figure 1. Respondents by region and tier

MENA Tier 2

In short:

The latest wave of the survey reveals that the crisis faced by MFIs has laid bare the structural strengths and weaknesses specific to their sizes: the biggest MFIs (Tier 1) appear better equipped to overcome the financial difficulties resulting from the health crisis and epidemic containment measures, as well as to take crisis management measures and make use of the specific measures put in place by local authorities. Smaller MFIs (Tiers 2 and 3), on the other hand, are more likely to offer their clients non-financial services to help them cope with the situation and are eager to continue developing non-financial services in the future. More generally, if they are considering launching new products or services, it is mainly to meet the needs of their clients rather than following their strategy or reducing risks. While big MFIs appear to be more resilient in times of crisis, small ones are also rising to the challenge and staying true to their powerful social mission. This is a real strength for these institutions, which should not be neglected in favour of more autonomous structures during the current crisis.

The biggest MFIS are less exposed to financial difficulties…

Since June, epidemic containment measures have been relaxed in certain regions, particularly Eastern Europe, Central Asia and Sub-Saharan Africa. As a result, the operational difficulties faced by microfinance institutions have ebbed in these regions since May,(3) but they are still very much present in Latin America and the Caribbean, where containment measures are still in place and a higher percentage of MFIs still find it difficult to move around, meet clients in agencies and, therefore, to disburse loans and collect loan repayments, as can be seen in Figure 2. For example: 76% of MFIs in the Latin America and the Caribbean region report that their staff is finding it difficult to move around, compared to 23% in Sub-Saharan Africa.

Figure 2. Operational difficulties faced by MFIs by region:

As explained in our previous article, these operational difficulties are having an impact on the portfolio and its quality in all MFIs. However, the resulting financial difficulties vary by MFI size. Overall, the biggest MFIs are less likely to face these types of problems, with lower percentages of Tier 1 MFIs reporting difficulties in repaying funders (12% versus 22.5% of Tier 2 and 3 MFIs), insufficient equity capital to cope with the crisis (6% versus 29% of Tier 2 and 3 MFIs) or lack of liquidity (2% versus an average of 29% of Tier 2 and 3 MFIs), as can be seen in Figure 3. Tier 1 MFIs appear better equipped to absorb the impact of the crisis on their financial situation.

Figure 3. Financial difficulties faced by MFIs by size

Although an increase in the portfolio at risk is the main difficulty faced by all MFIs, this increase varies by MFI size. Tier 1 MFIs have experienced smaller increases than other MFIs, as can be seen in Figure 4: only 12% of Tier 1 MFIs report that their portfolio at risk at 30 days has doubled or more than doubled compared to end 2019, versus 44% of Tier 2 MFIs and 57% of Tier 3 MFIs. In contrast, 35% of Tier 1 MFIs report a stabilisation or decrease in this indicator, versus 17% of Tier 2 MFIs and 8% of Tier 3 MFI.

Figure 4. Changes in the PAR30 of MFIs compared to end 2019 by MFI size

…and more likely to implement crisis management solutions…

The governments of most countries have taken measures to help microfinance institutions to weather the crisis. However, not all MFIs are benefiting from these measures. While the exact percentages vary from one region to the next, probably due to differences in the communication and implementation of these measures (e.g. MFIs in Asia are more likely to report making use of a certain number of measures), geographic location does not appear to be the sole determining factor for making use of certain government measures: bigger MFIs are also more likely to benefit from them, as can be seen in Figure 5.

Figure 5. Government measures from which MFIs have benefited by MFI size

This size effect is real because it cannot be explained by a specific distribution of MFIs by region. For example, when it comes to rescheduling or cancelling the payment of taxes and the non-provision of loans affected by COVID-19, a regional analysis shows that MFIs in Asia are more likely to benefit from these measures despite Tier 1 MFIs being in the minority in this region. Similarly, when it comes to liquidity lines, MFIs in Sub-Saharan Africa are among the most likely to benefit from them despite Tier 1 MFIs being few and far between in this region. As for the operational and crisis management measures implemented, the types of measures again vary by MFI size (Figure 6): For example, 100% of Tier 1 MFIs in the sample restructured client loans, versus an average of 69% of other MFIs. They are also more likely to engage with supervisory authorities to explore the possibility of suspending prudential regulations during the crisis. In contrast, Tier 3 MFIs are less likely to use their liquidity plans or implement new digital solutions.

Figure 6. Operational and crisis management measures taken by MFIs by size

…while small MFIS continue to focus on their clients’ needs

In contrast, despite facing significant challenges, the smallest MFIs continue to focus on their clients’ needs: for example, they are more likely than Tier 1 MFIs to have surveyed their clients to better understand the impact of the crisis (Figure 7). On the other hand, although they were less likely to disburse emergency loans to their clients, they were more likely to implement measures that went beyond their core business to better meet the needs of their clients during the health crisis. For example, more of these MFIs launched hygiene awareness campaigns on hygiene or provided clients with emergency kits. Bigger MFIs were less likely to offer these types of direct services to clients, instead forging partnerships with specialised
organisations.

Figure 7. Crisis response measures for clients by MFI size

More Tier 1 MFIs reported interest in launching new products or services in the medium term; as shown above, these MFIs have fewer financial constraints and, therefore, more room for manoeuvre in this regard (Figure 8). More specifically, while few MFIs overall are planning to launch microinsurance products in the future, Tier 1 MFIs are the most likely to do so. They are also more likely to want to increase their focus on agriculture or launch new digital products and services. The smallest MFIs, on the other hand, also want to start offering non-financial services such as financial literacy and business development services.

Figure 8. New products, services or markets that MFIs wish to develop in the medium term, by size

The motivations for MFIs to focus on new markets or develop new products or services also vary by size (Figure 9): Among those that reported wanting to launch at least one new product or service and stated their motivations (76 out of 108 respondents), the desire to meet the new needs of clients and/or follow new market trends was more frequent among Tier 3 MFIs than among MFIs in other tiers. In contrast, there are fewer that base this choice on following their strategic plan or striving to reduce risks. The focus of the smallest MFIs on their clients’ needs will probably become one of their strong points during this crisis.

Figure 9. Main motivations for MFIs to focus on new markets, products or services by size

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(1) The results of the first wave of the survey of ADA, Inpulse and the Grameen Crédit Agricole Foundation’s partners
can be found here: //www.findevgateway.org/paper/2020/06/beyond-difficulties-posed-covid-19-crisis-newopportunities-are-emerging-microfinance
(2) Tiers are defined according to the value of their total assets: over USD 50 million for Tier 1, USD 5 to 50 million for
Tier 2 and under USD 5 million for Tier 3.
(3) See the results of the first wave of the survey, available via the above link.

The Foundation finances microfinance institutions in Mali and Romania

The Grameen Crédit Agricole Foundation funded two new partners, including one in a new country. With these two new partners, the Foundation currently supports 83 organisations in 40 countries.

It thus granted a first loan for a total amount in FCFA equivalent to €1.5 million to Cofina Mali, a subsidiary of Cofina SA which provides inclusive financial services. The institution offers loan, savings and money transfer services to micro and small businesses but also to individuals. It also provides financial education and business development trainings. Cofina Mali has over 2,500 active borrowers, 28% of whom are women.

The Foundation also invested for the first time in Romania, in the form of a guarantee of a total amount in local currency equivalent to €1.5 million granted to the microfinance institution VITAS. VITAS provides loans to near 2,000 clients, mostly micro- and small enterprises and to individuals, for home improvements. The institutions has its roots in the CHF Romania, an NGO that was founded in 1995 as one of the first microfinance institutions in Romania. Today, Vitas is one of the main players in the Romanian microfinance market.

See all the organisations supported here.

Impact of Covid-19 on Refugee Saving Groups in Uganda

VisionFund Uganda has been working in Obongi district since May 2019 and has disbursed US$ 92,000 to 100 savings groups, supporting 2,264 individual group members. VisionFund started training saving groups in Yumbe district late 2019, but has not financed any group yet. Savings groups have been operating in both districts for some time and all the interviewed groups have been in existence for at least two cycles (or two years). VisionFund Uganda is the first microfinance institution to offer loans into those groups. Between April and May, a study was conducted to understand the effect of Covid-19 on savings group (SG) on both host and refugee communities.

Savings group meeting behavior

The majority (81%) of the groups are still meeting; only 19% of groups have stopped meeting. The main strategy has been to keep meeting (65%), but in small groups as per government requirements on social distancing. One explanation for the stronger resilience of the refugee groups may be that these groups had more support in their formation than host groups. Almost all refugee groups are still saving (some are saving less) while 24% of host groups have stopped saving. The conclusion is that refugee groups have not only adapted to the new meeting guidelines but have also found ways to continue meeting, showing higher levels of resilience.

When asked about the future of the group, of the overall 417 participants 65% expected to continue to save. However, it is worrying that 28% of all respondents expected to drop and for host communities this was up to 39% of respondents. It is important to better understand what this means long term.

Impact on households

Households were stressed on two fronts. 88% of all respondents reported an increase in staple food prices, which puts pressure on household budgets. Almost all refugee respondents (96%) reported the increase, which probably reflects the reduction of their WFP rations. At the same time, 92% of all respondents reported some level of financial stress due to either lower business activity (34%), decreased income (23%), challenges to save (25%) and food insecurity (11%). It’s safe to conclude that all households were stressed by the COVID-19 pandemic, but even though refugees were stressed at a higher level, they proved to be more resilient.

Despite these stresses, households are not resorting to increased demand for the SG social fund or selling their assets (87% haven’t had to sell any assets). In terms of demand on the savings group social fund, 58% of the groups reported no change in number of requests (with little difference between host and refugee), but did note that those who did request use of the social fund, the amount was significant.

Business impact

Savings group members engage in multiple economic activities. Similar to other studies on the impact of Covid-19, 93% of all respondents reported some level of reduced income. More than half of the groups reported either a big reduction in income (47%) or a complete stop to income (11%). Interestingly, 6% reported an increase in income reflecting that there are business opportunities even in a crisis.

In conclusion, the three following points can be highlighted:

• Refugee savings groups are resilient: The demonstrated resilience of these refugee savings groups (compared to host groups) continues to support the thinking that the formation and support for refugee savings groups is a key response to livelihoods for long term refugee communities.
• Covid-19 is having a dramatic impact on the livelihoods of the rural poor: This survey was undertaken in a remote part of Uganda which supports anecdotal evidence that rural communities are as much impacted as the more visible impacts of Covid-19 on people livelihoods.
• Surveys can be done safely in a lockdown situation: Finally, this report shows that even in a lock down situation, using a simple digital tool and practicing social distancing guidelines surveys can be done quickly.

Further information here.

The Grameen Agricole Foundation approved as a new CSAF global affiliate

The Council on Smallholder Agricultural Finance (CSAF) is an alliance of social lending institutions, also referred to as impact-first agricultural lenders, targeting agricultural businesses in the “missing middle” in low- and middle-income countries, and focused on creating a thriving, sustainable and transparent financial market to serve the financing needs of small and growing agricultural businesses in low- and middle-income countries worldwide. CSAF members include AgDevCo, Alterfin, Global Partnerships, Impact Finance, Incofin Investment Management, Oikocredit, Rabo Rural Fund, responsAbility Investments AG, Root Capital, Shared Interest Society, SME Impact Fund, and Triodos Investment Management

Its mission is to facilitate market entry and increase lending to agricultural businesses in the missing middle, focus the agriculture finance sector on reaching and supporting the livelihoods of the world’s 450 million small-scale farmers and promote responsible lending principles, including social, environmental and corporate governance standards, among all financial institutions serving this market.

In June, the Grameen Credit Agricole Foundation has been unanimously approved by the CSAF global members as a new global affiliate. The Foundation and the Council will work together in the years ahead to strengthen CSAF and its efforts to build a growing and high-impact financial market serving agricultural enterprises globally.

Further information on the Foundation’s mission here
Further information on the CSAF here

The AFD Group grants a €10 million loan to the Foundation to promote microfinance

A €10 million loan has just been granted by the Agence française de développement Group (AFD), represented by its subsidiary Proparco, to the Grameen Crédit Agricole Foundation. This loan will enable the Foundation to develop its support for microfinance institutions, which provide guidance and support, mainly in Africa, to populations excluded from the traditional banking system. The AFD Group has also pledged to support the Foundation with a €900,000 grant that will enable it to set up a microinsurance technical assistance programme.

Nearly 4 out of 10 adults in the world do not have a bank account. This means that 1.7 billion people are excluded from the traditional banking system. This problem is at the heart of the Grameen Crédit Agricole Foundation’s action. For nearly 12 years, it has been financing and supporting microfinance institutions that serve populations excluded from the traditional banking system, mainly women (85%) and rural populations (82%), in some 40 countries.

The Agence française de développement Group, which has been supporting the Foundation since 2013, has granted a €10 million loan to the Foundation in order to bolster its action in favour of small and medium-sized microfinance institutions based mainly in Sub-Saharan Africa.

€900,000 grant to support microinsurance

The insurance penetration rate in Africa is well below the global level. Yet, insurance is a lever for economic and human development. It has a significant impact on improving the quality of life and protects human capital from certain risks, so as to preclude the need for emergency adjustment strategies.

Since 2011, the Grameen Crédit Agricole Foundation has been supporting microinsurance through research activities and technical assistance projects for the institutions it guides and supports.

A €900,000 grant from the Agence française de développement Group will enable the Foundation to develop its microinsurance technical assistance offering to the organizations it supports.

“We share the AFD’s ambition to help the fight against poverty and inequality throughout the world. We are very proud of the trust that the AFD Group has placed in us over many years. This new funding will enable us to strengthen our action in favour of microfinance institutions, particularly in Africa. We will also be able to bolster our capacity to support the development of insurance products and services, including agricultural insurance. This partnership will in turn enable the clients of such institutions –low-income households, women, small farmers and micro, small and medium-sized enterprises– to protect themselves better, to be more resilient”, affirms Eric Campos, Managing Director of the Grameen Crédit Agricole Foundation and Head of CSR at Crédit Agricole SA.

“At a time when the coronavirus crisis could jeopardize the activity of many African entrepreneurs, access to financial services is an essential lever more than ever before for supporting the private sector and reducing inequalities. Against this background, I am proud of the mobilization by the Agence française de développement to support the most vulnerable African businesses, particularly in the informal sector. This is what the partnership with the Grameen Crédit Agricole Foundation is all about, through which the AFD Group is pursuing its commitments in favour of financial inclusion. By enabling the Foundation to increase its portfolio of loans, capital, guarantees and technical assistance to microfinance institutions, the AFD is taking action to support Africa’s population, which is the most entrepreneurial in the world”, says Rémy Rioux, Chief Executive Officer of the Agence française de développement.

Further information about AFD here
Further information about the Foundation here

A Consortium to support microfinance in Africa during Covid-19 crisis

In the economic crisis linked to Covid-19, the occurrence of a liquidity and / or solvency crisis turns out to be one of the main risks microfinance institutions are facing. To deal with this, the Grameen Crédit Agricole Foundation, the Microfinance African Institutions Network (MAIN), International Solidarity for Development and Investment (SIDI) and the ACTES Foundation are creating a consortium to better support the organizations supported in Africa.

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In April 2020, MAIN sent a questionnaire to all its members in order to gather their needs and find out what type of support the network could offer them. The results of this survey show that most of the institutions questioned encounter difficulties in managing their liquidity and wonder how to continue to serve their customers in a sustainable manner in such a context.

It is in this context that the Consortium was formed, which brings together the Grameen Crédit Agricole Foundation, MAIN, SIDI and the ACTES Foundation. The objective of the Consortium is to provide the organizations supported with risk analysis and management tools in order to anticipate and better manage the impact of the crisis on their liquidity and solvency.

The Consortium will thus offer 50 microfinance institutions, including 31 partners from the Grameen Crédit Agricole Foundation, mainly in West and East Africa, support on the theme of liquidity and solvency risks management. The target organizations are mainly small institutions (Tiers 3: loan portfolio <10 million dollars), very present in rural areas.

The support will take the form of a cycle of three online training courses for each institution, workshops and personalized coaching, which will be provided by Cabinet Senbumo. In addition to liquidity and solvency management, institutions will be trained on the subject of resumption of activities following the Covid-19 crisis. The programme will start on July 06, 2020 and will last for 6 weeks.

Grameen Crédit Agricole Foundation publishes its 1st Impact Report

In order to give more insight to and share the results of its action, the Grameen Crédit Agricole Foundation is publishing its first Impact Report, a financial and extra-financial assessment based on 2019 activity data. The impact assessment was carried out with CERISE, an independent firm specializing in impact and social performance measurement. The purpose of this report is to provide a concise and objective overview of the Foundation’s contribution and its forms of action in favour of impact entrepreneurship and access to essential services.

Humanity is going through a period in history that it has never known. The crisis generated by COVID-19 has shaken our societies, economies, and activities. In a world where inequalities are growing and low-income populations are affected disproportionately, financial inclusion and entrepreneurship are factors for enhancing the resilience of such vulnerable populations. These are the levers of action of the Grameen Crédit Agricole Foundation, which has for nearly 12 years been contributing to the reduction of inequalities and poverty through financial inclusion and impact entrepreneurship.

Today the Foundation is publishing its 1st Impact Report, produced with methodological support from CERISE, a pioneering organization that specializes in the promotion of responsible finance. It aims to provide an objective and concise overview of the Foundation’s contribution and its forms of action. Defining its impact model, objectives, beneficiaries and action levers is the first step towards a more active management of the Foundation’s impact and social utility.

Direct impact of the Foundation

The Foundation aims to create sustainable value by reconciling social, economic and environmental impacts. Its value creation model is based on long-term support for socially efficient microfinance institutions and social impact enterprises that promote access to essential services. The Foundation moreover encourages the emancipation of women by promoting women’s entrepreneurship (85% of microcredit beneficiaries through the supported organizations are women), mainly in rural areas (where 78% of microcredit borrowers live). Sub-Saharan Africa (37% of its portfolio) and South and South-East Asia (29%) are its two geographical areas of reference.

The impact of supported organisations

The Foundation also provides technical assistance and support to the organizations financed to bolster their social and environmental performance. On the social side, the Foundation’s portfolio is assessed by using ALINUS, a tool for managing the social performance of microfinance. The microfinance institutions supported outperformed the sector benchmark (with a score of 65% vs. 53% for the sector) in all the areas assessed. The environmental performance monitoring is more recent, but is progressing. For example, 84% of the supported institutions have established a list of banned environmentally hazardous activities and 42% offer green products to fund environmental friendly practices.

Finally, the Foundation is reinforcing its impact through its cooperation with Crédit Agricole and other major players in development aid. In 2019, the Foundation worked with 51 private, public and community stakeholders in some 40 countries.

In 2020, the Foundation will continue its impact measurement work with the operational deployment of tools and a field study to verify whether its impact model is solid. It will continue to write the chapters of its history in a more collective, committed and sustainable way.

Download the Impact Report here

Microfinance lenders and platforms endorse principles in Covid-19 crisis

July 2020. Two groups of lenders and microfinance stakeholders published a set of principles to support the microfinance sector and fragile clienteles in Covid-19 crisis. Both groups have coordinated their efforts for complementarity and consistency.

Microfinance institutions (MFIs) have an important role in the fight against poverty. They offer financial and non-financial products and services to support income-generating activities for low-income populations. In Covid-19 crisis, supporting the microfinance sector is then essential to protect the most vulnerable populations. This calls for a collective approach within the sector.

That is why, we, Leading microfinance lenders, impact funds, platforms and networks covering markets in Africa, Asia, Central Asia, The Middle East, Eastern Europe and Latin America, have established two complementary agreements. They frame a series of principles to support MFIs in order to avoid credit crunch, which would be extremely harmful for microfinance’s fragile clienteles. We published both documents as guides for the investment teams, investors, investees, and other stakeholders.

• “Key principles to !protect microfinance institutions and their clients in Covid-19 crisis”: In this agreement, the pooling of available information, analyses and anticipations, as well as the concerted implementation of shared decisions are the fundamental principles. The signatories, including lenders, impact funds, platforms and networks, agree to coordinate policies, technical assistance and resources to help microfinance institutions face the crisis. The objective is to protect the microfinance institutions and their clients to ensure the continued access to funding in the best possible conditions and to look out for clients’ and staff well-being.
• “Coordination among microfinance MIVs in response to Covid-19 crisis”: This Memorandum of Understanding (MOU) addresses the impact on the liquidity flows within financial institutions as a result of Covid 19 and related actions to prevent spreading. The MoU among MIVs further acknowledges the importance of timeliness and cooperation among lenders and other stakeholders and presents a framework for managing Covid related debt rescheduling.

Subscribers to the Pledge and MoU acknowledge and express support for both documents as they are considered complementary serving a similar purpose. Other public and private actors in the financial inclusion sector are invited to support, endorse and act in line with the principles presented. In particular, the signatories believe that it is essential that the public sector aligns with private sector practices to strengthen the impact-investing sector and its social impact on low-income households and small businesses.

The participation of all stakeholders is vital to enhance the impact of microfinance. We are committed to continue to support our partners’ action to promote financial inclusion all around the world.

Covid-19 crisis: New opportunities are emerging for microfinance institutions

ADA(1), Inpulse(2) and the Grameen Crédit Agricole Foundation have joined forces to closely monitor and analyze the effects of the COVID-19 crisis among our partners around the world. This monitoring will be carried out periodically throughout the year 2020 with the purpose of evaluating the evolution and trend of both the effects of the crisis and the financial needs and adaptation measures implemented by our partners. We hope with this constant and close analysis to contribute, at our level, to the structuring of strategies and solutions according to the needs of our stakeholders, as well as the dissemination and exchange of information between the different actors in the sector for the joint construction of comprehensive and systematic solutions.

This article is based on the responses provided between May 18 and May 27, 2020 by 110 partners. Which are present in 47 countries distributed between Europe, Africa, Asia and Latin America, 5 Regions(3) and 13 Sub-regions of the world(4). In our analysis, we addressed 46% of very small MFIs, with less than 5 million assets (Tier 3), 47% of medium size, with an amount of assets between 5 and 50 million (Tier 2) and 7% with a size greater than 50 million assets (Tier 1)(5).

In Summary

The current period leaves no MFI or region of the world indifferent. The crisis related to COVID-19 has struck at the heart of most microfinance activities. All of the institutions surveyed have faced common problems because of the crisis: difficulties in disbursements, collection of reimbursements and meeting with clients, among others. These deeply operational activities, which are closely linked to client contact and meeting with customers, have financial consequences for MFIs. Portfolio and risk management are among the first short-term challenges raised by the crisis according to more than 80% of our partners.

However, pronounced regional differences emerge from this research. The health crisis, which is constantly evolving, does not have the same impact on all regions of the world, and not with the same intensity. On the operations side, for instance, the difficulty or impossibility to collect savings is not an issue for all. This concerns 56% of the surveyed MFIs in Sub-Saharan Africa and 60% of those in South Asia, whereas the matter is hardly mentioned in other regions, if not even mentioned. This depends on the constitution of the local market, and on the capacity for institutions to offer this product to their customers, according to the legislation in force. On the restrictions caused by the crisis, we note that a high proportion of MFIs in LAC, Central Asia and the MENA region witness that it is difficult for employees to move around or to meet clients in branches, contrary to MFIs in South East Asia or Sub-Saharan Africa.

The increase in the portfolio at risk is also having diverse impacts depending on the region. For instance, only 17% of MFIs in Central Asia, Europe and LAC record a PAR 30 + R that has more than doubled, while this is the case for 41% of MFIs in Sub-Saharan Africa, 27% of those in South Asia and 33% of those in MENA. However, none of the MFIs in the regions analyzed are free from the negative impact on their portfolios. This is due to the fact that globally, 80% of the respondents indicated a deterioration in portfolio quality, this impact represents a challenge for the entire sector in the short and medium term.

To address these issues, the financial needs of MFIs also vary. While 58% of the surveyed MFIs express additional funding needs, this is not as true for the EAC region. Indeed, 57% of the MFIs in this region report having no additional needs, and 22% consider that their funding needs have decreased. On the other hand, about 30% of the institutions in the MENA, SSA and LAC regions have funding needs that are between 20% and 50% higher than their expected.

In a broad way, the information collected demonstrates the proactivity of MFIs facing the crisis. All around the world, MFIs have multiplied adjustment measures to adapt to the crisis. The institutions have chosen not to remain passive when facing the consequences of the global economic downturn, for which they have constituted crisis management and monitoring committees, elaborated continuity plans and established debates with all interested parties. Finally, beyond the conjunctural difficulties, the reflections led by most of our partners are also directed towards new opportunities for the future, with for example the targeting of new markets or the development of new products. This could contribute in the future to greater flexibility for our partners, although this remains to be confirmed.

The impact of the COVID-19 crisis on the microfinance sector: the view of different MFIs around the world

The rigor of the containment measures is still variable between the different countries. 44% indicated that in their countries there are almost total lockdown and total restriction of movement. 46% of our partners, mainly those located in the SSA and LAC region, reported limited lockdown and partial movement restrictions. In contrast, 10% of the partners, mainly those located in LAC, stated that there are no or very few containment measures (no lockdown and no travel restrictions). The context of each region is different and largely, or totally, determined by the actions established by government authorities. While in the EAC region there seems to be greater uniformity in containment measures, it is not the same in Latin America where restrictive containment measures have been established in some countries while in others this type of measure has not yet been contemplated.

Another important aspect to consider is that the process of spreading the pandemic has been gradual between the different regions of the world. The COVID-19 crisis did not affect all regions at the same time. At the end of 2019, the virus was widely spread in China, in March it had been controlled in Asia, however, at the same time, Europe was becoming the new epicenter of the pandemic and the World Health Organization (WHO) declared the virus as “global pandemic”(6). Currently, America and Africa are being strongly affected. The evolution of the pandemic in the different regions of the world also determines in a significant way the type of responses provided by our partners, their level of affectation and surely the evolution of some of its most relevant indicators. Trends on which we will be paying attention in our next surveys and analyzes.

The COVID-19 crisis caused net slowdown to even impossibility of carrying out essential activities by our partners

82% of our partners reported having difficulty/impossibility to collect loan repayments as usual. This difficulty seems to impact partners from all regions but more significantly those located in MENA (100%), SSA (85%) and LAC (81%). The second most relevant difficulty, pointed out by 80% of our partners, is the impossibility of meeting clients in the field. Partners in the MENA region continue to be the most affected (100%), followed by those located in the EAC region (91%) and LAC (81%).

The third most relevant difficulty, manifested by 74% of our partners, relates to the disbursement of loans. This difficulty is a little more relevant among partners located in the MENA (89%), LAC (81%) and SSA (78%) regions.

On the other hand, for 94% of our partners, communication with clients does not seem to be a significant difficulty. This may be due, as detailed below, to the significant use of digital systems and technology for remote communication. Likewise, 94% of MFIs reported that their employees are not contaminated with COVID-19. This represents a very satisfactory result of the measures taken at the beginning of the crisis by our partners for the protection of their staff. (8)

MFIs have faced different financial difficulties due to COVID-19

For 91% of our partners, the increasing portfolio at risk is the most significant financial difficulty they have had to face due to the pandemic. This is a difficulty present in all regions and all sizes of MFIs, however, it concerns 100% in partners located in the MENA region, 93% in those present in SSA and Asia, 91% and 86% of those located in the EAC and LAC regions respectively.

The outstanding portfolio reduction is also a relevant difficulty for 80% of our partners. This is mainly important for 93% of those located in the SSA region and 86% of those present in LAC.
The increase in the costs of materials and equipment and the lack of liquidity were difficulties faced by 46% and 39% of partners respectively.

“We think we may not have adequate funds for disbursements end of June if the situation improves in the field” – Partner in South Asia

PAR 30 is already at this stage a major concern

80% of our partners indicated that their PAR 30 has increased due to the COVID-19 crisis. However, for 12% of the partners it has increased twice and for 25% of partners the PAR 30 has more than doubled. For 43% of the partners it has increased without being double. The partners mainly located in Asia, LAC and EAC are those who consider that their PAR 30 has increased without even reaching double, while most of the SSA partners reported an increase in PAR 30 of more than double, followed by partners in the MENA region.

Strategies used to mitigate the crisis: From credit restructuring to the use of technological means

Our partners implement different financial measures and operations to mitigate and adapt to the crisis. 75% of them, mainly those located in Asia (87%), have carried out the credit restructuring with their clients. 65% of partners have slowed down or stopped the disbursement of credits. This measure has been mainly implemented by partners located in the LAC region (78%) and less used by those located in the MENA region (44%).

“Analysis of rescheduling requests in order to be able to accompany them with emergency loans but this is really on a case-by-case basis”- Partner in West Africa

Another relevant strategy is the orientation of loans to clients in sectors less impacted by the crisis (for example, agriculture). This is a measure carried out by 51% of the partners, mainly those located in the SSA and EAC region. In addition, 50% give priority to repayment of credits.

Likewise, communication with customers is a priority strategy among our partners. 73% have increased communication with clients and 50% have hygiene awareness campaign for clients (by SMS, video, etc.).

Technology is used as an important tool to face the crisis. Partners use existing digital solutions (by 48% of partners) or new solutions (by 31% of partners) for communication with customers as well as the management of financial products and services.

“We plan to improve the use of digital approaches to service provision, help clients for product marketing and business diversifications (…)”- Partner in South Asia

Strategies for the management of human talent: From hygiene measures to the use of technological means

90% of the partners have made the provision of sanitary equipment to staff. Office hygiene and disinfection measures are carried out by 82% and 70% of partners, respectively.

The organization of work times and travels to the field is indicated as another measure of great importance. 71% of the partners, mainly those located in the MENA, LAC and Asia region, implemented telework as much as possible. 66% of partners restricted or prohibited movement in the field. 54% of the partners, mainly located in the MENA and LAC region, have reduced working hours and 52% of them have reduced customer service hours in the agencies.

The use of digital to maintain communication and work activities with employees is also relevant. 82% use online meeting solutions and 57% use an online document sharing solution (mainly MENA and LAC partners). In addition, 46% provided their employees with work laptops or tablets (mainly those located in the MENA region, 78%).

“We established 2 WhatsApp communication groups with the staff (one for Singhala speaking and one for Tamil speaking). Then we had regular communications with them during the lock down” – Partner in South Asia

Crisis management measures

It can be considered that our partners carried out two main types of measures to manage the crisis COVID-19 in a relevant way. The first group contemplates the development of the following internal actions for the analysis, monitoring and follow-up of the effects of the crisis: 78% of the partners established an ad hoc management committee to monitor the crisis. These measures were particularly priority among partners in the SSA and MENA region. 75% of the partners, mainly those located in the Asia and SSA region, prepared a Business Continuity Planning. 74% of the partners, primarily those located in the EAC and MENA region, updated the Liquidity Plan. Furthermore, 65% carried out worst-case scenario simulation, this action being carried out more in the MENA region than in the SSA region.

In the second group are management measures aimed at requesting support from third parties. 53% of partners, mainly those located in MENA and LAC, requested financial support from funders / partners. 52%, notably those located in the MENA region, negotiated with Lenders to arrange loan repayment. Additionally, 37% of partners, particularly those located in Asia and SSA, requested technical support from funders / partners. These three actions have been less developed by partners located in the EAC region, of which the request for technical assistance seems to be the least relevant.

Additional funding needs from lenders: What is expected in the coming months?

30% of our partners stated that they had no additional financing needs and 12% indicated that their needs have decreased. These responses come mainly from partners located in the EAC region.

In contrast, 58% of the partners indicated that they would need financing for amounts greater than expected. Of these, 28%, mainly those located in the Asia and MENA region, reported that they would need between> 0% and 20% more funds than expected. 24%, mainly those present at MENA, stated that they would need between 20% and 50%. And 6% of partners, particularly those located in Asia, reported that they would need> 50% more funds than expected.

Looking forward to the near future: new markets or products

At this stage, the majority of our partners, equivalent to 57%, expressed interest in focusing their activities more on the Agricultural sector. This purpose seems to be particularly more relevant among partners in the SSA, Asia and EAC regions. This may be due to the increase in the needs of customers in this sector or to its identification as one of the production sectors least affected by the COVID-19 crisis (aspects already envisioned in the articles elaborated by Inpulse and the Grameen Credit Agricole Foundation) (9).

This assumption will be important to investigate in the following survey since the Agricultural sector let converge relevant economic, social and environmental factors, such as the allocation of an important part of the portfolio of our partners; the generation of significant amounts of jobs in some countries and the potential negative effects of climate change.

On the other hand, 37% of our partners plan to launch financial education programs and 27% plan to focus more on female clients.

“We plan to promote digital education for women clients (digital culture)” – Partner in South America

These are sectors that are traditionally addressed in the microfinance sector, however, 25% of our partners also indicated the interest in launching “green” financial products related to environmental protection. Could this interest demonstrate the increased awareness of our partners about the environmental problems linked to their actions? Does this represent the boost of green microfinance due to the COVID crisis? What type of green products would our partners be targeting? These are questions that could also be relevant to investigate in our next survey.

In contrast, the launch microinsurance related to hygiene, life, health or environmental risks does not seem relevant among our partners. Finally, 22% of our partners do not plan at the moment to focus on new markets or develop new products.

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(1) //www.ada-microfinance.org/fr
(2) //www.inpulse.coop/
(3) The regions and subregions addressed are: Asia (South Asia and South East Asia), EAC (Eastern & Southern Europe and Western and Central Asia), LAC (Caribbean, Central America and South America), MENA (Middle East and North Africa), SSA (Central Africa, East Africa, Southern Africa and West Africa).
(4) The total number of MFIs that responded to the survey for each region are Asia:15, EAC: 23, LAC: 36, MENA: 9, SSA: 27. For a total of number of 110 institutions.
(5) This classification corresponds to the one traditionally used in the microfinance sector, more information here
(6) “Propagation analysis and prediction of the COVID-19” here
(7) These measures according to Inpulse and the Foundation articles were mainly focused on hygiene awareness campaigns as well as teleworking
(8) Idem

The Foundation launches its new website

A new decade is dawning in 2020, and the Grameen Crédit Agricole Foundation is broaching it with enthusiasm and modernity. Created nearly 12 years ago, the Foundation now supports 85 microfinance institutions and social impact enterprises in emerging countries, particularly in Africa and Asia. In order to communicate better on its action and to enhance the value of joint actions and projects with its partners, the Foundation is publishing a brand new, more modern, dynamic and ergonomic website.

HEADINGS

This new website will keep you informed of the Foundation’s key figures, activities and news. A special section is dedicated to Banquiers solidaires [Solidarity Bankers], a skills volunteer programme open to all Crédit Agricole Group employees to support microfinance institutions and social enterprises financed by the Foundation.

QUICK ACCESS

The “Quick Access” menu is used to access the projects developed with the Crédit Agricole Group as well as the platform of organizations supported by the Foundation. The platform maps out all the partners and devotes a file to each organization supported to highlight their action and impact. It was carried out with the financial support of CA Life Insurance Europe (CALIE), which chose the Foundation as the beneficiary project for its 20th anniversary.

This is website for all of you: directors, the Grameen network, Regional Banks and Crédit Agricole entities, donors, technical partners, supported organizations, etc. It is also a token of our appreciation.

[Interview] The FIR promotes the values at the very heart of CA Normandie Seine

Interview with Nicolas Denis, CEO, CA Normandie-Seine

Launched by the Grameen Crédit Agricole Foundation, the Fund for Inclusive Finance in Rural Areas (FIR) enables the entities of the Crédit Agricole Group to invest in microfinance and social entrepreneurship in emerging countries. The Caisse Régionale Normandie-Seine, which contributes €500,000 to the fund, sees it as a responsible approach in line with the actions it pursues in its region.

– What objectives does your Bank pursue by investing in the Fund for Inclusive Finance in Rural Areas?

Nicolas Denis, General Manager of Agricole Normandie-Seine: The values of social responsibility are at the very heart of our Regional Bank’s corporate project – they are in our DNA.  It is natural for us to join the FIR supported by the Grameen Crédit Agricole Foundation because it promotes these same values. The expected impact is to fight poverty by opening up access to financial services for rural communities in developing countries. This will further the actions already undertaken by the Regional Bank, for example by supporting and financing responsible businesses such as the ecological oil producer Olvea, the manufacturer of sustainable acacia gum Nexira, or the scheme for the prevention of malnutrition in rural areas Nutriceps.

– How do you see these new investments with a social impact?

As a Regional Bank our economic action makes a full contribution to the social life of the regions. We play a guidance and support role in many initiatives with beneficial effects at the local level. Microfinance and social and responsible entrepreneurship are realities whose development we support. Our Bank supports ADIE, a specialist in entrepreneurial microcredit, the Réseau Entreprendre [Enterprise Network] and the Plateformes d’Initiatives Locales [Local Initiative Platforms] for loans on trust. We also take part in Plateformes de financements Participatifs [Participatory Financing Platforms] such as Tubigo, Babyloan and Miimosa. In addition, we are also present alongside the AFDI in Normandy, an organization that forges links between French agricultural professionals and projects in Cambodia and Mali in particular.

– Do these models represent hope?  A future?

What strikes me personally is the extent to which these models abound and are promising. When put in practice, crowdfunding and microcredit turn out to be much more than new ways of financing. They are also excellent vehicles for information and social integration through projects which bring the offer and the public closer together more rapidly. In addition to the FIR, this year we are supporting the Femmes & Challenges Fund, intended for women entrepreneurs endeavouring for gender equality. We see it every day: in direct contact with the real economy and society, these approaches are powerful tools for a positive social transformation.

Source: Integrated Report 2019, Grameen Crédit Agricole Foundation. Dowload it here

New signatories to protect microfinance from the Covid-19’s economic effects

In response to the health and economic crisis caused by the Covid-19, a group of lenders, platforms and key players of the inclusive financial sector committed to a common pledge:  “Key principles to protect microfinance institutions and their clients in the Covid-19 crisis”. Initiated by the Grameen Crédit Agricole Foundation, this pledge was built in consensus between all original signatories. The objective is to protect both the microfinance institutions and their clients to ensure the continued access to funding in the best possible conditions and to look out for clients’ and staff well-being.

The pledge aims to guide stakeholders to better support microfinance institutions and vulnerable clients during this crisis. The main principles of the pledge are the pooling of available information, analyses and anticipations, as well as the concerted implementation of shared decisions. The signatories agree to coordinate policies, technical assistance and resources to help microfinance institutions in this unprecedented crisis.

Since its publication in May, six new organizations have signed the pledge. This initiative now counts 26 signatories active in Africa, Asia, Eastern Europe and Latin America: ADA, Alterfin, Azerbaijan Micro-finance Association, Bamboo Capital Partners, CERISE, CIDR Pamiga, Cordaid Investment Management, Crédit Agricole CIB India, CA Indosuez Wealth (Asset Management), Crédit Agricole S.A., European Microfinance Network, FS Impact Finance, GAWA Capital, Grameen Crédit Agricole Foundation, InFiNe.lu, Inpulse, Kiva, Luxembourg Microfinance And Development Fund, MCE Social Capital, Microfinance African Institutions Network, Microfinance Centre, Rabo Foundation, SIDI, SIMA, Social Performance Task Force and Whole Planet Foundation.

The signatories welcome additional stakeholders to join this common initiative. The coordination of efforts to support microfinance institutions’ actions is essential to overcome this crisis.

Download the Commitment

Microfinance institutions’ responsible approach to the effects of Covid-19

By Grameen Credit Agricole Foundation

Last April, Africa’s Pulse, an analysis published by the World Bank Group, estimated that economic growth in sub-Saharan Africa would fall from +2.4% to a level between -2.1% and -5.1%, which would constitute the first recession in the region in 25 years. This recession is expected to hit countries dependent on mining and oil exports, while countries without natural resources are expected to post slower but positive growth.

In permanent contact with its network of 80 partner microfinance institutions (MFIs) and social enterprises in 40 countries, the Grameen Crédit Agricole Foundation is continuing its work of collecting information, analysing and sharing its observations. The privileged testimonials of our partners enable us to continue our monitoring of the crisis and its consequences. In this last questionnaire we focused on two particular aspects: the operational adaptations of MFIs and the role of loan officers during this crisis.

In summary

The economic crisis has become a reality for the vast majority of microfinance institutions supported by the Grameen Crédit Agricole Foundation. Almost all of them have implemented massive maturity extension programmes to facilitate the economic recovery of their borrowers.

The loan officers of these institutions are the privileged point of contact between clients and microfinance institutions. They spend almost half of their working time studying requests for loan maturity extensions and implementing such extensions.

The institutions were quick to adopt programmes intended to reduce their costs while ensuring the social protection of their employees and safeguarding jobs. Only 12% of them have resorted to economic redundancies, which is relatively low compared to national averages. On the other hand, the institutions are postponing their recruitment programmes as well as a large part of their investments. They also seem to be seeking to direct their funding towards sectors that are now considered less risky. This is particularly the case in agriculture, in what is a recent phenomenon.

It remains to be confirmed and will be followed up closely in our next news items.By looking proactively for bulwarks against the crisis and by adopting responsible approaches, MFIs are on the right track: today’s innovative solutions can be tomorrow’s successes as well.

Institutions are henceforth focusing on risk management

Whereas the health crisis seems to be slowing down in the countries that have adopted the most effective measures, the plans for exiting from the lockdown point to a very gradual recovery in economic activity. Our latest results confirm what we have been observing for several weeks: a  remarkable adaptability on the part of microfinance institutions in the face of an unprecedented crisis.

Nearly 90% of the institutions have set up a crisis committee, chaired by the Chief Executive Officer and bringing together the management committee, to steer the various decisions and deal with the effects of the crisis. This committee usually meets every week.

“[We created] a “Crisis Management Team” composed of the Executive Committee members and supported by the Chairperson of the Board whenever required. [We have] weekly meeting with the Board of Directors to update on the situation and validate the main decisions”– Partner in Myanmar

The effects of the crisis are now being felt by 81% of the partners surveyed, who report an increase in risks to their customer portfolio. The efforts of microfinance institutions are now focused mainly on responding to this challenge, to the detriment of other activities that are currently considered less essential (nearly one out of two were providing this type of service at the beginning of April, compared to one in three today). Intended to provide non-financial services (awareness and information campaigns, provision of equipment, etc.) this reduction in activity has fuelled strong growth in activities dedicated to credit restructuring.

“To support our clients during the coming months, proposition of suspension of principal and interests instalments to all customers that were not in PAR as of March 1st. To date, 75% of the customers called have accepted. The process will continue.” – Partner in Ivory Coast

Institutions are adapting on the financial and economic activity fronts

The table below shows the progression of the difficulties encountered and the mitigation measures implemented to address them.

On the financial front

Against this background, the volatility of currencies is weighing heavily on the treasuries of institutions: 64% of respondents outside the CFA Franc zone are thus faced with a strong devaluation of their local currency against the dollar. This devaluation has a direct impact on institutions that have taken on debt in that currency since the vast majority of them receive microcredit interest in local currency.

“The situation is becoming even worse with significant KGS devaluation over the last months, contributing to increase the hedging cost” – Partner in Kirgizstan

The information provided by our partners in this survey also confirms the quasi-mandatory measures taken by MFIs during the crisis: 67% of the MFIs surveyed have reduced or stopped microcredit disbursements. In the same proportion, institutions have started to restructure loans to small borrowers on a massive scale by granting maturity extensions of 3 months on average. These moratorium periods constitute a truly essential element of crisis management at all levels. Whether mandated by local regulators or proposed spontaneously by the MFIs, they enable borrowers to benefit from a reduction in charges before resuming their activities. Similarly, the many processes of maturity extensions for investors enable the MFIs to retain valuable liquidity in a period of uncertainty. The Grameen Crédit Agricole Foundation consequently granted numerous maturity extensions in April, in full and effective consultation with other lenders.

For all that, the crisis has not affected MFIs’ proactivity, but is encouraging them to adapt. To do so, some are looking for more resilient sectors in the current economic crisis. For example, we have noted that 40% of institutions are considering turning to the agricultural sector — a sector that has been rather neglected because it was considered riskier before the crisis. This point will be followed up in particular in the next questionnaires as this percentage seems to us to mark a notable change in attitude. This new direction is being considered by more than half of the MFIs whose agricultural loans do not exceed one third of their portfolio, but also by very rural and agricultural MFIs. It is still too early to say, but the current crisis could encourage institutions to discover traditionally neglected sectors.

“[We] move ahead with plans on Rural & Agriculture Finance” – Partner in Sierra Leone

On the economic activity front

As to economic activity, the difficulties in moving teams around are diminishing somewhat: 55% had difficulties in May, compared with nearly 80% in April. Conversely, group meetings are still banned, and such prohibitions are on the increase, which penalizes the relationship processes of the institutions, especially with clients who have no alternative to solidarity loans.

“Group meeting was weekly or bi-weekly for repayments and social network. Without group meeting you cannot enforce the repayment any more”. – Partner in Kenya

In social terms, only 12% of those surveyed have had to part with employees since the beginning of the crisis, which is quite low, however, compared to the national average growth in unemployment figures. Our partners seem to follow the first principle set up by SPTF (1)  “Keep staff employed” according to which “today’s employees will be tomorrow’s assets”. For a large number of our partners, parting with employees in critical times seems to be more of a loss than a slight short-term economic gain. On the other hand, expectations are already weighing on the growth and development projects of our partners since almost one institution in two has put these ongoing recruitment projects on hold. This uncertainty weighs also on organisational projects, with 41% of the MFIs surveyed having decided to postpone this type of internal project.

The protection of staff is always a point of vigilance with 90% of the MFIs that continue to provide them with significant resources and remind them of barrier gestures. Since the beginning of the crisis, our partners have taken quick decisions to reduce the weight of their fixed costs and limit the risk of exposure to the health crisis: mandatory paid holidays (52%), teleworking (62%), team rotation, reduced working hours (57%) and reduced branch opening hours (52%). The level of progress in internal digitization in some institutions has favoured these organizational changes. This is particularly the case for our partners in Europe and Central Asia, who benefit from numerous electronic and online tools.

“Most of us from the head office have been working distantly, thanks to our proper remote IT system which enables all the departments continue smooth working.” – Partner in Georgia

The current crisis, which, as we have seen, limits the “business as usual” capacities of MFIs, has led us to explore how to adapt the job of loan officer, which is at the heart of the microfinance business. Certain tasks remain the same, particularly for MFIs in the least affected countries: loan disbursement (43%), repayment monitoring (38%) or client file analysis (43%).

The restructuring of loans in progress is taking an increasingly important place in the daily life of loan officers (43%), with the encouragement to use mobile payments (36%) and the drafting of amendments relating to maturity extensions (31%).

Just as in the retail banking sector, where the client officer has clearly demonstrated its importance in times of crisis, the loan officers of microfinance institutions are the privileged link for clients. 81% of respondents say that the key role of loan officers is to maintain contact with clients and/or credit group leaders.

“[We] maintain contact with all individual clients, group leaders and Village Bank Presidents through digital and phone channels.” – Partner in Zambia

“Strengthening client interaction by (smart) phone or other digital devices and collecting through group leader where possible.” – International MFI network

This essential and massive approach is to be favoured all the more as it is recognized by the Social Performance Task Force (SPTF) in its crisis management principles as being essential in times of client fragility. It is also worth noting that 33% of the MFIs have initiated surveys of their clients to gain a better understanding of their needs and propose adapted offers and services. For nearly half of the MFIs (43%), the advisors also play the role of “health advisor” by reminding them of good hygiene measures, which is the case in West Africa and Europe in particular.

”One of the best investments you can make right now is to maintain close contact with your customers. Many can’t make payments, but they are valuable assets just the same.” – SPTF

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(1) STPF is a non-profit association that engages with stakeholders from the inclusive finance sector to develop and promote standards and good practices in social performance management.

Crédit Agricole and Dai-ichi Life partner to support microfinance and gender finance

May 14, 2020. Of the 1.7 billion adults worldwide who are unbanked, women are overrepresented: about 980 million do not have an account, 56% of the world’s unbanked (World Bank). That is the target population of the microfinance sector, which provides a set of financial products and services to people excluded from the banking system.

To support the development of microfinance and gender finance, the Dai-ichi Life Insurance Company Limited, Crédit Agricole CIB, Tokyo Branch, and the Grameen Crédit Agricole Foundation have set up an innovative scheme. The Dai-ichi Life Insurance Company has invested 2 billion Yen in a 10-year Microfinance and Gender Loan scheme by Crédit Agricole CIB, which will benefit the Grameen Crédit Agricole Foundation to support microfinance institutions focusing in women and social enterprises in rural economies of developing countries.

This is the first ever Microfinance and Gender Loan scheme arranged by the Crédit Agricole Group. “This one of a kind transaction is a perfect illustration of the ambitions of the Group’s Project 2022. It reaffirms our customer-focused model and our efforts to provide innovative solutions to our Asian clients, while strengthening our commitment to responsible investment”, says Michel Roy, Senior Regional Officer for Asia-Pacific of Crédit Agricole CIB.

With this partnership, Dai-ichi Life Insurance Company reinforces its commitment to high social impact investments. “We are honored to financially support the Grameen Crédit Agricole Foundation and its action in favour of women financial inclusion and entrepreneurship in developing countries. As a responsible institutional investor, Dai-ichi Life will continue an active engagement in ESG investment and contribute to forming sustainable social framework around the world”, affirms Tetsuya Kikuta, Director, Managing Executive Officer of the company.

For the Foundation, it is a great opportunity to strengthen its action in developing countries. “Alongside Crédit Agricole CIB and Dai-ichi Life, we will step up our support for women empowerment through microfinance and female entrepreneurship. It is a real pride for the Foundation to be part of this innovative and unique partnership in the history of the Crédit Agricole Group”, says Eric Campos, CEO of the Grameen Crédit Agricole Foundation.

An international coalition to protect microfinance institutions and their clients in the Covid-19 crisis

By the Grameen Credit Agricole Foundation

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[1] Microfinance Barometer 2019
[2] //sptf.info/resources/covid19
[3] Charting the Course: Best Practices and Tools for Voluntary Debt Restructurings in Microfinance, IAMFI, Morgan Stanley, 2011. The document is available on Findev Gateway

[Interview] CA Centre-est reinforces its support to the Solidarity Cents operation

Interview with Aurélie Bellemin, Director, Fondation Solidarités by CA Centre-est

The Solidarity Cents operation is taking off within the Crédit Agricole Group. After a successful inaugural edition in 2018 on the Montrouge and Saint-Quentin campuses, the new edition was held from 18 to 22 November 2019. Organized by the Grameen Crédit Agricole Foundation, Crédit Agricole SA and Crédit Agricole Centre-Est, the operation has changed scale and has been extended to the three company canteens of the Crédit Agricole Centre-Est: Lyon-Champagne-au-Mont-d’Or, Bourg-en-Bresse and Mâcon.

With more than €8,600 collected at all the sites, the funds will finance the ICI d’Entrepreneurs du Monde [Incubation – Creation – Inclusion project of Entrepreneurs of the World] which guides and supports entrepreneurship projects carried out by refugees, single parents and homeless people.

— What is the Solidarity Cents operation?

Aurélie Bellemin, General Manager: It is a great collective adventure at Crédit Agricole to finance projects with a social impact. Employees at 5 sites of the Group can, if they wish, make a donation of 50 cents (or more!) when they pay for their meals at the canteens. The warm welcome extended to the initiative in 2018 in Montrouge and Saint-Quentin encouraged Crédit Agricole Centre-Est to join the operation and organize it on our three sites in 2019.

— How would you sum up this edition?

The generosity of our employees, our service provider and the Regional Bank enabled us to collect €1360, supplemented by additional financing from the regional bank. Solidarity Cents is an action that disseminates the Crédit Agricole’s mutual assistance spirit. Employees participate and feel concerned about the concrete effects of the operation.

— What exactly are the funds collected used for?

For the second year, we are donating the funds collected by the NGO Entrepreneurs du Monde to finance its project Incubation, Creation, Inclusion (ICI) – a programme aimed at helping vulnerable people get integrated through the creation of micro-enterprises. The beneficiaries are trained and supported by volunteers and experts to give concrete form to professional projects, with an emphasis on digitization on the one hand and sustainable catering on the other. Some forty training schemes have already been financed thanks to the donations made in 2018.

— Do you have examples of beneficiaries?

Yes, when the operation was launched in November, Crédit Agricole employees from Montrouge and Lyon met Rania, supported by Solidarity Cents, who came to present the entrepreneurial project she has created. Rania is a Syrian refugee who has managed to launch her catering business based on Syrian specialities, thanks to guidance and support from the Entrepreneurs du Monde. This type of meeting helps to change the way we look at refugees and to understand that there are inspiring human destinies that transcend preconceived notions.

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Source: Integrated Report 2019, Grameen Crédit Agricole Foundation. Dowload it here

Click to view the Solidarity Cents video

[Interview] Palmis Enèji: For clean and accessible energy in Haiti

Interview with Jean-Farreau Guerrier, Coordinator, Entrepreneurs du Monde Haiti

– Tell us about Palmis Enèji. How is this social enterprise adapted in Haiti?

Jean-Farreau Guerrier, coordinator: Palmis Enèji is a Haitian social enterprise that specializes in the distribution and maintenance of clean cooking and lighting equipment for the most disadvantaged households in Haiti. The situation is critical in our country, so action is needed. Already one of the poorest countries on the planet, Haiti is going through a crisis that is severely affecting its population. Street demonstrations are frequent, the security situation is deteriorating, and some areas are completely inaccessible. Hit by an inflation rate of nearly 20%, households are losing purchasing power, 62% of them remain without access to electricity and up to 85% are in rural areas. As a result, families use candles or kerosene for lighting and charcoal for cooking. With its stoves and solar lamps, Palmis Enèji offers solutions to replace these rudimentary methods.

–What are the socio-economic impacts of your actions?

Thanks to partnerships with microfinance institutions, Palmis Enèji provides financing solutions that facilitate the acquisition of equipment. Many households and professionals are thus switching to cooking using LPG, which is far less harmful than charcoal cooking. The poorest families in rural areas have practically no access to LPG, so they use our improved charcoal stoves, which consume 20% to 30% less than traditional stoves. Our solar lamps also provide them with lighting, which is healthier and more comfortable than candles. These solutions enable the poorest families to save money while reducing their ecological footprint: we estimate that we have helped save over 153,000 tonnes of forest timber and reduced harmful CO2 emissions by more than 203,000 tonnes. Finally, Palmis Enèji supports economic activity with a network of franchised micro-businesses. As one of our resellers aptly summarized the social utility: “I am proud to see light shining in our families.”

– What upcoming developments do you foresee?

We are pursuing the strong objective of making devices, which are beneficial to health and to the environment, accessible to everyone in every village. To that end, we are prioritizing three projects:  access to LPG through distribution centres in the centre of the country and in the Grande-Anse department; the development of the after-sales service and diversification of our product range; and the expansion of our partner network.

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Source: Integrated Report 2019, Grameen Crédit Agricole Foundation. Download it here

[Interview] CA Val de France supports a Solidarity bankers mission in Cambodia

Interview with Laurence Lebrun-Renoult, General Manager, CA Val de France

Launched by the Grameen Crédit Agricole Foundation and Crédit Agricole SA, Banquiers solidaires [Solidarity Bankers] is a skills volunteer programme that offers Group employees technical assistance assignments with organizations supported by the Foundation. In 2019, the Caisse Régionale Val de France supported a Solidarity Banker assignment in Cambodia. Dominique Rombczyk, a risk analyst with the Regional Bank went to Cambodia on a 10-day “financial management” assignment in September for Cirque Phare (PPSE), a social business in which the Foundation is a shareholder.

– What motivated your Bank to take part in the Solidarity Bankers programme?

When one of our employees took the initiative to apply for a Solidarity Banker assignment, our Bank naturally supported his request and granted him a week of skill-based sponsorship. Dominique Rombczyk was thus able to bring his skills to bear in the financial management of the Cirque Phare (PPSE). PPSE is a Cambodian social business which promotes the social integration and empowerment of young people through the arts and culture. It is a source of pride for us, because this approach is fully in line with our guidance and support values.

– What feedback do you get from this experience?

Solidarity Bankers is one of those programmes that make us more sensitive to the social consequences of our banking activities. It is making a difference for a sustainable vision of finance in both theory and practice. The initiative carried out by our employee enabled us to share and disseminate in our Bank the human qualities of openness and commitment which we promote. In addition to communication at Group level, his experience made headlines in internal communications, for instance. Fur us bankers, knowing how to mobilize our skills in the service of others, opening up and adapting to a different context and to different issues are soft skills that must be part and parcel of our line of business.

– What other actions does your Regional Bank take to promote social inclusion?

Social cohesion in regions is a strategic priority for a Regional Bank such as ours. The Crédit Agricole Foundation – Val De France is pursuing initiatives in favour of local or regional associations endeavouring for the inclusion of young people on the one hand and for intergenerational support on the other. We provide skills-based sponsorship for these associations on a voluntary basis, following the same model as the Solidarity Banker assignments. For example, we are launching a youth training project for which all the expertise of our staff is welcome for support assignments: assistance for financial management, leadership, advice, etc. We also work with young people to support isolated, often elderly persons, which fosters the inter-generational dialogue. This effort as a whole is part of a broader approach aimed at promoting the socio-economic autonomy of populations.

Source: Integrated Report 2019, Grameen Crédit Agricole Foundation. Dowload it here

[Interview] “With the FIR, CA Centre-France opens-up to microfinance”

Interview with Jean-Christophe Kiren, CEO, CA Centre-France

Reserved for the Regional Banks and the entities of the Crédit Agricole Group, the Fund for Inclusive Finance in Rural Areas (FIR), supported by the Grameen Crédit Agricole Fund, is used to invest in microfinance in emerging countries. Crédit Agricole Centre France subscribes thereto for an investment of €700,000 and reinforces its mission as a bank that promotes economic inclusion.

– What is your Bank’s approach to investing in the Fund for Inclusive Finance in Rural Areas?

The new fund open to the Regional Banks is fully in line with our mutual assistance and cooperative action. First of all, its general mission, i.e. to promote economic and social inclusion in rural areas, already requires our undivided attention at Crédit Agricole Centre France, given the specific rural features of our regions in Auvergne and Limousin. Secondly, I was particularly touched by the issue of the financial empowerment of women, which the FIR is intent on strengthening. Finally, this cooperation is an opportunity for the Regional Bank to open up to microfinance by drawing on the expertise of the Grameen Crédit Agricole Foundation and to develop new tools to serve the territories.

– Which actions on financial inclusion and entrepreneurship with an impact does the Regional Bank pursue in the region?

The entire Regional Bank – elected representatives and salaried employees – is committed to and takes part in actions with a social impact. It carries out many operations ranging from initiatives led by the  Crédit Agricole Foundation – Centre France to equity investments in social enterprises. In this respect, the Regional Bank has a broad banking organization to support projects with a strong social impact. Furthermore, I would like to see the Regional Bank endowed with a €2 million fund by the end of 2019 to support projects that promote inclusion. There are plans to have some of the financed projects identified directly by employees so as to involve the teams.

– How do you see these new inclusive and responsible approaches?

We are bankers… but not just bankers. We are also men and women committed to the life in the regions, driven by the cooperative and mutual assistance values of Crédit Agricole. The investment of Crédit Agricole Centre France in the FIR supported by the Grameen Crédit Agricole Foundation is fully in line with this spirit. Mutual aid, sharing, and solidarity are commitments for the benefit of all.

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Source: Integrated Report 2019, Grameen Crédit Agricole Foundation. Dowload it here

The Foundation publishes the Newsletter #35

The Grameen Credit Agricole Foundation publishes its Newsletter #35, marked by the crisis linked to the Coronavirus that continues to expand and intensify. The Foundation, in permanent contact with its network of 75 partner microfinance institutions (MFIs) in 40 countries, has undertaken since early March information gathering, analysis and sharing of its observations. This information is very important. It allows us, at our level, to take the most relevant decisions for the Foundation’s management, the support of our partners and the effectiveness of our action in line with their difficulties and expectations.

The economic crisis is expected to be hard, undoubtedly beyond our first forecasts in early March, but the institutions are preparing to face its effects. No stress model had anticipated it. The answer must therefore be systemic if we want to avoid a major failure in this sector.

To do so, donors organise their action by adapting funding plans but also by offering monitoring tools, technical assistance plans or training to strengthen the capacities of MFI teams to deal with this sudden and exceptional situation. All of these elements remind us how this crisis concerns all microfinance stakeholders. The involvement and rigor of local institutions, the coordination of international networks, the support of public and private donors and the confidence of investors will be the key values of our collective capacity to overcome the challenge presented by this health tsunami.

Download the Newsletter #35 here.

The Grameen Crédit Agricole Foundation publishes its 2019 Integrated Report

For the third consecutive year, the Foundation experienced dynamic growth in its activity: the outstanding portfolio reached 96 million euros in favor of 75 microfinance institutions and 12 social enterprises in 39 countries. Women’s entrepreneurship and the development of rural economies are at the heart of the Foundation’s action: 85% of the clients of the institutions funded are women and 78% live in rural areas.

Stronger partnerships

In 2019, the Foundation reaffirmed its position as a lever for the Crédit Agricole Group to promote inclusive finance. Already working closely with Crédit du Maroc and Crédit Agricole Egypt, the Foundation has partnered with Crédit Agricole CIB in India to support Indian microfinance institutions. The Fund for Inclusive Finance in Rural Areas (FIR) brought together no less than 21 Regional Banks, as well as Amundi and Crédit Agricole Assurances. Furthermore, Solidarity bankers, Crédit Agricole’s skills volunteering programme for Crédit Agricole programme on behalf of the Foundation’s partners, celebrated a first year of success: since the launch of the programme in 2018, 13 missions were launched, for a total of 123 days of Solidarity bankers’ missions.

Last year, the Foundation also developed numerous projects with institutional and technical partners. The programme with Agence Française de Développement (AFD) [French Development Agency] is in its second phase and supports 22 microfinance institutions in Sub-Saharan Africa. The Foundation also received a loan from the European Investment Bank for an amount of 12 million euros equivalent in CFA francs and funding to develop a technical assistance programme to support microfinance in West Africa.

In 2020, the Foundation will continue to work with its partners to support impact entrepreneurship and financial inclusion. Faced with the Covid-19 crisis, the Foundation is organizing its action with other donors, by adapting funding and technical assistance plans to strengthen the capacities of the organisations supported. 2020 will be a milestone year and the Foundation will continue to contribute to the fight against poverty, with ambition and commitment.

Download the Report

Travel diary of a Solidarity Banker in Cambodia

By Dominique Rombczyk, CA Val de France

Launched by the Grameen Crédit Agricole Foundation and Crédit Agricole SA in June 2018, Solidarity Bankers is a skills volunteering programme aimed at all Crédit Agricole group employees for the benefit of microfinance institutions or impact businesses supported by the Foundation. Discover the article written by Dominique Rombczyk, Solidarity banker of CA Val de France, who travelled in 2019 to Cambodia to support Phare Performing Social Enterprise (PPSE), a social enterprise in which the Foundation is a shareholder.

When I discovered the Solidarity Bankers programme, I remember looking for as much information as possible on the Grameen Crédit Agricole Foundation as well as on Professor Yunus, on inclusive finance, on social entrepreneurship … All well-known notions, shared values but which seemed to be part of another world. The opportunity offered by Crédit Agricole and the Foundation to step into this world was too exciting to be overlooked.

I therefore decided to apply and was selected to carry out the Solidarity Bankers mission with Phare Circus (PPSE), a social enterprise that aims at promoting social inclusion and the empowerment of young Cambodians through art. The objectives of the mission were to identify the roles of the financial and managerial team, to train and propose a training plan on management concepts and financial strategy, and to propose monitoring and financial management tools.

The preparation phase was essential. After initial discussions with the Grameen Crédit Agricole Foundation team, there was quite a reading of PPSE presentation documents, financial data and general information to better understand the mission. In the weeks prior to the departure, several meetings took place with the Foundation and the enterprise to finalise the planning of the mission. Telephone exchanges allowed me to feel the enthusiastic state of mind of all interested parties.

A fascinating field mission

The departure for the 15-day field mission in Cambodia took place on September 7, 2019 with Hélène Kéraudren-Baubé, Administrative and Financial Director of the Foundation. The Managing Director of PPSE himself came to greet us at the airport, along with his family, creating a very familiar atmosphere that lasted during our whole stay there.

During the first four days of the mission, we had several meetings with the Managing Director and the heads of departments to analyse the functioning and organisation of PPSE in order to reflect together on ways for optimising the structure. The presence of Ms. Keraudren-Baubé during the first days of the mission was a true added value for proposing a relevant strategy planning for PPSE.

We also had the chance to attend the show offered by Phare Circus. A show mixing theatre, folk music and Cambodian stories. The incredible performance of young artists from difficult social and economic backgrounds was one of the highlights of my mission.

The second part of the mission was mainly based on the training of the Financial Unit teams. There were training sessions in the field of accounting, analysis and financial strategy, that helped consolidate, within the PPSE financial team, certain concepts. These trainings also allowed detecting training needs and thus helping to develop a training plan that the institution will be able to implement later.

Back in France

After the return from the mission, many projects were under way. The training plan, the strategic planning project, the drafting of a support for financial communication with the PPSE Board of Directors, the implementation of a financial monitoring tool … Several weeks after the return, I sent my final report to PPSE. Interactions in the meantime have been positive, and elements established during the mission are already being used and implemented.

I am back in France with the joy of having been able to share the daily life of so many passionate, enthusiastic and brilliant people within the Grameen Crédit Agricole Foundation and PPSE. This mission allowed me to experience from the inside the functioning of a social enterprise and the beautiful dynamic that animates these structures. The idea of living this daily is extremely tempting.

A sense of pride also exists: that of being part of a Group that acts concretely, on the ground, with commitment, to promote social values.

Incidentally, but it is worth mentioning, the visit of the Angkor Wat temple, an emblematic place of Cambodia (which appears on its flag), can only leave an indelible mark on all visitors who go there.

Newsletter #35 to download here

The dairy sector favours the emergence of territorial dynamics in Northern Senegal

Interview with Bagoré Bathily, Founder and CEO, Laiterie du Berger

A committed player to the professionalization of the dairy sector, from its dairy factory located in the Saint-Louis region in northern Senegal, Laiterie du Berger is based on a local supply organisation considered a model in Sahelian Africa. A social impact company in which the Foundation is a shareholder, it continues to flourish thanks to the implementation of its subsidiary Kossam SDE, a livestock development company. This is an interview with Bagoré Bathily, Founder, Chairmain and CEO of Laiterie du Berger.

– You created Kossam SDE, a subsidiary of Laiterie du Berger. What is it?

Bagoré Bathily, CEO of Laiterie du Berger: The Kossam project started in 2017 with a Solidarity Bankers mission, a a skills volunteering programme of Crédit Agricole, carried out by Jonathan Michaud, an agricultural engineer from Crédit Agricole Franche-Comté, who today heads Kossam.

The objective of Kossam is to strengthen and structure the dairy sector in Northern Senegal. It operates through fifteen mini-farms that test and make the model more reliable.

– What exactly are these mini-farms? What is their impact on the region?

They are pools of dairy specialisation. In practical terms, farmers place the best milk-producing cows of their herds in the stables at any time of the year. Kossam provides them with the best production conditions in terms of feeding, watering, reproduction monitoring, advice.

These actions give coherence to the sector, enhance the sector and slow down transhumance. The sector is getting organised and becoming more attractive. Young people get involved, train in new professions, gain responsibilities. It also has an impact on families. Thanks to the income from dairy farming, they settle down, improve their living conditions, and send children to school. Around Kossam, an entire territorial dynamism is being established.

– With Kossam, Laiterie du Berger expands its scope of expertise. What balance and prospects do you draw from the Senegalese dairy sector?

Today, our local milk production level has reached industrial levels. With higher income prospects, the industry is now structured and our social entrepreneurship model continues to demonstrate its effectiveness. We have found outlets for our products in the Dakar region. When it was launched ten years ago, Laiterie du Berger had a turnover of € 30,000. Now it reaches € 10 million. We plan to reach 2,000 families by 2022 and deploy 100 mini-farms nationwide. Each progress represents a new challenge!

– Laiterie du Berger benefits from the support of the Grameen Crédit Agricole Foundation, Crédit Agricole Franche-Comté and Amundi. How important are your partners?

Laiterie du Berger and Kossam are companies based on the social impact entrepreneurship model, one for the production and distribution of dairy products, the other for the raising of livestock and milk production. Our model goes hand in hand with a culture of alliance and cooperation. All of our stakeholders commit themselves with mutual understanding: local communities, farmers, financial partners. We all work with the same objective: allow Fulani breeders in the sahelian zone, who represent more than half of the population, to make a living of their activity. This is essential to the stability of the region.

What are the next steps for Laiterie and Kossam?

Kossam received a USD.5 million grant from Mastercard Foundation. It will help speed up the dairy’s activity and generate over 5,000 jobs in the dairy sector in Senegal. The grant will be used to increase milk collection to 4,000 tonnes and to capitalise on the restructuring of the collection system.

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Solidarity Bankers: Discover the video testimony of Haoly Basse, Solidarity Banker of Crédit Agricole CIB, who travelled to Senegal to support Kossam for the implementation of a digital application.

Digital and microfinance sector in the face of the health crisis

By Grameen Credit Agricole Foundation

The deployment of an ad hoc observatory to monitor the effects of the health crisis in relation to 80 microfinance institutions (MFIs) and social business partners in some forty emerging countries enables us to collect information regularly so as to share it and draw the best lessons from it.

This week we have monitored more specifically how microfinance institutions used their digital channels to overcome their difficulty of direct contact with borrowers which traditionally takes place either in the MFI branch or in group meetings or even during the disbursement of funds (microfinance uses mostly cash when disbursing the borrowed sums) or the monitoring of the projects financed.

According to the survey we conducted in the beginning of April, 68% of partner microfinance institutions indicated that they have made greater use of digital channels to overcome contact difficulties, as a result of lockdown or group gathering prohibition measures. This strong growth in use observed in the traditional finance sector can be seen also in the microfinance sector which has had no alternative but to adapt.

The technological means and processes, including digital tools, are being developed rapidly by institutions of all sizes (the smallest with client portfolios of up to $10 million, and the largest well over $100 million). Since the beginning of the crisis, institutions have been producing business continuity plans, as the basis of new discussions and exchanges for their funding backers, in which they frequently include new digital applications.

For most institutions, the first step entails raising awareness among clients about the possibility of using remote payment methods. This step is implemented through SMSs (which are particularly suitable for 2G network coverage) but also through the social media – the telephone network permitting.

“[We] encourage clients through SMSs to utilize mobile money platforms for repayments as it is the safest mode at the moment.” – Partner in Uganda

”[We] start informing our clients by social media and SMS on possibility of repayment via terminals, mobile wallets, plastic cards and Internet banking” – Partner in Tajikistan

For many MFIs which did not yet have it in their range of services, the first process developed rapidly at the beginning of this health crisis was that of electronic money payments. This practice of remote payments is encouraged by many regulators, such as the Bank of Central African States (BEAC) for the countries under its authority or the Central Bank of West African States (BCEAO), which decided to reduce transfer and use fees for this form of currency. This implementation of remote payment is accompanied by mass mailings of information to clients to explain the new procedures.

“Sending bulky texts to customers to remind them how to use the mobile money code to make their loan repayments and also the hotline they can call for help or complaint.” – Partner in Uganda

These remote services enable customers to pay their instalments without having to travel (and therefore to use public transport) by using the pay station network of telephone operators which is generally dense and available even in rural areas.

The implementation of these means of payment also makes it possible to disburse loans to the electronic portfolios of clients, as the latter go to said pay stations not to pay their instalments but to obtain cash disbursements of their microcredits. The use of mobile money therefore makes it possible to continue the financing activity during a lockdown period.

“The Palestine Monetary Authority is urging all MFIs to start disbursing loans to income generating projects through digital channels with lower interest rate.” – Partner in Palestine

Yet, as astonishing as it may sound, this crisis is seen by some institutions as a real opportunity to accelerate the deployment of digital platforms and to launch new services in order to make headway in operational optimization and even excellence in customer relations. For the managers of these partner institutions, having to invest in digital tools for reasons that are “vital” for their institutions at this time seems to be a means of accelerating investment plans that they had been thinking about before the crisis broke out. It thus enables them to embark on modernizing their distribution mode and their processes, which has come as a pleasant surprise to us, even though we are well aware of the vitality and capacity for innovation of our partners.

“This was contemplated prior to the COVID issue […]. However, discussions are ongoing with regard to the possibility of [the mobile payment solution] being launched to all clients.” – Partner in Sri Lanka

“In times like this when anything can be a source of transmission for the deadly virus, it is prudent that less physical cash is handled. [We] used the opportunity to pilot [our platform] in order to look out for the shortfalls and the loopholes in the system.” – Partner in Ghana

The economies of certain countries that were already highly digitized, as is the case in East Africa, for instance, seem to be more resilient to the effects of the crisis. Microfinance institutions operating in these areas have shown remarkable adaptability. By way of example, the Kenyan economy, which is particularly open to payment, financing and investment operations using digital wallets, is running according to remote uses that minimize the risk of spreading the virus.

”Kenya is better prepared than others because of the high penetration of mobile money. The concept is accepted widely by the public” – Partner in Kenya

Many institutions tell us that they will be more structured and more effective in the aftermath of this crisis. These experiences, which are sometimes vital to the continuation of their activities, seem to be very useful to them for operational performance gains in the future.

”Our team will tailor mobile app to add a feature enabling to apply for loan restructuring remotely. […] We introduced a new criterion in our monitoring tool – “emergency (coronavirus)” meaning the loan officers will have to monitor their customers remotely, and get information and enter monitoring data into the software” – Partner in Kazakhstan

“The new strategy will focus on transforming [our] current mode of operations to embrace more digital solutions, decreasing the need for physical interactions between employees and customers, and replacing cash transactions with mobile payment functionalities.” – Partner in Georgia

These positive effects of digitization, which have been achieved by microfinance institutions thanks to forcibly imposed developments can also be found in social enterprises in our equity portfolio. The digitization of the operational processes is a very effective means for combatting the constraints of the lockdown for companies that have to deal directly with the public or with suppliers of raw materials. This is the case, for instance, of a Senegalese company which, thanks to digital payments, has managed to continue its milk collection and sale of dairy products and to generate growth that has exceeded the forecasts.

For another social enterprise specializing in drinking water treatment, the health crisis has also led to the development of home water delivery following an order placed online.

Our partners are aware that the use of digital technologies is not a global solution to all the issues raised by this systemic crisis. They expect their customers and their operations to run into economic recovery problems in fact, where the digital dimension can only be of an altogether relative help. Despite the more and more intensive use of digital channels, the commercial activity of microfinance institutions is slowing down. They are all focusing on providing guidance and support to their customers by taking care to cope with the increasing number of requests for maturity extensions, while maintaining risk control and a good operational quality.

In some areas, the supervisory authorities have issued directives or strong recommendations for MFIs to grant moratoria to their clients that could last for several months, which entails a very high level of activity for the institutions.

In the majority of the testimonials we have collected, however, the health crisis is seen as a sequence that requires the different Management Committees of our partners to give serious thought to the operational performance under constraint. Our partners are convinced that the experiences they have gone through and the solutions found to deal with the health crisis will prove very useful “the day after.”

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Discover more articles on: COVID-19 Observatory.

A partnership between the Foundation and CA Romania to support microfinance

“After Egypt, India and Morocco, we are implementing a new cooperation agreement with a Group entity, Crédit Agricole Romania. This partnership fits perfectly within the framework of the Group’s project which integrates the societal dimension, in this case supporting low-income population, at the heart of development activities”, says Eric Campos, Managing Director of the Foundation and Head of CSR of Crédit Agricole SA.

With this partnership, the Foundation strengthens its positioning as one of the sector’s key players in the region, while forging its links with the various entities of the Group.

“Our focus on the Romanian market is to grow our presence in financing the agriculture sector and contribute to economic and social development benefiting from the expertise of our Group. This partnership is a great support in achieving these objectives”, says Luc Beiso, CEO of CA Romania.

The first beneficiary microfinance institution is Vitas Romania, which received a loan of €1.5 million, guaranteed 100% by the Foundation. Founded in 1996 by CHF International, a USA-based international development organisation, Vitas provides financial products and services to support the development of income-generating activities. The institution has 1,970 active borrowers, 45% of whom are women and 45% live in rural areas. It manages a portfolio of over €15.5 million. It operates in Western Romania, with its headquarters in Timisoara, through a network of 9 branches.

International microfinance institutions anticipate the first effects of a recession

By Grameen Credit Agricole Foundation

The crisis is beginning to take its economic toll

A few days after our last publication, the impact of the coronavirus continues to expand and intensify. The milestone of one million infected people worldwide has been passed and new outbreaks of the epidemic are being confirmed.

In constant contact with its network of nearly 80 partner microfinance institutions (MFIs) in 40 countries, the Grameen Crédit Agricole Foundation continues its work of collecting information, analysing and sharing its observations. Over the past few days, we have focused our monitoring efforts on the consequences of the crisis and the work of the MFIs to deal with it. Such information is very important. It enables us to take the most relevant decisions at our level for the management of the Foundation, for the support of our partners and the effectiveness of our action as close as possible to their difficulties and anticipations. It also contributes to the sharing of information by and between the stakeholders of this sector who are getting collectively organized in these times of crisis.

The results we have obtained confirm the trends identified in the information provided in the first weeks: the crisis is very hard, undoubtedly beyond our initial forecasts in early March, but the resistance is being organized. The effect of the health crisis is systemic. No stress model had anticipated it. The response will therefore have to be systemic, too, if we want to avoid a major failure in this sector.

Small-scale outreach activities are sliding into recession

78% of our partners are seeing the first effects of the economic recession on their areas of activity.

In the first feedback we received, rural areas seemed to be escaping the first effects of the crisis, especially in food-producing regions. By now, irrespective of the size of the institutions (the smallest have a financing portfolio of less than $10 million, and the largest over $100 million)) and their geographic location, they are all, more or less, faced with similar problems: the inability to travel (74%), the drop in disbursements to borrowers (77%), and the ban on group meetings (63%) are the reasons most cited by our partners for the slowdown of their activity.

“As indicated in the first analysis, the expected direct impact (up to 6 months) is a possible deterioration in the quality of the portfolio in the tourism, transport and hotel sectors, as well as loans financed by remittances from abroad. A medium-term impact is also expected due to the general slowdown in the economy and the reduction of solvent customers.” – Partner in Georgia

More than a third of our partners are under almost total lockdown (36%) and the rest are adapting to restrictive pre-lockdown measures.

“[Our] activities have been significantly affected so far, with client businesses primarily affected by general public fears and more directly by the strict guidelines implemented by the government in an effort to control the spread of the virus. An increase in the cost of living is also expected […]. Imports are declining, production costs are going up. Kenya’s GDP is likely to fall and inflation will most probably rise, which will affect the country’s economy.” – Partner in Kenya

“We see that the government is taking increasing measures to limit travel and commercial activities. For example, a regional government has specified that all microfinance activities in the region should be suspended in April. We are getting similar requests from village authorities in other regions.” – Partner in Burma

Effects that now impact the accounts of institutions

These difficulties are starting to be reflected in the figures of MFIs. For instance, 74% of the institutions explain that their portfolio at risk (PAR 1) has increased compared with the end of 2019. This increase is currently contained to less than 10% in absolute value for 8 out of 10 institutions.

The institutions are clearly accelerating and intensifying the use of digital technologies in order to make up for the fact that sales teams cannot travel and organize out-of-pocket payments. For example, 68% of the respondents say they are making greater use of digital services to carry out their activities remotely.

Loan restructuring operations have already started in nearly one out of two MFIs (43%). The intervention announced by regulators and legislators in the financial sector is confirmed: almost half of the respondents (44%) are encouraged to take the initiative in proposing moratoriums and restructuring operations for the benefit of their borrowers (the countries which have imposed these measures include in particular Kazakhstan, Kyrgyzstan, Sri Lanka, Cambodia, India, Uganda, Burkina Faso, Rwanda, Senegal, DRC, Egypt, Morocco and many countries in Eastern Europe). New initiatives are also being considered such as the introduction of emergency products (such as minimum subsistence) in the coming months.

Institutions are implementing crisis plans

This systemic crisis calls for an in-depth review of MFI business planning and financing needs. Upon closer scrutiny, the increase in maturity extensions granted to borrowers does not yet translate significantly into additional financial resource requirements for the MFIs surveyed. At the time of the survey, 48% of them did not yet see any change in their liquidity needs compared with the projections made for the year, and a third even envisaged a decrease in their needs due to a significant drop in their activity.

At this stage, only one out of five MFIs (19%) is expecting an increase in its financial needs, linked to the increase in the price of inputs (seeds, fertilizers, raw materials …) which will trigger an increase in the financial needs on the part of borrowers, mainly in rural areas of our intervention territories. This prospective analysis has been spearheaded by the major international microfinance networks.

“In addition to the Covid-19 crisis, Kazakhstan has been affected by the sharp drop in oil prices which has weakened the national currency by 380 tenges to 445 to the dollar” – Partner in Kazakhstan

The responses from our partners reveal other factors of concern, in particular their ability to finance their activity: a quarter of them foresee a loss of value of their local currency against the dollar (26%) and a substantial increase in currency hedges in their future funding (23%). One out of five MFIs is already experiencing funding difficulties with their usual donors.

In order to be able to monitor the rise in risks and funding developments as closely as possible, more than half of the MFIs (55%) declare that they have finalized (or that they are in the process of doing so) a Business Continuity Plan that includes precise liquidity monitoring. This responsiveness is remarkable and such plans are an essential element in helping MFIs cope with and manage the consequences of the crisis.

Our analysis shows an apparent correlation in the quality of the Business Continuity Plans following the Coronavirus crisis and the past experience of a serious crisis that has already affected the MFI. The lessons learned from past crises thus seem to play a very important role in the resilience of institutions in the face of a crisis, be it financial, political, health, etc. Many less experienced institutions however also show a remarkable willingness to innovate and an equally remarkable capacity to anticipate.

Donors reacted very quickly also. Drawing on the lessons of past crises they have shown remarkable capacity in the past few weeks to intervene and anticipate in a sector that, all things considered, is still young. International lenders, foundations, investment funds, and local banks in all regions of the world are thus working on joint action plans. A number of meetings are being held around the world to get ahead of the crisis and absorb its effects that would be absolutely devastating without such awareness and rapid and determined commitment. There is agreement across the board on the need for effective information sharing and coordination by and between the various stakeholders. Donors are organizing their action around responses adapted to the funding needs of MFIs impacted by the crisis, but also by providing monitoring tools, technical assistance plans or training to strengthen the capacities of MFI teams in the face of a situation that is as sudden as it is exceptional.

All of these elements remind us to which extent this crisis is a shared concern for all microfinance stakeholders. The involvement and rigour of local institutions, the coordination of international networks, the support of public and private donors and the confidence of investors will be the key values of our collective capacity to overcome the challenge of this health tsunami.

Read more articles on : Covid 19 Observatory.

ADA releases a guide to ensure business continuity of MFIs during the crisis

The health and economic crisis generated by the Covid-19 strongly affects microfinance institutions and their clients. To support the microfinance sector in this very particular context, the NGO ADA pursues its mission to promote inclusion for all by leveraging its knowledge and expertise in risk management with a guide of good practices for the continuity of microfinance institutions.

Available in French, English and Spanish, this guide offers recommendations to microfinance institutions to organize crisis management and ensure business continuity.

The document can be downloaded from the ADA website, in a page exclusively dedicated to the management of the Covid-19 crisis, a space which offers partner articles, guidelines, testimonials and videos in order to provide a place to exchanges and sharing of experiences between professionals in the sector.

This guide describes certain points of attention for the analysis and the measures to be taken to organize appropriate crisis management and ensure business continuity in the face of the COVID-19 pandemic.

To access it, click here.

[INTERVIEW] “Life must go on, we should not lose hope”

Interview with Dara Huot, CEO, Phare Performing Social Enterprise

The CambodgeMag interviewed Dara Huot, Managing Director of Phare “Performing Social Enterprise”, partner of the Grameen Crédit Agricole Foundation. He expressed his concerns and hopes regarding the Phare Circus social enterprise.

Since March 17, performances of the Phare circus, one of the main attractions in Siem Reap, but also in Battambang, have been suspended …

Indeed, we had to apply a government decision taken against performance halls. Before that, we had implemented all the necessary measures to disinfect the premises between each performance and respect the distances between the spectators. The temperature was controlled for each person entering the tent, and distributors of alcoholic solution were located everywhere. However, the number of spectators was gradually decreasing. The government decree only precipitated a closure that would have been inevitable.

How did staff react to this closure?

Phare is a very large social enterprise, split between Siem Reap and Battambang. Here we have 40 artists and 70 employees. The Battambang school, which provides circus training, but also graphic animation, dance, painting and theater training, has 110 teachers for 1,200 students. When the closure was decided, we took the opportunity to resume our list of “things to do”, you know, all those little things that accumulate over time and that we generally reserve for the off-peak season.

We cleaned everything, redid the paintings, carried out all the maintenance work… And then, when we finished all this, everyone went home. The vast majority of the staff are from Battambang, so many have joined their families there. All the artists continue to train hard, for the resumption of the shows, but also for the next tours. Some have been canceled, but we hope to be able to carry out the one planned in France for this winter.

Are wages still being paid?

The full wages were paid throughout the month of March. As for April, the wages have been reduced by 50%, and this will be the case for the following months. It is unthinkable to leave our employees without any income, and we do not hesitate to draw on our cash for this. But how much longer can we continue like this? After 3 or 4 months, there won’t be enough money … Especially since we have to keep paying the rents.

Do your employees receive support from institutions?

No, it’s not like in France, where compensation is granted to people who find themselves unemployed. Nothing is planned for them here, and the situation is made worse by the fact that many employees have contracted debts with banks and microfinance organisations. The interest they have to pay back every month is very high, and I don’t see how they will manage. The only hope would be for more flexibility from these organisations in terms of reimbursement. Maybe cutting interest rates, spreading out the due dates or, why not, hanging them off until things get back to normal. A moratorium on rents could also allow many Cambodians to see the crisis pass. As it stands, paying off a loan, paying rent and supporting your family when you have a low salary or, worse, when you are unemployed will be a big problem for a whole part of the population.

How will this crisis change Siem Reap?

Since the city opened to mass tourism, that is to say twenty years ago, the number of visitors has only grown exponentially. The infrastructure did not necessarily follow. The environment has suffered a lot from the increase in traffic, waste is not always well managed, access to water and its quality are still problematic in certain districts. Electricity needs have increased, but there are still many cuts. Why not take advantage of this involuntary “break” to renew yourself, to question yourself and, thus, to embellish the city? We have to stay positive, try to see what we can get out of this ordeal. Life must go on, you must not lose hope, and continue to be positive despite the circumstances. More than ever, we must take care of ourselves and our loved ones, and stay strong. This is important for you, but also for those around you. Everyone hopes that this pandemic will last as short a time as possible. 2019 will have been a difficult year, and 2020 will be much worse. But we will get out of it, and come back, I hope, hardened by this ordeal. Although it will, of course, be very difficult to go up the hill.

The microfinance sector prepares to face health crisis’ effects

By Grameen Crédit Agricole Foundation

The COVID-19 virus continues to spread around the world with over 450,000 confirmed cases as of March 26, 2020. Governments, even those who deny it, are taking more and more stringent steps to contain the epidemic. As the situation evolves more quickly every day, microfinance players are preparing themselves to face this crisis by taking the first salutary steps.

Following its enquiry launched two weeks ago, the Grameen Crédit Agricole Foundation has established an observatory to constantly update the information collected through daily exchanges with its partner microfinance Institutions (MFIs). The goal is to better understand how to support them, but also to share its analysis with other financial players in the inclusive finance and development aid sector.

Adapting to slow the spread of the virus

MFIs quickly realised the health issue of the crisis. They immediately sought to adjust their operating methods to the contamination risks by adopting recommended barrier actions and launched awareness campaigns among customers and employees.

“Hand washing is mandatory in all branches, with the provision of buckets and soap for everyone entering the office. Hand sanitizers are provided over the counter for all customers who transact with cashiers. […] The process of acquiring protective masks for cashiers is underway. It is strongly recommended that all staff members experiencing symptoms stay at home during the follow-up. We strongly recommended all staff to avoid going to the branches in the light of developments, unless it is absolutely necessary.” – Partner in Sierra Leone

MFIs also had to adapt to decisions taken by local authorities to curb the spread of the virus. Organisations in the most risky areas were therefore forced to partially or completely cease their operations and to close some of their local agencies.

“All operations will be closed as of 12:00 noon on March 26, 2020, in accordance with the announcement made by the President on Monday, March 23 and to allow personnel to return home for the period of confinement. […] Disbursements to customers have been postponed until the end of the period of containment.” – Partner in South Africa

The vast majority of our partners have rapidly implemented teleworking or staff rotation systems. Faced with the numerous prohibitions on groupings, institutions are now working with a representative of solidarity-based credit groups and remain in contact with their customers through instant messaging services.

Digital solutions are particularly adapted to this context. They allow the continuation of microcredit disbursement activities and remote recovery. In a dairy in Senegal, for example, the payment for milk collection to breeders has not experienced any disruption because it has been done for a few weeks via a mobile phone payment device.

“We encourage by SMS our customers to use mobile payment platforms for refunds because it is the safest method of payment at this point in time.” – Partner in Uganda

If MFIs have been able to adapt quickly their operating methods, it is also the time to prepare for the looming economic slowdown. Crisis meetings are increasing in head offices, or through video conferences from managers’ homes, in order to set up continuity plans.

New regulations

A growing number of countries are introducing new credit regulations to cushion the economic shock and the likely insolvency risk of vulnerable customers. Regulators are urging financial institutions to grant deferred payments to their crisis-affected customers, as well as to restructure loans. Such decisions are already beginning to be implemented.

“The government is also implementing measures to help local businesses, such as reducing interest rates. For example, the borrowing rate for secured loans has been lowered by 1%” – Partner in Myanmar

“The Central Bank of Kyrgyzstan has taken the following support measures: 1) cancel the accumulation of penalties for all borrowers; 2) review the conditions for repayment of loans and provide for a delay in payment of at least 3 months upon the borrowers request; 3) when restructuring loans related to changes in borrowers’ cash flows due to coronavirus, institutions should not consider them as bad debts if the cause is health crisis “- Partner in Kyrgyzstan

“The Central Bank has announced that financial institutions must accept all requests for deferrals until April 30.” – Partner in Kosovo

The microfinance sector shows a high degree of responsibility and maturity to face this global crisis. The partner institutions of the Grameen Crédit Agricole Foundation produce regular financial statements and forecast analysis of their financing needs in the coming months. Although we have not yet observed any particular increase, the evolution of portfolio at risk (PAR) levels is systematically subject to a very high degree of vigilance. Multiple exchanges between lenders, specialised non-governmental organisations and microfinance institutions are now organised daily.

The Grameen Crédit Agricole Foundation is in regular contact with its partners and colleagues in a reciprocal effort to pool ideas and resources. We share with our partners, with responsible investment players and with our peers our analysis and best practices implemented by microfinance institutions.

The pooling of available information, analysis and anticipations, and then the concerted implementation of shared decisions are principles that are vital today for our sector. At the cost of this transparency, this concertation and a necessary adaptation of our intervention principles, we should be able to overcome the effects of this exceptional health crisis, which could knock down many microfinance institutions, leaving fragile populations in desperate situations. Because we know the crisis will hit the most deprived populations in the first place. Hard. Let’s work together to live up to the issues of this humanitarian challenge.

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Discover other articles at: Covid-19 Observatory.

The Grameen Crédit Agricole Foundation continues to invest in Kosovo

The Grameen Crédit Agricole Foundation has just granted a new loan in local currency for a total amount equivalent to € 1.5 million to the Kosovar microfinance institution Kreditimi Rural i Kosoves (KRK) which it has supported since 2009.

KRK is a project initiated in 2000 by ADIE International as the Rural Finance Program of Kosovo (RFPK). The project turned into a microfinance institution shortly after, when the new regulations on financial institutions came into force in Kosovo. KRK’s mission is to provide access to financial services in rural areas of Kosovo in a sustainable manner, giving priority to the agricultural sector. To date, the institution has nearly 17,000 clients, including 16% women and 84% rural clients.

With this investment, the Foundation now has, in the Eastern Europe & Central Asia region, an outstanding portfolio of € 22 million, which represents 23% of its portfolio, and has 18 partner organisations supported, that is 21% of the microfinance institutions and impact businesses it finances.

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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 operator which contributes to the fight against poverty through financial inclusion and social impact entrepreneurship. Investor, lender, technical assistance coordinator and Fund advisor, the Grameen Crédit Agricole Foundation supports microfinance institutions and social enterprises in nearly 40 countries.

A TA programme to strengthen the impact of microfinance in West Africa

Actors committed to microfinance

With almost 12 years of experience in the microfinance sector and over €200 million in funding,  the Grameen Crédit Agricole Foundation finances and supports with technical assistance microfinance institutions worldwide. This support aims at promoting sustainable and innovative microfinance services which, in turn, will have positive social and economic impacts for low-income populations and the development of small and micro enterprises.

With 37% of its investments in Sub-Saharan Africa, the continent is at the heart of the Foundation’s action and its mission to contribute to the fight against poverty. Alongside the European Investment Bank (EIB) and the Luxembourg Government, the Foundation will strengthen its support to microfinance institutions in West Africa, within the framework of a new technical assistance programme.

Both partners of the Foundation have strong experience in the development of microfinance: the EIB has already committed over € 1.3 billion for the sector since its first microfinance operations in 1992, a key objective of EIB support for private sector investments in Africa, and Luxembourg concentrates 61% of global assets under microfinance management.

Strengthening the impact of the Foundation in West Africa

After granting in 2018 to the Grameen Crédit Agricole Foundation a loan equivalent to €12 million euros in CFA francs, in order to support microfinance in West Africa, the EIB allocated, on behalf of the Government of Luxembourg, a grant of € 332,000 to provide technical support to five microfinance institutions supported by the Foundation.

This two-year programme will allow the Foundation to support Caurie (Senegal), Kafo Jiginew (Mali), Graine (Burkina Faso), ACEP Burkina Faso and ACEP Niger in order to facilitate their digital transformation, improve risk management or even strengthen the social performance management. Thanks to this partnership with the EIB and the Government of Luxembourg, the Foundation is increasing its presence in West Africa and strengthening its value proposition to its partners in the region. This will strengthen the impact of microfinance in rural and urban areas of West Africa, including in the Sahel States. Moreover, consolodating private sector access to finance will be key to bolster Africa’s resilience and recovery from the expected impact of the Corona virus.

UGAFODE, partner of the Foundation in Uganda, extends services to refugees

UGAFODE Microfinance Limited (MDI) has opened a mini-branch in Nakivale Refugee Settlement in Uganda in the framework of a programme to foster financial inclusion of refugees launched by the UN Refugees Agency, the Swedish International Development Cooperation Agency and the Grameen Credit Agricole Foundation. The initiative aims at building sustainable livelihoods, resilience and self-reliance among refugees in the settlement and host communities. This follows a successful pilot scheme of financial inclusion for refugees in Kampala. Under the project, refugees continue to access credit, savings and money transfer services.

During the pilot phase, UGAFODE adjusted its policies and procedures, including document requirements, such as identification (Refugee ID issued by the Office of the Prime Minister — refugee department). “Serving refugees fits in well with our mission of transforming lives of the low income, but economically active population. The refugees are economically active and have financial needs like any other person and deserve utmost attention,” declared Shafi Nambobi, the UGAFODE’s CEO.

Nakivale settlement hosts over 100,000 refugees from 13 countries, who mostly are engaged in agriculture and trade. With the Nakivale branch UGAFODE will extend financial services to smallholder refugee farmers and host community members to improve their household incomes. Nambobi announced that the institution plans to roll out financial services to refugees in other settlements in the future.

According to some refugees interviewed, UGAFODE Nakivale branch saves them from travelling long distances to access financial services in Mbarara or Isingiro. “With the establishment of this UGAFODE branch in our camp, financial services have been brought to our backyard, we can now be served easily,” one of the refugees said. Another refugee said that previously, due to poor roads, they needed to spare a day just to go to the bank and that the branch will help them save on transport costs and time wasted traveling.

Further information on the programme here.

The Foundation strengthens its support to the microfinance institution Graine

In February, the Grameen Crédit Agricole Foundation signed a new financing contract in Burkina Faso, in favor of the microfinance institution Graine, for a total amount in local currency equivalent to € 380,000. This funding is provided within the framework of the African Facility programme, a scheme set up in 2013 by the Grameen Crédit Agricole Foundation, in partnership with the French Development Agency (AFD), to support a greater number of rural microfinance institutions in sub-Saharan Africa .

GRAINE (GRoupe d’Accompagnement à l’INvestissement et à l’Epargne) is a microfinance institution which has set itself the mission of “contributing to the improvement of the economic and social conditions of the poor populations of Burkina Faso, mostly rural women, by offering them appropriate financial services ”. To date, the institution has over 24,000 borrowers, 97% of whom are women and 80% of whom live in rural areas.

With this new funding, the amount of the Foundation’s outstandings in sub-Saharan Africa reaches € 35.5 million, that is 37% of the total outstandings of the Foundation. With 40 partners, sub-Saharan Africa brings together 47% of the institutions and companies supported by the Foundation at the end of February 2020.

How Coronavirus affects Microfinance sector

By Grameen Credit Agricole Foundation

Created in 2008, at the joint initiative of Crédit Agricole SA and Professor Yunus, founder of the Grameen Bank and 2006 Nobel Peace Prize, the Grameen Credit Agricole Foundation is a cross-business actor committed to promoting a better-shared economy.

Investor, funder, technical assistance provider and fund advisor, the Foundation has more than 80 partners (microfinances institutions and social business) and operates in around 40 countries with nearly 100 million euros in outstanding. The Foundation focuses on microfinance institutions that serve women and rural people. These institutions support approximately 4 million clients.

The Microfinance sector is exposed and concerned

On March 19th, according to the latest figures from Santé Publique France, the Coronavirus has reached 213,254 people worldwide. 8 843 deaths are to be deplored. After following announcements of the closings of many institutions and companies, confinement measures continue to be taken around the world. Africa and South America were not officially affected for a long time by the virus, but they now face the crisis with hundreds of cases.

The global sanitary crisis also became an economic crisis. Economic activities are extremely limited in all countries and stock exchanges have lost almost a third of their value in less than a month. Quite logically, the worldwide microfinance sector is also not immune.

For this reason, the Grameen Credit Agricole Foundation’s team launched a survey among its partners on March 11th in order to gather their first impressions and analysis, the impact on their clients’ activity, on their institution and their potential needs. We also took advantage of our regular interactions with our partners to obtain as much information as possible. All further information in this document come from these resources. 56 Micro Finance Institutions (MFIs) responded to our survey, out of 75 reached partners (75% participation rate) with the last answers received on March 19.

All our partners are expressing in their responses a real concern about the expected effects of this global health crisis.

Local government decisions are already impacting small income-generating activities

48% (27) of surveyed MFIs felt their clients are impacted by the coronavirus at the time of the survey, and 68% (38) of them think they will be in a near future. Thanks to a quick feedback, we learn that governments have decided to close schools, to close down non-essential activities, to restrict movement or to prohibit gatherings in Sri Lanka, Cambodia, Romania, Myanmar, Sierra Leone, Jordan, Mali and other operating countries. These changes are taking place everywhere today and very day new countries are added in that list.

Such decisions have a direct impact on our partners’ customers. First, many customers rely on imports for their business. Border closures and travel bans affect trading activities.

It should also be noted that concerns about the travel ban in China is affecting not only Asian countries but also African countries.

“As the border to China has been closed, some agricultural product prices are decreasing so our farmer clients aren’t getting good prices for their harvest.” – Partner from Myanmar

“We have customers who travel for purchases (China, Ivory Coast, Togo, Benin,..). Informal sector traders are afraid and this can affect their activities.” – Partner from Burkina Faso

The impossibility of gathering will also have an impact on all the operations that take place in markets and fairs. Merchants will not be able to carry out their activities. The travel ban will strongly affect global tourism. All activities relying on tourism will face many problems (stocks, lack of customers, refunds) as well as countries depending on remittances.

“If travel bans will continue due to increased coronavirus cases in Gulf region and Europe as
economy of Jordan is dependent on tourism income and money remittances from the Gulf” – Partner from Jordan

Finally, we had no feedback yet on the plans of local authorities regarding the adjustments to be made by the financial institutions in particular. The only compelling example we were provided is that of Palestine. Through 8 guidelines, the Palestine Monetary Authority urges financial companies to continue provide lending services to people to ensure the continuation of the commercial and economic cycle and also postpone the periodic monthly payments of all borrowers for the next 4 months’ period (6 months for tourism and hotel sector).

Also, no any additional fees, commissions, or interest on delayed instalments can be collected during the period.

MFIs activity could be reduced

59% (33 MFIs) of the surveyed MFIs mentioned that their activity was still not affected by the epidemic at the time. 23 MFIs (37%) were feeling concerned at the time of this survey, giving several explanations such as risk for field staffs, restricted movement, working from home.

One of the main concern is the prohibition of group meetings, which will affect all MFIs whose microfinance methodology is based on a group approach. Few partners are already adapting.

In some countries with no clear decisions yet, MFIs will have to postpone disbursements if their loan officers are unable to travel or will have to temporarily adapt their processes.

“During the emergency period until 29 May 2020 above, client centre meetings will not take place as usual. Instead, the ‘Pay and Go’ method has been put in place as follows: only group leaders, two to four persons per centre of some 15-20 clients usually, are requested to come to the usual centre meeting at the usual location. The group leaders are requested to collect the instalment of their respective group members”. – Partner from Indonesia

“We have set up a special procedure to meet members of the solidarity groups individually. We provide advice to clients on how best to deal with the situation” – Partner from Senegal

Our partners must also adapt to the situation for their own staff. The risks of virus transmission is an important factor to take into account for the activity of credit agents. Likewise, the confinement rules prevent the smooth running of the activity for all departments and operations. Some staff are already working from home in some MFIs.

“lmaty where HQ is located will be on quarantine from 19 March, employees will be working on distance” – Partner from Kazakhstan

“Field staff are at high risk of contracting, so they are hesitant to work on clients, a quarantine will hit and polarize the whole MFI market” – Partner from Uganda

Portfolio risk and liquidity needs are under scrutiny

Many concerns are raised about portfolio risk. According to our survey, at the time of answering, only 11 MFIs were noticing an increase in the portfolio at risk. African partners raised more concerns. However, when asked if they anticipate an increase in the portfolio at risk, 36 of the MFIs answer “yes” (64%). In this case, anticipation of a risk increase comes from all over our regions of activity.

“Potential increase in PAR30 and reduced credit demand. Estimate an increase of PAR30 not to go beyond 2% and portfolio growth to potentially slow down by around 20%” – Partner from Cambodia

However, some partners consider that they are no more at risk than usual. In most cases, these MFIs are those with a particularly rural customer base.

“In general, since our customers are rural residents (70%), we predict that they will not have a strong deterioration due to rising prices for their agricultural products. But we think that a clearer situation will appear in the second half of April.” – Partner from Kyrgyzstan

“As of 16 March 2020, our business continue as usual. We have not seen impact on loan payment yet across Cambodia include Siem Reap and Phnom Penh. However, we would expect some increase in Siem Reap from end of this month onward. Please note that our client are mainly living in rural areas. The exposure has on Tourist, hotel, services industry is minimal.” – Partner from Cambodia

Coronavirus is going to have an impact on liquidity needs. According to our survey, 29 MFIs (52%) forecast a change in their needs. Most Tiers 3 MFIs do not forecast changes as the time, as a majority of Tiers 2 MFIs (17 MFIs) do forecast such changes. MFIs expect problems on the funding side. In particular, hedging issues are expected, and discussions with all the different lenders are initiated.

“Mainly, the exchange rate has been very volatile, indirectly due to the epidemic, and this causes new disbursements in USD to exchange to less local currency which has affected the number of loans we can disburse” – Partner from Myanmar

Liquidity problems are also anticipated. Indeed, non-repayment could be a barrier to the possibility of disbursing new loans. Rising provisions for risk and potential losses is also a cause of the drought in liquidity.

“if the situation continues up to mid-year, we will need liquidity as most of the liquid assets will have been suppressed by high provisioning for impaired assets (Expected losses) due to increased non-repayment” – Partner from Uganda

“The non-repayment of loans leads to a decrease in liquidity. Yes, we have taken steps to limit a potential situation” – Partner from Mali

Microfinance