SIDI’s 2023 annual report is online

Couv RA SIDI 2023 fr

2023 was a very special year for SIDI: we celebrated 40 years of existence.

  • 40 years of SIDI putting finance at the service of local economic development players in developing countries
  • SIDI has been financing and supporting local economic players for 40 years, working to improve the living conditions of vulnerable populations and promote virtuous ecological practices.
  • 40 years of an innovative intervention model based on the principle of a chain of financial solidarity, linking citizens who want to give meaning to their savings, to partner organizations and their beneficiaries.

Despite the combination of multi-factorial crises, SIDI manages to carry out its mission by placing additionality at the heart of its impact strategy, and by working on three major mission objectives:

  • Promoting economic equality
  • Promoting poverty reduction
  • Supporting the fight against climate change

Let’s continue to invest in a just transition.

Great news for the FEFISOL II fund

SIDI is very pleased to announce that USAID  – US Agency for International Development – and Prosper Africa – US government’s initiative to increase trade and investment with African countries – have approved a grant for FEFISOL II to help the fund mitigate currency risk on its local currency portfolio.

FEFISOL II is the investment fund backed by SIDI and Belgian investor Alterfin. Managed by Inpulse Investment Manager, FEFISOL II is dedicated to financing African rural microfinance institutions and agricultural entities sourcing from small producers in Africa.

FEFISOL II is a highly additional fund focused on sub-Saharan Africa, targeting the poorest and most unequal regions, often deemed too risky by traditional investors. It aims to support vulnerable populations, particularly women and rural inhabitants, by financing microfinance institutions to enhance financial inclusion, reduce poverty and generate employment. The fund also supports small agricultural entities to strengthen agricultural value chains and improve food security. FEFISOL II offers flexible debt products to meet diverse financial needs, and provides technical assistance to strengthen organizational capacities and support their social missions.

This grant provided by USAID and Prosper Africa will allow the fund to further develop its microfinance portfolio in Africa, and support FEFISOL II in its efforts to raise capital for the third and last closing, targeting to reach a size of €30 million. With this grant, USAID, Prosper Africa and FEFISOL II aim to enhance trade, investment and the business environment across the African continent by strengthening agricultural value chains, creating rural employment, increasing local value-added markets, reducing climate change vulnerability and, ultimately, contributing to the continent’s sustainable economic growth.

USAID and Prosper Africa’s contribution complements other blending mechanisms secured by the fund in 2023 with DFC – U.S. government’s development finance institution – and the Aceli Africa program. Given the amplification and overlapping of risks in Africa, it is crucial to rely on such risk-sharing mechanisms for a fund dedicated to financing rural microfinance and smallholder farmer organizations.

Testimonial at the SIDI General Meeting: resilience and social impact of Financiera FDL

présentation Julio Flores AG SIDI

This year’s General Meeting was an opportunity for SIDI to invite one of its partners to testify. Julio Flores, Managing Director of Financiera FDL, came to present the activities of this microfinance institution (MFI) which operates in Nicaragua, the 2nd poorest country in Central America.

The fruitful exchanges between Julio Flores and SIDI shareholders continued the following morning with a question and answer session. This time allowed us to go into more detail about FFDL’s business and its formidable resilience in the face of crises.

The NGO Fondo de Desarrollo Local (FDL) was created in 1993 by the Jesuits, following the civil war. FDL’s aim is to improve the living conditions of the most vulnerable Nicaraguans by providing them with loans, training and support services to help them develop their businesses, at a time when banks are not interested in this group. Financiera FDL has become the first MFI in the country and one of the largest in Central America. The institution mainly targets low-income people, farmers, breeders and micro-entrepreneurs in peri-urban areas. Thanks to its 38 branches, La Financiera has a strong territorial coverage, enabling it to provide 70% of its loans in rural areas, to populations with little access to credit.

 

Financiera FDL and its resilience to crises.

FDL’s growth was first slowed by the crisis between 2008 and 2011. In addition to the global economic crisis, an anti-MFI “Movimiento del no pago” (non-payment movement) has developed. It has led to a decline in the number of customers and payment defaults in the microfinance sector. FDL, despite a decline in portfolio and customers of around 50%, managed to restructure, before creating, alongside the NGO, the financial company Financiera FDL (FFDL) in 2016. To structure this financial company, FDL has chosen “international partners who share its vision”. As a result, SIDI became a minority shareholder.

A second crisis affected the country from 2018 to 2021. Politico-social conflict (murderous repression by the authoritarian regime) and economic instability led to a three-year contraction in GDP. Mass migration (10% of the population fled the country) was caused by persecution of civil society, including the Church. The number of FFDL customers has plummeted. This recession and drop in activity were exacerbated by the Covid crisis. Several MFIs have gone bankrupt, while FFDL’s portfolio has once again shrunk by 50% (more than $6 million in losses in 2018 and 2019)

FFDL overcame a number of challenges in order to emerge from the crisis: renewing its customer base, consolidating its portfolio and building up reserves. To support it, SIDI participated in the recapitalization of FFDL and made a 5-year subordinated loan (total outstanding amount of over €1.7 million in 2023). This second acquisition brings SIDI’s stake in FFDL to 4.4%. Backed by the support of its international shareholders, FFDL was able to negotiate with lenders to maintain its credit lines.

FFDL has achieved a spectacular turnaround. The portfolio has been growing since the end of the crisis, with a forecast +12% in 2024, which will enable us to recover the $6 million in losses recorded in recent years. All this has been made possible by the serious management and expertise of the company’s management team.

 

FFDL, an MFI with a strong social and environmental impact.

Nicaragua is one of the countries most exposed to climate change. The economy is partly based on cattle farming (54% of agricultural land), and the deforestation rate is the second highest in Central America. These activities are highly polluting and destructive, while severe droughts reduce agricultural yields by 20 to 40%.

Over the years, the MFI has developed a comprehensive range of support services for producers and breeders in the transition to agro-ecology. Support for producers in agro-ecological practices focuses on themes such as water management or arboriculture combined with animal husbandry. This technical assistance is paid for in part or in full by FFDL, depending on the customer’s standard of living.

To improve producers’ incomes and reduce poverty, FFDL supports product processing, such as packaging coffee for export. This on-site processing of raw materials by producers creates added value, reduces the number of intermediaries and enables them to sell their produce at a higher price, guaranteeing local producers a better income.

FFDL seeks to maximize its impact, and the results are there. According to an independent survey partly financed by SIDI, in 2023, more than 60% of FFDL’s customers will report an improvement in their standard of living. The structure adapts its loan amounts and terms according to customers’ needs. It grants loans from 14 months on average (for traders and businesses) to 36 months for agricultural activities. This earned FFDL a Microfinance Index award in 2023. (see related article).

FFDL has demonstrated impressive resilience, while maintaining a strong social and environmental dimension, with a focus on financial inclusion in rural areas and environmental protection.

For Julio Flores, “although SIDI is a minority shareholder, it is very much involved in FFDL’s key moments. SIDI’s active participation in FFDL’s governance through the involvement of a volunteer consultant (on its Board of Directors) is decisive”.

SIDI acquires a majority stake in Inpulse, a management company specializing in impact investment

SIDI is delighted to announce that it has taken a majority stake in the Belgian management company Inpulse Investment Manager, in which it previously held a 35% stake, through the partial buyout of Crédit Coopératif’s shares.

SIDI and Crédit Coopératif, the two shareholders in Inpulse, have decided to invert their respective shares in the company’s capital in order to consolidate it and support it in the development of its impact fund management activities in Europe and the South.

SIDI, more than Crédit Coopératif, has the experience of impact investment, both geographically and thematically (particularly in the financing of agricultural entities), to support development as a majority shareholder in the management company. By remaining a minority shareholder and member of the Board of Directors, Crédit Coopératif is demonstrating its determination to continue supporting the development of Inpulse alongside SIDI, of which it is also a shareholder and long-standing partner, and with which it has developed numerous collaborations in Africa and the Mediterranean Basin, notably within the framework of the FEFISOL and COOPMED Funds.

For SIDI, the strategy linked to this operation is based on 3 axes:

  • Consolidate the funds managed by Inpulse and ensure their economic viability, in particular the FEFISOL II fund, supported by SIDI.
  • Develop synergies between SIDI and Inpulse, notably through geographical complementarity at the operational level, the sharing of experience and best practices on the subjects of impact, social and environmental performance, compliance and the development of institutional relations.
  • Support the development of Inpulse in its efforts to diversify its activities, thanks to a competent team committed to the microfinance and social entrepreneurship sectors, in line with SIDI’s vision and strategy.

SIDI is taking a majority stake in a pioneering management company in the impact sector, with AIFM approval, which will also enable it to continue innovating socially in partnership with other investors and operators in the sector.

The Muungano agricultural cooperative wins the Grands Prix de la Finance Solidaire!

“We’re very inspired by this award,” confides Daniel Habamungu, the cooperative’s CEO. It further strengthens our determination to work together. It’s very important for the collective, because it gives courage and loyalty to the members of the cooperative”.

The award is in recognition of the remarkable work carried out by the Muungano team. In recent years, the cooperative has tripled its membership to 4,100 small family producers, 43% of whom are women. It produces very high value-added coffee in a particularly difficult context: limited infrastructure, transport difficulties, chronic insecurity in the region, and the area’s vulnerability to climate change.

The plantations are located between 1400 and 2600m altitude, and these volcanic highlands offer optimal conditions for growing Arabica coffee. The cooperative is certified fair trade and organic. Coffee growers take advantage of the great plant diversity to use agroforestry methods that combine shade and fruit trees with coffee plants. This naturally fertilizes the soil, reduces the risk of landslides and diversifies members’ sources of income.

SIDI has been a partner of Muungano since 2015. In a sector where other financiers charge high rates and also require property guarantees, SIDI can offer loans at attractive rates, enabling the cooperative to pre-finance coffee campaigns. At the same time, SIDI offers tailor-made support in key areas such as accounting and financial management, performance management and development strategy. Lastly, it supports the promotion of sustainable farming practices, particularly agro-ecology.

Despite the major challenges facing the cooperative, it has been able to resist, progress and supply the gourmet coffee sought after by connoisseur buyers in a niche sector with very high added value. SIDI is very proud to support the dynamism and resilience of the people of Kivu and the members of Muungano.

Well done to the great team at the Muungano agricultural cooperative and to all the coffee growers!

Beni Ghreb and Muungano, two SIDI partners nominated for the Grands Prix de la Finance Solidaire!

Beni Ghreb is a small company that markets dates produced in the Hazoua oasis in southern Tunisia, on the border with Algeria. It was set up in 2002 in response to the desire of a group of farmers to facilitate the marketing of their produce and increase their income. Beni Ghreb buys all its date production from the Groupement pour le Développement de l’Agriculture en Biodynamie, which groups together 130 families in the oasis. These dates, produced biodynamically (DEMETER certification), are marketed in Europe. The quality of the Deglet nour variety is excellent.

The company provides growers with a technical team that monitors the palms from flowering onwards, and takes care of harvesting. The dates are then sorted, washed and packed in the factory, before being exported to Europe.

Beni Ghreb, a company with a strong social and environmental mission to benefit the inhabitants of the Hazoua oasis. In fact, biodynamic certification enables producers to benefit from a purchase price for their dates that is up to 40% higher than on the conventional market. The company is also one of the main sources of employment for women in the town, mainly the wives and daughters of Groupement farmers. Beni Ghreb’s environmental impact is also very significant. In particular, it has set up a program to regenerate the oasis’ traditional ecosystem based on agroforestry, and has developed sprinkler irrigation systems that save 70% of water consumption.

SIDI entered into a partnership with Beni Ghreb in 2017 to finance date campaigns through annual loans. The partnership will take on a new dimension with the acquisition of a stake in the summer of 2022, enabling BGH to continue strengthening its technical and financial position in the years to come, and thus offer the best possible service to its growers.

In the Democratic Republic of Congo, Muungano is an organic and fair trade coffee cooperative located on the steep shores of Lake Kivu between 1400 and 2600 m altitude. It brings together more than 4,100 members, small-scale family coffee growers, 43% of whom are women.

The cooperative collects and processes the coffee produced in this disadvantaged region of South Kivu, which is highly vulnerable to climate change. Muungano, which means “living together” in Swahili, was created in 2009 as part of a reconciliation initiative to bring together ethnic groups divided by successive conflicts in the region through coffee production. SIDI became a partner of the cooperative in 2015 to finance its agricultural campaign and salutes the extraordinary work accomplished by this cooperative specializing in high-quality gourmet Arabica coffee.

Muungano is a model cooperative in terms of its democratic governance, its social and environmental performance and its economic impact, all in an unstable, fragile and impoverished East Congolese (Kivu) context in terms of living standards and the development of infrastructure and services.

The cooperative employs 25 permanent staff and up to 550 people in high season. In addition to organic certification, Muungano encourages the use of more resilient and soil-regenerating farming practices through training workshops in agoecology, agroforestry and the promotion of mixed cropping-livestock farming. Fair trade premiums are used not only for productive investment, but also to finance community projects. Muungano’s two major achievements are the construction of a small hydroelectric power station that now supplies the entire village of Kiniezire, where the cooperative’s head office is located, and a health center that is currently being finalized and is open to all. Muungano also offers growers a 2nd coffee payment at the end of the campaign. The cooperative also pays a premium to women producers, mostly used to provide them with goats.

Despite the major challenges facing the cooperative, it has been able to resist, progress and supply a highly sought-after gourmet coffee, sold at a better price, which increases the income of the growers and their families. Muungano illustrates the powerful social and environmental impact that an agricultural cooperative can have for its members and for the development of the area in which it operates.

We look forward to seeing you on November 8 in Lille to discover the winners of the Grands Prix de la Finance Solidaire and, in particular, the International Prize.

Further information: Beni Ghreb Muungano agricultural cooperative

Official launch of the new European solidarity financing fund for Africa, FEFISOL II!

[chapeau]SIDI announces the1st closing of the new FEFISOL II fund, dedicated to financing rural microfinance and small family farms in Africa, at 22.5 million euros, with a technical support envelope of one million euros.[/chapeau]

The FEFISOL II Fund is designed to help meet the crucial challenges of financing vulnerable populations in rural areas of Africa, with a particular focus on financing the agricultural sector.

Financing the agricultural sector is of crucial importance in terms of food security, employment and resilience in the face of climate change, and also in terms of the financial inclusion of women who, despite representing more than half of the agricultural workforce, often do not have the same access to financing as men.

Although it makes a major contribution to many African economies, and its growth directly contributes to poverty reduction, the agricultural sector is still poorly served financially, as it is often perceived as too risky or not profitable enough.

FEFISOL II is structured to provide financial and technical support for solutions designed locally to meet these challenges. The fund will continue to target agricultural entities sourcing most of their supplies from sustainable family farming. It will be managed by Inpulse, a Brussels-based management company – a subsidiary of SIDI and Crédit Coopératif.

In addition to the two founders, SIDI and Alterfin, most of the investors in FEFISOL have renewed their commitment to the new fund. In particular, Agence Française de Développement’s private sector subsidiary Proparco, the European Investment Bank and the French social banks Crédit Coopératif and Banca Etica in Italy have renewed their commitment. New investors are also joining the initiative: the Belgian investment company for developing countries BIO, the Alternative Bank of Switzerland (BAS), and the NGO SOS Faim Luxembourg. The technical support package is financed by Proparco.

These commitments will enable the Fund to pursue its social mission and be even more ambitious in terms of social and environmental performance. FEFISOL II will be implemented in over 28 African countries, and should eventually support 110 microfinance institutions or agricultural companies and cooperatives sourcing from smallholders, most of them Fair Trade or organic certified. The first disbursements will be made in July 2022.

By supporting the implementation of socially and environmentally sustainable practices, FEFISOL II directly aims to improve the living standards of vulnerable populations in rural Africa, reduce inequalities and promote sustainable agricultural development.

Read the press release here

SIDI acquires a stake in ACEP Burkina

[chapeau]SIDI acquires a 20% stake in ACEP Burkina by purchasing the shares of the Incofin CVSO fund.[/chapeau]

Today, ACEP Burkina is the second largest microfinance institution (MFI) in Burkina Faso by portfolio size and reach: over 32,000 active customers, 23% of whom are women, and more than 15,000 borrowers. It focuses mainly on micro, small and medium-sized businesses.

Through this acquisition, SIDI wishes to strengthen its commitment to the development of inclusive finance in Africa and more particularly in the Sahel region. Given the multiple challenges facing the region – political and security issues, the impact of climate change on the agricultural sector, lack of employment opportunities particularly for young people – SIDI considers it a priority to develop its activities in the area in order to achieve its mission of social and environmental transition.

SIDI is currently working with 9 partners in Burkina Faso in a wide variety of sectors: inclusive finance, sustainable agricultural value chains, renewable energies and seed capital for small-scale industries that create jobs and added value. In Burkina Faso, 40% of the population still lives below the poverty line.

Becoming a shareholder of ACEP Burkina is a strong commitment on the part of SIDI and an opportunity to strengthen and diversify its activities in the country by including in its portfolio one of the leading and strong MFIs in the financial inclusion market. SIDI will therefore play an active role in governance to help strengthen the institution and promote social and environmental performance alongside financial and operational viability.

Read the press release here

 

View the webinar on partner support

[chapeau]You can watch or re-watch this new edition of Les Témoins en Actes webinar on support, the cornerstone of the solidarity investor’s mission.[/chapeau]

The webinar featured Abdou-Rasmané OUEDRAOGO, Managing Director of Union des Baoré Tradition d’Epargne et de Crédit (UBTEC). UBTEC is a microfinance institution that operates mainly in rural areas of northern Burkina Faso, in the Sahelian zone, while maintaining a strong peasant base thanks to the fact that it was founded by Burkina Faso’s main peasant federation.

SIDI’s General Manager, in dialogue with SIDI’s partnership manager, came to talk about the relationship forged with SIDI to support farmers in the Ecological and Social Transition. Support from the ACTES Foundation has made it possible to finance and support the agro-ecological practices of UBTEC members.