More Social Microfinance

MICROFINANCE BAROMETER 2011 2 nd Edition Edito Frédéric Roussel Founder of ACTED

n 2010 French microfinance stakeholders increased their actions: higher numbers of microcredits provided by French and foreign microfi- Inance institutions (+40% for the personal microcredits between 2009 and 2010* in France and +36% abroad), diversification of services such as micro-insurance* (+30%) and the savings products (+34%) and increase in funding supports provided by French donors and investors (+34%). In the same time, the public’s awareness of microcredit and microfinance has also improved: indeed in 2010, 80% of French people had heard of « microcredit», while this figure was 71% in 2009. They have also continued to praise this new solidarity tool (currently, 69% of French people believe that microcredit gives the pos- sibility to step out of poverty, against 62% in 2009) and would be ready to get involved: 19% of French people are indeed willing to make a financial

investment towards organizations Gwenn Dubourthoumieu providing microcredits to the poorest. For two years now, these very encouraging figures of the French general opinion have contrasted For a return to with the sector’s worldwide economic crisis. Microfinance is going through a difficult period due to aggressive commercial practices, more social microfinance over-indebtedness of beneficiaries, difficulties encountered by some of icrocredit, mira- and reports of violence towards credit Barometer of Microfinance presents recommendations of several actors on the microfinance institutions in cer- cle or disaster?”, agents, microfinance has entered a special report aimed at clarifying the crisis and their various responses. tain countries, as well as increased « “Microfinance in cri- a phase of turmoil. Such criticisms the current situation of microfinance criticism from the media. After 30 sis”, “Microcredit are in contrast with the sector’s and the responses that microfinance years of existence and a tremendous turns to tragedy”… long-lasting optimism, which usually actors are putting together to facilitate performance (190 million beneficiar- ForM several months, successive arti- presents microcredit as a miracle a greater social impact. These answers SPECIAL ies including 128 million impover- cles denouncing the escalation of solution to poverty, embodied by the include labeling, social performance ished people), the microfinance sec- microfinance in certain countries Nobel Peace Prize recipient Professor transparency, responsible investment REPORT tor is currently paying the cost of its have been accumulating in French Muhammad Yunus and the Grameen practices, client protection, regula- success and is starting a questioning and international press. From exces- Bank in 2006. Between idealism and tion, products for the poorest, etc. See vvv page 5 process. sive debt to overly high interest rates excessive criticism, this year, the page 5 to discover the opinions and Convergences 2015 and the Microfinance Barometer have decided to engage in this questioning process. In addition to data, useful information and articles of analysis, this publication of the Barometer Interview IPSOS Survey includes a special study on the ways to return to a more “social” microfinance. The special feature contains a range of articles explaining the sec- Michel Barnier What do the tor’s good practices as well as stake- European Commissioner for holders’ efforts to refocus on their French think original assignment: poverty allevia- Internal Market and Services tion through the financial inclusion of the poorest. of microfi- Meanwhile, Convergences 2015 is launching numerous initiatives and …microcredit can nance? is actively taking part in the sector’s improvement process: setup of focus not“ only restore their groups, support provided for studies Cyril, potter, on microfinance’s crisis and its good individual dignity, but also create an funded by Adie practices, the organization of confer- ences and workshops and finally, the economic activity which is beneficial for launch of the « Paris Appeal » campaign for a responsible microfinance the whole society… (see last page). „ vvv continued on page 10 vvv continued on page 4 This second improved publication Romain Joly of the Barometer aims to help you better understand the instrument of microfinance, its success as well as Table of contents its limits and questioning positions. ID-Ghana: Social Microfinancev p. 2 Mapping the actors of microfinancev p. 3 IPSOS It also includes a mapping of the sec- Exclusive Survey – What do the French think of microfinance?v p. 4 REPORT: A better understanding of the flaws of microfinancev p. 5 tor’s stakeholders and of recent indi- Under what conditions can microfinance be virtuous? vp. 5 What has been done to regulate the microfinance sector? vp. 6 Mutual cators. For further information, or in order to join these different initia- Solidarity vp. 6 Portraits vp. 6 Guaranteed bank microcredit vp. 7 Individual microcredit vp. 7 SURVEY – French actors in international tives, please contact Convergences microfinance vp. 8 SURVEY – Microfinance in France vp. 9 Interview with Michel Barnier vp. 10 Glossary vp. 11 The Paris Appeal for 2015 on the following website: responsible microfinancev p. 12 www.convergences2015.org

*See glossary on page 11 2. MICROFINANCE BAROMETER 2011 A brief history of microfinance Definition of microfinance 1462: An Italian monk named Barnabé 1880: In France, Father Ludovic de 1988: In France, Maria Nowak de Terni sets up a charitable institution, Besse sets up People’s credit unions, creates the Association for the right to The poor need a variety of financial services, not just Monte di Pietà, to fight usury. of which Cooperative Banks are an economic initiative (ADIE). loans (…). offshoot. In the years that follow, Just like everyone else, poor people need a wide range of finan- 1653: Lorenzo Tonti, an Italian the French State launches the Crédit 2005: The year is declared cial services that are convenient, flexible, and reasonably priced. financier, sets up a new savings system Agricole, based on the Raiffeisen model, International Year for Microcredit by Depending on their circumstances, poor people need not only in France – an association of savers. He as an attempt to reorganize and support the UN: the motto being “Building credit, but also savings, cash transfers, and insurance (…). will then give his name to the Tontine the agricultural sector. inclusive financial sectors to achieve system. the Millennium Development Goals”. Microfinance means building financial systems that 1970’s: Following the failure of serve the poor. 1720: In Dublin Dean Jonathan Swift rural development funds financed by 2006: The Nobel Peace Prize is given Poor people constitute the vast majority of the population in most is the first person to lend small amounts international aid and various states both to Professor Muhammad Yunus developing countries. Yet, an overwhelming number of the poor to poor craftsmen of the city. in the 1950s, savings and cooperative and the Grameen Bank. continue to lack access to basic financial services (…). credits start emerging in developing 1864: Friedrich-Wilhelm Raiffeisen countries. The implementation of 2009-2011: Following several Microfinance is a powerful instrument against pov- forms the first cooperative credit group experimental agreed microcredit localized crises, various initiatives are erty. in Rhineland, Germany. Its objective is programs to groups of poor women: launched to reinforce the supervision, Access to sustainable financial services enables the poor to to offer cooperative financial guarantees in India (SEWA), Brazil (ACCION transparency, and performance of increase incomes, build assets, and reduce their vulnerability to to banks so that poor farmers can have International) and in Bangladesh microfinance institutions (Social external shocks. Microfinance allows poor households to move access to credit. (Grameen Bank, created by Muhammad Performance Task Force, Smart from everyday survival to planning for the future, investing in bet- Yunus who, in 1976, granted $27 USD of Campaign…). ter nutrition, improved living conditions, and children’s health and his own money to a group of 42 women education. in Jobra, Bangladesh).

Microcredit is not always the answer. Microcredit is Exponential growth in the number of microfinance clients in 15 years not appropriate for everyone or every situation (…). In many cases, small grants, infrastructure improvements, employment and training programs and other non-financial services may be more appropriate tools for poverty alleviation (…). Such non- 200 financial services should be coupled with building savings. 150 Number of customers earning more than $ 1.25 per day (in millions) Extracts of : Key Principles of Microfinance, CGAP, 2007. 100

50 Number of customers earning less than 0 $ 1.25 per day (in millions) 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Source: State of the Microcredit Summit Campaign Report, 2010.

ID-Ghana: Social microfinance for the poorest families in Accra

keys to the continuation of the pro- is borne out by the experience of An original MFI on the gramme. The most dynamic women Entrepreneurs du Monde, which pro- microfinance landscape direct their unfortunate neighbours to vides ongoing support to some fifteen of West Africa the MFI with even greater ease. The organisations such as ID-Ghana in ten credit provided is clear and has no countries. ID-Ghana is a Ghanaian microfi- hidden costs: a monthly interest rate The Ghana experience has also nance organisation that has received of 3%, which has fallen consistently in been used as a model in other coun- technical and financial support from recent years; no collateral and a mini- tries in West Africa: Amenovi at VEG in the French association Entrepreneurs mum monthly saving requirement of the Volta region, Tovi Nonvi at ALIDE du Monde since 2003. Based in Accra, 2 Ghana cedis (€1) that pays interest in Benin, Zaska Vim at LSK in Burkina it has 8 agencies and close to 40 staff at 5% per annum; free weekly training Faso, etc. Each year, a regional meet- that provide finance to 6,000 benefi- and social assistance; and a valuable ing between the MFIs supported by ciaries. incentive to join the national social Entrepreneurs du Monde allows it to ID-Ghana provides traditional security system, with the programme increase its number of initiatives and financial services (savings and loans) assuming 50% of the cost for the first adapt them to the local context. The which are an integral part of a holistic year. philosophy remains the same: a social approach: economic and social train- and global approach to microfinance ing and subsidised access to national A philosophy that serves to ensure the independence of benefi- health insurance. While this approach ciary families in the long-term. is expensive for supporters of micro- as a model finance that generate high returns on investment, for ID-Ghana, it guar- Mutual assistance is also at the antees support suited to the poorest heart of the work of the team at LAETITIA RAGINEL families. ID-Ghana, in particular of loan offic- ENTREPRENEURS DU MONDE lefe, on the outskirts of than 50,000. A former fishing village The team at ID-Ghana and the fami- ers and trainers: the former direct peo- 1The average size of a loan is €149 and 4-6 Accra, capital of Ghana. swamped by the increasing urbani- lies that benefit from its services have ple experiencing difficulty to the lat- months’ duration. Were it not for the clock sation of the capital, the sea can no only one word on their lips: onipa ter, who can provide them with advice. tied to the tree and the wad longer feed its people and its inhabit- nua, or mutual assistance in Twi. In All are aware that the beneficiaries’ of notes carefully piled up ants are turning to small businesses, practical terms, borrowers are not new-found stability is fragile, and that Gon a small table in the shade, it could such as hairdressing or selling food in required to provide collateral. Each microcredit is but one tool among be a meeting between neighbours. the street to earn a living. week, they meet in their district in many with which to combat poverty. In one corner, there is a metal bowl While 96% of ID-Ghana’s borrow- groups of 15 to 30 people to deposit ID-Ghana’s holistic approach to brimming with plastic flip-flops and ers are women, William can person- their savings, repay their loans and microfinance is toothbrushes, a small glass box full ally vouch for the usefulness of credit attend a 30-minute training session. unique in this con- of dried fish… some twenty women extended to men. At just 30 years of This practice has a number of advan- text: very few insti- and a few children are sitting in age, he was one of the first borrowers tages: it is conducive to the cohesion tutions are prepared the shade. Every Monday at 9 AM from the Glefe agency. Thanks to the of the group, the inclusion of the poor- to provide this social the group Anoyinting, whose name agency he was able to switch to new est members of society and the shar- support without pay- means “God bless you” in the local employment, first as a pedlar and now ing of experiences, as well as rigour ment, yet it is pre- Twi language, meets with Francis, as a grocer. Next to him is Evelyn, who in financial management. Yet when cisely this support the loan officer from ID-Ghana. arrived from the provinces at 17 and it comes to the size and duration of that is most needed This week, Godknows, the head of who, like many young mothers, found its loans, ID-Ghana remains flexible.1 by the very poorest. the social mission is also there to it difficult to earn enough to meet The repayment rate of 98.6% (January The ID-Ghana provide training on cholera while her family’s needs. Through word of 2011) would be the envy of many a example shows that Francis and the leaders of the group mouth, she heard about ID-Ghana. banker. This success is due in par- social microfinance collect weekly savings and loan She is now on her sixth loan from ticular to regular follow-ups by loan has a future. Thanks repayments. A child hums a nursery ID-Ghana, and has been able to diver- officers, who know their customers to a methodology rhyme learnt at school to the same sify her stall in the neighbouring mar- personally and visit them at home and like Onipa Nua, social tune, “Mama, we are clean, the chol- ket. A bit further away, Agatha earns a at their place of employment, but also MFIs are on aver- era is scared of us”. In 2 months, living from the small stall she has set to the rigour of borrowers, who attend age viable after five 638 new cases of cholera have been up in front of her house. Having left 4 training sessions before receiving years, with interest recorded in Ghana. for the provinces several years ago, their first loan and comply strictly income that meets all The district of Glefe is a shanty- she immediately turned to ID-Ghana with deadlines for repayments. costs, including those town trapped between the sea and to relaunch her business upon her For ID-Ghana, this commitment that are inherent to the lagoon with a population of more return to Accra. from its beneficiaries is one of the social activities. This

*See glossary on page 11 MICROFINANCE BAROMETER 2011 3. Mapping the actors of microfinance

Throughout the world, microfinance activities are carried out by organizations commonly called microfinance institutions (MFIs)*. They operate within a sector which has structured itself around them. This sector involves such a large number of actors that it is sometimes difficult to know who is doing what. It is nevertheless possible to classify these actors into 3 categories: support services, the State and donors.

Support Services start ups), commercial loans or warranties (collaboration between ■■These specialized organizations MFIs and commercial banks). They State: legal and scal framework, and incentives are NGOs or research departments have also contributed to the train- which have developed a specific ing and reinforcement of the sec- expertise on microfinance. They tor as a whole and more particu- often play a decisive role at the time larly to professional associations, Donors Lobbying of the launch of MFIs, as well as dur- networks, administrative authori- ing the implementation of specific ties (States, central banks and law Public tasks such as institutional transfor- makers). They have also accompa- donors mation or the development of infor- nied the emergence of a part of the Support services mation systems. There are 2 types of private sector, which was dedicated Funding interventions: either through consul- to financing microfinance activi- tancy work to the management body ties, through the creation of spe- Specialized financing funds of the institution (technical assis- cialized funds (see below). These tance), or as directly taking on the donors will still have an important Specialized management of the MFI for a few role to play in ensuring the suc- organizations years (as an operator). cess of microfinance, for instance Private in financing and supporting medium investors ■■The aim of MFI networks is to size MFIs and in stimulating supply Commercial Networks disseminate information, share best in poorly reached areas. banks of MFIs practices and ensure greater transparency. There are various types ■■For a number of years now, of networks: partnering of profes- various commercial banks have Funding Technical sional entities within one country, shown a real interest in microfi- Exchanges international partnering of MFIs nance. They first started to get assistance who share the same philosophy, or involved at the local level by pro- finally MFI networks which have viding funding directly to MFIs. been created by specialized organi- They were thus addressing a need MFI zations. to re-finance MFIs, while accessing new markets which constituted a Services real opportunity. Nowadays, many The State banking groups in Northern, as Clients well as Southern countries, both at In every country, the State has a local and international levels, have crucial role to play in setting up a adopted specific strategies in rela- From the Guide of Microfinance Editions Eyrolles, 2009, by authorization of the editor. legal and regulatory framework of tion to microfinance. Nevertheless, microfinance activities (including the levels of involvement may vary monitoring the collection of sav- from simple short term loans to ings, fixing interest rates, applica- long term investments on capital. resources in Northern countries financial tools as well as new types important to mention MFI clients, ble taxes, and consumer protec- These interventions are indeed con- and invest them in MFIs in Southern of actors. Their emergence is linked whose satisfaction is the final goal tion). The State can also directly ditioned by the level of profit that countries either through loans or in to MFIs’ increasing needs in terms of all these actors, and who play a intervene in the microfinance sec- the MFIs are expected to make, and capital. The funds allow the devel- of funding, highly specialized finan- defining role not only as borrowers tor either through specific policies commercial banks focus their atten- opment of financial and analyti- cial competencies, and increasing but often as savers. They constitute aimed at structuring the sector or tion on the most profitable institu- cal competencies that are specific knowledge on microfinance among the most important source of fund- via refinancing activities through tions. Beyond the fads and the need to microfinance. Of course, these the public. These tools can be for ing for microfinance in the world. public banking. for communications, the participa- can either be motivated by social instance specialized rating agencies tion of banks is necessary and must or commercial objectives, depend- (who evaluate MFIs’ performance be consolidated with time. ing on their approach. It has been on behalf of potential donors), JÉRÉMY HAJDENBERG noted that, similarly to commercial online microcredit platforms (peer INVESTISSEUR ET PARTENAIRE Donors POUR LE DEVELOPPEMENT (I&P) ■■Specialized financing funds banks, these often invest in MFIs to peer online websites which allow ■■Public donors have played and emerged at the end of the 1990s which are usually the most success- individuals to lend small amounts continue to play an important role and have grown considerably ful and profitable. However, we can directly to micro-entrepreneurs) as Lists of actors by categories (as well as in structuring the sector. Funding since. Firstly supported by public now see more and more specific well as fund management compa- their webpage) are shown in section 3 is either directly given to MFIs, donors, these funds have become funds dedicated to some areas of nies (which manage investments of of the Guide to Microfinance, Editions to specialized organizations or to the main vector of private invest- Africa and South-East Asia, target- specialized funds). Eyrolles, 2009. financial microfinance funds. These ment in microfinance. They rep- ing medium sized MFIs which had donors or “public funders” can pro- resent more than half of the total been ignored until now. The microfinance sector is there- vide support through grants (for international funding for the sec- fore composed of an increasingly training and technical assistance tor and in 2009, they represented ■■Finally, we have also been notic- important number of actors. In to MFIs), concessional loans, (MFI around €1.5 billion. They attract ing the emergence of sophisticated order to complete our analysis, it is

In numbers Microfinance in the world today

190 million borrowers Including 128 million impoverished people 641 million beleficiaries 74 % of borrowers are women €200: is the average amount of savings €300: is the average amount of microcredit in developing countries

Source: Mix Market & State of the Microcredit Summit Campaign Report, 2010 ACTED

*See glossary on page 11 4. MICROFINANCE BAROMETER 2011

IPSOS exclusive survey What do the French think of microfinance?

The first survey on the opinion of French audiences on microfinance, published by the first Barometer of Microfinance in May 2010, revealed that microcredit was seen in a positive The French want microcredit to be further developed light by the general public, even though some French people in France… cited certain limitations and dangers to this system. What is the situation a year on? Has microcredit become Do you believe that the microcredit system should also be developped for better known? Is this system still seen in a positive light? the poor, the socially excluded and the unemployed in France who wish to create and/or develop a business? The survey, conducted by Ipsos/Logica Business Consulting, for the 2011 Barometer of Microfinance from March 4-7, 2011, offers a new assessment on the perception of microfinance in France based on a sample of 1,015 French people.

Absolutely 28% 20%

45% Somewhat 2011 agree 52% 2010 The reputation of microfinance in France Somewhat 19% Have you heard of microcredit? disagree 19%

8% Absolutely 9% not

Yes 30% 2011 22% 2010 ■■As a consequence of the positive reputation of microcredit among the general public, three-quarters of French people (73%, up 1 percentage point) would like to see it devel- 50% Yes, vaguely oped in France for the poor, people who experience social exclusion and the unemployed 49% who wish to set up or develop their own business; 28% of respondents (up 8 percentage points) even said that they are “absolutely” won over by this idea. 20% No 29% Imagine you need a loan tomorrow to develop or set up your own business. In your opinion, would it be easy or difficult for you to obtain this loan? ■■Microcredit has become rather well-known since 2010. Four out of five French people (80%) now say that they have heard of microcredit, up 9 percentage points from a year ago. More significantly, this increase in prominence has been accompanied by a more widespread accurate understanding of the concept. Thus, 30% of respondents stated that 2011 they knew what it was, 8 percentage points more than 2010, while the number of people 39% 2010 who have heard of it, but who do not really know what it is, remained unchanged (50%, Easy up 1 percentage point). 36%

Difficult 61% 64%

Is microfinance a solution for poverty and exclusion? ■■The granting of microcredit is seen as all the more necessary given that six out of ten people (61%) still believe it would be difficult for them to obtain credit to develop or set up a business in France. While this sentiment was slightly less widespread than in 2010 Do the following comments reflect your point of view? (down 3 percentage points), it must be acknowledged that a vast majority of French people continue to believe that access to traditional sources of credit is problematic when it comes to establishing their own business.

2011 Yes % 2010 Yes 80 76% 70% 72% 70 69% 62% 60 50% Prepared to engage? 50 47% 46% 41% 40 30 If tomorrow you were to make a financial gesture to help the poor in 20 France or overseas, which of the following methods would you prefer? 10

Microcredit Microcredit is Microcredit Microcredit is Microcredit gives its an innovative allows the a dangerous interest rates are beneficiaries solution to poorest to solution because too high Lend money to organisations that a sense of poverty and escape poverty it involves provide microloans to the most responsibility exclusion in the lending money impoverished by providing world to people 19% them with the who are not means to meet creditworthy 39% their needs Donate to an organisation that themselves combats insecurity among the most impoverished ■■ The reputation of microcredit, which to a large extent was already positive in 2010, improved in 2011, despite crises in the sector that became the subject of particularly intense media 42% Invest in a solidarity-based coverage. However, the positive opinion held by French people of the founding principles savings product of microcredit was reinforced: 76% of respondents expressed the view that microcredit gives its beneficiaries a sense of responsibility by providing them with the means to meet their needs themselves (up 6 percentage points), while 72% said that it is an innovative solution to poverty and exclusion in the world (item tested for the first time this year). 69% of respondents said that they believed it allows the poorest to escape poverty (+7 points). ■■Donations to organisations that combat insecurity remain the preferred method among As in 2010, however, respondents pointed out a number of limitations of this system, French people to help the poorest sections of the population in France and overseas (42%). albeit in smaller proportions: 47% believe it is a dangerous solution, since it consists of Yet French people are also receptive to other less traditional modes of support: one out lending money to people who are not creditworthy (down 3 percentage points), while of five (19%) would lend money to an organisation that provides microloans to the most 41% indicated that this type of credit is provided at interest rates that are too high (down impoverished, while 39% would prefer to invest in a solidarity-based savings product. 5 percentage points). Questions in relation to this system remain, but arguments against Close to two-thirds of respondents would consider a financial contribution other than a microcredit have less support than a year ago, a sign of the positive light in which micro- traditional donation. credit is seen by the public.

*See glossary on page 11 MICROFINANCE BAROMETER 2011 5.

SPECIAL REPORT Towards more social microfinance

This year’s Barometer of Microfinance presents a specific focus to clarify where the microfinance industry stands today and what are the answers microfinance actors are developing to allow for greater social impact.

A better understanding of the flaws of microfinance 3 questions to Jean-Michel Servet, Professor at the able governance within microfinance of microfinance institutions: it does needs of the populations. Finally, it is institutions is important. Shareholders not make sense to have 16 institutions important that we monitor social per- “Institut des Hautes Etudes Internationales et du and investors have a role to play with concentrated in one area and none in formance and therefore that we have Développement (IHEID)” and Xavier Reille, Head of a two-fold vision of both financial another for instance. Authorities must reliable measuring systems in place. performance and social impact. Early also provide a framework for interest microfinance, CGAP/World Bank 2011 for instance, 40 investors signed rates. We can indeed notice that in J-MS: Firstly, it is one that offers an accountable investment charter some areas these can be very high in products which better address the in Holland. Besides, more regulation comparison with the resources being needs of the populations. That is What are the causes of should be in place. These crises have generated. It is indeed possible to products that are better adapted ask ourselves why clients stop reim- demonstrated that microfinance can- have 50% interest rates in some areas to clients’ capacity to pay and their microfinance’s flaws in your bursing. The first reason is excessive not be completely regulated by the if people make business operations mental capacity to figure it out them- view? debt. Some clients play around with market and that there is a need for which generate 100%. However, if one selves. Secondly, it is important that Xavier Reille: The crisis recently competitiveness: which means that regulation, particularly of interest borrows at a rate of 25% for a project we don’t see microcredit as a miracle experienced by microfinance is linked they reimburse by borrowing from rates and practices. Transparency which brings in only 8%, one becomes remedy which will generate extraordi- to the excessive search for gain, other institutions. It is a vicious cir- should also be improved. There are impoverished and this is embarrass- nary returns on investment. Thirdly, it uncontrolled growth and lack of reg- cle, bound to collapse at some point. already 350 microfinance institutions ing. In times of crisis, institutions is important to know that microcredit ulation. Microfinance has been a vic- Moreover, the income of this popula- and 80 investors which report to must also be smart and reconsider the is not only dedicated to fight against tim of its own success. The sector has tion is weak. Take Nicaragua, where CGAP (Consultative Group to Assist loan repayment plan. If people can- poverty, it also targets financial exclu- grown very fast, with annual growth the strong decrease in income from the Poor) on their social performance not reimburse because of floods or sion, which is essential given the con- rates of 30 %. We can now observe the meat sector has affected the global and it is important to continue along droughts for instance, we must adapt. text of financialization. Microfinance that some institutions and investors income. In turn, this has made reim- this path. Finally, structuring the In order for microfinance to work, can also address the needs of people have favored profit making over the bursements difficult. Microfinance market is important to avoid clients’ it is important to reach a balance who are not poor, but who do not quality of services provided. We have has nothing to do with these causes. excessive debt. Credit bureaus would between market place, public sector have access to financial services. also witnessed the emergence of new The second phenomenon is linked allow a better assessment. and social rules. If we are unable to investors whose vision has been to to market saturation. In Morocco articulate these 3 areas, none of them maximize profit. for instance, clients have had a very J-MS: Solutions cannot be applied can function on their own in a sus- However, it is important to remem- good relationship with microfinance. everywhere in the same way. We are tainable way. ber that these crises are localized in However, they have now reached the talking about credit bureaus. For countries such as India, Bosnia and level they wished for. We were wrong instance, some elements show that How can we define social Morocco, and that they are not seen in thinking that because of impor- this can work in Morocco. This is microfinance? everywhere. tant growth rates, clients would have because people generally hold identity wanted to indefinitely increase their papers and because informal finan- XR: Social microfinance is one which Jean-Michel Servet: Firstly, we turnover, but that is not the case. cial systems are not very developed. has sensible and measurable objec- need to define what is meant by the On the contrary, India, where 70% of tives of social, financial and environ- crisis of microfinance. It refers to the What answers and solutions loans are given by private lenders, is mental performances. Beyond these increase in unpaid amounts, mean- should be put forward? setting up credit bureaus which is not 3 objectives, social microfinance ing that clients do not reimburse, an efficient solution. In this case, sup- can also be defined by the services putting microfinance institutions in XR: Solutions can be found at differ- port must be provided by the public it offers. It should go further than great difficulty. We should therefore ent levels. First of all, more account- sector and by authorizing the opening providing credits, to address the real

Performance standards to reassert base principles of Under which conditions can microfinance

Through the SPFT, “universal social microfinance be virtuous? performance standards” are currently being defined in a way to protect against drifts towards excessive com- n the new millennium, the has been able to identify the risks tutions to achieve their social objectives, dering clients and to follow principles of mercialization, motivated by profit microfinance sector has been of its activities and has worked on according to four criteria: consumer protection (as minimum stand- making alone. The maturity of micro- given increased attention. This the conditions of virtuous microfi- ■■targeting the poor, ards) which avoid the risks of debt, pro- finance calls for controlled growth, is as a result of its own suc- nance. In this context, various initia- ■■adaptation of services, mote interest rate transparency, employ- reasonable financial returns, cost lev- cess (increase in the number of tives, brought together in networks ■■client capacity building, ees’ ethical behavior4 as well as clients’ els in line with the service provided Iclients, targeting vulnerable popula- such as the “Social Performance ■■social responsibility (towards data confidentiality. Beyond the “do no and clients’ capacity to reimburse. tions, promoting entrepreneurship, Task Force”(SPTF)2, have devel- employees, clients and the environ- harm” social responsibility approach, Microfinance must continue to rest etc.) but also because of the media oped approaches and innovate tools ment). the microfinance sector is now aiming at solidly on the principles which have attention portraying it as a tool to in order to assess and improve the having a positive “do good” impact on its made the sector and its fame: proxim- fight poverty. This has allowed the social performances of microfinance. The two other types of tools empha- clients. The sector is developing a range ity, inclusion, client protection, trans- sector to develop and professionalize Disseminating these innovations now size more specifically the results of services adapted to the client (cred- parency and adaptation of the range itself. At that time, microfinance insti- allows the reinforcement of social achieved by the clients: poverty assess- its, but also savings, insurance and non- of services. These discussions are on- tutions were seen mainly as ‘social’ strategies and offers solutions to face ments and impact studies. These tools financial services). The aim is to address going. All these tools and approaches actors and one would evaluate their these criticisms and identified risks. allow the assessment of poverty levels the different needs of households and provide a road map of the sector and success by analyzing solely their according to international poverty stand- micro-entrepreneurs to reduce clients’ allow the promotion of virtuous prac- financial performances. Nowadays, The conditions of a ards and enable the follow up of a house- vulnerability and to support them in tices in a transparent manner. there is increased criticism1 around virtuous approach to holds’ living standards to make sure the the various stages of their lifecycle. The the sector notably around excessive microfinance range of services offered meet clients’ goal of microfinance is to reach clients debt, lack of transparency of rates, expectations. that have been excluded from the clas- CECILE LAPENU services’ limited impact, etc. One Social assessment tools aimed at sical financial system using specific & FLORENT BEDECARRATS CERISE can therefore reflect on the condi- greater transparency: Approaches on the strategies. It also ensures the good use tions under which microfinance can There are four main types of tools management of social of services through financial education 1 See Esther Duflo, «Microcrédit, miracle ou désastre ?» Le Monde, 11 January 2010, or Isabelle Guérin, Solène be virtuous. which address each step of the social performances in order to and brings about positive changes on Morvant-Roux, Marc Roesch, Jean-Michel Servet, « Faut-il assessment and complement the finan- improve the impact on the socio-economic conditions of the aider une microfinance « lucrative » ou une microfinance cial assessment. Two of these assess the targeted population. Reinforcing social « éducative » ? », Le Monde, 13 December 2010. A collective analysis of clients 2 See http://sptf.info the sector on the stakes of internal processes of MFIs: audits and performances allows the consolidation 3 This tool, along with many other methodological guide- its social performances social ratings. These tools, such as the Beyond these assessment tools, the of financial performances; this ensures lines on the evaluation of social microfinance, governance, institutions, etc. are available on www.cerise-micro- Social Performance Indicators (SPIs) microfinance sector has also been look- the faithfulness of clients who are better finance.org The microfinance sector has now which were developed by CERISE3, ing at improving its practices. First and served and better prepared to use finan- 4 See the SMART Campaign website: www.smartcam- matured and for some time now, it assess the actions implemented by insti- foremost, the aim has been to avoid hin- cial services. paign.org

*See glossary on page 11 6. MICROFINANCE BAROMETER 2011 SPECIAL REPORT

What has been done to regulate the microfinance sector?

n terms of financial regulation, subsidisation of rates and a manda- often translates into: ference, and a trend in certain coun- ■■Retailers (service stations, pharma- microfinance consists of the tory cap on rates is inadvisable. The ■■Refocusing on three incorporation tries to strongly encourage mergers, cies, etc.) that complement traditional provision of banking services study of regulation is full of examples structures: the association (which in with mixed results (Brazil, Mexico, agencies in the provision of certain (i.e. standard loans, the receipt of full or partial caps on interest rates general is confined to microloans), West African Economic and Monetary services (such as deposits and with- of funds from the public, finan- charged on microloans where they the limited liability company and the Union, etc.). drawals); Icial intermediation and certain means have remained capped in the “tradi- cooperative, and the removal of insti- ■■Institutions that specialise in pay- of payment). Regulating this sector tional” banking sector. tutional patterns that are unsustain- Another trend is toward the integra- ments, in particular payments via involves posing questions about the able; tion of MFIs into the financial land- mobile phone, and mobile telecom adaptation of financial legislation to Renewed interest in ■■More stringent conditions for access scape, which sees supervisory bodies: operators themselves. these operations, which are unique mutual financial systems (share capital, proof of financial viabil- ■■Facilitate ties with the banking sec- due to their size, customer base and ity, quality of organisation, etc.); tor (refinancing, the acquisition of In general, the impact of information modus operandi. In some cases, savings and lending ■■The reinforcement of rules on finan- shares in banks); technology on methods of operation cooperatives, which in many cases cial transparency, which increases the ■■Expand bank risk agencies to MFIs is growing, a fact to which regulators Deregulation of maximum have existed for several decades, financial software and IT infrastruc- and consumer finance companies, and supervisory bodies are not indiffer- interest rates have been the big winners in terms ture requirements of MFIs; with this expansion accompanied by ent. This phenomenon has forced them of regulation from the renewed media ■■Greater emphasis on solvency the will to exercise better control over to adapt to these innovations, which In proportional terms, a microloan interest in their activities. In some (equity/assets ratio) and the protec- client debt levels. improve the traceability and recording costs more to manage than a larger areas, the supervisor has even noted a tion of deposits (deposit guarantee of operations but engender new risks loan (or loan secured by a salary) and degree of tropism within mutual finan- systems); Microfinance is experiencing a that are at times not properly under- is more expensive than a bank loan. cial systems. ■■The establishment of anti-launder- gradual shift in its semantics towards stood. As a result, there is no ongoing micro- However, in a number of countries ing mechanisms to prevent MFIs from those of the extension of banking finance provided at a rate of interest and zones the main trend is towards unwittingly becoming tools for laun- facilities in the broader sense, a shift that is comparable to those charged by the consolidation of the sector and dering dirty money or financing crimi- that includes new frontiers (remote retail banks, unless the State provides the necessary reinforcement of gov- nal activity; banking and mobile banking). This LAURENT LHERIAU an ongoing subsidy out of budget ernance and management tools. After ■■Greater attention to the mutual has prompted intervention from new funds. Except where indicated other- years of experimentation within and microfinance sector, with closer super- actors in regulation that is at times wise, the approach that involves the the rapid growth of the sector, this vision, independent of political inter- incomplete:

savings and the emergency funds, sector. Mutual Solidarity groups members’ vulnerability is reduced. Because Musos manage their own The way in which credits are granted funds, they run a risk of being drifted responds adequately to members’ away from their own objectives or social, financial and decentralized organizations needs as it is discussed between mem- being implemented in an unsuitable bers (in some cases however, i.e. with way; this would be a source of failure ow can credit be accessed based on rules that ensure flexibility at the general assemblies (frequency medium terms investments, amounts and conflict. This is why a regular and in rural and vulnerable and simplicity whilst guaranteeing the and amounts for the two contribu- cannot cover all needs immediately). rigorous monitoring of Musos is essen- areas when the supply is good use and security of funds. The tions, attribution of credits, participa- Besides, the repayment rates of this tial for long term success. The local not adapted to the needs system is based on three specifically tion in the payment of the fees, use of system are very high. The financial Muso promoting institutions have (credit granting condi- identified banking systems: the red fund…) dynamic thus created can be impres- contributed to its success through Htions, delays, costs, etc.) or is inex- Two factors have facilitated the sive: in the conflict-stricken region of their understanding of the context istent (remote areas, political crises, ■■A green fund collects members’ dissemination of this tool: firstly the Kivu in Eastern DRC, the 30,000 mem- they work in and thanks to the field etc.)? contributions - its cumulative amount advantages that it offers (simplicity, bers of the Musos have been able to animators who ensure regular moni- Mutual Solidarity groups (Muso) constitutes the credit funds. These decentralization, self-management save two million USD in 8 years. The toring. In 15 years, Muso has proven are an innovative response to this savings can be recovered, for instance and easy appropriation), and secondly Musos have even become the main its financial and social use, notably in problem. While being a tool for coop- at the time of retirement. the fact that the system involves local shareholders of their refinancing fund, rural, crisis-ridden areas. The search erative financing, it is also a sup- ■■A red fund collects non recoverable “promoting” institutions. Nowadays, created with SIDI. for full, financial, social and institu- port group. In 1995, Senegalese rural contributions and is used as an emer- there are more than 5,000 Musos regis- From an organizational and social tional viability is now the main prior- organization UGPM (Mekché union of gency fund (in case of fire, disease…). tered across eight countries (Senegal, point of view, the operating principles ity of these promoting institutions and farmer groups) set up a banking system ■■A blue fund collects external refi- Burkina Faso, Mali, Rwanda, Burundi, and repetitive nature of the activities has been collectively reaffirmed at the inspired by the tontine scheme. This nancing funds, if applicable. DRC, Madagascar and Haiti), with make Muso a tool that aids both struc- global workshop on Muso organized in system also allowed making additional approximately 100,000 members. tures and organizations. Members December 2010 by SIDI. savings, granting credits which are bet- The rules which have been set up Thanks to this success, various feel full ownership of the tool, and ter adapted to needs and operating as to ensure the security of finances conclusions have been drawn. From this allows them to address problems an insurance and refinancing system. are unbreakable (how the funds are a financial point of view, the fact that which only they are able to identify. LAURENT CHEREAU Muso is a group of individuals from opened, how the accounts are held, this system gives the opportunity In Haiti during the cholera outbreak SOLIDARITE INTERNATIONALE POUR LE DEVELOPPEMENT ET the same village who get together in the separation between the till and to make savings addresses a strong for instance, Muso dipped into its red L’INVESTISSEMENT (SIDI) order to manage a banking system the key). All other decisions are made demand. Moreover, thanks to these fund to pay staff working in the health

Portrait of a micro-entrepreneur in the South Portrait of a micro-entrepreneur in France The revision of Miriam Lema Aulla, Djena, client of Adie, client of Cepesiu and Babyloan.org in Montfermeil pork in a spicy sauce. The situation was however Miriam shares her secret to us: complicated for Djena as she did to “prepare food with love”. Her day not have any funds of her own, starts at 5 AM behind the stoves. She space nor the necessary equip- then goes out onto the street at around ment to start her activity. She did 9 AM to sell cevichochos. She is a cook not have the appropriate “profile” and a street vendor, and she loves both to be able to access credit from jobs very much. traditional banking institutions. With time, she was able to buy a She then submitted her project small cart allowing her to go to differ- to a friend who put her in contact ent neighborhoods of her city every with the French Association for day to sell this traditional dish. In addi- the Development of Economic tion to this, Miriam also has a fixed Derennes Yannick Initiative (Adie). She found some- customer base: 2 schools and a col- one there to give her advice, lis- lege where students and professors Djena is a young single ten to her but most of all to support her wait for her every day. These are real mother tired of living her throughout the duration of her project. “cevichochos amateurs” as this dish is life “in slow motion”. One Today, one year after she opened her filling, very well prepared and above all day, she decided to take her nail shop, Djena has managed to make convivial! life into her own hands. She ends meet and is a shining example of

Babyloan Every day, Miriam sells 150 dishes Dexplains: “I wanted to get off the dole sys- entrepreneurship. She is now settled in of her delicious recipe, at a unit cost tem and off social benefits in general. I Montfermeil, near Paris, and has built a iriam Lema Aulla lives 2010, she discovered Cepesiu, a micro- between $0.25 and $0.50. “I make little wanted to become an autonomous and diverse client base: women, as well as in Riobamba, a town in finance institution partnered with money but I am proud to be an active independent woman.” Djena then started young and older men. At first, she used the center of Ecuador Babyloan, and obtained her first micro- woman who brings an income to the a training degree in nail techniques and her personal network, but then she where this dynamic credit of €380. Seven members of the household,” she says adding that she became a freelance hairstylist. developed her activity through word entrepreneur aged 37 Babyloan.org website believed in her has 4 sons who all study at school, high At that time, she was planning on of mouth and flyer distribution. After Msells cevichocho. She has been a project and decided to refinance her. school or university. opening her own shop but she was one year, she now receives a monthly street vendor from a young age. She was then able to buy chocho not sure how to proceed. She then salary and feels very optimistic about She used to borrow the money that seeds to cook cevichocho. Cevichoco attended training in a management the future of her activity. she needed to develop her activity from is a popular dish, with the specific seed YASMINE HAMRAOUI shop where she learned how to set up BABYLOAN local lenders who were asking her for as main ingredient accompanied with a business plan. This training allowed DanièlE Defert a daily interest rate of 20%. In February banana crisps, grilled corn and fried developing her entrepreneurial spirit. ADIE

*See glossary on page 11 SPECIAL REPORT MICROFINANCE BAROMETER 2011 7. Microcredit support in France

ong-term support provided with the application and often covers to the clients is an essential additional services such as project set and compulsory component up and analysis, investigation of the of microcredit in France. case, administrative assistance, look- It allows the integration of ing up alternate solutions, training in Lmicrocredit through a comprehensive office work or accounting, marketing process of professional and social coaching, legal or management train- integration of often fragile people. ing, etc. Support is tailored to each This process allows beneficiaries to persons’ unique needs, making this become more involved in their pro- French system an excellent exam- ject, to strengthen their independ- ple of good practice in microfinance, ence and skills, to better plan for the linking access to financial services future, and helps them deal with an with a provision of non-financial ser- administrative and legal environment vices, often required for a successful that can be complex. Support is often final project. p rovided by networks which may be non-profit organizations (French Red Cross, Restaurants du Cœur, Secours Catholique), public social services MICHAëL KNAUTE , OXUS (community social action centers, & Emilie Perbost, convergences 2015 local missions) or lending institutions (Adie, as well as major banks with specific services: “Parcours Confiance” of the Caisse d’Epargne savings bank and “Gateway” for Crédit Agricole). Support provided includes, at the very least, assistance

Two original French approaches Guaranteed bank microcredit: Individual microcredit: an original model of an original approach high added value First of its kind, the satisfaction for the new entrepre- Individual microcredit finance partners who release the culated according to “life expec- neur and a new customer for the funds. tancy”, this is why the social and report of the General banker, all with no cost, or the is a financial tool which financial diagnosis which is under- Inspectorate of Finance project stumbles because it is guar- broadens the methods The system’s partner taken at the time when the loan is anteed, and the bank recovers any- associations and banks requested is essential. Indeed, SCF is (GIF) on microcredit, where from 50 to 65% of its stake. used by social workers not designed to guarantee disbursed published in 2010, Bank credit is good: it is at a rea- and volunteers to fight The Caisse des Dépôts, which loans to people in great financial sonable interest rate and it does not is the guarantor of the disbursed distress without repayment capac- confirmed the social and cause the entrepreneur to heavily financial exclusion. loans, facilitates the linkages ity. Individual microcredit is there- economic benefits of rely on the use of personal guar- between associations and banks. fore not a substitute to existing aid antees from family and friends. n France, the creation of the Associations support the borrower schemes. It can, nevertheless, com- microcredit in its different In 2009, 80% of commercial loans Fonds de Cohésion Sociale from the moment they draw up plement them. approaches. obtained through France Active (Social Cohesion Fund, SCF) their file; ensuring that the indi- were at interest rates below 5%, and in 2005 largely contributed vidual microcredit is the appropri- none exceeded the threshold of 8%. to he expansion of individual ate solution for them as it is better Some figures he overriding common This virtuous circle is not a utopia, Icredit. SCF has two main objec- adapted to their budget and project principle is to provide it is an objective reality: last year, tives: one is to allow the creation right from the beginning. After the In 2010, 7,884 individual micro- access to credit to peo- more than 5,700 projects run by of very small enterprises as well as credit is disbursed, the borrower credits were disbursed by credit ple facing difficulties people suffering exclusion were social inclusion enterprises (profes- also receives support which allows institutions, an increase of 40% over who want to start their able to access bank credit through sional microcredit), the other is to him/her to be better prepared to 2009. Financed projects addressed Town business and have seen banks France Active. Since the 2008 finan- promote individual microcredit for face repayment difficulties should mobility needs by up to 70 %. closing their door. While abuses cial crisis, bankers attach particular people who have been excluded they arise. have been committed in Mexico importance to this type of expertise from the traditional banking system Financial bodies which have been In the five years from 2005 (the and India by freeloaders who have and guarantee. Now, traditional and who have the capacity to reim- registered with the SCF enjoy a guar- year the SCF was created by the found a way to charge exploitative channels are more frequently send- burse (social inclusion projects). antee of up to 50% of the losses on State) to 2010, 19 403 credits were interest rates, which have proved ing candidates to France Active, disbursed personal microcredits. disbursed. to be highly profitable, microcredit which explains the 40% increase in The Caisse de Dépôts ensures the Over the last 5 years, calls for (of which Muhammad Yunus was 2010 in microcredit activity. Another management of SCF, as per the con- guarantees have been few and the At least 25 000 financially weak the great pioneer) remains a unique contributing success factor is the vention signed with the State on 5 loss-rate is low (less than 3%). households have benefited from the leverage for lifting men and women zero-interest rate loan to start- April 2005 (Ministry of Employment, scheme in 2010, according to the out of exclusion in France, as in ups that the State has entrusted Social Cohesion, Economy, Finance Individual microcredit, a Caisse des Dépôts , which manages Bangladesh. One of the methods to “Caisse des Dépôts” and which and Industry). If we consider the solution better adapted the scheme at national and regional is the “Guaranteed bank micro- bears the pretty name of “Nacre.” number of loans that have been dis- to the borrower’s project levels. credit”, developed by the France Given only one entrepreneur in four bursed, France is today the European and to their capacity to The website www.france-micro- Active network, with support from starts their venture with credit, leader in individual microcredit2. reimburse credit.org is a tool that was devel- the government, the Caisse des whether bank guaranteed or unre- oped by the Caisse des Dépôts. It Dépôts, the European Social Fund lated to the bank system and man- Individual microcredit […] is a registers all contact details of the and local authorities. The name is aged through non-profit organiza- Strong Regulation loan operation which is destined main support structures manag- complicated but the idea is very tions, microcredit has a bright future. to facilitate the social integration ing individual microcredit in each simple. Where traditional banks Public support for this system is a In order to protect individu- of its beneficiaries and which is French department. refused to open their doors, a win- real investment in economic and als from the risks affiliated with mainly based on the trust gradu- dow is opened with the guarantee of social inclusion, thus decreasing excessive debt, the individual ally built in the support relation- France Active. To achieve this, the social benefits and on the contrary microcredit scheme, guaranteed ship (COSEF 2009 report). CAISSE DES DEPOTS entrepreneur is first advised on the increasing tax revenues and social by the SCF, is based on a strong Five years after the passing of 1 ET CONSIGNATIONS financial part of the “business plan”: contributions. Solidarity and effi- set of regulations. This means that July 2010 French law, this legisla- how much money does he need to ciency can definitely go together. actors, and most particularly those tion on consumers’ credit identifies 1Annual Report of the Microfinance Observatory, start? Will the company generate a of the banking sector, are closely microcredit loans guaranteed by the Banque de France, 2009. decent income and allow him/her to supervised. The Comité de Suivi SCF. Their objective is to facilitate repay the loan? Once consolidated, d’Orientation des Fonds (COSEF – social and professional integration: the project is then reviewed by an CHRISTIAN SAUTTER body in charge of following funds’ employment, mobility, education and independent committee of active FRANCE ACTIVE orientation, provides the main stra- training, shelter, and health; how- and retired bankers and officers. tegic orientations of the scheme ever, these cannot be used for pur- When the project loan is approved, while the Comité d’Agrément chasing debt or credits. it is “France Active certified.” (CAFCS – Agreement Committee) Credits are generally of low Either the project is a success (in decides on whether or not the amounts: between 300 and 3000 82% of the cases), resulting in social State’s guarantee is granted to the Euros. The capacity to repay is cal-

*See glossary on page 11 8. MICROFINANCE BAROMETER 2011

Survey French actors in international microfinance

Each year, Convergences 2015 offers a comprehensive and updated map of French actors of microfinance in the world, investment in the sector, Types of actors: and weight and impact on the international scene of microfinance

■■Investors: Public or private organizations engaged in investments in microfinance institutions in devel- Summary of the action of French actors oping countries can also provide technical assistance. Investments may take the form of loans, abroad by geographical area capital, guarantees or subsidies.

■■Intermediary actors in microfinance: These are actors who provide the technical assistance of the board and ad hoc services to EECA microfinance institutions in developing countries. This may include research, technical assistance, consulting, networking, skills support, financial intermediation, or auditing and scoring.

103 M |15 T |38 APS ■■Microfinance operators: They are actors who control MFIs in developing countries or are in the field to support MFIs MENA in the long term and into the future, notably by helping them become self-sufficient.

LAC 100 M |33 137 M | 266 T | 59 SSA 47 M | 5 T | 92

123 M | 187 T | 109 Intermediaries

Type of services offered by the French intermediate actors (in days/ Investor financing person) (in millions) EECA: Eastern Europe and Central Asia MENA: North Africa and Middle East Number of clients supported by SSA: Sub-Saharan Africa operators (in thousands) APS: South Asia & Asia Pacific Software and information systems 5% 7% LAC: Latin America and Caribbean 9% Number of partnerships established by MM: Millions Management, strategy and governance 10% intermediaries T: Thousands Technical assistance 5% ■■ This map summarizes the geographical distribution of all types of French actors (investors, Client support 9% intermediaries and operators) in late 2010. This map shows the extensive global coverage of Audit and rating microfinance today as the 36 French operators that responded to the survey work on all con- 33% tinents: Latin America, Africa, Middle East and Asia. Networking 22% Research French investors in microfinance Other advice

Amount of outstanding loans and types of funding between 2006 and 2010 ■■In 2010, French intermediaries in developing countries supported the development of 331 MFIs. (in millions of Euros) Most services provided were channeled in the form of technical assistance (33%) and customer support (22%).

€ 600,000,000 541 MF ACTORS € 500,000,000 409 404 € 400,000,000 Number of active savers, borrowers and insured in developing countries between 2006 and 2010 290 € 300,000,000 207 Savers, borrowers, Outstanding € 200,000,000 insured savings and credit 500,000 € 120,000,000 € 100,000,000 450,000 € 400,000 100,000,000 € 0 2006 2007 2008 2009 2010 350,000 € 80,000,000 300,000 Other Capital 250,000 € 60,000,000 Subsidy Local currency loan 200,000 € 150,000 40,000,000 Guarantee Loan excluding local currency 100,000 Subordinated debt € 20,000,000 50,000

2006 2007 2008 2009 2010 ■■In developing countries, French investment in microfinance has increased from €207 million in 2006 to about €540 million in 2010. In 2010, the total amount of microfinance funds found the Active borrowers on 31/12 Outstanding credit on 31/12 path of growth after a mixed 2009 year, where funding flows slightly slowed down due to the Active savers on 31/12 Outstanding savings on 31/12 global financial crisis. Loans represent nearly three-quarters of total investments, while equity investment keeps on Active insured on 31/12 expanding to represent 15% of funds in 2010 against 9% in 2006. It is important to note that the share of loans in local currency continues to decline from 70% ■■The number of beneficiaries (borrowers, savers and insured persons) from French microfinance in 2006 to 31% in 2010, leaving MFIs to greater exposure to foreign exchange risk. actors in developing countries has risen sharply: it increased from about 250,000 in 2006 to over Finally, the increase in grants during 2009 was a temporary response to the crisis, as in 2010 one million beneficiaries in 2010. Over the last five years, outstanding loans increased by 52.2% per the amount of subsidies returned to pre-crisis levels. year, while savings deposits account for almost 30% of outstanding loans in 2010 against 3% in 2006. Finally, in the micro-insurance sector, though at early stages in developing countries, the number of insured people increased from 18,000 in 2006 to over 115,000 in 2010, showing the sector’s high Share of funding beneficiaries growth potential.

MFIs Number of operators that have… 15% Banks Impact studies 2/7 9% Microfinance investment funds Formalized environmental policy 3/7

76% A funded client tracking tool 3/7

Social ratings 5/7

A formalized consumer protection policy 7/7 ■■Direct investments in MFIs correspond to 76% of the total amount invested by French actors. Number of This category includes not only MFIs but also NGOs and cooperatives which are the main operat- 0 1 2 3 4 5 6 7 Operators ing actors in microfinance. In contrast, microfinance banks stand only for 9% of the total. These less numerous actors are usually more financially autonomous given that they are financed partially by ■■Microfinance aims to achieve a double bottom line, financial but also social. To measure social per- local savings. Finally, microfinance investment funds represent 15% of the amounts invested and formance, rating agencies specialized in microfinance have developed specific tools aside from tradi- serve as intermediaries between MFIs and institutional investors who often lack capacity to invest tional financing measurement. We notice that these tools are widely used by operators who have, on directly in the field. the other hand, greater difficulty in setting up formalized consumer protection policies.

*See glossary on page 11 MICROFINANCE BAROMETER 2011 9.

Survey Microfinance in France

Each year, Convergences 2015 also offers an exclusive survey on the development of microfinance in France. It includes key figures on personal and professional microcredit; and, for the first time, an overview of micro-insurance.

Personal microcredit Number and amount of professional in France microcredit loans in France (excluding banks) Number and total amount of guaranteed personal Professional microcredit granted by non-bank operators microcredit granted between 2006 and 2010 between 2006 and 2010

Number of Microcredits Number of Prêts Jeune Avenir 14,000 (PJA) loans € 50,000,000 10,000 € 25,000,000 Number of 12,000 personal 8,000 € 20,000,000 € 40,000,000 microcredit 10,000 guaranteed 6,000 € by the Caisse 15,000,000 € des Dépôts 8,000 30,000,000 (excluding PJA) 4,000 € 10,000,000 6,000 € 20,000,000 2,000 € 5,000,000 Total amount Adie of guaranteed 4,000 personal Crea-Sol – € € 10,000,000 2006 2007 2008 2009 2010 0 microcredit 2,000 CSDL

– € 0 Total amount 2006 2007 2008 2009 2010

■■This graph shows an increase in the amount of personal microcredit*, from 473 ■■We notice a regular increase in the amount of professional microcredit loans provided by micro- to 9782 microcredits in 2010. In the meantime, the total amount of those microcred- credit associations (Adie, Crea-sol and CSDL); from 7,713 loans representing €21.9 million in 2006, its went from €1.1 million in 2006 to €12.6 million in 2009. On the other hand, the to 14,249 loans at €49.2 million in 2009. The slight drop in 2010 is linked to the decrease in Adie’s average amount remained stable throughout the whole period, at around €2,300. number of active banking-excluded loans. The average amount of loans has remained stable at around €3,000, for an average duration of 18 months. Source: Caisse des Dépôts, Records of personal microcredit in the 4th trimester of 2010 and the Barometer of Microfinance 2010 (Adie data) Source: IGF 2009 report (Le microcrédit, Report #2009-M-085-03, IGF, Inspection Générale des Finances, December 2009) and the Barometer of Microfinance 2011 (2010 data)

Share of personal microcredit by purpose in 2010 Professional microcredit guaranteed by the Social Cohesion Fund between 2007 and 2010

Number of Microcredits

€ 200,000,000 25,000 71% Employment and mobility Number of microcredits € 160,000,000 20,000 13% Accomodation Guaranteed amounts € 120,000,000 (Galland Fund, FGIF, FGAP, Education and training 15,000 GGSF, FGIE)

Health € 80,000,000 Amount of loans raised 5% 10,000 10% Others € 40,000,000 1% 5,000

€ 0 2007 2008 2009 2010 ■■Personal microcredit grants in France are mainly for employment and mobility reasons, followed by accomodation. Health only represents 0.8% of uses. ■■In the absence of official statistics on microcredit granted by banks, we opted to present the results Source: Caisse des Dépôts, Records of personal microcredit in the 4th trimester of 2010 of professional loans guaranteed by the Social Cohesion Fund, via France Active. These microcredits are granted directly by banks to persons in need with support from a network of associations. Over 3,800 microcredits were mobilized in 2010 by the France Active network for a total amount of 113.6 The impact of microcredit million Euros. 13,841 interest-free loans were granted as part of the Nacre setup (New support for Through microcredit, more than 37,000 jobs were created or maintained in 2010. After two years, the creation and recovery of business) for a total of 77.9 million Euros in 2010 (versus 8,384 in 2009, among the unemployed funded by microcredit programs, 68% of businesses are still operating and for a total amount of 45.4 million Euros). In 2010, 78% of these loans were granted by the France 80% of applicants no longer require social benefits after a three year time period. Initiative and France Active networks. In the same year, France Initiative also granted, outside the Nacre set up, 14,940 unsecured loans for a total amount of 119 million Euros. Beneficiary profile ■■The Social Cohesion Fund also guarantees non-banking professional microcredits (see chart In 2009, an estimated 20% of microcredit beneficiaries in France were seeking jobs, and 80% were above) granted by specialized associations such as Adie, Crea-Sol and CSDL. In 2010, FGIE guaran- non-bankable clients, that is to say customers who could not borrow from traditional banks. These teed 11,083 loans granted by associations for a total amount of 38 million Euros. figures demonstrate the importance of microcredit and of their social impact.

Methodology Note Micro-insurance in France The results published in the Barometer of Microfinance 2011 are based on a survey led by the major Number of active micro-insurance clients from 2006 to 2010 actors in French microfinance, supervised by a steering committee of the sector’s leaders: ACTED, Adie, Babyloan, BNP-Paribas, Caisse des Dépôts, Crédit Coopératif, Finansol, Grameen Credit Agricole Microfinance Foundation, Banque de France Microfinance Observatory, OXUS, PAMIGA, PlaNet Finance, the European Microfinance Network, International Solidarity for Development and Investment 2 500 (SIDI), Société Générale. The study was conducted in two parts: one on French microfinance actors’ actions in developing countries, and the other on microcredit in France. The data collected between 2 000 January and March 2011 covers the 2006-2010 period, but certain 2010 figures are estimates. 1 500 Those who took part: Adie 18 investors: AFD, Babyloan, BNP-Paribas, Cofides, Crédit Coopératif, Ecidec, Mérieux Foundation, 1 000 Entrepreneurs de la Cité Grameen Credit Agricole Microfinance Foundation, Investisseur et Partenaire pour le Développement (I&P), MACIF, Natixis Asset Management, SIDI, Société Générale, PlaNis responsAbility, Proparco, 500 Saint Honoré Microfinance Fund, Veecus, Xetic. 11 intermediate agents: CERISE, GRET, Handicap International, Horus, PAMIGA, PlaNet Finance, – PlaNet Guarantee, PlaNet Rating, Microfinance Sans Frontière, Octopus, SAMN. 2007 2008 2009 2010 7 operators: Advans, CIDR, Entrepreneurs du Monde, GAMIFI, Inter Aide, Microcred, OXUS. ■■Micro-insurance is still at a stage of infancy in France with 2,244 active insured people by the end Those who participated in the France survey: Adie, Banques Populaires, Caisses solidaires de Franche- of 2010. It is aimed at entrepreneurs, excluded from traditional insurance systems with low-income. Comté et de Nord-Pas-de-Calais, CSDL, Caisse des Dépôts, Crédits Municipaux de Bordeaux, Dijon et But this new service has been developing with the start of this activity by Adie in 2009. Today, there Paris, Crésus, Fédération Nationale des Caisses d’Epargne, Entrepreneurs de la Cité, France Active, are two operators in France: Adie, associated with MACIF and AXA, and Entrepreneurs de la Cité, France Initiative, Créa-Sol, la Nef. supported by Ag2r, April Group, La Banque Postale, CDC, CNP Assurances, Matmut and La Mondiale.

Source: Microfinance Barometer 2011

*See glossary on page 11 10. MICROFINANCE BAROMETER 2011 Interview with Michel Barnier European Commissioner for Internal Market and Services

and men who have As part of our regional policy might know, the Commission is pre- tion we launched in October 2010 on been excluded from (Commissioner Hahn), the JEREMIE paring a major initiative to boost the what this boost should include, has the market place by program allows member states to use single market. It is a bill which the received massive support, and even the economic crisis part of their regional development Commission is due to adopt in April. I enthusiasm to the approach, notably have in fact a great funds to financially support small have fought for this document to rec- from NGOs, citizens and some mem- potential for crea- and medium enterprises. I would ognize the idea according to which ber states. tivity. By provid- also like to mention the JASMINE such a boost of the single market Various actions could be carried ing them with the program which provides technical can only be achieved if we find ways out in this area. For instance, I am means to carry out assistance to microfinance organiza- to take into account the interests of planning on introducing a social, eth- their projects, even tions or the PROGRESS microfinanc- European citizens and address their ical or environmental label mecha- if these are humble, ing program (Commissioner Andor) real daily needs. I believe that the sin- nism for companies, at the European microcredit can not which more specifically targets assis- gle market is an essential tool allowing level. I would also like to suggest the only restore their tance to micro-enterprises created by us to reach the objective of the Lisbon creation of a system that facilitates individual dignity, the unemployed. treaty, meaning the development of a the development of investment funds but also create an All these initiatives have a com- highly competitive social market econ- which would be specialized in these economic activ- mon goal, which is to allow millions omy. We will not be able to achieve sorts of assets. Actions could also ity which is benefi- of women and men who have ideas this if we do not put citizens at the be undertaken to facilitate the activ- cial for the whole and want to succeed, to carry out their center of our concerns. ity of foundations at the European society. projects. I believe that each citizen counts. level, or yet again to improve com- Europe has a role to play in stim- Each citizen is a potential entrepre- panies’ governance, in order to direct Can you tell us a ulating initiatives taken by member neur. Microfinance can help us turn them towards more respectable social little more about states or in disseminating best prac- this potential into reality. Thus, I development or environmental prac- the various meas- tices. Generally speaking, I strongly intend to put this question as a subject tices. ures taken at the believe that microcredit can play an to be addressed at the social entre- As you can see, we have plenty of European level for important role as a new stimulator preneurship conference which will be ideas. The thoughts currently circulat- What is your view on the concept the development of microcredit? for growth and would like this role held in Brussels on 18 November and ing within the Commission aim at giv- of microcredit as a tool for social Europe is indeed active in this to be recognized as widely as possi- which I am organizing. ing more coherence to these ideas. In inclusion and for setting up com- area and its actions can be seen ble. I would not rule out that we could the next months, I hope that we could panies? in various ways. For instance, the need to carry out other actions at the Which actions are you planning identify more specifically what could I am indeed convinced that micro- framework programme for competi- European level if necessary, notably in to carry out in order to sustain be done at the European level in this credit can play an important role in tiveness and innovation, which has the area of the single market, which is social economy more generally in fairly new area. both areas. I believe the two are com- been placed under the responsibil- of my portfolio. Europe? You can count on my determina- plementary. At a time when we are ity of Vice President Tajani by the For example, should we take meas- As I have mentioned, I believe tion to make sure that Europe sets actively looking for ways to regain European Commission, provides ures at the judicial level allowing that the development of social entre- the example in this area, as it does in growth in order to create new jobs, I financial guarantees to national microfinance organizations to pro- preneurship should constitute a key many others! think that individual initiative should organizations working on microfi- ceed more easily across the 27 states? foundation in the upcoming boost be stimulated at all costs. Many women nance (such as ADIE in France). It is a question worth asking. As you of the single market. The consulta-

A step further More information

Need microcredit Do you want to make a You want to invest in Bibliography Microfinance in France : in France? Pay the contribution to micro- microfinance? Le microcrédit, Rapport following organizations enterprise support in N°2009-M-085-03, IGF, You can invest in a financial product État de la Campagne du Sommet a visit: France? du Microcrédit Rapport 2011, Larry Inspection Générale des Finances, that supports microfinance activities décembre 2009 Association for the right to Contact one of the following abroad, by: R. Reed, The Microcredit Summit economic initiative (Adie) support networks: Campaign, 2011 Rapport annuel 2009 de l’Observatoire de la microfinance, Crea-sol Asking your bank Le microcrédit ou le pari de Caisse sociale de développement ADAM/Entreprendre en Banlieue You can ask your bank: l’homme, entretien avec Maria Banque de France, 2010 locale, Bordeaux (CSDL) National association of local 1) To invest your money in a financial Nowak, Éditions Rue de l’échiquier, Crédit municipal (in some large mission directors product that will help develop 2009 cities) National liaison committee for microfinance activities: this is The Economics of Microfinance, Useful websites France Active local neighborhood management referred to as “investment savings” Beatriz Armendariz et Jonathan France Initiative Boutiques de gestion 2) To give all or part of the financial Morduch, MIT Press, 2010 CGAP: www.cgap.org Garrigue Comité national de liaison des product revenues to an association: Laser Cofinoga régies de quartier it is referred to as “donation Le guide la microfinance, Convergences 2015: Cetelem CRESUS Federation savings”. microcrédit et épargne pour le www.convergences2015.org , Sébastien Boyé, Cofidis French Red Cross développement Jérémy Hajdenberg, Christine Portail de la microfinance: FinanCités National federation of social Becoming a shareholder of a Poursat et David Munnich, Éditions www.lamicrofinance.org Autonomie et Solidarité reinsertion associations (FNARS) microfinance social business d’organisation, 2009 Cigales FFR (Fédération of rural families) You can choose to become a Microfinance Gateway: Femu Qui PlaNet Finance France shareholder of a company whose La politique de l’autonomie, Lutter www.microfinancegateway.org Herrikoa Restaurants du Cœur objective is to achieve social goals contre la pauvreté (II), Esther Duflo, La république des idées, Plateforme européenne de la micro- Secours Catholique related to microfinance. finance: www.e-mfp.eu Or one of the UNAF (National union of family édition du Seuil, 2010 following banks: associations) Acting within your company L’espoir économique, Maria Nowak, Réseau Européen de la UNCCAS (National union of town Within your own company, you can JC Lattès, 2011 Microfinance: Crédit Coopératif social action centers) subscribe to the employee savings Banquiers aux pieds nus : la www.european-microfinance.org Banque Postale Or one of the associations plan (PEE or PERCO in France). microfinance, Jean-Michel Servet, MIX Market: www.mixmarket.org Caisses d’Épargne mentioned above. Part of the savings is invested into Broché, 2006 Crédit Mutuel microfinance and international Microfinance Focus: Crédit Agricole Since 2010, you can assistance programs. Vers un nouveau capitalisme, www.microfinancefocus.com BNP Paribas also loan directly, Muhammad Yunus, Le Livre de Société Générale For more information Poche, 2009 not only to micro- Please refer to Finansol website: For more information visit: entrepreneurs in www.finansol.org www.france-microcredit.org Southern countries, but also in France. Visit our new website: Need micro-insurance Pay the following in France? organizations a visit: Entrepreneurs de la Cité babyloan.org (for loans in France Association pour le droit à l’initiative and abroad) économique (Adie) dhanax.com www.convergences2015.org kiva.org Do you want to invest in microplace.com microworld.org Social and microfinance ? Micro nance Social myc4.com Business & BoP Solidarity-based Solidarity-based microfinance rangde.org Economy investments, with the Finansol label unitedprosperity.org (see table page 10) veecus.com wokai.org Social Environment International xetic.org Entrepreneurship & Development Cooperation

*See glossary on page 11 MICROFINANCE BAROMETER 2011 11.

Glossary

■■Beneficiaries or clients extended directly by banks that are the object its income from investments to a charity or ■■Solidarity economy The clients of microfinance are micro-entrepre- of support – and the community/non-bank humanitarian organization chosen beforehand. Local activity that meets social needs not met microloan, which is provided by associations neurs, who tend to be poor and excluded from In return, the subscriber receives a tax rebate. by the traditional economy. The legal struc- authorized to extend loans for up to €10,000 traditional financial systems. tures usually found in the solidarity economy to the unemployed, individuals on minimum ■■Social Cohesion Fund (Borloo are associations, credit unions, foundations, social benefits or founders of businesses with ■■ Law 2005) integration bodies and cooperatives. These are Central risk unit fewer than three employees, either from their called social companies or social enterprises. An independent body that collects and shares own equity or through refinancing from banks. An instrument created by the Planning Act for information on individuals’ credit history and Social Cohesion to encourage banks to grant Cf. 2011 Barometer of Social Entrepreneurship. repayment habits. The unit is used in particu- ■■ professional or social microloans to individu- Microloan for social or ■■Solidarity finance lar by banks, which use it to confirm the credit consumption purposes als on low incomes by providing guarantees for worthiness of potential clients. For microfi- some loans. The segment of the financial sector that pro- nance, this system is very important but rarely A loan to finance the acquisition of a consumer vides funds for professional and social integra- put in place. good or training in order to improve the liv- ■■Social performance tion activities, housing, international solidarity, ing or working conditions of the borrower. In A practical translation of the social objectives etc. ■■ France, it is called a personal microloan and Consumer protection € € of an institution: to serve a growing number of varies from 300 to 3,000, with support given ■■ A concept that arose in the United States at the to individuals for financing “projects for the the poor and excluded in a sustainable manner, Solidarity funds instigation of the consumerist movement led by integration of physical persons” (the French improve the quality and suitability of financial Solidarity funds invest 5 to 10% of their assets Ralph Nader. Consumer protection legislation Economic modernization law, LME) guaran- services, improve the economic and social posi- in securities issued by recognized social com- relates to consumer contracts, but also lending teed by the Social Cohesion Fund. tion of clients and to engage the social respon- panies, with the balance invested in shares and operations in consumer credit or home loans. sibility of the institution towards its clients and bonds. ■■Mobile banking employees and the community it serves. ■■Employee savings plan ■■Solidarity investment The ability to conduct financial transactions via ■■ A collective savings mechanism offered by mobile phone (transfers, money transfers, pay- Socially and ethically Investment in solidarity activities. An activity companies to their employees: participation, ments, check account balances, cash deposits, responsible investment fund can be considered solidarity-based depending profit-sharing, stock options, time savings etc.). A fund that incorporates non-financial criteria on the nature of its activity, social utility, the accounts, company savings plans, group retire- into traditional financial criteria, such as: objec- social status of the beneficiary of the funding, ment savings plans. ■■Mutual fund (MF) tives, products, the quality of the relationship etc. A category of UCITS (Undertakings for of the business with its employees, clients and ■■Gross loan portfolio (or amount ■■ Collective Investments in Transferable suppliers as civil society, and its respect for the Support bodies of loans outstanding) Securities) devoid of legal personality that environment and human rights. Persons who provide professional support to The outstanding balance on all sound, doubt- functions in a manner comparable to UCITS. micro-entrepreneurs at one or more stages of ful or restructured loans of an institution. This ■■Solidarity-based savings/ the loan (creating a business, budget analysis, amount does not include loans that have been ■■Mutual guarantee lending investment etc.). In France, support is an important com- the object of a debt waiver or accrued interest. or group-based lending Investment used to finance projects to establish ponent of microloans and can take the form of When loan loss provisions are deducted, the (microfinance product) or develop socially useful but non-profit activi- voluntary action or a professional activity. portfolio becomes a “net loan portfolio”. ties: reintegration through employment, accom- A form of credit whereby borrowers come ■■ modation for people experiencing difficulties, Tontine ■■Honor loan together in groups of 5 to 20 people who do not provide physical collateral but provide a group etc. Solidarity-based savings products bear the An investment system in which profits are dis- A medium-term loan (2-5 years) that does not guarantee: If one of the members of the group FinanSol label. tributed among the remaining subscribers. accrue interest or accrues interest at below fails to meet their obligations, the other mem- market rates extended to a person implement- bers will stand in for them. For some group- ing a project without asking them for real or based loans, savings are compulsory. personal securities. Extended mainly by Adie, France Active, France Initiative Réseau, Nef ■■Non-financial services and Réseau Entreprendre. Services provided to borrowers to reinforce ■■Individual loan (microfinance their capacities: technical and management training, literacy, education, nutrition, health, product) etc. A form of credit whereby the borrower receives a loan in his or her own name. In many cases, a ■■Non-governmental organization physical collateral or deposit must be provided. (NGO) ■■Microfinance A not-for-profit structure that is not part of the state or an international institution, created to Financial services aimed at poor individuals defend a cause in the public interest. excluded from the traditional banking system with no regular income and without property ■■Over-indebtedness rights. It mainly includes loans, savings products, micro-insurance, money transfers and A situation characterized by the inability of the leasing. In France, beneficiaries cannot be debtor to repay in good faith their professional excluded from the banking system but can have debts payable by the due date. low incomes (the long-term unemployed, dole recipients, etc.). ■■Peer-to-peer lending Loans between individuals, without the involve- ■■Microfinance institution (MFI) ment of a financial institution. In the case of A MFI is an organization that provides financial microfinance, online platforms allow internet services to persons on low incomes or persons users to lend money to micro-entrepreneurs in who cannot access the formal financial sector. the South through microfinance institutions. MFIs can have a variety of legal forms: NGOs, associations, savings and credit cooperatives, ■■Portfolio at risk (PAR) limited liability companies, financial institu- Outstanding balance on all current loans on tions, banks, etc. Depending on the country, which at least one repayment of principal has MFIs may or may not be regulated by mone- been outstanding for a certain number of days. tary authorities or other entities, and may or This account includes the total amount out- may not collect savings. standing (repayments due and unpaid + future repayments not due), but not interest accrued. ■■Micro-insurance The PAR is frequently calculated over 30 days. An insurance product for the very poor. The most common services are health, incapacity ■■Savings (microfinance product) and death insurance, and cover against natu- A product that may be compulsory (to obtain ral disasters and harvest failure. Not yet wide- a loan) or voluntary (term deposits or target spread in developing countries. deposits remunerated according to the term, or at-call deposits with unrestricted deposits and ■■Microloan withdrawals). A small loan. There are several types of micro- ■■ loans (see below). Sensitive urban zones Districts with a large proportion of people ■■Professional microloan experiencing difficulty where microloan and See also the First Barometer of social entrepreneurship A loan used to finance an economic activ- low income micro-entrepreneur assistance programs are tested. ity, with revenues used to repay the loan. In France, a distinction is made between two ■■ Available on: types of professional microloans: the bank Shared return fund microloan – microloans for less than €25,000 A category of UCITS that pays all or part of www.convergences2015.org 12. MICROFINANCE BAROMETER 2011 The Paris Appeal for responsible microfinance

In association with a large collective of partners, Whether you come as 1. Consider that microfinance institu- cial viability and to reach their Convergences 2015 has launched the “Paris Appeal a private individual, a tions must pursue a long-term dou- social objectives. for responsible microfinance”. To answer the ble objective of financial viability 5. Encourage researchers and univer- beneficiary, a regulator, an and social impact, by offering prod- sities to scale up cooperation with excessive commercialization of microfinance and ucts and services adapted to the MFIs to conduct impact studies and other drifts thus brought about, the Paris Appeal investor or an operator, poor, by leading a policy of moder- disseminate best practices. reaffirms the role of microfinance as a tool in the be one of the many who ate interest rates, and by complying 6. Call on to donors and private foun- service of development and inclusive finance. It support the following to the highest standards of informa- dations to uphold their microfi- aims at bringing back ethical values and a social tion and client protection. The com- nance commitments, to encour- Appeal: pliance of policies and practices age innovation and diversification, orientation that should inspire all stakeholders in the must be certified by recognized to support and train clients and to sector and offer to make self-regulation initiatives social performance indicators; focus programs on geographical and rules converge towards a solid pedestal of 2. Remind of the importance of solid regions, particularly Africa, sectors principles. These rules will help define responsible For 30 years, microcredit has been an governance of adapted prudential such as agriculture, and products microfinance and restore faith among the public. instrument of development in the fight rules and efficient reporting and and services such as micro-insur- against poverty. It is now in 80 devel- control systems. Such rules and ance and credit for the poorest, oping countries and reaches 190 mil- practices must be given an efficient where the needs are manifest. Officially presented at the 4th annual Convergences lion people, including 128 million poor, and objective supervision and nota- 2015 Forum in May 2011, the Paris Appeal for 81% of which are women. By helping tion system. To breathe life into this funda- responsible microfinance is part of a campaign of people excluded from the classical 3. Call on to microfinance institutions, mental basis of rules and regula- advocacy and action among all concerned actors: financial sector benefit from small their national and regional associations, in the respect of the diver- the general public, microfinance professionals and loans to set up and develop income tions, and regulation authorities, sity of microfinance, the signa- generating activities and by offering to systematically apply the princi- tories are launching an appeal decision makers. them other financial (micro-insurance, ples and rules established by the for Responsible Microfinance micro-savings, money transfer, etc.) industry to adjust and prevent the General Assemblies, to be organ- If like us, you support the Millennium Development and non-financial services, microfi- sector’s mission drifts, and to pre- ized in each greater region of the Goals and microfinance as powerful tools for nance institutions (MFIs) play a part vent and complete them with reg- world and for each large category economic development and poverty reduction, sign in improving these people better liv- ulations adapted to the context in of stakeholders, under the aegis of the Paris Appeal for responsible microfinance on ing conditions. Developed countries each country. an Organization Committee man- have, for their part, seized the tool to 4. Encourage investors specialized in dated by the G-20. www.appeldeparis.org allow marginalized populations to be microfinance to subscribe to a Code financially included in the financial of conduct serving the long term Convergences 2015 www.appeldeparis.org and economic system. interests of the MFIs they support, www.APPELDEPARIS.ORG

The Paris Appeal signatories... allowing them to strengthen finan-

Convergences 2015 A publication BY

Convergences 2015 aims at improving the action and the linkages between multiple actors committed to a more sustainable world. This initiative targets economic and political actors, the civil society and all of those who share the same values of solidarity and who feel concerned by the challenges of today and tomorrow. The ambition of this unifying project is to develop an “open architecture” in the field of solidarity; a base for increased exchanges and new sustainable MICROFINANCE BAROMETER, partnerships between actors from different but complementary fields, therefore strengthening opportunities for collaboration between mobilized actors. publiSHED AS PART OF Convergences 2015 Launched in 2008, the First edition of the Convergences 2015 Forum brought together actors from the fields of finance, new technologies and from grassroots civil society organizations to discuss the issue of microfinance and prospects for the emergence of ethical and responsible capitalism. AN INITIATIVE OF In 2011, Convergences 2015 has become a permanent platform. The reinforcement of the organization allows the development of the initiative along three axes: ■■Reflection: think, debate, produce ideas; ■■Advocacy: promote ideas and reflections with decision-makers and the general public; ■■Action: promote the creation of linkages and projects around those MAIN PARTNERS themes.

Convergences 2015 is structured as a permanent open space for exchanges, already hosting some hundred operators from the business sector, public authorities, NGOs, universities and the media in France and in the world. They are all partners of Convergences 2015. Commission européenne REPRESENTATION EN FRANCE Convergences 2015 aims at launching new partnerships and collabora- tions between political and economic actors and the civil society, as well as influencing their strategies and action. Today, Convergences 2015 also ASSOCIATE PARTNERS offers advocacy initiatives all year long, campaigns and messages, train- ings, events for wider audiences, awards, and a resource and information website on its key topics. These projects are also linked to existing French or international networks and initiatives, so as to increase the impact of Convergences 2015.

www.convergences2015.org SUPPORTING PARTNERS

Thank you to the members of the Steering Committee of the Barometer of microfinance and to the editors: Florent Bédécarrats, Pauline Bensoussan, Samantha Brangeon, Gérard Brasquet, Thomas Brebion, Renée Chao-Beroff, Laurent Chéreau, François Dechy, Danièle Defert, Anthony Degouve, Dominique François, Philippe Guichandut, Jérémy Hajdenberg, Jürgen Hammer, Yasmine Hamraoui, Stefanie Lämmermann, Cécile Lapenu, Grégoire Lechat, Laurent Lhériau, Paul Loridant, Emmanuel de Lutzel, Laurence Moret, Nicoleta Munteanu, Justine Palermo, Aude Penent, Jean-Luc Perron, Arnaud Poissonnier, Sarah Puzzuoli, Thierry Racaud, Laëtitia Raginel, Anthony Rear, Xavier Reille, Christine Rousselot, Christian Sautter, Grégoire Schöller, Marylène Viala-Claude, Marie-Anne de Villepin, Dominique Weiss, Yaël Zlotowski.

For more information: [email protected] or www.convergences2015.org. Suggested reference for this document: The 2011 Barometer of Microfinance / MEDIA PARTNERS Convergences 2015. Published by Convergences 2015. Special thanks to: Michaël Knaute, Alexis Surun and Ana Torres from OXUS Group, Judith Jakubowicz, Emilie Perbost, Alison Biscoe and Alexia Tronel of Convergences 2015, Adrien SURVEY Tomarchio and Paul Duke from ACTED. Layout: Advitam. Printer: RAS. Copyright ACTED/ Convergences 2015 September 2011 – 33, rue Godot de Mauroy, 75009 Paris - France ; www.convergences2015.org ; +33 (0)1 42 65 33 33.

*See glossary on page 11