Social finance in progress Social Finance and inclusion in Europe

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Social finance in progressSocial Finance and
inclusion in Europe

• Linking North - South networks
• expectations,
• added values,
• co-operation

Summary SIDI and the microfinance networks in
the South Microfinance networks in the
South Analysis and prospects
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20 M since 1983
5000 Solidarity savers
Shareholders
Alliances in Europe
Technical assistance
5 M as equity, loans, guarantees
Partners (IMF,PO) from developing and emerging
countries
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Why is SIDI working with networks?

• As a financial stakeholder, SIDI can hardly
  absorb all requests of a rising relevant and
  sustainable demand,
• It is an acknowledgement of local endeavours to
  bring about policies locally with legitimate
  actors,
• It helps create leverage and improve social
  viability,
• When requested, SIDI can help design national or
  regional policies or instruments,
• A highlight is proposed on 3 regional
  microfinance networks from developing areas (not
  exhaustive)
• MAIN in Africa
• FORO-LAC in Latin America and the Caribbean
• SANABEL in the Mediterranean

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The criteria of SIDI to collaborates with networks

• Voluntary membership,
• Local/ regional decision taking organs and
  processes,
• Vision of financial services integrating 3
  pillars of sustainability IMF, clients and their
  environment,
• Institutional building to improve practices,
• A vision for advocacy on strong issues, such as
  for instance rural finance,
• Action plan designed on the request of their
  members agenda issued in the developing
  countries (neither in Europe nor in N. America),
• Selection of a competent and experienced
  coordinator coming from the area,
• Identification of quality resource persons,
• Definition of practices based on experience, not
  on international dogmas,
• Transparent management,
• Solidarity dimension upgrade and sponsorship of
  poorer members by better off ones.

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Microfinance and social finance in Africa (1) A
brief outlook

• The last 20 years have seen the development of a
  new wave of MFIs in almost all African countries
  offering savings and credit services to urban and
  rural people who have been neglected by the
  formal financial institutions. But microfinance
  is not new (stokvels).
• Two contending views with regard to regulation
• Pro-regulation regulation and supervision is
  prerequisite for the legality and protection of
  the institutions and their financial operations.
• No regulation access to financial services by
  the poor without any restriction is the major
  issue. No rush to regulate!
• A broad spectrum of actors involved in
  microfinance with relevant services savings and
  credit co-operatives, NGOs, Mutuelle de
  Solidarité, classical MFIs, ROSCAS, Village
  banks, Rural and agricultural banks (mainly
  through refinancing), etc
• Professional associations (farmers, fishermen,
  craftspeople) tend to create their own financial
  tools for lack of satisfaction of the present
  supply (including the one of MFIs).

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Microfinance and social finance in Africa (2)
Objectives of the alternative financial systems

• Long term objectives
• Poverty reduction through entrepreneurship and
  (real) job creation,
• Tangible income generation and profit
  orientation,
• Increase decision-making and participation
  individuals managing their own affairs,
• Need to understand better the family/ households
  economy (not only empowering women because of
  their good payback record),
• Promote alternative financial services
  strengthen the financial services accessible to a
  great number of people at lower cost and
  improving conditions in comparison to formal
  institutions.
• Short term objectives
• A better access to credit
• Savings mobilisation
• Relevant BDS

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Microfinance and social finance in Africa (3)
Differentiation of networks and networking
purposes
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The Microfinance African Institutions Network
MAIN (1)
Created in 1995 To-day 57 members (institutions
paying their fees) in 27 countries, mostly in
Africa. English, French and Portuguese speaking
(issues of communication). They cover an average
clientele of 60 000 borrowers varying from 600 to
120 000.
Established for capacity building of MFIs and
Joint Reflection on Socio-economic Development in
Africa
The mission of MAIN is to help reinforce the
social and economic role of the African MFIs by
initiating an African agenda for microfinance
promotion in the process of the African overall
development.
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The Microfinance African Institutions Network
MAIN (2) Main issues/ problems faced/ expressed
by these 57 MFIs

• high and increasing funding requirements (at
  reasonable cost, i.e. compatible with
  indebtedness capacity),
• need to strengthen information and communication
  systems and client tracking techniques,
• management of a credit guarantee scheme,
• Improving the profile of products/ services,
• legal and institutional sustainability,
• partnership management in providing technical
  support to clients, improving organisational
  efficiency,
• Reflection and actions to improve sustainability.

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The Microfinance African Institutions Network
MAIN (3) Strategies and activities

• In order to achieve its mission, MAIN is set on
• developing a common ethical vision and praxis for
  socio-economic development,
• fostering increased professionalism among the
  microfinance practitioners in Africa, and to
  build sustainable institutions that serve the
  target population,
• strengthening the role of African MFIs as
  financial mediators.
• MAIN is structured around three major axes
• Communication to facilitate and promote exchange
  of information in the microfinance sector and to
  provide a framework for concerted reflection on
  issues related to financing African small and
  micro-economic actors
• Training aims at strengthening the internal
  capacities of the MFIs. MAIN gives priority to
  group training, exchange visits and seminars.
• Research Development seeks to build up skills
  and to strengthen the capacities of the MFIs,
  i.e. documentation of existing know-how and
  practices, and production of methodological
  materials.

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The Microfinance African Institutions Network
MAIN (4) Achievements/ results in a nutshell
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Microfinance and social finance in Latin America
A brief outlook

• A sophisticated sector with mostly sustainable
  MFIs, but
• strong in credit, weak in savings,
• strong in urban and suburban areas, weak in rural
  areas (applying urban products in rural areas).
• Regional development banks have helped capitalise
  MFIs (with equity and very soft loans).
• Sophisticated institutionalisation processes have
  helped increase efficiency and outreach but not
  necessarily relevance (higher costs), hence
  cheap NGOs are thriving again and BDS are set
  aside.
• Solid national MFI associations are strong
  advocators.
• A broad spectrum of both imported and
  national MFIs.
• The incoming of commercial banks brings about a
  real competition.
• The demand in some areas is (almost) covered,
  hence bad debt.

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The FORO-LAC for Rural Finance in Latin America
(1)
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The FORO-LAC for Rural Finance in Latin America
(2)vision, mission and general objective

• The vision of FORO LAC is to be the Forum for
  reference and proposals on institutionalisation,
  models, policies, processes, technology and
  instruments for the development of Rural Finance
  Schemes and Services (RFSS) for the poor families
  of Latin American and the Caribbean.
• The mission of FORO LAC is to be a Forum
  facilitating and promoting sustainable RFSS,
  through exchange of experiences and knowledge on
  innovations in order to improve the quality of
  life of the poor rural population.
• The general objective of FORO LAC is to become an
  accountable and integrated proactive group of
  committed actors who are able to jointly
  influence the definition of national and public
  policies in order to improve access of RFSS in
  rural and less attended areas (including the
  practices of the regional financial
  institutions).

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The FORO-LAC for Rural Finance in Latin America
(2)Fields of action and objectives
Strategies, plans of actions, business plans are
defined by the FORO-LAC on an annual basis.
Monitoring and evaluation, as well
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Microfinance and social finance in the Arab
worldA brief outlook

• A very recent sector operating in a very isolated
  environment (22 countries with only 300000
  clients in 2001). Yet the potential is huge
  todays microfinance intermediaries meet less
  than 5 of the demand.
• Two countries are leading Morocco and Egypt,
• A formally thriving sector in Palestine
  victimised by illegitimate occupation and
  paralysing war,
• Shadow of Islamic banking (interests may be
  cashed),
• MFI are recent creations for financial purposes,
  very seldom rooted in the civil society (unlike
  Africa and Latin America),
• The lack of BDS increases the risk.

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SANABEL in the Arab world (1)background

• In September 2002, 19 representatives from seven
  countries (Egypt, Jordan, Lebanon, Morocco,
  Palestine, Tunisia, and Yemen) gathered in
  Tunisia to launch the first and only network
  designed to serve MFIs in the Arab world.
• At this meeting, the group adopted bylaws and
  membership criteria, articulated a vision,
  mission and objectives, and elected an executive
  committee for the network.

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SANABEL in the Arab world (2)Mission and
objectives

• SANABELs mission is to maximize outreach to Arab
  microentrepreneurs by providing MFIs with a forum
  for mutual learning and exchange, capacity
  building services, and advocacy for best practice
  microfinance.
• SANABELs objectives
• Enhance the capacity of MFIs through training,
  translation, MIS, capitalization.
• Promote and facilitate exchanges between MFIs
  through annual conferences, information
  exchanges, bringing microfinance to other
  countries.
• Improve standards of practice and encourage
  transparency through benchmarks, external
  audit/appraisal/rating, and participation in the
  Microfinance Information eXchange (MIX)
• Promote an enabling environment for best practice
  microfinance through public awareness and
  regulatory education.

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SANABEL in the Arab world (3)Expected results
(June 2004 - June 2005)
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Analysis and prospects (1)

• These different groups of organizations,
  associations, and interest groups are working
  together to gain something, but also to gain it
  together such as
• Creating a platform to voice their concerns
  jointly,
• Learning technical training, systems
  development, policy advocacy, sharing experience,
  knowledge and information,
• Lobby and policy advocacy influencing decisions,
  politics and policies in their favour, favourable
  legal and administrative framework through the
  promulgation of appropriate legislations,
  increased participation in the formulation of
  development policies, democratisation and for
  sharing power with those welding it.
• Asset and resource redistribution,
• developing a common operational strategy,
  resource mobilization, financial intermediation
  for the group members, etc

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Analysis and prospects (2)

• With such prospects, networking
• Refers to the creation and maintenance of
  linkages and relationships among organizations to
  foster flows of information and ideas.
• is like a hub linked to several nodes whose
  purpose is to harmonise ideas and issues, and
  subsequently build coalition among members to
  work towards a common goal.
• is the putting of the collective experience and
  strength at the disposal of the actual and
  potential actors in the same area of interest. It
  is a cross-pollinating of core ideas and
  practices.