MICROFINANCE
Barometer 2016
7th Edition
in PARTNERSHIP WITH

IntroductionT
SUSTAINABLE DEVELOPMENT GOALS:WHAT ARE THE STAKES FOR MICROFINANCE?

NOPOVERTYZERO
HUNGERGOOD HEALTH
AND WELL-BEINGQUALITYEDUCATIONGENDEREQUALITY

CLEAN WATER
AND SANITATIONAFFORDABLE AND
CLEAN ENERGYDECENT WORK AND
ECONOMIC GROWTH

INDUSTRY, INNOVATION
AND INFRASTRUCTURE

REDUCEDINEQUALITIESSUSTAINABLE CITIESAND COMMUNITIESRESPONSIBLE
CONSUMPTION
AND PRODUCTION

CLIMATEACTIONLIFE
BELOW WATER

LIFE
ON LANDPEACE, JUSTICEAND STRONG
INSTITUTIONSPARTNERSHIPSFOR THE GOALS

he microfinance sector continues toenjoy double-digit growth. In fact,global figures testify to significant
levels of development, with aportfolio of USD87 billion and 111
million clients in 2014, and an estimatedgrowth of 10% in outstanding portfolio and15.8% in borrowers in 2015 (see pp. 2 and3).
Microfinance is not only a factor for
financial inclusion, but is also a significant
lever in the implementation of the 2030
Agenda. By fostering access to services in
the fields of health, food security, education,energy and housing, the sector confirms itsrole as a catalyst in global and inclusive
development. This is the special feature of
the 2016 Microfinance Barometer.
Microfinance actors worldwide support
access to essential services by developing
innovative schemes and diversified products,
and by adopting an integrated approach.
Improving personal finance education,
financing agroecology, and fostering thedevelopment of renewable energies, thoseare all indicators of the role and increasing
potential of the sector (see pp. 5-9).
As in every year, the Barometer exclusively
presents the figures for microfinance inFrance and in Europe (see pp. 10 and 11).
As guarantor for sustainable housing access,driving force in job provision and a tool ofsocial innovation, microfinance is once
again demonstrating its impact in developed
countries.
In view of this growth in the sector, it will
be important to continue ongoing initiatives
in order to build a responsible and reactive
microfinance that places clients at the heartof the sector’s strategies and action (see p.
4).
This 7th edition of the Barometer provides
an overview of the sector’s growth and theconstant reach for innovation of microfinanceactors.
Happy reading!
carolina herrera
programmING and studies MANAGER
convergences

Editorial

Jean-Luc Perron

Vice-Chairman of Convergences
Managing Director of Grameen
Crédit Agricole FoundationIn 2015, the Addis Ababa Conference
on the financing of development,
the adoption of the 17 Sustainable
Development Goals (SDGs) by theUnited Nations General Assembly, andDeveloped in collaboration with
For queries on usage, contact: dpicampaigns@un.org

the Paris Agreement on climate change, were
the highlights of a remarkable diplomaticsequence that set the course for the next
15 years for a responsible, coordinatedand inclusive development. Convergencessummarises this course in a mobilising formula:
Zero exclusion, Zero carbon, Zero poverty.
Although microfinance is barely mentioned in
the texts solemnly adopted by the international
community, it is an essential tool to reach theobjectives that the community has set itself.
The ambition of the 2016 Microfinance
Barometer is to illustrate the current
role and the potential of microfinancein the pursuit of these objectives.
Despite the controversies, microfinanceremains true to the ambitions of its pioneers:
to help eradicate poverty (SDG 1) by allowing
the most disadvantaged to develop incomegenerating projects and accompanying themthrough training programmes and advice.
Access for the world’s 450-500 million
small farmers to suitable financial services
is an essential condition for achieving SDG
2: to end hunger and ensure food security.
Although microcredit, taken individually, has
shown its limits in the financing of agriculture,
micro-insurance of crops and livestock isbound to play a steadily increasing role in theprotection of family farms against natural risks,and provides an incentive to produce more.

| TheGlobalGoals@trollback.com | +1.212.529.1010

The articles proposed in this Barometer
also highlight the products and services
developed by microfinance institutions(MFIs) to provide better access to healthservices (SDG 3) and education (SDG 4),
to good-quality, safe and affordable habitat
and to clean energy (SDG 7), in the context
of both developing and developed countries.
Finally, need we remind the essential role
played by microfinance in the promotionand empowerment of women, thus directly
contributing to the realisation of SDG 5?
If the MFIs can play this economic andsocial role, it is because of their proximity
to their clients and the trust those clients
put into them. In return, this trust requires
the MFIs to comply with higher standards oftransparency, quality and responsibility in theprovision of their services and loans, and inreports on their social performance. In thisregard the action of the Social Performance
Task Force (SPTF) for the adoption of
Universal Standards, and that of CERISE
in distributing the SPI4 tool, are essential.
By means of this Barometer, Convergences
aims to enhance the role of microfinance indevelopment and calls on all actors in the
sector to continue their actions in providing a
responsible and inclusive microfinance system,
which represents a real lever in the 2030 Agenda.

Emilie Poisson
EXECUTIVE DIRECTOR
convergences

Content
Exclusive!
Pages 2-3
Key figures offinancial inclusion
Exclusive!
Page 4Social performance

Pages 5-9
Special report
Microfinance and SDGs
Exclusive!
Page 10Microfinance in Franceand Europe
Exclusive!
Page 12Interview of
Muhammad Yunus

KEY FIGURES OF FINANCIAL INCLUSION
Focus on global microfinance figures
World portfolio of loans and number of borrowers in 2014

World total 201419%

Eastern Europe and Central Asia

81%

56% 44% 57.8%

57.3%

Other MFIs
23%

87.1
Bill. USD

3.5 M

Top 100 MFIs
77%

111.7 M

2014:+11.6%
2015: -3.9% (prev)

1,045+ 12.6%

2014: +14.2%
2015: +15.8%(prev)

11.3
Bill. USD
143
+17.9%

Middle East and North Africa
40% 60% 43%

1.2South Asia
8%

92%

Bill. USD

2.1 M

+6.7%

31

58.4%

2014: +8.3%
2015: +6% (prev)

Latin America and Caribbean
35%

25% 75%

65%
29.9%

40.6

Bill. USD
21.6 M

2014: + 4.5%
2015: + 8.8% (prev)

12.8

Bill. USD

Africa59.2%

16564.1 M

8.2

2014: +11.3%
2015: +0.8% (prev)349+ 16.4%75%

219

15.1 M

2014: +7.6%
2015: +17% (prev)

2014: 14.2% Annual growth

80.2%

12.9

Bill. USD

+3.7%

Number of borrowers

East Asia and Pacific25%

2014: +19.7%
2015: +20.4 (prev)

Bill. USD

5.3 M

+33.7%

Proportion of rural borrowers

Portfolio size

+18.3%

138

Number of MFIs reporting to the MIX

Source: MIX Market

Microfinance: a sector growing at two different speedsIn 2014, the 1045 institutions
that sent their data to the MIX
platform reached 111.7 million
low-income clients and produced
a loan portfolio of $87.1 billion
with a growth of +12.6%. The increasein numbers of borrowers has almost
tripled compared to 2013, increasingfrom +4.8% à +14.2%. It is estimatedthat the rate of growth in the sector
for 2015 will be +10% for loan
portfolio and +15.8% for borrowers.
The

100

most

significant

institutions dominated themarket, with 76.9% of total loan
and 67.7% of global borrowers.
Banks and non-governmentalorganisations (NGOs) respectively
served 27% of global borrowers, leaving
the rest of the market to non-banking
financial institutions (NBFIs) (43.3%).
Despite the equivalent distribution ofclients, banks held 50.9% of totalloan while NGOs only registered
10.2%. A preliminary study for 2015
predicts a growth of +16% in totalloan for NBFIs and +14.8% for NGOs.
Southern Asia recorded the highest
growth in terms of total loans andclients (+33.9% and +19.7%). Thisregion numbered more borrowers
than the rest of the world (57.3%)
despite accounting for only 14.7% of
the global loan portfolio. According
to estimations, the region once again
registered the strongest growth in2015 (+42.7% and +20.4%). In
contrast, Eastern Europe and Central
Asia grew less compared to 2013,

Top 10 countries by borrowers
and loan portfolio outreachmoving from +30% to +17.9% of
total loans, and in 2015 seeing a fallof -23.9% in loan totals and -3.8%
in clients because of the economiccrisis affecting the region. Africa
also saw a less significant growthin 2014 (+16.4%), and is expected
to slow sharply to +3.4% in 2015.
Latin America saw the smallest levelsof growth in total loans and clients(+3.7% and +4.5%), although it holds
almost half of the global portfolio(47%). Estimations for 2015, however,predict that the rate of growth in Latin
America will double.

International financial inclusion
funding remains stable in 2014

I

nternational funders committed at least$31 billion to financial inclusion in 2014.
This commitment level is stable whencompared to total commitments in 2013.
These data align with Official Development
Assistance (ODA) trends reported by OECD,
which showed that international aid (across all
development sectors) also stabilized in 2014.
Public funding accounts for 72% of cross-borderfinancial inclusion funding.

The top 10 countries listed are defined baseon the loan portfolio size and borrowers served in
the country during 2014. Countries are ranked
based on the average of the percentile ranking
for each of these indicators e.g. if Bangladesh

2

MICROFINANCE
Barometer 2016

has scored percentile rank of 93% for loan portfolio and 99% for borrower the average value isarrived at 96% and then ranked at 4th position.

At world level, 57.8% of borrowers
come from rural areas, with East Asiaand the Pacific Region topping the listat 80.2%, in contrast to Latin America
registering only 29.9%. In addition,
81% of borrowers were women andalthough Eastern Europe and Central
Asia were the exception (44%), thistrend is clearly evident in South Asia
where women accounted for 92% ofborrowers.

The majority of funding (about 80% of totalcommitments) is allocated, either directly
or indirectly, to the retail sector. Financing
is usually on-lent to clients typically in theform of credit products. The second largest
commitment by volume targeted capacity
building of retail financial service providers(FSPs) in order to improve their operations,management and governance. FSP financing
dominates commitments partially because of
the total volume of these interventions. When
we look at number of projects, we find that
one third of international funders’ projects
target the capacity building of the financial
inclusion sector, primarily to develop suitable
and appropriate products and services that
better suit the needs of the underserved andto foster an enabling policy environment andinfrastructure that allows greater financial
access.
During 2014, there was an increasing interest
in digital financial services and a rapid andsustained growth in funding to the Middle Eastand North Africa (MENA). Eastern Europe andCentral Asia continue to receive the bulk ofcommitments because of the high concentrationof financing of FSPs, while Africa is home tothe largest number of projects, focusing on
topics ranging from youth or women, to digitalfinance or agricultural finance.
Going forward, funders report that they will
increase their funding to Sub-Saharan Africa
and continue to focus on supporting FSPs,
as well as payment systems and consumer
protection programmes.

EDLIRA DASHILEAD ANALYSTFUNDING LANDSCAPE

key figures of financial inclusion
Focus on microfinance institutions: from financing to products offerIn 2014, the return on equity of institutions
reporting to MIX at world level was 9.4%.
South Asia was in the lead, with a return rateof 14.2%, closely followed by the Middle Eastand North Africa (MENA) and East Asia andthe Pacific with respective return levels of 12.3%
and 12.2%. Despite a slight rise, Africa showed thelowest return this year, with 6.9%.
Financial service providers earn a yieldof 28% on the gross loan portfolio with
MENA out in front (32.4%), while South
Asia produced the lowest return (23.7%).

The global portfolio at risk exceeding 30 days was
3.7%, with South Asia registering less than 1%.
The Sub-Saharan African institutions faced morerisks, with a rate of 6%.
The Operational Expense Ratio, a measure ofservice delivery cost, stood at 13.7% at worldlevel. The South Asian institutions have managed
to maintain lower operating expense costs (9.9%)
thanks to lower staffing costs and higher overall
productivity from their delivery models. In contrast,
Sub-Saharan Africa recorded the highest ratio, with17.1%.

MFIs median performance ratios in 2014

Portfolio yield

Operating expense ratio

Portfolio at risk 30 days

Return on equity

Deposits, first source of funding
in the sectorT

he funding structure in the
microfinance sector is comprisedof deposits, borrowing and equity.
In 2014, deposits constituted
the principal source of financing
for institutions with 50%, followed byborrowings (30%) and equity (20%).
The banks were principally financed bydeposits, for 60%, in contrast to NGOs and
NBFIs, which relied principally on borrowings(52.8% and 40.8%). Equity was only asubsidiary source of funding, with 17.6%
for banks, 30.6% for NGOs and 19.8% for
NBFIs.
Sub-Saharan Africa was the region mostfinanced by deposits (70.6%), followed by
Latin America (62%). In MENA and SouthAsia, where most NBFIs are not able tocollect savings, the first source of funding
was borrowings for over 50%, followed byequity (42.8% and 20.9%).

Sources of funding of MFIs in 2014

Equity20%
Deposits
50%
Borrowing30%

Microfinance Institutions (MFIs): Institutions
which can provide savings, credit and otherfinancial products to lower income clients.
They include non-financial providers (nongovernmental organisations, suppliers,
branchless banking providers), members
based organizations (cooperatives, financial
service associations, self-reliant villagesavings and credit banks, self-help groups)
and financial institutions (banks and nonbank financial institutions)1.
Equity: Investments that typically take theform of an owner’s share in business whose
legal status allows it and often also a sharein the return or profit2.
Borrowings: Funds received by an MFI
through a loan agreement or other contractual
arrangement that carry a market rate ofinterest (commercial borrowings) or a
below-market rate of interest (concessionalborrowing)3.

MICROFINANCE
Barometer 2016

13,7 %

3,7 %

9.4 %

The institutions expand their offerwith non-financial servicesT

he global average of non-credit productoffers is balanced between deposit
services, voluntary insurance and nonfinancial services. Indeed, the offer ofvoluntary insurance services has grownsignificantly, rising from 17% in 2013 to 55%.
Offers of non-financial services rose from 40% to
58.9%, concentrating in particular on education
services, entrepreneurship, health and women
empowerment, which all returned a rate of over
50%. Deposit services, in contrast, fell from 76%
to 54.7%.

Thus, regions with a large presence of banks,
such as Sub-Saharan Africa, East Asia and thePacific, had the highest rate of institutions
offering deposit services (93.6% and 83.3%) andthe lowest rates of voluntary insurance services
and non-financial services offers. In contrast,
Southern Asia, a region characterised by a heavy
presence of NGOs and NBFIs produced thehighest rate of institutions offering these services,with an offer exceeding 70% for each of them,followed by Eastern Europe and Central Asia
(69.2% and 74.1%).

Banks showed the highest rate for institutions
offering deposit services (90%). NGOs werethe leaders in the voluntary insurance market(65.9%) and the non-financial services market(60.9%).

MOHITA KHAMAR
MARKET INTELLIGENCE LEAD
MIX MARKET

MFIs product offer excluding credit in 2014

Providing deposit services

55 %Providing voluntary insurance services

55 %Providing non-financial services

Glossary

28 %

59 %

Methodology
Deposits: Total value of funds placed in an
account with an MFI that are payable on
demand to a depositor. This item includes
any current, checking, or savings accounts
that are payable on demand. It also includes
time deposits which have a fixed maturity
date4.
1-2

MIX calculations are based on data provided byfinancial service providers to MIX that is publicly available at www.mixmarket.org. MIX makes
every effort to collect the data from the dominant
actors of each market to ensure visibility into
each market, but does not collect data on every
actor in every country. Total figures for borrowers
and loan portfolio as of 2014 are based on data
provided by 1,045 institutions.

MIX Market and CGAP, 2015 Funding Explorer for Financial Inclusion, 2015.

3-4

CGAP, Consensus guidelines definitions of selected sinancial terrms, Ratios

and Adjustments for Microfinance, 2003.

Growth figures for borrower and loan portfolio
values from 2012 through 2014 are based ona balanced panel data set of 1,045 institutions
that provided both data fields to MIX for each of
the years from 2012 to 2014.
Estimate growth values for 2015, globally andregionally, are based on all institutions that provided data to MIX for the periods of December
31, 2014 and either September 30, 2015 orDecember 31, 2015.

Growth was calculated by institutions and thenweights were assigned by that institution’s market
share using the assumed value for the end of
2014. These institutions number to 451 andrepresent 90% of the 2014 market by borrowers
and gross loan portfolio.
Funding data is provided by microfinance institutions. To fill in any gaps in the funding data, values
were assumed provided that enough data wasinitially reported by the institution. For example,
equity was calculated if no value was provided
by the institution, but the assets and liabilities
were available. Similarly, deposits or borrowings
were calculated assuming total liabilities werecomprised of either deposits or borrowings andthat two of the three values were available from
the MFI. The number of institutions included in
the funding analyses total 641 institutions andcomprises 70% of the 2014 market by borrowers.

3

SOCIAL performance
Summary of the 2015 Universal Standards Implementation Survey

Launched in 2012 by
the Social Performance
Task Force (SPTF), theUniversal Standards
for Social Performance
Management (Universal Standards)
are a comprehensive manual of bestpractices to help financial service
providers (FSPs) put clients at thecenter of all strategic and operational
decisions and align their policies andprocedures with responsible businesspractices. Today, the Universal
Standards are considered the globally
accepted standards for strong social
performance management practices
in the inclusive finance sector.
For the last three years, the SPTF
has partnered with the Global Appeal
for Responsible Microfinance, the
MIX -and for the first time in 2015the Microcredit Summit Campaign
to conduct an annual Universal
Standards Implementation Survey.
This survey helps the SPTF and its
partners understand the state of
implementation of the Universal
Standards and related tools andinitiatives, and identify the best ways
to promote and support stakeholders
in the implementation of social
performance management practices.
The 2015 survey gathered 407
responses from all stakeholders inthe sector. 60% of them were FSPs
-including NGOs, banks, and nonbank financial institutions). 13% of
respondents represented networks/
associations and 8% represented
investors.
The results show a continued
increase in the awareness andimplementation of the Universal
Standards across stakeholder groups.
91% of respondents mentioned being“very familiar, familiar, or aware” ofthe Universal Standards and 82%
found the Universal Standards to be“very helpful” or “helpful” to their
institutions.

As in 2014, the SPTF website
ranked #1 in terms of being “theplace” where to look for information,
tools and resources on social
performance management. The SmartCampaign, MIX, and CGAP websites
were also highly ranked (SPTF’s #1
ranking increased from 58% to 71%
in one year).
The SPI4 (social assessment toolaligned with the Universal Standards)
showed significant increase inawareness, with 77% of respondents
being “familiar, very familiar oraware” of it (vs. 66% the previousyear).
Results also showed high influenceof the Universal Standards in thepractices of FSPs: 74% of FSPs
noted the Universal Standards
influenced the implementation of
SPM practices and 47% mentioned
having changed practices in theirorganisation after learning about the
Universal Standards.
Dimensions related to “defining andmonitoring social goals” (Dimension
1) and “ensuring board, management,
and employee commitment to social
goals” (Dimension 2) were indicatedas the ones where the Universal
Standards had highest level ofinfluence. The dimensions of the
Universal Standards that have highest
levels of current implementation by
FSPs were indicated to be “treat
clients responsibly” (Dimension 4)
and “treat employees responsibly”(Dimension 5).
Results from networks/associations
were also promising, with 96% being“very familiar, familiar, or aware” ofthe Universal Standards. 100% of
those noted having discussed the
Universal Standards with stakeholders
in their region (vs. 90% in 2014).

investors noted being “very familiar,
familiar, or aware” of the Universal
Standards (vs. 91% in 2014).
64% mentioned having discussed
the Universal Standards with theirinvestees at least once in the lastyear. Another significant progress
was the offering of preferential
terms by investors to financial
institutions demonstrating strongsocial performance commitment. In
2015, 50% of respondents noted
offering preferential terms (vs. 32%
the previous year).

DEFINEAND MONITOR
SOCIAL GOALSBALANCEFINANCIAL
AND SOCIALPERFORMANCE

Despite the bias inherent to thistype of survey, these results show avery encouraging trend from financial
service providers, networks andinvestors to implement the Universal
Standards and put the end clientat the center of their strategy andoperations.
In the upcoming year, the SPTF willcontinue to promote and support theawareness and implementation of
the Universal Standards around theworld and across stakeholder groups.
For this the SPTF will offer trainings
and tools for implementation, manage
the Responsible Microfinance Facility(RMF), and work with CERISE in theworldwide adoption of the SPI4 (theUniversal Standards assessment tool).
SPTF is also developing guidelines for
managing social outcomes (for FSPs
and for investors) and defining shortlist of common social indicators incertain areas of priority. Guidelines
and social indicators will be pilot
tested in the field later in 2016. The
work on outcomes is a key step for
the financial inclusion sector to beable to achieve and demonstrate its
social promise.

UNIVERSAL
STANDARDSFOR SOCIALPERFORMANCE
MANAGEMENTTREATEMPLOYEESRESPONSIBLY

ENSURE BOARD,MANAGEMENT,AND EMPLOYEECOMMITMENT TOSOCIAL GOALSDESIGN PRODUCTS,SERVICES AND DELIVERYCHANNELS THAT MEETCLIENTS' NEEDS AND
PREFERENCES

TREAT
CLIENTSRESPONSIBLY

Source: The Universal Standards for Social Performance
Management Implementation Guide, SPTF, Leah Wardle

Going further
Social Performance Task Force (SPTF) website for Universal Standards for Social
Performance Management:
sptf.info/spmstandards/universal-standards
SMART Campaign website to access the Client Protection Principles:
www.smartcampaign.org
MIX Market website for social reporting of microfinance institutions:www.mixmarket.org
CERISE website to access the SPI4 social performance evaluation tool:
www.cerise-spi4.org
Global Appeal for Responsible Microfinance website, launched by Convergences:www.theglobalappeal.org

leaticia emme
operations and special project directorsocial performance taskforce (SPTF)

Results from social investors werealso very encouraging. 100% of social

Microcredit Summit Campain website:www.microcreditsummit.org

Behind the buzz : the rise of client-centred financesafe, and likely to generate benefits
for poor clients2- emerged not only
in reaction to these crises, but asa coordinated response to a form of
microfinance that over-emphasized
growth (and in some cases, profits)
to the detriment of client well-being
and microfinance’s social mission.

To answer this question, it is worth
taking a step back, to the mid-2000s.
From 2004-2008, the microfinancesector grew at unprecedented rates,with average annual asset growthof 39 per cent 1. It seemed thatafter years of experimentation andinnovation, the sector had finallyfound its footing. But then the crises
started: Bosnia, Andhra Pradesh,
Morocco, Nicaragua… Over-indebted
clients, high rates of delinquency,
eroded trust. Soon it became clearthat unbridled growth combined witha vulnerable clientele was a risky
mix, with grievous consequences forclients and providers alike.

Responsible finance is therecalibration of the sector against
a new set of standards. Definedin the Universal Standards forSocial Performance Management,
which include the Client Protection
Principles, these standards put
clients at the centre of strategic andoperational decisions. This means
making choices based not just on
profit and growth, but on effects toclients. Like offering loan officer
incentives that value client service
quality alongside portfolio growth. Or
deciding to open a new branch based
not just on the potential revenues,
but an honest review of external
and internal factors: Is there room
for another financial provider in themarket, or is there a risk of saturationand over-lending? Do I have thecapacity to ensure new staff is welltrained to provide quality service? Can
my audit department handle adding
another branch to its annual plan, tosafeguard against poor quality loan
analysis or fraud?

Responsible finance -defined as
the provision of financial services
in a way that is transparent, fair,This is what we mean by clientcentred management, and it is notnecessarily costly or complex. It

4MICROFINANCE
Barometer 2016

does, however, take more than justre-branding one’s operations as
responsible. This is because behindthe buzz are concrete practices
and indicators. They have beencollaboratively developed and arefreely accessible. They are gaining
traction, in part thanks to audit
tools like the CERISE-SPI4, whichlets financial service providers
assess themselves against the
Universal Standards and compare
their practices to peers, throughbenchmark reports that can be sharedwith their board or investors.
The increasing ubiquity of the
responsible finance agenda isindisputable, but it is more than apassing trend. It’s about a change inperspective, from the balance sheet
back to the client. Far from beinga big new idea in microfinance,
responsible finance is a return toorigins.
1

CGAP Focus Note No. 61, Feb 2010.

2

USSPM Implementation Guide.

BOnnie Brusky
programme manager
ceriseCredit: David MaurelEvery sector has its jargon.
Buzzwords that seep into
our collective psyche,
pepper our conversations
and top conference
agendas. Microfinance is no different.
Depth. Breadth. Sustainability.
When these concepts first emergedin the mid-1990s, they had abuzzword feel. Today, however, they
are built into the sector’s DNA,
integral to our understanding of
microfinance. Responsible finance.
Social performance. Client-centred
management. Are the terms
dominating today’s conference
agendas fleeting fashion, or do theyreflect new approach to microfinance?

SPECIAL REPORT

HealthHealthy, Wealthy & Wise:
The results of integrating financial and health services

Sustainable Development
Goal 3 (SDG 3) sets out
to ensure healthy lives
and wellbeing at all stagesof life. To reach this goal,
reductions in infant, child andmaternal mortality as well as increases
in health care services, essential
medicines, and health financing
options have to be achieved.

Meanwhile, the rapid growth anddevelopment of the microfinancesector has led to an extensive,
financially-sustainable network
comprising more than 350 million
poor people who regularly interact
with a trusted group or institution.
Microfinance institutions (MFIs), by
the nature of their business, haveregular contact with clients. Clientsprioritize this interaction over thosewith other sectors because access tofinancial services is critical for them.
This dynamic creates an open andreliable access point to a populationthat the health sector has historicallystruggled to serve.
In 2012, the Microcredit
Summit Campaign estimated thatapproximately 50% of 317 reporting
MFIs globally provided some sortof health service, such as healtheducation, sales of health products

Credit: Karl Grobl for Freedom for Hunger

The public health sector has focused
historically on trying to guarantee thesupply of health services to achieve
this goal but has been challenged
with reducing the financial barriers
people have in accessing available
services. Despite efforts to improve
the supply of health services, healthcare services continue to be sparse oroperate at limited capacity, especiallyin the under-served areas where themajority of the world’s poor live. Thisin turn leaves millions of people
with limited options for preventing
and treating illness, locking them incycles of poverty and poor health.

and medicines using social enterpriseor franchise models, health fairs,
and linkages to or direct provisionof health services. Equally and evenmore naturally, these MFIs also
manage health financing products,
such as health loans, health savings,
microinsurance or prepaid packages
to help cover the health needs oftheir clients, and do so at scale andin a sustainable way as part of theircore business 1. MFIs can partnerwith the health sector to improvetheir services to make them moreconvenient and cheaper to underserved communities, in exchange for
an increase in effective demand for
health services by their clients.
When thousands of MFI clientsare armed with health informationand financial capability, the goalof achieving improved health andwellbeing is within reach. In fact,
we already know that integrated
financial and health services works.
MFIs, when they have integrated

health services or collaborated withthe health sector, have proved tobe effective at increasing healthknowledge, improving healthbehaviors and access to appropriate
health care, and improved healthoutcomes2.
Metcalfe M., Hollingworth, S., Stack, K., Sinclair, M. (2014).
Leveraging the Strengths of Two Sectors to Achieve Widespread
Change in Health and Poverty: A Business Case for Integrated
Microfinance and Health Programs. Freedom from Hunger.
Davis, CA. Available at: https://www.freedomfromhunger.org/
leveraging-strengths-two-sectors-achieve-widespread-changehealth-and-poverty-business-case1

Gray, B. (2015). Healthy, Wealthy and Wise: How
Microfinance Institutions Can Track the Health of Clients.
Health Outcome Performance Indicators (HOPI) Project
Report. Freedom from Hunger. Davis, CA. Available at:https://www.freedomfromhunger.org/healthy-wealthyand-wise-how-microfinance-institutions-can-track-healthclients
2gabriela salvadorsenior director, microfinance and health
Freedom from Hunger
Bobbi Gray
research director
freedom from hunger

Towards Universal Healthcare:
Health Microinsurance in Rural Western Africa

T

he governments of several
West African countries are
moving towards Universal
Health Care (UHC). However,these systems take time to
implement and can have difficulties
reaching vulnerable populations
particularly in rural areas, which canrepresent up to 60% of the population.
Health microinsurance is a useful
tool to complement UHC and as it
relies upon traditional microfinancedistribution channels, can more easily
access these populations. Moreover,health microinsurance allows
populations to protect themselves
against adverse shocks allowing themto invest in the development of theiractivities or the education of theirchildren. Finally, insurance can help
reinforce the supply of health services.
By giving populations the capacity to
pay for healthcare, microinsurance
injects financing into the healthcare
system allowing the network to arm
itself with medicine and equipment
Currently, we are witnessing a
positive momentum towards thedevelopment of health microinsurance.
Innovative models tailored to lowincome populations have emerged.
For instance, the healthcare system
in India combines Public Private
Partnerships technology and solvent
demand permitting to cover over 40
million people in rural areas. The
development of information andcommunications technology (ICT)and mobile technology eliminates
cumbersome banking and insurance
systems and enables to equip entire

MICROFINANCE
Barometer 2016

masses with inclusive social protection
products. New technologies ine-money and management of financial
services via mobile apps are decisivein improving mass distribution ofguarantees, improving services andreducing management costs. These are
all factors that contribute to making
health insurance more accessible at alower cost than ever before.
Microinsurance benefits from thispositive momentum and can be acomplementary tool to UHC andeven facilitate its implementation.
PlaNet Guarantee, a social businessdedicated to the developmentof inclusive insurance, has been
actively involved in the developmentof health insurance and innovativemodels in health since 2009. Basedon its experiences and its strong
implantation in West Africa, PlaNet
Guarantee is developing an innovativemodel for health coverage in thisregion.
The system relies upon several key
principles as depicted in the adjacenttable. This approach is being done
largely with the microfinance sector
and large agribusinesses. Rural healthcare products are being distributed
via microfinance institutions andcooperatives in Ivory Coast.
For roughly €20 per year and perperson, rural populations have accessto health services for chronic illnesses,
obstetrics, consultations, surgery, etc.

PlaNet Guarantee adopts a participatory
approach to microinsurance. Products
are developed in collaboration withend beneficiaries through focus
group discussions that reveal theneeds of the beneficiaries as well as
their contribution capacities. Accessto products is made possible via
collaboration with the agribusinessindustry and the rural microfinancesector. Microfinance serves as a vector
of distribution for health insurance
products. The main challenge ahead
involves bringing the initiative to scale
via mass distribution. Here technology
can play a large role. Mobile and digital
subscription and payment platforms
are being implemented to generalise
distribution to large numbers.
Access to health insurance is thenumber one demanded product inmicroinsurance. Health insurance
is one tool to promote the wellbeing of low-income populations.
This insurance is complementary touniversal health care programmes
implemented by national governmentsin the sense where it might equip
rapidly rural areas, facilitated in thatby the existence of a well-developed
microfinance sector.
François xavier albouy
CHAIRMAN
Planet guarantee
Anaar kara
partnerships director
Planet guarantee

Cover critical illness• These illnesses are the ones most common in a given
context (ex. India, the Philippines)• Effects of illness are economically devastating to a family• Cover hospitalisation costs• Defined healthcare package so supplier network must
organise itself to provide services
Render demand solvent and lower management costs• Upon diagnosis of a covered illness, cash available to coverhealth costs• If health care networks have cash available, they can stock
on medicine and improve quality of network• Control healthcare supply and not individual beneficiaries
Public Private Partnership• Public authorities help define healthcare package• Government fix public expenditures on healthcare• Private organisations via calls for tender are responible for
implementing the programme at a local level
Technology• Population equipped with smart cards with their individual data
• Hospitals equipped with biometric readers• Mobile technologies to reduce costs

5

SPECIAL REPORT
Food security										Financing agriculture: towards a logic of partnerships
to modernize farms and reach thesecond Sustainable Development
Goal (SDG 2): eradicating hunger inthe world.
It must be observed that at present,
microfinance institutions (MFI) work
mainly in urban and peri-urbanzones or finance non-agriculturalactivities in rural areas. The
reasons are well known: unsuitableloan methodologies, geographicalscattering of clients, variability in raw
material prices, risk of poor harvestand so on. Financing agriculture isboth more expensive and riskier thanfinancing other activities.

Credit : Philippe Lissac

We h a ve h o wev er s een new
developments in agricultural
finance since the 2000s, with the
emergence of new approaches aimed
at best serving small producers. For

example, Soro Yiriwaso in Mali has aclientele that is mostly agricultural:
the MFI has recruited a number ofagronomists, trained its loan officers
in agricultural matters, and adapted
its products and interest rates
according to the different types of
harvest. Numerous innovations arealso transforming the sector: mobilebanking, micro-insurance, integrationof non-financial services and so on.
Credit is becoming an integral partof a wider range of services on offer
to farmers. In Indonesia, Vashamoffers loans to farmers both in cash
and in kind in the form of fertilisers
and seeds. Each loan is accompaniedby training in agricultural techniques,
and Vasham facilitates market accesswith a guaranteed minimum price for
production.

farmer will automatically receive
compensation via his mobile, allowing
him to buy a new bag of seeds andreplant during the same season. ACRE
Africa’s micro-insurance products
have been designed and distributed
thanks to partnerships with insurance
and reinsurance companies,
microfinance institutions, suppliers ofagricultural inputs, telecom operatorsand satellite data providers.
The needs of smallholder farmers go
beyond credit and beyond investment
in agriculture. The MFIs alone cannot

satisfy the demand. In contrast, a true
ecosystem needs to be put in place toimprove access to finance, modernise
farms and increase farmers’ income.
Christen, Peck & Anderson, ‘‘Segmentation of Smallholder
households: Meeting the range of Financial Needs in Agricultural
Families’’, CGAP, April 2013.
2“Inflection Point: unlocking growth in the era of farmer finance”,
Initiative for Smallholder Finance and Rural & Agricultural Finance
Learning Lab, April 2016. This estimate excludes China, Central Asia,
the Middle East, North Africa and Eastern Europe.
1

Pierre casal ribeiro
Agricultural Insurance Research Officer
Grameen Crédit Agricole Foundation

We are seeing a multiplication inboth products and channels aimed at
helping farmers. This involves moving
outside the vision of development insilos (agriculture, financial inclusion,
new technologies) and forming
partnerships between different
categories of actors with skills andcapacities that complement eachother. In 2015, the social enterprise
ACRE Africa managed to protect
400,000 farmers against the riskof drought in Kenya, Rwanda andTanzania. One of the leading products
is the replanting guarantee; a farmer
who buys a bag of seeds will find acard, included in the price, with acode to be sent via SMS. Sending
this code will geolocate the producer
and activate a three-week insurance
against drought. If rainfall isinsufficient within the following three
weeks to guarantee germination, theCredit : Philippe LissacThere are between 450 and
500 million smallholder
farmers in the world.
To g e t h e r w i t h t h e i rhouseholds, this represents
2,000 million individuals1. They are
not a homogeneous group: some are
involved in subsistence farming whileothers’ farms thrive as a true businessand are integrated in structured value
chains. Although their needs are not
the same, they all are confronted withthe problem of insufficient access togood-quality financial services. In
total, the credit needs of 270 million
small farmers living in Latin America,
Sub-Saharan Africa and South andSouth-East Asia are estimated at$200,000 million per year 2 . At
present, barely a quarter of theseneeds are being met, and half ofthese are through “informal circuits”.
However, access to proper financial
services is an essential condition

Microfinance and family agriculture: focus on Agrosolidaria in Colombia

As Colombia is finally
dreaming of peace after
50 years of armed conflict,the toll is heavy on rural
population. First victimsof the violence and expropriations
inflicted by the various armed groups,
many have had to abandon theirland. Those who stayed then faced aturning point in national agricultural
policy. Promoting the opening ofmarkets and an agro-exporting model,
this policy was implemented firstand foremost to the detriment of thesmall family farms, who could notwithstand the increased competition,
the disappearance of lending entities
to small agricultural structures andthe massive importation of food at
low prices.

building short food supply chainsthrough these network links, which
offer locally-produced foods while
respecting agro-ecological practices.
In order to meet the financial
needs of local associations andtheir members, savings and credit
groups have been set up in certain
localities. Each group sets its own
operating and lending conditions,although agricultural activities are apriority. These self-managed funds are

increased by members’ contributions
and also by refinancing from afederated fund, itself increased bynational and international lenders
such as SIDI in France. At the end of
2014, the 50 self-managed and refinanced local funds had a cumulative
portfolio of almost €400,000. Thisfinancial link of the agricultural foodchain is essential, as it not only
allows supporting the developmentof productive activity, but also gives
family members, traditionally excluded

from standard banking systems, ameans of accessing credit to improvetheir living conditions.
This post-conflict period that is now
beginning foreshadows the return ofmany people displaced from theirlands in the coming years: they must
be welcomed, accompanied andfinancially supported. This poses agreat challenge to civil society andthe State. In this context, the offerfrom Agrosolidaria which combines

the strengthening of social links,
development of outlets and financingof the production is currently a modest
but highly significant response.

Morgane nzelemonaCommunication and Shareholder
Relations Officer
SIDI – International Solidarity for
Development and Investment

The chronic lack of financial
resources has forced some producers’organizations to consider alternativemodels to support their members’
activities. This is the case ofAgrosolidaria, which for more than
20 years now has been developing asolid economic network of small local
associations of producers, processors,
distributors and consumers, which
ensures the viability of family farms
by guaranteeing them outlets. A totalof over 32,000 families have been

6

MICROFINANCE
Barometer 2016

Credit: Agrosolidaria

The financial needs of family
farms are many, but the banking
and microfinance sectors are justbeginning to express an interestin developing loan offers aimed
at financing agricultural and ruralbusinesses. Their strategy was more
on focusing on urban clients –79.5% of the portfolios of Colombian
microfinance institutions (MFIs) weredevoted to these clients in 2014,
according to figures compiled by
Asomicrofinanzas – and also oriented
in more reliable and profitable sectors
than agriculture.

SPECIAL REPORT

Education

Microfinance and impact in education: from financing to capability-buildingMeeting Sustainable
Development Goal 4
on providing quality
education for all
by 2030 is a greatchallenge of our time. Education
fosters self-reliance and prosperity. In
its absence it breeds unemployment,
crime, and social isolation.
Population bubbles in developing
countries mean more and more youth
will need jobs, and the skills to dothem in a changing world. Progresshas been made. Since the start of
the Millennium Development Goals
process, primary education access
has increased to 91%, and literacy
and numeracy continue to reach newlevels in most places. But more needs
to be done.

requirements for education services
will be crucial.
Microfinance is an importantchannel to address those challenges.
On the supply side, MFIs can improve
the financial capacity and efficiencyof the education system. Loans toschools can channel investment
capital to address insufficient or outdated educational material or poor

physical infrastructure. These canbe further leveraged when bundledwith capacity-building services suchas training for teachers and school
owners/entrepreneurs, curriculum
development support, or enhancing
school safety standards. On the
demand side, barriers to school entry
disproportionately impact the poorest
children and youth – many of whosefamilies are microfinance clients.

Education finance products can
include credit (education loans to
pay for tuition fees, transportation,
exam-related preparation expenses,
or uniforms and other school
materials); savings (commitment
savings or term deposits to smooththe payment shock of school fees,
uniforms, school material or books);
insurance (linked to education savingplans or loan products to coverschool fees for children in specific

Governments in developing countries
struggle to collect the tax revenue tofund their needs, parents also struggle
to pay for private tuition in theabsence of quality state education.
Infrastructure and resources are often
inadequate. Curricula must prepare
children for adulthood, and young
adults need vocational skills to breakcycles of poverty within dynamic
economies which value new talents.
Governments, private companies andNGOs all have roles to play in thiscomplex problem.

circumstances); or remittanceprogrammes (to encourage migrants
to use remittances for educational
purposes in the countries of origin).
Beyond financial services, MFIs canprovide ‘Education to Employment’services including vocational trainingor capacity development services foryoung people and unemployed adults.
This important topic is the subjectof the 7 th European MicrofinanceAward, which seeks to highlightthe innovations and best practices
among MFIs facilitating access to
education. Drawing on the work of
30 applicants from 19 countries, theAward will highlight how MFIs areinnovating in this space. Finalists will
be announced in September, and theeventual winner announced during
European Microfinance Week in
Luxembourg on 17th November 2016.

sam mendelson
consultant
european microfinance platform (e-mfp)

Alongside the responsibilities ofgovernments, there is a practicalneed for private financial resources
to support education access. Cost isa major barrier for students, parents
and providers. Innovations thatbalance quality and quantity on the
supply side with the demand-side

The Ujjivan case or how to conciliate microfinance and education
thirds of the sample admit they do
not know how much they reimburse
in total (principal + interests).

What are your main learnings of the Diksha programme?
76 %

60%

46 %
40%

27 %

22 %

22 %

20%

14 %

0%

How to savemoney monthly

Importanceof financial
planningBuilding more responsiblemodels is one of themain challenges for them i c r o f i n a n c e s e c t o r.
In this perspective
financial education programmes
can be a valuable tool to address it.
The success of Ujjivan, an Indian
microfinance institution (MFI) that
BNP Paribas contributes to finance,
illustrates what happens whenmicrofinance and education converge.
A survey performed by (IM)prove1 in2015, sponsored by BNP Paribas,
demonstrates it.
Aiming at assessing the social
impact of Ujjivan’s actions, thesurvey focused on group lending
clients of women who represent 85%of Ujjivan’s portfolio. The sample
consisted of 100 customers having
completed at least 2 loan cycles at
Ujjivan. The results are remarkable:

MICROFINANCE
Barometer 2016

How to reduce
financial risks

Debtmanagement

24% of the interviewees are currently
using their loan for education, whichmakes it the third loans’ destination.
41% of mothers took a loan to pay
for the education of their children.
The education level has undoubtedly
improved as 68% of children who had
quitted school had however a higher
level of education than their mothers’(16.4 years for children, 12.1 formothers). The protagonist of thoseresults: the Diksha programme.
Launched through Parinaam,
Ujjivan’s foundation, Diksha is afinancial literacy programme aiming
at training its clients at financial risk
management and budget planning.
It is a 5-module in-depth classroom
training spread over 5 weeks.
The training provides several toolsthat attendees extensively use: 85%
use calculators, 74% saving boxes andUnderstanding
finance

Several challenges need therefore to
be addressed as the Diksha programme
has planned to involve a growing
number of customers in the years tocome. However, Ujjivan has alreadyproved how MFIs can have a significant
impact beyond financial inclusion.
With 91% of the survey participantsdeclaring their self-confidence has
increased and 65% affirming being
more involved in their household’s
decision making, the effects ofthis type of programmes on women
empowerment shall encourage MFIs
and other stakeholders to develop those
responsible and holistic practices.

(IM)prove is a French volunteering students-based
association of support to social entrepreneurs aroundthe world.
1

alain levy
head of microfinance for americaS and asia
BNP Paribas

Use of banking
facilities

56% financial diaries. By the end of
2014, more than 137,000 women
benefited from this project.
Among the 100 respondents of thesurvey, 37 have attended at least one
module of the Diksha programme.
All the women who attended the
5 modules agreed that the Diksha
programme was useful for them. For
instance, 76% affirmed that theylearnt how to save money monthly,
while 86% shared their learnings with
their family. Furthermore, 16 bankaccounts have been opened thanks
to Diksha, mainly used to save money
and receive loan amounts.
Nevertheless, there are still efforts
to be done. Although 95% knowwhat they repay monthly thanks to
informative documents about theirloan (total amount, interest rate,monthly reimbursement, etc.), two

Credit: (IM)prove80%

On the investors or lenders point ofview, it is important to include thisevaluation into the standard tools
used to assess an MFI. Together
with financial assessment, the social
performance measurements are
essential not only to select the best
MFI but also to help them to continue
the educational approach.

7

SPECIAL REPORTEnergyClean Energy and Green Microfinance in Latin America and Caribbean

Latin America and Caribbean(LAC) region is increasingly
affected by Climate
Change, with droughts,
floods or storms affecting
98.2 millions of people in 20012015. Climate change’s impact isexacerbated by high deforestation rate
and unsustainable use of land, thatare also among the main sources ofgreenhouse gas emission in the region.
In 2012 still 23 million people were
without electricity1, and 68 million
people depended on the use of
unhealthy and expensive traditional
biomass which fosters deforestation2.
The very dynamic microfinancemarket (around 20 million clients,

USD40 billion3), is mainly focusedin urban areas with increasing
competition and saturation risk, while
rural areas have low outreach andonly 6% of the microfinance portfolio
is dedicated to agricultural credits.
Green microfinance could hence bea social and market opportunity toaddress these needs.
Green microfinance outreach in Latin
America and Caribbean.
Between 2011 and 2015, 183
microfinance institutions (MFIs)
in LAC have tried, are distributing
or are presently trying to develop
green credits. In 2015, 51 MFIs
declare having specifically dedicatedgreen microcredits, 33 specificallyfinancing Renewable Energies (RE)or Energy Efficiency (EE) and other35 financing RE or EE with nondedicated loan products. The mostfinanced RE or EE solutions are solar
home systems, efficient cookstoves,biodigesters, efficient refrigerators andair conditioners4.
Despite their positive trends andhigh potentiality, MFIs products’
outreach for RE and EE remains still
limited in LAC with on average only
few hundreds of loans disbursed per
MFI per year and a total portfolio
between USD3.5 million and USD15
million in 2014. Other kinds of green
microcredits supporting sustainable
practices such as agroforestry
and recycling seem to have better
outreach. Various challenges areat stakes among which the lack ofclear understanding of the economic
opportunity of green products, and ofsound business models for RE and EE
lending. However, in presence of goodstrategies, partnerships and products,
the potential microfinance market in
LAC for climate change adaptation

Microfinance and access to electricity
in rural environments for sustainable
development: the Burkina Faso caseW

ith a rural population totaling
71% 1, 80% of economic activity
concentrated on agriculture andlivestock producing 34% of theGross national product (GNP) in
2014, Burkina Faso had 14 million people without
electricity, and a rural electrification ratio of only
2%1. In response to this difficult rural energy
situation, Energies pour le Monde Foundation(Fondem) and the RCPB2 network of financial
cooperatives in Burkina Faso (the first IMF of thecountry) launched in 2011 the MICRESOL solar
microcredit programme with the aim of distributing
1,000 solar kits to 15,000 beneficiaries anddeveloping a sustainable and replicable businessmodel.
MICRESOL offers a range of four solar kits forthe use of low-consumption lights and electricalappliances that meet the demands of households,
micro-entrepreneurs and social infrastructures.
Each kit specifies the credit conditions: total loan
amount, duration, interest rate, initial and monthly
payments. At the same time, a procedure to train
and support the technicians for the installation andafter-sales service of the solar kits is established.
These solar kits have been made accessible to
the rural population through a combination of two
essential mechanisms: on one hand, grants forbearing the cost of the equipment, and on theother hand microcredit for financing the electricalequipment and its installation and after-sales
service.

World Development Indicator 2014.
Réseau des Caisses Populaires du Burkina.

1

The case of Te Creemos, in Mexico,
proves this potential. While Criotec, acompany providing energy efficiency
refrigerators, is in charge of the
majority of the technical activities:
marketing, clients selection,
promotions of energy savings, aftersales services, etc., Te Creemos
does the credit analysis and loans
disbursement. Mobile technology andpsychometric credit scoring support
credit disbursement. The strong
partnership, common objectives andbalanced roles distribution, are thekey factors for the success of the
project. At the end of October 2015
Te Creemos declared having disbursed

Today, various MFIs operating in rural areas
have understood that they could play a role infacilitating access to clean energy for off-gridvulnerable populations. Rural MFIs have twoadvantages: they have developed extended
networks in rural areas and they offer loansthat help overcome the financial barrier
to investment in a solar solution. For rural
MFIs, getting into energy lending is usuallyseen as a strategy to respond to their clients’needs and fulfil their social mission, as wellas to diversify their products, differentiate
from competitors, attract new clients andnew sources of funding.

Credit: Cyril Letourneur, Fondem

Since 2013, PAMIGA has been providing
technical assistance to its member MFIs
willing to engage in this area. The approachchosen was a “two-hand” model, where the
MFI sets partnerships with one or several
solar solution providers. In such a model,
the adequate selection of providers, the clear
definition of responsibilities among partners,
as well as the development of last mile agent
networks for effective customer services, aresome of the key elements to put in place fora successful and sustainable involvement inclean energy lending1.

MICROFINANCE
Barometer 2016

IFC (2013), “Access to Energy in Low-income
Communities in the Latin America and Caribbean
Region: Lessons Learned and Recommendations”.
3
Trujillo, V. and Navajas, S., (2015). “Inclusion
financiera en América Latina y el Caribe: datos ytendenciasé, edición especial para Foromic 2015,
FOMIN.

Green Microfinance in LAC Current State andOpportunities”, IDB Study by D. Forcella, in collaboration
with D. Castellani, F. Huybrechs and M. Allet.

4

davide forcellaassociate researcher
cermi
Co-Head of the e-MFP Microfinance andEnvironment Action Group
european microfinance platform (e-mfp)

Z

yves maigne
director
Énergies pour le monde foundation (fondem)

8

IEA (2014), World Energy Outlook 20142

aynaba is an Ethiopian farmer
and mother of 5 children. She
lives in Tijo Kerensa, a village
with no access to the electricity
grid. Earning less than USD2.50
a day, Zaynaba and her husband do theirbest to provide better living conditions totheir children. In June 2015, through her
microfinance institution, Zainaba was able
to purchase a solar lantern on credit. The
household then stopped using kerosene
lamps, which Zaynaba considered as costly,unhealthy, and not bright enough for her
children to study. Thanks to the solar kit,
the family significantly reduced its monthly
energy expenses from Birr 120 to 40, savingaround Birr 80 per month (€3.50). Zaynaba
has now finished repaying her Solar Loan andis thinking of applying for a second loan forinvesting in a larger solar solution.

At the end of 2014, a sample of 100
beneficiaries representing different social levels
and professional categories was selected for an
initial impact analysis. 22% of households were
found to have started an economic activity, 62%of children can study in the evening thanks to
the kits, and 38% of households claimed to havestopped using batteries. With regard to the current
energy crisis and the willingness of the Burkinabe
government to solve the situation, one can believethat this renewable energy distribution tool has abright future.

2

Partnerships impact on green
microfinance

USD860,000 and it forecasts to growits energy efficiency portfolio to morethan USD9 million by the end of
2016. The MFI has discovered a newmarket sector and it is integrating
green dimensions in its procedures.

Facilitating access to clean energy:
microfinance impact in rural Africa

A particular feature of this programme is theinvolvement of several actors and the structuring ofoperations. Fondem is responsible for coordinating
and verifying the quality of local services, the linkwith donors and proper operation of the grantelement. RCPB manages the development andimplementation of financial methods, the training
and support of its loan officers and the followup of loan documentation. Finally, bank agencies
manage the distribution of the kits to clients. In
December 2013, 11 bank agencies had distributed
solar kits throughout Eastern region. In early
2014, the marketing area was extended to cover
26 agencies, covering South-East Burkina Faso.
1,000 kits should be set up by the end of 2016.

1

and mitigation can be estimated atvarious hundreds thousands clientsand hundreds millions dollars.

Of course, one cannot expect microfinanceto overcome all barriers to access clean
energy. Involving other actors and testing
different models remain crucial andcomplementary. However, rural MFIs stillseem in a position to play a positive rolein ensuring “access to affordable, reliable,
sustainable and modern energy for all” (SDG
7). A recent study conducted by PAMIGA in
March 2016, with 215 Solar Loan clientsand 61 control clients from two partner MFIs
in Ethiopia (Buusaa Gonofaa and Wasasa),
shows interesting results in this regard. Using

Credit: PAMIGA

Based on the Inter – American Development
Bank study: “Green Microfinance in Latin
America and the Caribbean: Current Stateand Opportunities”, done by the author andcollaborators.

a difference-in-differences methodology,
the study demonstrates that the provisionof Solar Loans has been instrumental in:(a) facilitating access to solar lamps for
92% of concerned households; (b) totally
stopping the use of kerosene lamps for 40%
of households; (c) extending the average
number of hours of lighting from 4 to 5
hours daily; (d) reducing on average energy
expenditures by 64%. Besides, 70% ofconcerned households perceive that they
have a better access to energy in terms ofcost, power, healthiness, or safety.
Today, PAMIGA implements similar
programmes in Kenya, Tanzania, Senegal,
Cameroon and Benin, supporting its
member MFIs in engaging in an impactful
microfinance.
1
For more on PAMIGA’s methodology and lessons learned onenergy lending, please refer to: Allet M. (2016), “Solar Loansthrough a partnership approach: lessons from Africa”, FACTS
Reports Special issue – Decentralised rural and peri-urban
electrification in emerging and developing countries; and Allet M.
(2016), “Energy Entrepreneurs: an innovative model to reach thelast mile”, FACTS Reports Special issue – Decentralised rural andperi-urban electrification in emerging and developing countries.

marion allet
environment & microfinance senior officer
pamigaSPECIAL REPORT

HabitatDecent, affordable housing for all: Why does housing microfinance matter?

C

an microfinance be aneffective response to all of
the challenges faced by poor
people? Probably not, but it
might be the best response
to a few of those challenges. Safe,
secure, affordable and appropriate
housing is one of the “big three”
priorities for low-income families
around the world, along with food andprimary education1. Access to suitable
shelter is linked to other development
outcomes such as better health, moreconsistent participation in the labour
market, stronger ties to the communityand better educational outcomes forschoolchildren.

investment they will ever make. Yet,in developing economies, the WorldBank’s latest figures2 show that lessthan 10% of people are able to borrowfrom a formal financial institution topurchase a home. A comprehensive
report on the global housing crisis
from the McKinsey Global Instituteestimates that 330 million urbanhouseholds around the world live in
substan¬dard housing. More than 200
million households in the developingworld live in slums.

For many people, buying or building
a home is the largest financial

Credit: Thomas White for The MasterCard Foundation

The problem is particularly acutein Africa where the majority ofhouseholds cannot afford to buy
or build even the least expensive
house. The United Nations Centre for
Human Settlements provides figures
which illustrate this stark reality:
Latin American households need
5.4 times their annual income to buy
a house. In Africa, 12.5 times theaverage income is required. The lackof housing finance in Africa meansthat middle class and low-income
earners must self-finance their own
home construction or improvement.
Often, work takes place in unplanned
areas with inferior materials andunsafe outcomes.
There is, however, a solution:
housing microfinance specificallytargeting low-income populations.
In 2012, Habitat for Humanity, inpartnership with The MasterCard
Foundation, developed the “Building
Assets, Unlocking Access” project3 totest whether a market-based approach
could help address the affordable
housing challenge. Research in
Uganda and Kenya confirmed that
there was significant demand forincremental housing construction
finance since it allows lower-income
earners to improve or build theirhomes step-by-step, with repayment
rates that match their repayment
capacity.

This project highlights theimpact microfinance can have on
improving access to decent andaffordable housing and its potentialof development. Expanding housing
microfinance on a large scale canhelp transform the lives of millions
of people living in poverty and makecities and territories inclusive, safe,
resilient and sustainable.
Maes and Reed (2012). “State of the Microcredit
Summit Campaign Report.” Microcredit Summit
Campaign.

1

Demirguc-Kunt, Klapper, Singer, and Van Oudheusden(2015). “The Global Findex Database 2014: Measuring
Financial Inclusion around the World.” Policy ResearchWorking Paper 7255, World Bank, Washington, DC.

2The “Building Assets, Unlocking Access” Project isavailable at http://www.habitat.org/housing-markets/
shelter-finance/services/projects/building-assetsunlocking-access3

That research persuaded financial
service providers to structure newlending products and services
specifically tailored to poor
populations. The result: to date, sevenfinancial service providers in those
two countries have processed about
14,000 housing finance loans for
low-income people. Early indications
are that those people repay theirloans on time and are satisfied withthe experience because it responds toreal needs and has real impact. Whatremains to be seen is whether there isa sustainable business case for banks
and other financial service providers
to offer this type of product.

ruth dueck-mbeba
senior proramme manager,
the mastercard foundation

Building the future of the sector,
Indian water and sanitation initiative:
a positive challenge for the microfinance sector one house at a timeA

recent study by WaterAid1
concluded that around
60% of people in India
have no access to a toilet.
The resultant health crisis
is a serious issue. In India more than
140,000 children under the age offive die each year from diarrhoea.
With the World Bank estimating thatover 20% of India’s population lackaccess to electricity, there is also a
growing demand and dire need forrenewable energy products as well as
appropriate sanitation.

beneficiaries. Various types of loans
were issued, including loans for theconstruction of toilets, piped water
connections, water storage units andwater filters, as well as renewableenergy loans for solar lighting andenergy-efficient stoves. Maanaveeya
also supported partners in attempts
to raise awareness about health,hygiene and the environment throughcampaigns, using street plays,
documentary films, video clips anddemonstrations. Over 1 million people
were reached through these activities.

The WATSAN project: Overcoming
challenges with concrete results

The partners involved in the
WATSAN programme had to face real
challenges and lift various obstacles.
First of all, continuity in the project
operations needed to be ensured
in the field by local implementersrather than sponsors and promoters.
Secondly, adequate monitoring was
requested to assess the usage of the
facilities by the end beneficiaries.
Thirdly, a permanent offer of aftersales services had to be deployed
for technical maintenance of water
purifiers and solar lanterns.

To address these challenges,
Oikocredit’s Indian subsidiary,
Maanaveeya, and the International
Finance Corporation (IFC) jointly
funded a USD 1 million Sustainable
Financing for Safe Drinking Water,
Sanitation and Renewable Energy
project (known as WATSAN2). The
three-year project, initiated in 2011,
was designed to help microfinanceinstitutions (MFIs) provide additional
products and services to improve
livelihoods.
As part of the WATSAN project,
Maanaveeya provided loans to 12
partner MFIs with a total of 234,000

The above targets were reached byaligning the WATSAN implementation
strategy with the interested MFIs’
business plans, by earmarking a partof their loan portfolio to WATSAN
and renewable energy solutions, bystrengthening standard monitoringprocedures and by conducting ad
hoc project assessments. Specificattention was also needed to selectthe appropriate technical solutions
and related services for performance
improvement.
Last but not least, the WATSAN
project took-off after grant funds werespent for awareness and promotionof WATSAN and renewable energies,
so that the end users would see thebenefits and were willing to go for it.
The WATSAN project is alreadymaking a difference in India. The
numerous women who participatedin the project said they felt a greater
sense of self-respect as well as safety,
by having their own toilet. Aside fromreducing the incidence of water-borne
and faecal-related diseases, accessto water and sanitation facilities also
saved the families time and effort infetching water.
The project has shown that whenfinance is made available to lowincome households, it enables themto purchase sustainable technologies
that improve their health and living
conditions. The success of the projectshows that MFIs can provide theirclients with other types of products
and services outside the traditional
lending model.
1
Feeling the Pulse, A Study of the Total Sanitation
Campaign, WaterAid, 2008.
2
WATSAN Sustainable Energy, Oikocredit, Maanaveeya
Development & Finance Private Limited.

Credit: Opmeer Reports

ging ledesma
Investor relations andSocial performance director
oikocredit

MICROFINANCE
Barometer 2016

At the 17th Microcredit

Summit, Ms. Deepali
Sood from Habitat for
Humanity, shared a
remarkable statistic:
just 2% of microfinance capital is aimed at housing finance.
Why is this remarkable? Consider that in 2015 housing loans
accounted for 73% of household debt in the United States,
82% in France, and 88% in the
United Kingdom. There is noquestion that the primary goal of
consumer lending in high income
countries is to fund housing.
The basic needs of poor families are not much different. It is
well known that clients often divert “microenterprise” credit forhousehold needs, with housingnear the top of the list. The problem is that typical microfinanceloans, designed for microenterprise lending, are too short andtoo small to meet most housingneeds. The need for effective
housing finance remains largely
unmet.
The challenge of accessto housing finance

Most poor families around theworld rely on incremental building to construct homes for theirfamilies. A young family may
save first to buy a small plot,
then save again to lay the foundation, walls, roof, windows, andadditions as the family grows.
Or a family may build a temporary structure, then improve itover time. The process can takedecades. Countless cities andtowns in Asia, Africa, and Latin
America have neighborhoods
filled with such half-finishedstructures, many of them alreadyoccupied.
E ven such incremental buil-ding requires significant funds
at each stage – one can’t build
half a wall or half a roof. As aresult, families will save overtime, usually by purchasing andstocking construction materials
until they have enough to proceed. Or they will string together
savings and loans – including
some microcredit – to make theincremental investment. But theprocess is inefficient and risky –bricks are stolen, cement bags
get waterlogged, roofing sheets
break.
The opportunities for housing

microfinance

Housing microfinance – loansthat are 2-3 times larger and2-3 times longer than traditional microcredit – are perfectly
suited to finance such building.
But although the products havebeen around for more than a decade, they remain a minor partof microfinance overall. One
largely unacknowledged reason
is that housing loans are lessprofitable – at least in the shortterm – mainly because to remain
affordable, their interest rates
have to be lower than those of
shorter-term microcredit.
But MFIs that stick to the highyields of traditional microcredit
without substantially diversifying
into housing and other segments
are taking a risk. Competing withmany other MFIs over a limited
customer base of microentrepreneurs is not a recipe for either
long-term growth or for greater
financial inclusion.
As Ms. Sood highlighted at theMicrocredit Summit the low levelof investment in housing finance,
she also challenged the audience
to bring housing finance to 10%
of total investment. Now that’s aprescription worth following.
daniel rozas
senior microfinance expert
european microfinance platform (e-mfp)

9

microfinance In France and europe
The development of personnal and professional microcredit in France
In 2005, the French State created the Social Cohesion Fund, or FCS, whichguarantees professional and personal microcredit. The management of thisfund was originally confided in the Caisse des Dépôts, which since then has
contributed to the development of microcredit in France.
Personal microcredit
The Caisse des Dépôts has
established partnerships with sometwenty financial partners – retail banks,
specialist financial establishments,
municipal lenders and microfinanceinstitutions – which grant the loans.
Applications are initially examinedby an accompanying assistant, who
may be a social or voluntary worker
from a financial exclusion prevention
association. When the application is
made, the plan is assessed according
to the social or professional insertion
that it could bring about; budgetaryevaluation allows to advise on the
managment of bank accounts, toopen access to social benefits andto verify the applicant’s capacity forrepayment. For the 10 years for which
the FCS (www.france-microcredit.
org) has existed, the Caisse desNumber of guaranteed personal microcredits
distributed in France per year

Dépôts website has itself undergone
substantial renovation; its visual
identity has been revamped and it
is now possible to make and monitor
applications via the site.

14,774

Division of personal microcredits according
to subject in France in 2014
Employment & mobility

15,188

Housing
Other

Education & training
Health12,866

1%

11,870

Personal microcredit in figures at theend 2015:•
84,130 personal microcredits
granted since 2006;•€192.2 million: nominal
distributed since 2006;•€2,285: average loan amount.

7%

3%

9,941

13%

7,884

5,520

76%
3,563
1,979
2007

2008

2009

2010

2011

2012

2013

2014

2015

Professional microcredit
FCS’s support for professional
microcredit translate into several
ways:•
Allocating the state funds
pooled under FOGEFI, theGuarantee Solidarity Fund forFemale Entrepreneurship andInclusion•
Supporting guarantees of“Galland law” territorial funds,
managed by France Active•
Supporting accompanying
enterprise creation networks•
New support for enterprisecreation and recovery (Nacre).

(mainly from Adie), social integrationenterprises and solidarity structures.

In 2015 the FCS contributed €18.5
million to these fields, including€7.4 million for classic guarantee
systems and €10 million for “Nacre”
loan resources guarantees loans
guarantees, the balance being
assigned to finance the accompanying
networks. This contribution has
allowed FOGEFI to implement 15,210
files (an increase of 9% comparedwith 2014) equivalent to €65.2
million, showing an increase in the
average guarantee amount. Thanks to
the FOGEFIT, more than €108 million
in loans were granted in favour of
female entrepreneurship, microcredit

In total, more than 37,231 jobs werecreated or consolidated by the actionof the FCS (excluding Nacre) in thefield of professional microcredit in2015.

Number of professional microcredits
distributed in France per year
19,704The “Galland law” territorial funds, towhich the local collectives contributejointly, have made significant progress:
4,021 guarantees representing €61
million. These guarantees concern
both very small companies (VSC) andsocial entreprises.

17,60016,313

16,1502012

2013

15,671

15,168In 2015, the guarantee of the“Nacre” loans via the FFS allowed
about 9,600 loans totaling €36
million.

economy and social cohesion departmentgroupe caisse des depots (CDC)

2010

2011

2014

2015

The Commission’s support to microfinance institutions in EuropeM

icrofinance has emergedat the European levelas a crucial policy tool
to fight against socialand financial exclusion,
promoting self-employment andsupporting microenterprises. Although
the sector has been steadily growing
over recent years, in Europe there is
still a significant unmet demand for
persons and microenterprises who
remain excluded from the traditional
financial system.
To fill this gap, the European
Commission has taken specificactions to increase the availability
and accessibility of microfinancefor vulnerable groups andmicroenterprises. The Commission
provides support to the sector in theform of funding and capacity building
primarily through the Employment andSocial Innovation (EaSI) programme,a financing instrument to promote ahigh level of quality and sustainable
employment, guaranteeing adequateand decent social protection,
combating social exclusion and poverty
and improving working conditions1.
The programme covers the period
2014-2020 and has a budget of €919

10

MICROFINANCE
Barometer 2016

million, of which 21% is specifically
dedicated to support Microfinance andSocial Enterprises.
Under the EaSI programme, theCommission does not directly financemicroentrepreneurs, but rather enables
selected financial intermediaries toincrease lending to vulnerable persons
and microenterprises, providingthem with guarantees and funded
instruments2. In fact, the objective
is to increase the availability of
microcredits for vulnerable groups
who want to set up or develop theirbusiness, and micro-enterprises wholack access to traditional credit frommainstream banks.
On the occasion of the 1st European
Microfinance Day organized by theEuropean Microfinance Networkand the Microfinance Center on 19th
October 2015 and with the supportof the European Commission, 6
microfinance institutions (MFIs) fromthe Netherlands, France, Ireland, Italy,
Spain and Romania have signed thefirst EaSI guarantee agreements under
the witness of the Commissioner Mrs.
Marianne Thyssen. Experts believethat 20,000 micro-enterprises willaccess loans worth €237 million
through the guarantee scheme. As
of February 2016, an additional 5
guarantee agreements have beensigned, supporting the disbursementof loans to micro-enterprises in Czech
Republic, Poland, Spain, France andthe United Kingdom. Some observers
expect that the guarantee fund will be
victim of its success and quickly run
out of funds.
In addition to the financial
instruments and as a continuationof the pilot technical assistanceprogramme known as JASMINE(in the programming period 200713), the Commission continues its
support to the institutional capacityof the MFIs. Fi-compass, a platformof the European Investment Bank, ismanaging the technical assistance(TA) programme under EaSI on behalfof the Commission. The TA programme
was launched in 2015 and offers three
types of support.
•

Assessments / ratings
carried by an independent
specialised service provider
and complemented by tailored
trainings addressed to the staff

and management of the MFI.
The first 25 MFIs beneficiariesof this capacity building support
were selected in 2015.
•

Advice to MFIs regarding theEuropean Code of Good Conduct
for Microcredit Provision (Code)through trainings and evaluationof the Code’s implementation.
The Code is a set of common
standards in terms of theoperation and reporting of
MFIs which has been built on
recognised best practice inthe sector. For MFIs, signingup to the Code has become apre-condition for accessing
assistance from EaSI Technical
Assistance and EaSI guarantees.

•

Access to market development
services such as workshops
and seminars on microfinancerelated topics, and a helpdesk
in order to promote the spreadof best practices and improvethe visibility of microfinance inEurope.

•All the initiatives presented
aim to expand the provisionof microfinance in Europe andthereby promote employment
and social inclusion. A midterm evaluation of the EaSI
programme for the period
2014-2016 is expected in2017 and will be key to assess
if the activities implemented
are having an impact on the lifeof vulnerable people wishing
to start up a microenterpriseand on those who have existing
micro-enterprises.
1

http://ec.europa.eu/social/main.jsp?catId=1081

The funded instruments are provided under theEuropean Progress Microfinance Facility that until
2016 will run alongside the Microfinance and Social
Entrepreneurship axis of the EaSI programme.

2

Nicola BENAGLIO
policy and research officer
european microfinance network (emn)microfinance In france and in europe
The answers of housing microcredit to poor housing in FranceUnhealthy or makeshift housing, fuelpoverty and all other forms of bad
housing can have adverse effects
on the health of those who live in it.
This issue concerns around 600,000
housing units all over France.

Examples of housing renovation works realised
thanks to housing microcredit
BeforePoor housing conditions can lead to different
health problems. For example, water infiltration,
poor ventilation, inadequate heating or no heating
may cause or aggravate allergic or respiratory
problems. In old buildings, wear and tear can also
bring to the degradation of lead paint which is ofparticular concern for young children who may
ingest the dust and flakes: over 5,300 children
in France currently suffer from lead poisoning,a condition that causes serious and irreversible
problems of development.

Although constantly increasing (+30% in 2015
compared with 2014), the number of households
financed each year is still low (less than 300 in2015). The figure is to put into perspective becauseof the increase in public aid available as well as
the complexity of the files processed, which require
an important long term support. This support
is provided by operators specialising in housing
renovations, the most prominent being the Soliha
network.

In 2015, a study conducted by the Abbé Pierre
Foundation highlighted that the frequency ofallergic and respiratory problems has increased
within the 5 million households facing fuel poverty,
that is, cannot be properly heated because thepoor state of the accommodation makes heating
unaffordable. Excessive use of portable heaters tocompensate for a deficient heating system createsa further risk to people’s health.
In view of this, carrying out housing improvement
works appears to be a major challenge. It requires
significant financial input for poor ownersoccupiers and must go along with public support.
Since its creation, the National Housing Agency(ANAH) has been offering assistance to owners
for carrying these works, including, in 2012, the“Habiter Mieux” (Living Better) heating renovation
programme. Depending on the territories, thisassistance is complemented by local public andprivate programmes.
However, public programmes cover only apart, namely 60-70%, of the renovation costs.
The remaining part is difficult and sometimes
impossible to finance for vulnerable households
who, for most of them, don’t have any savings.
For these households, housing microcredit isa solution, sometimes the only solution, thatallows achieving their renovation work projects.
Moreover, housing renovation can give access to
new benefits that, in return, facilitate paying backthe microcredit. For this reason, the Abbé Pierre
Foundation has conducted an experiment with
the Caisses d’Epargne, providing its support tohousing microcredits in order to encourage publicauthorities to propose a large scale solution.

In its 2013 edition, the Microfinance Barometerfeatured a French housing microcredit
experiment. Led by the Caisses d’Epargne andguaranteed by the Social Cohesion Fund (FCS)-a public fund for guaranteeing microcreditand the Abbé Pierre Foundation, the microcredit
programme targeted owners in difficulty, with theaim of financing housing renovation, thus reducing
their energy bills. This was an ambitious challenge
given the scale of energy insecurity in France, which
affected about 2 million homes1. What would theresults look like after three years?

Housing microcredit finances the installation of
new heating systems, insulation of buildings, and toa lesser extent the restoration of badly dilapidated
housing. It reaches a different public from thetraditional microfinance borrowers. 72% live in rural
areas, compared with the usual 35%. Their averageage is also higher, as one in two borrowers is retired(compared with 4%). The average total of a housing
microcredit is €7,500, compared with an averageof €2,000 for personal microcredit. That said,
the average income for beneficiaries of housing
microcredit is similar to that of personal microcredit
beneficiaries, and this means a doubling of theaverage repayment period from 30 to 60 months.
In the dynamic of this national experiment, in 2014
Crédit Municipal de Paris and its partners launched
a new microcredit for low-income (on average, lessthan €1,200) homeowners in Île-de-France region.
In addition to the support for housing renovation to
reduce energy insecurity, beneficiaries can also beprotected against risks of losing their house whenunable to finance their share in the works voted by
the association of homeowners.

After

To sum up, housing microcredit has met theneeds of a new customer base, homeowners whose
financial situation does not allow them to bear
condo fees and renovation works. In this regard,these national experiments played a pioneering roleand seem to have inspired the public authorities
which have announced the creation of a new 0%
eco-loan, guaranteed by the state. This is a fineexample of financial innovation and partnerships
for housing and sustainable development.

Credit: Thomas Busk/Cultura/Photononstop

1

Julia Faure
programme manager
abbé pierre foundation

Source: National Housing Agency (ANAH).

All the statistics presented in this article are those of the Fédération
nationale des Caisses d’Epargne.
2

cedric turini
CSR manager
fédération nationale des caisses d’épargne (FNCE)

Microcredit in France: a steeping stone into employment
Personal microcredit
Personal microcredit, unlike its big
brother professional microcredit, does
not have a direct link to employment,
as it does not finance business creation. In France, the law specifies thatit must finance professional or social
integration projects. However, it is
the first objective that has overtaken:
since 2005, 3 out of 4 microcredits
have been used to finance a job access or retention project. The principal
reason for this is doubtless the factthat financing a professional integration project must be the most effectivemeans of helping improve the poverty
situation of the applicants. But is thisappreciation justified?
In 2013, the Caisse des Dépôts
conducted a study of the impacts

MICROFINANCE
Barometer 2016of personal microcredit. This study
showed that when the borrowers followed a professional objective, twothird of them saw their situation improved or preserved. The scope of theresults, however, varies according to
the initial situation of the applicant:in 72% of cases the borrowers who
had a job when they made the application accomplished their project on
the long-term (keeping their current
job, having a better job, etc.), while
55% of the unemployed borrowers saw
a long-term success.
So what is the impact of personal
microcredit on borrowers’ living conditions. Here also we see a positive effect: borrowers having a professional
integration project saw their average
income increase from €771 when they
applied for the microcredit to €881
at the time of the study (the period

varying from 6 months to 5 years).

Professional microcredit

Even though we know that poverty
and social exclusion have many different aspects, professional integration is one of the key factors to fightthem. The positive results that wehave just reported should convince
us that personal microcredit has thepower to meet the challenge.

In 2015, the benefits of professional
microcredit guaranteed by the Social
Cohesion Fund (FCS) totaled 37,231
jobs created or consolidated in all of
the fields in question: bank and extrabank guarantees for very small companies (VSC) and social enterprises increation or development. This figure isalmost unchanged in comparison withthe previous year.
In retail, 20,750 jobs were generated in the VSC sector, and of these,
7,861 were covered by bank guarantees (especially related to female
entrepreneurship), while 12,889 werecovered by extra-bank guarantees such
as Adie’s, which saw a particularly significant growth of 15%.

With regard to social enterprises, thenumber of jobs created or consolidated was 16,482. In addition, in 2015
about 8,700 businesses were financedby ‘‘Nacre’’ loans (new accompaniment for the creation and restorationof businesses) loan. On the basis ofdeclarations by project participants,
it is anticipated that 12,800 jobs willbe created thanks to “Nacre” loans,
although it is not possible to add thistotal to the jobs data for the standard
guarantee as some project could benefit under more than one system.
economy and social cohesion
departmentgroupe caisse des depots (CDC)

11The interview
Interview with Professor Muhammad Yunus

Credit: Grameen Crédit Agricole Foundation / EDM‘‘We have created a financial system concentrated on the lucky ones’’
How is microfinance a tool to reach theSDGs?

young people and social businessare important; it all must be merged
together so that we can move forward.

Microfinance has already proven to be
an important tool. If you leave people
out of the financial system, they areat the mercy of everybody else. With
the support of a financial institution, I
don’t have to depend on anybody, I cantake care of myself. I can go out, takethe money and start my own life andcareer. All these women taking loans
from microfinance banks and NGOs
are not looking for job opportunities.
They instantly become entrepreneurs
and they keep growing. But this has tobe done as a part of the whole entire
financial system! It should not be afootnote in some financial discussion.

How can we all contribute to building a
3Zero world?

What evolution do you see for the
microfinance sector?

What should we do up to 2030 toachieve the Sustainable Development
Goals (SDGs)?
The 17 SDGs are a list of our mostimportant problems. We are decided
to bring them to a reasonable level inorder to avoid crossing poverty, hunger
and climate change thresholds. For
the 15 years to come, we have toconcentrate efforts to make sure

we can undo the problems we havecaused in the past. So here is myposition: why don’t we keep on doing
efforts to make sure we implement
these 17 goals while undoing,changing and correcting the things
which went wrong? This is what wehave to focus on. Our economic
framework is an example: 1% of theworld’s population owns 99% of theentire wealth, and tomorrow it will beworse. We have created a financial

system concentrated on the “lucky
ones” while the “unlucky ones” arecompletely forgotten. It is not justa question of giving microcredits;
microcredits are important, but it
is all about redesigning a financial
system, open to everyone who has
been rejected before.

We have a prepared ground and we
can create financial institutions. NGOs
can become microfinance banks. They
are doing the whole thing but the law
does not allow to deliver licenses. I
say: change the law, create the law, sothat microfinance NGOs can become
microfinance banks and address allthese issues. There are several banks
in microfinance such as the Grameen
Bank which tackles many aspects of
the rejection we have been sufferingfrom. Not only it provides loans, it also
provides saving facilities, insurance
facilities, pension funds and student
loans. Provide all the services, notjust one or two, stop there, and say“we have done it”. There is still muchto do. That is where technology,

We have to believe that we can do it, it
is not something impossible. We are ina phase of world history where nothingis impossible. It is about making up ourmind. If we make up our mind, we will
make it happen. Technology is there,creativity is there, entrepreneurshipis there. Young people are best
suited to address all these issues
and redesign things. Redesigning is
not just doing the same thing overagain, a little less and a little more.
You have to redesign the concept,
redesign the framework so we canmake it happen. There are two kindsof business: business to make moneyand business to solve problems. You
can do both. Give people options, giveyoung people options. Unemployment
is a major issue that we need toaddress. We should believe that weare entrepreneurs, not jobseekers.
Then suddenly everything changes.
Use your creative power and makesure what you are using it for. You areusing it to create a new civilisation, acivilisation that will not fuel all these17 troubles that we have. We can havea new start, a fresh beginning.
muhammad yunus
founder of the grameen banknobel peace prize laureate
interview by Convergences

Thank you to the members of the 7th Microfinance Barometer and to the authors : Abbé Pierre Foundation (Julia Faure); ACTED (Adrien Tomarchio, Silvia Icardi); BNP Paribas (Claudia Belli, Alain Levy);
CERISE (Bonnie Brusky); CERMi (Davide Forcella); Citi Inclusive Finance (Marjolaine Chaintreau); Crédit Coopératif (Anthony Degouve); Crédit Municipal de Paris (Sandra Bythell); Energies Pour leMonde Foundation (Yves Maigne); ESC Dijon (Arvind Ashta, Djamchid Assadi); European Microfinance Platform - e-MFP (Gabriela Erice García, Sam Mandelson, Daniel Rozas); Fédération nationale desCaisses d’Epargne - FNCE (Cédric Turini); Grameen Crédit Agricole Foundation (Pierre Casal Ribeiro, Maria Franco, Philippe Guichandut, Jean-Luc Perron, Muhammad Yunus); Freedom From Hunger(Bobbi Gray, Gabriela Salvador); Groupe Caisse des Dépôts - CDC (Frédéric Levet, Sébastien Poidatz); MasterCard Foundation (Ruth Dueck Mbeba, Roger Morier); MIX Market (Mohita Khamar, Blaine
Stephens); Oikocredit (Gaël Marteau, Gind Ledesma); OXUS (Sébastien Duquet); PAMIGA (Marion Allet, Quentin Antoine, Snezana Jovic, Claire Ozanne, Kerman Wildberger); PlaNet Guarantee (Anaar
Kara); European Microfinance Network - EMN (Nicola Benaglio); Social Performance Task Force (Leticia Emme); Solidarité Internationale pour le Développement et l’investissement - SIDI (Laurent
Chéreau, Morgane Nzelemona).
Convergences : Joséphine de Bartillat, Alix Bouillon, émilie Chassagnard, Carolina Herrera, Mathilde Ligneau, Camille Pesquet, émilie Poisson, Céline Rotcajg, Fanny Roussey, Carine Valette, Mathilde
Sulowski, Alice Wagner.
Suggested reference for this document: Microfinance Barometer 2016 / Convergences. Lay out: Convergences. Printing: Chevillon Imprimeur

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MICROFINANCE
Barometer 2016