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.

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”.

Discover SIDI’s 2023 Social and Environmental Report

Partenariat et pse en 2023

The Social and Environmental Report brings together figures and data on the social and environmental performance of SIDI and the partners it supports. Each year, it is presented to SIDI shareholders at the Annual General Meeting.

Social and Environmental Performance (SEP) consists of measuring how an organization – SIDI, like its partners – puts its mission into practice and achieves its social and environmental objectives in relation to the populations it targets. It complements economic and financial performance.

SIDI’s PSE guides the team’s actions at every stage of the partnership, from partner selection to impact assessments. By 2023, we will be supporting 124 partners in 33 countries.

As part of its social mission, SIDI has set itself three main objectives:

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

These three major mission objectives are complemented by a cross-functional strategic axis: maximizing our additionality. SIDI’s additionality strategy is at the heart of its impact strategy. SIDI’s ability to create additionality with its partners is essential to generate a strong social and environmental impact.

Once again this year, SIDI is responding to this ambition through two types of action:

Intervene where other investors won’t, by targeting areas where the need for financing is greatest:

  • 62% of SIDI’s portfolio is invested in sub-Saharan Africa.
  • 68% of SIDI’s partners are located in low-HDI countries.
  • 79% of partners are located in high-risk countries.
  • 65% of partners target rural areas

Adapting our offer to the needs of our partners:

  • 35% of the portfolio in equity investments (compared with 15% for other microfinance vehicles)
  • Long-term partnerships and loan durations tailored to needs: 39 months on average for loans granted to microfinance institutions (compared with only 29 months for other microfinance vehicles).
  • Financing amounts adapted to the size of partners: SIDI in particular has the capacity to offer smaller tickets (for example, 402 k€ on average for agricultural entities when other lenders offer an average of 990 k€).
  • A comprehensive range of support services: SIDI’s partnership approach is based on the complementary nature of financing and support.

 

SIDI favours structures with a strong social and environmental impact, mainly rural or mixed microfinance institutions, and agricultural entities that are mainly certified organic and fair trade. Their social vision is aligned with that of SIDI. It supports them in achieving their own social and environmental objectives, which in turn contribute to SIDI’s objectives.

 

Find all the data compiled in Bilan Social et Environnemental 2023

Discover the report

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.

 

SIDI’s strategic plan unveiled

This issue of Carnets de la SIDI is devoted entirely to the main conclusions of the analysis of SIDI’s 2017-2021 strategic plan.

This analysis was carried out jointly by the team and the governing bodies, and also included an in-depth survey of the partners, who were invited to anonymously assess the team’s achievements over the past five years, providing SIDI with a demanding mirror on its actions.

Indeed, SIDI must be objective about the effects of its mission, all the more so as it implements a financial solidarity made possible by the conscious commitment of its stakeholders. This is why SIDI analyses its support to partners honestly and transparently, and checks that this analysis corresponds to their perception.

This notebook gives an idea of all the work we’ve done, particularly in support of the Ecological and Social Transition (TES). Over the past five years, we have shown that this is a fundamental issue for our partners, as we prepare for current and future ecological shocks.

Enjoy your reading!

 

cover page notebook n°15

Click on the image to consult the Carnet

Webinar: Partner support

[chapeau]To strengthen its support for its partners, SIDI has created the ACTES Foundation under the aegis of the Terre Solidaire Foundation. In this new webinar, Les Témoins en Actes focuses on support, the cornerstone of the solidarity investor’s mission.[/chapeau]

To find out more about the tailor-made support provided by the ACTES Foundation to SIDI’s partners, we invite you to a new ” Témoins en ACTES ” event on Thursday March 31 from 5 to 6.30pm.

This time we welcome 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.

The Managing Director of SIDI will give us his account, in dialogue with SIDI’s partnership manager, of 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.

1h30 of discussions to better understand the links between SIDI’s investment and support activities, and the challenges it faces in consolidating its support mission with its partners.

→ Register for the webinar here

The first edition of Les Témoins en Actes webinar welcomed Assata DOUMBIA, producer and president of the ECAM cooperative in Côte d’Ivoire. You can read his testimonial and watch the webinar again:

Focus on technical support for rural African players

Created in 2011 by SIDI and its partners, the Fefisol fund offers a technical assistance (TA) facility to African rural players, in addition to its financial support. After conducting nearly 140 TA projects on the continent, SIDI and Alterfin are due to launch a second fund in 2022, with the ambition of further deepening its social and environmental approach to the companies financed.

Financing and TA, fertile ground for the growth of agricultural entities in Africa

By Gabrielle Orliange, Head of Social and Environmental Performance SIDI/Fefisol (published in Secteur privé & développement #36, La revue de Proparco, 4th quarter 2021)

In Africa, microfinance and the rural sector are of little interest to the traditional banking system. However, technical support (TS) for agricultural entities, combined with appropriate financial services, play an essential role in the continent’s sustainable development. This is why the Fefisol fund (Fonds européen de financement solidaire pour l’AFrique), in addition to its financial support, offers a technical assistance facility to rural players. In this context, it provides its customers with specialized service providers who help them to strengthen their viability and improve their productivity, while preserving the living conditions of small-scale agricultural producers.

Since its creation just ten years ago, Fefisol has financed 139 support projects for 51 customers in 22 African countries. Over two-thirds of beneficiaries are small microfinance institutions (MFIs) undergoing consolidation[1] or agricultural entities. A quarter of the technical support projects supported by the fund relate to financial issues, in particular accounting monitoring and strengthening internal control.

The technical support program reinforces the impact of financial support. At the beneficiary level, the two levers of action are complementary: Fefisol loans enable companies to grow their business, while technical expertise helps them secure this growth by improving their efficiency. In terms of fund management, technical support in return enables investment managers to improve their understanding of how investee companies operate, thus guaranteeing greater operational efficiency.

Fefisol’s TA offer stands out above the rest by providing a tailor-made response to customer needs. The customer is heavily involved in the entire process, including the selection of the service provider. This sense of ownership is also reinforced by the direct financial contribution that each customer must make to the project[2].

INVOLVE THE CUSTOMER IN ALL PHASES OF THE PROCESS

Over the decade, the needs of Fefisol’s customers have changed considerably. For almost two years now, due to the economic crisis linked to the Covid-19 pandemic, requests to the fund have mainly been for equipment coverage not provided for in their annual budgets. For their part, MFIs have asked for support in managing liquidity in a crisis context. Fefisol has responded to this need by organizing, with partners, an online training course on this topic.

The independent evaluation of the facility in 2019 will assess the impact of technical support on beneficiaries. Many TA missions respond to opportunities and needs for fundamental change within beneficiary institutions. In many cases, TA projects have helped to kick-start an in-depth transformation process. By enabling customers to test innovations more quickly and easily, they help speed up the implementation of optimal solutions.

Several lessons can be drawn from these ten years of activity. The main one remains the need for the customer to take ownership of the technical support project. As such, his involvement in the process is crucial, from defining his needs for a customized solution to managing the consultant. It is also important to maintain a certain degree of agility throughout the implementation of TA projects, to ensure an effective response.

MEETING THE CHALLENGE OF PROJECT IMPACT ASSESSMENT

Downstream, the major challenge of this type of scheme remains that of evaluating the impact of TA programs on beneficiaries. Thanks to the possibility of granting successive financing and to its processes for monitoring the performance of its customers, Fefisol nevertheless has powerful tools for characterizing and documenting this impact over time.

To support this ramp-up, a Fefisol 2 fund will be launched in March 2022. Following on from Fefisol 1, it will continue to offer financial and technical services to rural MFIs and agricultural entities, with the ambition of deepening its social and environmental approach to projects. As such, the AT facility will have a compartment dedicated to improving sustainable agricultural practices and financing agriculture, while retaining its “tailor-made” approach so as to meet all its customers’ needs.

[1 ] Tier 3 MFIs, with total assets of less than USD 5 million.

[2 ] This mandatory contribution – at least 15% of each mission – explains the relatively low average value of TA projects.

 

Focus on technical support for rural African players

Created in 2011 by SIDI and its partners, the Fefisol fund offers a technical assistance (TA) facility to African rural players, in addition to its financial support. After conducting nearly 140 TA projects on the continent, SIDI and Alterfin are due to launch a second fund in 2022, with the ambition of further deepening its social and environmental approach to the companies financed.

Financing and TA, fertile ground for the growth of agricultural entities in Africa

By Gabrielle Orliange, Head of Social and Environmental Performance SIDI/Fefisol (published in Secteur privé & développement #36, La revue de Proparco, 4th quarter 2021)

In Africa, microfinance and the rural sector are of little interest to the traditional banking system. However, technical support (TS) for agricultural entities, combined with appropriate financial services, play an essential role in the continent’s sustainable development. This is why the Fefisol fund (Fonds européen de financement solidaire pour l’AFrique), in addition to its financial support, offers a technical assistance facility to rural players. In this context, it provides its customers with specialized service providers who help them to strengthen their viability and improve their productivity, while preserving the living conditions of small-scale agricultural producers.

Since its creation just ten years ago, Fefisol has financed 139 support projects for 51 customers in 22 African countries. Over two-thirds of beneficiaries are small microfinance institutions (MFIs) undergoing consolidation[1] or agricultural entities. A quarter of the technical support projects supported by the fund relate to financial issues, in particular accounting monitoring and strengthening internal control.

The technical support program reinforces the impact of financial support. At the beneficiary level, the two levers of action are complementary: Fefisol loans enable companies to grow their business, while technical expertise helps them secure this growth by improving their efficiency. In terms of fund management, technical support in return enables investment managers to improve their understanding of how investee companies operate, thus guaranteeing greater operational efficiency.

Fefisol’s TA offer stands out above the rest by providing a tailor-made response to customer needs. The customer is heavily involved in the entire process, including the selection of the service provider. This sense of ownership is also reinforced by the direct financial contribution that each customer must make to the project[2].

INVOLVE THE CUSTOMER IN ALL PHASES OF THE PROCESS

Over the decade, the needs of Fefisol’s customers have changed considerably. For almost two years now, due to the economic crisis linked to the Covid-19 pandemic, requests to the fund have mainly been for equipment coverage not provided for in their annual budgets. For their part, MFIs have asked for support in managing liquidity in a crisis context. Fefisol has responded to this need by organizing, with partners, an online training course on this topic.

The independent evaluation of the facility in 2019 will assess the impact of technical support on beneficiaries. Many TA missions respond to opportunities and needs for fundamental change within beneficiary institutions. In many cases, TA projects have helped to kick-start an in-depth transformation process. By enabling customers to test innovations more quickly and easily, they help speed up the implementation of optimal solutions.

Several lessons can be drawn from these ten years of activity. The main one remains the need for the customer to take ownership of the technical support project. As such, his involvement in the process is crucial, from defining his needs for a customized solution to managing the consultant. It is also important to maintain a certain degree of agility throughout the implementation of TA projects, to ensure an effective response.

MEETING THE CHALLENGE OF PROJECT IMPACT ASSESSMENT

Downstream, the major challenge of this type of scheme remains that of evaluating the impact of TA programs on beneficiaries. Thanks to the possibility of granting successive financing and to its processes for monitoring the performance of its customers, Fefisol nevertheless has powerful tools for characterizing and documenting this impact over time.

To support this ramp-up, a Fefisol 2 fund will be launched in March 2022. Following on from Fefisol 1, it will continue to offer financial and technical services to rural MFIs and agricultural entities, with the ambition of deepening its social and environmental approach to projects. As such, the AT facility will have a compartment dedicated to improving sustainable agricultural practices and financing agriculture, while retaining its “tailor-made” approach so as to meet all its customers’ needs.

[1 ] Tier 3 MFIs, with total assets of less than USD 5 million.

[2 ] This mandatory contribution – at least 15% of each mission – explains the relatively low average value of TA projects.