In Lebanon, the fragile renaissance of Al Majmoua and microcredit, despite financial crisis and war

I took over the monitoring of the SIDI partnership for Lebanon in January 2025. A first mission, scheduled for February, had to be cancelled at the last minute due to the excessive Israeli bombardment of Beirut, despite the truce that had been signed. In May, I was finally able to leave, with my colleague Ariane Bevierre and a delegation from ADIE. During this mission, I discovered the resilience of Al Majmoua, the leading microfinance institution in Lebanon, a partner I know little about, but which is perfectly in line with SIDI’s target.

Banks in Lebanon are no longer operational

When I arrived, I discovered a country where there were no banking services and no financial activities. In 2020, following a massive devaluation, the banks confiscated savers’ assets ($90 billion!). The country’s elite got their money out in time. But the rest of the population found their accounts blocked and were unable to withdraw any money, except in small amounts. In recent months, it was still forbidden to withdraw more than 250 dollars a month. At this rate, it would take 3,000 years for Al Majmoua to recover the $9 million sequestered in his accounts. As a result, no one is depositing money with the banks, which are not granting any loans.

With average incomes plummeting and 30% of the population living below the poverty line, the demand for credit is enormous. The only recourse is money from the diaspora or microfinance. The problem? No donor wants to go to Lebanon any more because of the losses incurred during the crisis.

Lebanon’s financial crisis nearly wiped out our partner Al Majmoua

Before the crisis, Al Majmoua was a highly successful financial institution, managing over 100,000 loans. At the time of the crisis, it found itself on the verge of complete bankruptcy. With the devaluation of the Lebanese pound, its portfolio lost 99% of its value, given the exchange rate imposed. The association lost all its financial assets in the turmoil: $50 million!

The association’s bankruptcy was avoided thanks to the settlement of its debts by the donors, who assumed losses of $50 million, including $1 million for SIDI.

Loans repaid on time and on budget

After almost disappearing, Al Majmoua continues to operate with caution. With the little money it has, it issues modest loans averaging around $500. This enables it to reach more people. By April 2025, it had 23,000 loans outstanding. Of these, 85% are to support economic activity.

In Beirut, I visit a Palestinian chicken seller. The ceiling of her store collapsed during the Israeli bombardments. The loan will enable her to repair the ceiling, so that she can continue her business and gradually pay back her loan instalments.

Against the backdrop of Lebanon’s financial crisis and war, I’m impressed by Al Majmoua’s loan recovery rate of 98%. Including in bomb-ravaged southern Lebanon and the Bekaa plain.

Among the loan beneficiaries I met, I felt a strong sense of identification with Al Majmoua and recognition. For them, nothing is more important than paying, because Al Majmoua is the only entity that can lend them money for their projects. They hope that the association can continue to help them get back on their feet.

A global vision in the fight against poverty

I totally identify with Al Majmoua’s approach.

For Al Majmoua, microcredit is not an end in itself, but first and foremost a means of combating poverty. The association carries out both financial and non-financial activities. To support its members, it acts on various levers: financing, but also education and organization. For example, it offers a financial education program: how to manage a loan, a budget, a forecast. It’s a basic entrepreneurial culture that’s extremely important if you want to get out of poverty.

This posture is not so common in the world of microfinance. But it is totally in keeping with SIDI, which offers both financial services and support.

For me, this global approach is the most effective way to fight poverty. Because poverty has many facets, and credit alone solves nothing.

Supporting the rebirth of Al Majmoua

It’s not easy to think about lending again in Lebanon. SIDI (or rather FID, the guarantee fund backed by congregations, CCFD-Terre Solidaire and SIDI itself) has had to cover major losses. But this seems to me to be the right time to support Al Majmoua in its redeployment, at a time when so few organizations are backing it. It’s an institution that seems to me to have the potential and the qualities to turn itself around.

In a context where poverty has exploded, the demand for microcredit is very high. But so far, no one wants to return to Lebanon. Wouldn’t it make sense for SIDI, which “wants to go where others don’t go”, to get involved again?

It’s our job, as partnership managers, to maintain this balance between preserving the resources of SIDI’s shareholders and fulfilling the mission they entrust to us.

 

Interview by Anne-Isabelle Barthélémy

Photo credits: Philippe Lissac – agence Godong /SIDI; except ADIE cover photo

How to remove barriers to financing agrifood organizations in developing countries

By Johan Thuard, West Africa Investment officer

In developing countries, financing agricultural activities represents a major challenge that is often underestimated. According to ISF Advisors, only 34% of the $160 billion needed each year to support the 220,000 small and medium-sized agricultural enterprises in Southeast Asia and sub-Saharan Africa is covered by formal financing[1]. This lack of financing creates an annual deficit of $106 billion, with serious consequences for the sector’s dynamism. In particular, its ability to meet the challenges of food security, job creation and reduced vulnerability for the 1.3 billion people who depend on agriculture in these regions [2].

This deficit is colossal; to better understand its scale, it is almost equivalent to the $113 billion allocated to fossil fuels by the main banks of the European Union in 2023 [3]. This critical situation cannot be resolved by the market alone.

But what explains such a deficit? At SIDI, through our experience as a solidarity investor active for over 40 years, we seek to shed light on this question. In this context, SIDI finances cooperatives and agri-food SMEs in developing countries. These organizations work with small-scale producers in support of family farming, both upstream – by facilitating their production and their transition to sustainable agriculture – and downstream – by developing outlets through the processing and marketing of agricultural produce.

We identify three major barriers to the mobilization of financing by agricultural organizations: problems of identification, preparation, and an imbalance between risk and return on transactions. These barriers particularly affect smaller, less mature organizations. These organizations find themselves in the “missing middle”, while also being ill-suited to the requirements of formal financiers (commercial banks, international financiers, donors, etc.).

This article looks at these three barriers, focusing specifically on debt financing, and proposes solutions to overcome them.

Better identification between agri-food organizations and funders

For agri-food organizations, particularly those with little experience of fund-raising, it can be difficult to determine which funders to approach, given the fragmented nature of the ecosystem. Each funder has its own strategic priorities, investment criteria and areas of operation, which can be highly specific and difficult to understand externally.

Similarly, for internationals, identifying new opportunities not yet financed by other players can be complex, especially for organizations that are not members of entrepreneurship networks or that operate in remote areas.

Finding new financing opportunities requires in-depth knowledge of the local economic fabric. This represents a challenge for investment officers, as the areas to be covered are vast. At SIDI, for example, each investment officer is responsible for three to four countries, so building up in-depth knowledge of local players is a gradual, long-term process.

To enrich our understanding of the field, we regularly collaborate with allied organizations, both local and otherwise. For example, SIDI invests in local I&P funds, such as SINERGI in Burkina Faso, which focus mainly on agricultural value chains. We have also established a partnership with the Ethiquable cooperative to finance and support some of their supplier cooperatives, and maintain close links with organizations specializing in agricultural value chains, such as Nitidæ. At the same time, we are strengthening our local presence with the opening of two offices in Lomé and Kampala, from which we conduct much of our business in sub-Saharan Africa.

The challenge of preparing to raise funds

Fund-raising is a complex process, requiring specific resources and skills. Sometimes, there is a gap between the prerequisites that funders may have to validate a transaction and the capacity of local organizations to meet them. This gap becomes particularly problematic when it involves the fundamentals – operations, social and environmental impact (particularly for impact funders), finance, team, market, or data reliability.

Developing cooperatives and SMEs are often not equipped to meet these expectations. This is particularly true of organizations that are growing organically and lack a strong management team. These organizations may also find it difficult to identify their own areas for improvement, or to overcome them on their own.

To overcome these shortcomings, it is important for organizations to have access to specific support to prepare them for financing. This is where SIDI’s offer, which combines financing and support, comes into its own. Based on a diagnosis by an investment officer, SIDI can offer not only financing, but also support tailored to the organization’s needs. SIDI works with several facilities, including the ACTES Foundation, the SSNUP program and the AT facility of the FEFISOL II fund, to meet the support needs of prospective and existing partner organizations.

There are also investment preparation programs that reinforce the fundamentals while supporting organizations in the preparation of their funding applications – market analysis, creation of business plans or other documents intended for investors. Some of these programs also include prospecting and matchmaking. There are many such programs, often financed by donors and implemented by consulting firms. Examples include Activ’Invest in Senegal, Invest Salone in Sierra Leone, and CrossBoundary, which helps agri-food companies raise funds in several sub-Saharan African countries.

The imbalance between risk and profitability in agricultural financing

A study carried out by Dalberg on 3,500 loans granted to agri-food SMEs by international financiers reveals that half of loans between €250,000 and €500,000 are not profitable.

One of the main reasons for this imbalance is the cost of risk, which is high and rising all the time. In particular, agricultural production is under increasing pressure due to its growing exposure to climatic disturbances. Furthermore, agri-food organizations often operate in markets where product supply and demand are not systematically correlated. As a result, some sectors experience cyclical crises, putting operators under pressure and increasing the risk of default.

This risk puts a strain on the market, which then concentrates on certain well-defined segments:

  • Organizations with a lower risk profile, generally larger, more mature organizations with a solid financing history and/or able to offer guarantees.
  • Short-term financing, often in the form of working capital, instead of medium-term loans to finance equipment or investments
  • High financing rates to cover transaction costs

As a result, the market remains relatively static, with a limited number of organizations already known to the sector and funded, and little openness to new partnerships.

For a financier like SIDI, whose mission is to be additional, in particular by acting as the leading international investor for certain partners, managing this risk is an essential challenge. This is achieved through several approaches: on the one hand, portfolio diversification across different sectors (such as microfinance and agriculture) as well as more or less mature organizations; on the other hand, SIDI’s business model enables it to take greater risks, thanks to its philanthropic shareholding and access to certain guarantee tools.

These elements are essential if we are to ” intervene where others do not go “, and thus support high-risk organizations, sectors and regions. This also gives us the opportunity to finance particularly risky organizations and/or not be profitable on certain transactions when this is justified by high additionality and a significant social or environmental impact. From this experience, we see the need to have access to guarantee mechanisms or subsidies so that financiers can be more additional, have more impact and thus make the sector more dynamic.

Effective solutions already exist, starting with the Aceli program in East Africa. This program, dedicated to financing the agricultural sector, offers financiers subsidies to reduce transaction costs, and guarantees to reduce the cost of risk. The value of this program also lies in its ability to minimize market distortions, while encouraging financiers to support the least well-served companies: grants cover only part of the costs, and are higher for companies that have never raised institutional funds, or that have a higher social or environmental impact. This is the kind of example that deserves to be better studied and replicated in other regions, given its proven effectiveness.

In a context where the vulnerability of producers and the challenges of food security are increasingly pressing, it is crucial to work towards reducing the barriers to financing agri-food organizations in developing countries. In addition to offering some food for thought, this article is an invitation to all those who wish to collaborate and develop concrete solutions for a more dynamic, socially just and ecologically sustainable sector.

Johan Thuard, West Africa Investment officer

[1] ISF Advisors, The state of the agri-SME sector – Bridging the finance gap, 2022

[2] ISF Advisors estimates that this concerns 260 million households – ~1.3 billion people – who consider family farming to be an integral part of their livelihoods in Southeast Asia and sub-Saharan Africa.

[3] Banking on Climate Finance Chaos, Fossil Fuel Finance Report, 2024

The MFI ALIDé, SIDI’s new partner in Benin.

SIDI’s development in West Africa

SIDI’s deployment in Benin is part of its development strategy.
The opening of SIDI’s regional office in Lomé, Togo, in 2023 will strengthen our proximity to our partners in West Africa and facilitate the creation of new partnerships.
This geographical proximity allows for greater flexibility in carrying out missions, including prospecting.
It was during one of these missions to Benin that SIDI forged ties with ALIDé, leading to this new partnership.

ALIDé, a partner aligned with SIDI in a difficult Beninese context

Thanks to its 17 points of service, including 10 branches and 85 agents, the ALIDé microfinance institution is working to improve the living conditions of vulnerable and low-income populations throughout Benin.
Founded in 2006, ALIDé currently serves some 50,000 customers, offering essential financial services.
This enables them to realize both personal and professional projects.
In 2022, ALIDé strengthened its social commitments around strong values as part of the revision of its social strategy.
The main commitment concerns women, with the aim of providing them with greater support to promote their social and economic inclusion.
Clear, measurable indicators have been defined for this purpose.
The Association supports projects in various sectors, including agriculture, through non-financial services and dedicated financial products.
This is an ambition that SIDI supports, in a general context of worsening risks in the agricultural sector and an economic situation impacted by strong political decisions at local level since 2023.
Indeed, developments in the political and economic situation in Benin are marked by a timid resumption of trade transactions with Niger (80% of transit through the port of Cotonou comes from Niger) despite the decision taken by ECOWAS member countries, including Benin, to resume trade with Niger and the reopening of borders with this country.
In addition, in 2023, government intervention in the setting of prices in certain sectors such as soya has had a slight impact on the smooth running of the campaign for some ALIDé producers. Thus, ALIDé’s work is essential both as a financier and, above all, as an advisor to guarantee the continuity of its members’ activities in a constantly changing environment.

Partnership objectives

The partnership between SIDI and ALIDé will have a dual dimension in line with SIDI’s strategy: financial contribution and technical support.
Several areas of intervention and areas of support have been identified to support the development of activities and the finalization of its digitization process initiated in 2018.
These areas will be defined and prioritized by mutual agreement between the association and SIDI.
This partnership will enable ALIDé to increase its medium-term financing capacity.
At the same time, it marks the return of SIDI’s activities in Benin, where it no longer had an active partnership at the end of 2023.
SIDI, always committed to long-term partnerships, intends to continue its deployment in this country, supporting players such as ALIDé who are committed to fulfilling their social mission.

Discover SIDI’s 2021 activity report

The 2021 Activity Report is online!

The year 2021 was still very much marked by the effects of the Covid19 pandemic, but let us salute everyone’s commitment, which enabled SIDI to pursue its mission as a solidarity investor serving the financial and economic inclusion of populations excluded from conventional financial systems.

Discover the performances and achievements of SIDI and its partner organizations, all committed to ecological and social transition. Aware of the significant financing and support needs that remain, SIDI is fully mobilized to respond to the ever-increasing challenges facing the most vulnerable populations.

Let’s stick to our course and our ambition to promote socially responsible finance!

 

 

 

 

[CP] EIB lends €5 million to FEFISOL II fund

[CP] European Investment Bank lends €5 million to FEFISOL II to finance Africa’s agricultural sector

 

Building on the success of FEFISOL, the first impact fund dedicated to the rural world in Africa, which closed in 2021, its two founders, SIDI and Alterfin, have been actively working on the creation of a new fund: FEFISOL II, created at the end of 2021.

Today, the EIB is announcing its entry into the capital of FEFISOL II for an amount of 5 million euros! This renewed commitment will enable the Fund to pursue and deepen its social mission.

FEFISOL 1 has had a considerable impact over the past decade:

– 86M euros disbursed, of which 93% in Sub-Saharan Africa ;

– 75% of average outstandings in local currency ;

– 92 customers financed in 25 countries;

– 139 technical support projects carried out for 51 customers.

FEFISOL II builds on FEFISOL I’s pioneering support for rural microfinance and the agricultural sector. The challenge posed by the lack of financing for rural areas in Africa, and for farmers in particular, remains crucial.

In Africa, less than 5% of loans disbursed by traditional financial institutions are earmarked for the agricultural sector, and less than 10% of farmers have access to credit. And this despite the fact that around 48% of the population depends on agriculture. Although it makes a major contribution to many African economies, the agricultural sector is still poorly served financially, as it is often perceived as too risky or not profitable enough.

Rural communities face multiple challenges: the remoteness of financing, but also the growing risks induced by climate change, as well as the financial inclusion of women, who represent 60% of the agricultural workforce in Africa without often being able to benefit from the same rights as men.

FEFISOL II is structured to provide financial and technical support for solutions designed locally to meet these challenges. FEFISOL II will be implemented in over 25 countries in sub-Saharan Africa, and is expected to support 130 microfinance institutions or agricultural companies and cooperatives sourcing from smallholders and certified fair trade or organic.

Other investors are joining FEFISOL II for a round of financing that will close at the end of March: the first investments will be effective from May!

 

 

Successful 5th African Microfinance Week in Kigali

[chapeau]The 5th edition of African Microfinance Week brought together nearly 600 inclusive finance professionals from 55 countries in Kigali, Rwanda. A tremendous success![/chapeau]

African Microfinance Week (AMW) is the largest conference on inclusive finance in Africa. Organized every two years in a different African country, it features conferences, training and workshops, an innovators’ village, and of course the investor fair in which the SIDI team plays an active part. A networking event dedicated exclusively to investors and African MFIs, the investor fair enables SIDI to forge future partnerships.

The SAM is an essential event for exchanging and sharing expertise on inclusive finance. The theme chosen for this year’s event was resilience: ” You’re not born resilient, you become resilient: strengthening inclusive finance to better overcome crises “. This was the first time the SAM had been held in Rwanda. This choice has enabled us to shine the spotlight on a country that has shown tremendous resilience and a phenomenal ability to adapt.

As always, the SIDI team was on hand. The emotion of being back in the flesh, and seeing the success of our participation, was palpable.

Why so many people? The impact of microfinance has always been the subject of debate. It’s a fact that microfinance is resilient, that it continues to provide concrete solutions and that, thanks to the leverage it generates, it enables individuals to define their own destiny.

At this 5th edition, everyone was able to gauge the vitality of African MFIs. In the face of the health crisis, MFIs ultimately managed to cope with the liquidity problems they faced. This shows the considerable work carried out by MFIs over the past 20 years, making them already resilient. The current crises – whether the health crisis linked to Covid19, the ensuing economic crisis, the issue of access to employment for young people, or the crucial challenge of adapting to climate change – must also be an opportunity to change practices, innovate, and advance the solutions that enable this adaptation. From the investor’s point of view, crises can have the beneficial effect of encouraging us to get closer and more involved together.

SIDI continues to forge ahead, placing solidarity at the heart of the economy and finance. Invest in small MFIs, establish long-term partnerships, share the partners’ vision and risk, so that these partnerships serve to consolidate the structures. Supporting the MAIN network in its capacity building program for its members – over 125 African MFIs! Defend the importance of technical assistance and support in response to the needs expressed by partners, to serve an inclusive economy in a process of ecological and social transition.

Some pictures of the event:

(c)GODONG // (c)SIDI

The 2020 activity report is available online

Couv_RA2020_FR(final)

A pioneer in solidarity investment in the South and East, SIDI publishes its annual report

SIDI offers its partners tailor-made financing and support, and thus works towards a form of finance that generates greater social and environmental impact, transparency and solidarity. A look back at the highlights of 2020 and our activities in favor of the ecological and social transition.

 

 

 

 

[CP] SIDI and Crédit Coopératif: a strengthened partnership at the service of solidarity finance

0001[CP] SIDI and Crédit Coopératif intensify their relationship for solidarity investment.

 

SIDI and Crédit Coopératif are pleased to announce the strengthening of their partnership in the service of solidarity finance.

By acquiring a stake in Inpulse Investment Manager, a microfinance fund management company and subsidiary of Crédit Coopératif, SIDI will be able to expand its range of services for its partners in developing countries. This will give SIDI considerable additional leverage to attract new investors via the impact funds it will be developing with Inpulse and Crédit Coopératif.

SIDI promotes finance that serves integral, socially just and ecologically sustainable development, based on the values of solidarity, trust, ethics and transparency. Its private and institutional shareholders give it the means to carry out its activities, and in return expect added value that is exclusively human, social and environmental.

 

 

 

Publication of the new social and environmental report

Discover SIDI’s new social and environmental report

 

 

This year’s Social and Environmental Review looks back over the four years of SIDI’s 2017-2020 Strategic Plan.

A wealth of information and figures highlighting the importance of the two pillars on which SIDI’s action towards its partners is based: financing and support.

An assessment that measures our progress, and that of our partners, in terms of ecological and social transition.

→ 139 partners in 36 countries

→ Growth in SIDI’s overall portfolio: from €25.1m in 2017 to €37.3m by the end of 2020

→ Africa remains SIDI’s No. 1 priority: 67% of partners, 56% of its portfolio by the end of 2020

→ Micro-finance institutions focused on rural financing, producer organizations mostly certified organic and fair trade

→ A focus on the most vulnerable populations: 46% of beneficiaries are women and 47% are from rural areas

Social and environmental report 2017-2020