EN
Inclusive Finance. Increasing Autonomy. Improving Lives.
2013 Activity report
02 — ADA Edito
2013 saw ADA’s continued commitment to our long term partners. This year has been marked by the strengthening of our regional partnership with REDCAMIF, successful experiences in the area of renewable energy, the integration of young people into employment and remittances. Academic and managerial trainings have also assumed an increasingly important position within our support programme. This year has also seen a change at senior management level, with the departure of Axel de Ville, whom we would like to thank for all of his hard work. September 2013 saw the arrival of Arnaud Servais, who took over the reins as Executive Director.
Robert Wagener President of ADA
At a time when the microfinance sector is experiencing considerable growth, we deplore the fact that some 2.5 billion adults continue to be excluded from the conventional financial system. It is unacceptable in the 21st century that men and women do not have the fundamental right to access a financial system and therefore are not able to access micro-loans, savings or micro-insurance. These products enable them to cover their fundamental and basic needs – food, education, healthcare – notably through income-generating activities. As a result of our 20 years of experience, ADA firmly believes in using microfinance or, in a broader sense, inclusive finance, as a vehicle to support the economy, the creation of sustainable wealth and employment. Working alongside our partners, our teams invest a huge amount of time and effort on a daily basis strengthening the inclusive finance sector in order to make the world a better and fairer place.
ADA’s approach Over the last 20 years, ADA has been engaged in efforts to both reinforce and accelerate the financial inclusion of populations still currently excluded from conventional banking circuits in developing countries. Our efforts are designed to strengthen the autonomy and the capacities of microfinance institutions, professional associations, and networks. Through the LMDF, we are also able to support their efforts to seek out funding, which is essential in order to ensure that their actions are sustainable over the long-term. For many years, ADA has advocated transparency and has been involved in the promotion of practices designed to manage social and financial performance. We support a range of initiatives which encourage the implementation of these practices.
In developing countries, only 38% of young people have a bank account, compared to
83%
in developed countries In Sub-Saharan Africa,
38%
of bank account holders use their account to receive
money transfers,
compared to only 14% worldwide Arnaud Servais Executive Director of ADA
The banking penetration rate in Peru will exceed
50%
in the next 10 years
Under the High Auspices of HRH the Grand Duchess Maria Teresa of Luxembourg
Source: Global Findex
ADA is able to pursue its mission thanks to the support provided by the Luxembourg Directorate for Development Cooperation and Humanitarian Affairs.
ADA Summary — 03
07
12
17
ADA in Luxembourg Finding sources of funding
Developing the sector at the national level
18
Stimulating the development of microfinance in Cape Verde 19 06
LMDF: the Luxembourg Microfinance Investment Fund 06 EIIL: paving the way for impact investing in Luxembourg 07
Raising awareness of the challenges of microfinance
25
08
Midis de la microfinance: Discussing microfinance over lunch 08 “More autonomy, better life.” 09
MicroMED: Accelerating the process of financial inclusion in Tunisia 20
Strengthening the networks as key actors in financial inclusion
22
Support for the professional associations in South East Asia 22 The decisive role played by the professional associations
22
A library specialising in inclusive finance 09
Workshops designed to promote exchanges with the networks 23
The 2013 MFI Managers Global Forum 09
Support for the regional network REDCAMIF 24 The first African Microfinance Week 25
Professionalising the sector
ADA on an international level Green energy and environmental protection
28
Professional trainings and performance tools 28 12
Ecological equipment acquired thanks to microcredits 12
Academic trainings in the North and South 29
Replication of the access to green energy model in the Philippines 15
An approach to research shaped by what is happening on the field
30
The launch of a new department dedicated to research
30
Microfinance Gateway
31
Helping our partners on the road towards autonomy
Our projects across the world 32
Ecology is at the heart of the Fondesurco strategy 14
16
Migrants’ savings: a strategic pillar for PAMECAS 16 Créd’art reaches out to young artisans 17
Figures given in this publication were accurate as of 31 December 2013.
Our financial data 34 Institutional data 38 Come visit us 39
04 — ADA Sensibiliser aux enjeux de la microfinance
ADA
in Luxembourg
ADA Sensibiliser aux enjeux de la microfinance — 05
26th Midi de la microfinance organised at the Banque de Luxembourg
« »
When it is managed responsibly and seriously by competent actors in an adapted, regulated, and transparent environment, microfinance can generate powerful leverage. It makes possible the combination of efforts and resources of the public sector, civil society, and the private sector. Marc Spautz, Minister for Cooperation and Humanitarian Affairs, July 2013
06 — ADA Finding sources of funding
Finding sources of funding ADA assists microfinance institutions in their search for funding from the Luxembourg investment fund, the LMDF.
Support for funding
LMDF: the Luxembourg Microfinance Investment Fund Funding is vital for the development of the activities of microfinance institutions (MFIs). It opens up new perspectives for long-term projects and ensures the stability of such institutions. ADA assists MFIs in their efforts to seek funding from the LMDF (Luxembourg Microfinance and Development Fund SICAV) investment fund.
Vision LMDF aims to contribute to the alleviation of poverty by supporting organisations that empower people and stimulate entrepreneurship, with a particular focus on the most excluded. The Fund facilitates access to responsible finance by building sustainable links between investors, microfinance institutions and ultimate beneficiaries.
Mission In order to realize its Vision, LMDF - Constitutes an attractive investment proposition by balancing stable financial returns to investors with the provision of responsible financial services to the poor.
- Specializes in facilitating the growth of promising emerging microfinance institutions which address the financial needs of marginalized communities and individuals in developing countries. - Enables the development of microentrepreneurs in areas where unmet needs are largest, particularly among women, youth and rural populations. - Is accessible to public, institutional and retail investors and is accountable for reaching both social and financial objectives, and transparent in its reporting.
31,007
Micro-entrepreneurs financed by LMDF
72% women
of which
EUR 1,018 Average disbursed micro-loan
LMDF is open to all private or institutional investors in Luxembourg who are interested in microfinance as a development tool. Please consult www.lmdf.lu to find out more.
07
EIIL: paving the way for impact investing in Luxembourg ADA manages the secretariat of the EIIL (European Impact Investing Luxembourg), a group of companies in the financial services sector created in order to establish a meaningful position for impact investing in Luxembourg. The group was set up at the EVPA General Assembly held in Luxembourg in 2009. EIIL established working groups in 2013 in order to create expertise groups devoted to the development of impact investing in Luxembourg. The first workshop was attended by more than 45 participants and focused on four topics: crowd-funding, impact measuring, the social economy, and impact funds domiciled in Luxembourg. EIIL’s objectives: - to establish and moderate working groups on issues related to impact investing; - to become a platform for the exchange of information between the various impact investing stakeholders; and, - to make the financial market in Luxembourg aware of the importance of developing this form of investment.
The EIIL is an initiative which is open to all organisations and individuals who would like to contribute to the development of impact investment in Luxembourg. To become a member, please contact the secretariat: info@eiil.lu.
www.eiil.lu
08
Raising awareness of the challenges of microfinance Established in Luxembourg, ADA plays an active role in raising awareness and disseminating information regarding financial inclusion.
Midis de la microfinance: Discussing microfinance over lunch The Midis de la microfinance (lunchtime discussions about microfinance) are meetings which provide a specialist with the opportunity to lecture on a topical issue related to inclusive finance. The 24th Midi de la microfinance Impact Investing: but what impact? Harry Hummels, GIIN Liaison Officer, spoke to participants about the challenges of impact investing. This event was held with the support of Ernst & Young and Elvinger, Hoss & Prussen, and in partnership with ALFI, BRS, EIIL, and LuxFlag. 25th Midi de la microfinance Left out of financial services:Â How to reach the unbanked? Dr. Prega Ramsamy, CEO of FinMarkTrust, explained the importance of collecting field data in order to provide an appropriate response to the populations excluded from the banking system in Africa. 26th Midi de la microfinance Interests rates in microfinance: an abuse or a necessity? A debate between Aldo Mauro, CEO of MicroFinanza Rating, and Marek Hudon, Professor at the Solvay Brussels School of Economics and Management and co-director of the CERMi, on the controversy surrounding the issue of interest rates in microfinance. Held in partnership with BRS and the Microfinance Round Table in Luxembourg.
These events are held in partnership with the Banque de Luxembourg and BRS.
ADA Raising awareness of the challenges of microfinance — 09
“More autonomy, better life.” In May 2013, ADA launched an awareness-raising campaign in order to draw the attention of the general public in Luxembourg to the importance of financial inclusion in the development sector. The campaign relays the story of three micro-entrepreneurs who have been able to improve their living conditions thanks to a microcredit.
Capacity building Research
The 2013 MFI Managers Global Forum Twenty managers of ADA’s partner microfinance institutions (MFIs) in Africa, Asia, and Latin America were invited to take part in a seminar in Luxembourg, entitled “Financial and operational efficiency in MFIs,” which also discussed issues of governance and social impact. During the seminar, a workshop was held with regard to the link between the social and financial performance of MFIs.
I was able to obtain a microcredit from a cooperative in order to set myself up as a self-employed taxi driver. Since then, I have been going into town every morning to ferry clients around on my motorcycle taxi. Now, I have enough money to support my family – and, most importantly, to pay for my daughter to go to school. I used my microcredit to pay for my motorcycle taxi; and, once I had repaid that, I took out another microcredit to cover repairs to my vehicle. Now I am saving the money I have left over at the end of each month in order to maintain my motorcycle on my own. Alexander L. Napat, motorcycle taxi driver on the island of Mindanao in the Philippines
Knowledge management
A library specialising in inclusive finance ADA’s library contains more than 4,500 publications in English, French, Spanish, and German. It is located in the House of Microfinance and is open to the general public upon request from Monday to Friday, from 9 am to 1 pm and from 2 pm to 6 pm. Access and consultation of the publications are free of charge.
If you wish to use the ADA library, please make an appointment beforehand by contacting us either by phone: (+352) 45 68 68-1, or by email at: info@ada-microfinance.lu.
10
ADA
on an international level  
Microfinance associations and networks make it possible to strengthen the entire microfinance sector in a region or a country, thanks to the provision of a range of different services. By supporting these structures, the lenders and other support organisations can create a powerful leverage effect, enabling them to reach out to more MFIs and, as a consequence, to more microentrepreneurs. Since they are able to offer tailored services to support their members in the process that will lead to them becoming fully professional, the networks and the professional associations play a fundamental role in the development of the microfinance sector at the international level. Luc Vandeweerd, Strategy Director, ADA
11
12 — ADA Green energy and environmental protection
Green energy and environmental protection The lack of access to energy represents a major obstacle to development. Microfinance is a valuable form of leverage: it may be used to facilitate access to clean energy and may, therefore, contribute to the development of micro-enterprises while helping to protect the environment and public health.
Innovation
Ecological equipment acquired thanks to microcredits ADA and its partners develop products in order to make green energy technologies accessible to low-income households and micro-entrepreneurs in rural areas in developing countries. With the technical support of MEI and EnDev/GIZ, as well as two Peruvian microfinance MFIs – Caja Municipal de Ahorro y Crédito (CMAC) Huancayo and Fondo de desarrollo Regional (Fondesurco) – ADA has been developing projects since 2011, with the aim of enabling low-income households in rural areas of Peru to obtain microcredits to acquire green equipment, equipment which consumes only a small amount of energy and produces very little pollution, or which is powered by a renewable source of energy. ADA supports the MFIs in the provision of microcredits which may be specifically granted for the acquisition of such type of equipment, for example: solar water heaters, solar dryers for coffee beans, and energy-efficient wood burning ovens.
MFI Partners: Fondesurco, Caja Huancayo Partners: MEI, Hivos, GIZ, EnDev/GIZ
This project is part of an overarching approach to sustainable development; it is designed to achieve a triple economic, social, and ecological bottom line. The micro-entrepreneurs who access green energy through a microcredit are actively and autonomously contributing to local economic development, the reduction of CO2 emissions, and the improvement of public health. At the end of 2013, 16 of the 18 Fondesurco agencies were offering microcredits to purchase two green products, namely the water heater and the energy-efficient oven. ADA supports this project in two areas vital to its success: the development of the financial product, which is carried out by the MFI, and the development of the technology, which is undertaken by local suppliers.
Solar water heater
13
Microcredits that have been specifically earmarked for the purchase of green equipment have proven themselves to be an excellent way for MFIs to introduce themselves to the market. Indeed, 60% of clients who take out a green microcredit are new clients to the institution; additionally, these new clients often then take out a further microcredit to finance an economic activity once they have applied for a green microcredit. The latter is, therefore, a tangible asset for the development and future prosperity of the MFIs who make them available.
Change in the number of green loans granted up until end of 2013 $400.000
500
$350.000
450 400 350
$300.000 $250.000
300
$200.000
250
$150.000
200 150
$100.000
100
$50.000
50 0
13
13 Q
4-
20
13 Q
3-
20
13 Q
2-
20
12 Q
1-
20
12 Q
4-
20
12 Q
3-
20
12
20
20
2-
1-
Q
Q
11
20
20
4-
3-
Q
Q
11
$
Total amount of loans disbursed Total amount of accumulated loans - Fondesurco Total amount of accumulated loans - Caja Huancayo
95%
of clients say that they are satisfied with their new green energy equipment
14 — ADA Green energy and environmental protection
Ecology is at the heart of the Fondesurco strategy The Fondesurco MFI has fully integrated the environmental dimension in the way it works, both with its clients and with its own employees. The green loans it provides are now part of a global green strategy to promote environmental protection.
In terms of environmental protection, the institution has, for example, adopted an internal strategy to reduce electricity and water consumption in its agencies. It is also currently envisaging the installation of solar panels. With a view to creating financial products designed to promote
environmental protection and the mitigation of risks related to climate change (such as reforestation, the usage of organic crops, or soil conditioning) Fondesurco is also involved in studies in collaboration with other partners.
Developing rural areas The green energy loans make it possible to develop rural areas and to provide people with the means to improve their quality of life thanks to an inexhaustible source of energy, namely the sun. Gabriel Meza, CEO, Fondesurco
The green energy project had already received the Green Finance Award at the Green Business Awards in Luxembourg in 2012.
EE
20
GR
12
XEMBOURG LU
N
BU
S
In November 2013, the innovative efforts undertaken by Fondesurco were recognised when it was awarded the Premio Citi a la Microempresa 2013 (PREMIC) prize in the most innovative financial institution category.
SIN
ES S AW
AR
D
GREEN FINANCE AWARD
15
Innovation
Replication of the access to green energy model in the Philippines Following the success of the green microcredit initiative in Peru, ADA has endeavoured to replicate the access to the green energy model in the Philippines in partnership with the MCPI (Microfinance Council of the Philippines). In 2013, following a positive feasibility study, the specific needs of clients in the Philippines were analysed with a view towards determining which access to green energy products would provide the best response to the region’s needs. The challenge is to adapt the good practices developed in Peru to the Philippines’ context. Two products have been identified as a priority in order to meet local needs: solar lighting and energy-efficient refrigerators. Two MFIs, ASKI (Alalay Sa Kaunlaran Inc.) and PBC (People’s Bank of Caraga), have been selected to launch the pilot project which will begin in 2014. In order to reduce energy poverty in the archipelago and to create new opportunities for the urban and peri-urban populations, ADA has decided to accord priority to the following two elements: - Providing a response to the issue of the funds available to MFIs to finance green loans; and, - Improving the poor populations’ access to loans in order to encourage the acquisition of green energy products. Working with a professional association such as MCPI makes it possible to broaden the distribution of new microcredits and to make acquisitions in this area sustainable over the long-term throughout the country. Indeed, MCPI covers 70% of the micro finance market in the Philippines. At the end of the project, the access to green energy products developed by ADA and its partners will be distributed by all of the MFI members of MCPI.
Partners: MCPI, Frankfurt School, UNEP
MCPI is a nationwide network of MFIs, which is comprised of 56 institutions, including 46 MFIs and 10 support organisations. MCPI represents approximately three million clients in the Philippines. www.microfinancecouncil.org
16 — ADA Helping our partners on the road towards autonomy
Helping our partners on the road towards autonomy ADA’s actions always follow an approach designed to support the autonomous development of its partners. Our aim is to pass on the know-how they require in order to develop and innovate on a sustainable and independent basis.
Innovation
Migrants’ savings: a strategic pillar for PAMECAS ADA and three partner microfinance institutions (MFIs) have developed a project designed to add value to migrants’ savings through the establishment of money transfer corridors between the migrants’ place of residence and their country of origin. Once it has been transferred, this money can easily be assigned to savings products or loans, thereby making an important contribution to local development.
ADA and PAMECAS started the project by creating a corridor between Italy and Senegal. Bolstered by this experience, PAMECAS has since created three new corridors to Senegal, from Spain, Gabon, and the United States. Having taken stock of these activities, ADA put an exit strategy in place in 2013, with a view towards ensuring the long-term future of the project before enabling PAMECAS to assume complete and autonomous responsibility for it. This project, which
is designed to add value to migrants’ savings, is now an integral part of the strategy adopted by PAMECAS and of the range of products offered to its clients. It enables PAMECAS to put together a larger reserve of funds, to provide a better response to its clients’ needs, and to attract new clients. These are key factors contributing to the MFI’s financial stability.
EUR 5,380,000
transferred via the corridors created by ADA and its 3 MFI partners since 2009
The project, which is designed to add value to migrants’ savings, receives financial support from the IFAD.
MFI Partners: Camide, Nyesigiso, Pamecas
Acquiring the capacity to innovate PAMECAS has now acquired the capacity to innovate on an autonomous basis. The diversification and innovation of our products have allowed us to reach out to clients who have traditionally been marginalised and enable them to be more competitive on the market. The broadening of our range of products provides us with the opportunity to diversify our funding sources and, therefore, to reinforce our stability. Mamadou Touré, Director General of PAMECAS (Partnership for the Mobilisation of Savings and Loans in Senegal)
17
Innovation
Créd’art reaches out to young artisans Créd’art is a financial product aimed at young artisans — shoemakers, mechanics, hairdressers, seamstresses, etc. — who would like to establish their own microenterprise. It is comprised of microcredits, training in company management, and customised guidance which is provided until the loan has been repaid. The Créd’art project, therefore, combines the acquisition of managements skills with access to capital, two key ingredients in the creation of flourishing enterprises. The Créd’art project has been developed and tested since 2008 in Burkina Faso by ADA, together with the microfinance institution (MFI) RCPB and the CIF confederation. In 2013, a global evaluation of the project showed that Créd’art is a viable product for an MFI that makes it available. In keeping with its aim to ensure the autonomy of its partners, ADA has devised an exit strategy, so as to allow RCPB to assume complete responsibility for the distribution of Créd’art. As well as the benefits it provides to young artisans, this innovative financial product also serves to increase the MFI’s loans portfolio by expanding its client base. Not only is Créd’art aimed at young people who generally do not have access to funding, it is also a means for improving the social performance of the microfinance institutions that choose to distribute it. ADA now intends to replicate Créd’art’s success by introducing the model in other West African countries.
683
young people have been financed
Partner: CIF MFI Partner: RCPB
1,783
jobs created
18 — ADA Developing the sector at the national level
Developing the sector at the national level ADA is convinced that the development of the microfinance sector only reaches its optimal level when it is able to operate coherently on all levels. This type of approach makes it possible to gain a good understanding of all of the challenges faced by the sector and reconcile interests which may sometimes diverge.
MACRO Government and regulatory authorities MESO Representative bodies of the inclusive finance sector
MICRO Microfinance institutions
Beneficiaries Micro-entrepreneurs
This type of market, which is integrated at all levels, increases the impact of the actions undertaken and makes it possible to create a stable and favourable environment for the development of microfinance institutions (MFIs).
Cape verde Population: 505,300 IDH: 132nd out of 187 countries Literacy rate > 15 years: 84% Life expectancy: 74 ans Sources: UNDP (2014) / World Bank (2011)
ADA Developing the sector at the national level — 19
Capacity building
Stimulating the development of microfinance in Cape Verde In 2012, the governments of Luxembourg and Cape Verde commited to a project to develop microfinance within the framework of the third Indicative Cooperation Programme. This project is designed to promote and vitalise the microfinance sector in the archipelago, so that it becomes self-sufficient and is able to serve the population of Cape Verde that is currently excluded from the conventional banking system. ADA manages this support project in conjunction with the governments of Luxembourg and Cape Verde.
The project is designed to be executed in a participative way and is undertaken in close collaboration with all of the stakeholders. The involvement of the three levels of the sector represents the key element to the project’s success: The objectives at the MACRO level The governments and the regulatory authorities work together in order to create an environment favourable to microfinance activities, notably through: - Revision of existing legislation; - Formulation of a national strategy for microfinance; and, - Reinforcement of local skills. The objectives at the MESO level The FAMF (Federation of the Microfinance Associations in Cape Verde) is the main representative body of the inclusive finance sector. The FAMF is a professional association that represents the interests of
The
its 13 MFI members. These MFIs cover the whole of the archipelago. FAMF’s aim is to create a new environment which is favourable to their development, in order to provide the most appropriate responses to the needs of the population excluded from the conventional banking system. FAMF is currently undertaking a professionalisation process and increasing its visibility at the national level. This is to ensure recognition as the leader in the development of the sector and an example of close consultation with its stakeholders. FAMF undertook several actions in 2013 to achieve this aim: - Opening of a documentation centre; - Creation of a website; - Formulation of a four-year strategic plan; and, - An impact study on the microfinance sector in Cape Verde in collaboration with the UNDP Praia agency.
national strategy for microfinance has been
created and approved.
The objectives at the MICRO level The MFIs undertake efforts to become more professional and also to improve their degree of self-sufficiency by applying the good practices developed in the sector. To this end, the 13 MFI members of FAMF have benefitted from: - The introduction of a computerised management system; - Training sessions for their staff and managers on governance, management and information systems, and accountancy; - Specially designed training modules for their loan officers; and, - A project grant designed to encourage MFIs to present projects to develop their activity. This first grant made it possible to finance the recruitment of loan officers and accountants, to organise finance education workshops for clients, and to purchase motorbikes to be used for travel to the rural areas.
law which regulates microfinance has been revised and is currently being re-enacted. The
Some of these actions have been carried out in collaboration with the PNLP (National Programme to Combat Poverty).
Partners: Luxembourg Ministry of Foreign and European Affairs, Directorate for Cooperation; Cape Verde Ministry of External Relations
20 — ADA Developing the sector at the national level
Capacity building
MicroMED: Accelerating the process of financial inclusion in Tunisia Following the Jasmine revolution, the development of inclusive financial services was identified as an important vector for socio-economic development in Tunisia. The MicroMED programme was created against this background in order to favour the financial inclusion of the local populations through the development of the microfinance sector.
ADA is responsible for the project’s technical assistance, which is provided in three main areas: Supporting the creation of an national observatory on financial inclusion
The market will be developed through the introduction of new inclusive finance products and services which have been identified through market research and tested during pilot projects.
This observatory will analyse and monitor financial inclusion in Tunisia. It will also be given the task of disseminating information to the public and private operators which they will be able to take into account when making their decisions.
Improving the market infrastructure
Reinforcing the capacities of the stakeholders and developing the market
Efforts will be made to diversify the distribution channels for inclusive finance products and services. Studies will be undertaken regarding the potential of the postal market and the possibilities offered by access to mobile technologies.
Specific training and support programmes will be provided to the actors on the market, so as to reinforce their skills and raise their awareness of the principles of client protection. Communication campaigns and awareness-raising workshops will complete this approach.
Transparency will be enhanced by the work performed by a risk centre which will be created in conjunction with the authorities and the lenders.
TUNISIA Population: 10.7 million IDH : 94th out of 187 countries Percentage of population > 15 years old with an account in a financial institution: 32 % (26% in rural areas and 35% in urban areas) Sources: UNDP(2014) / World Bank (2011)
MicroMED is a project financed by the European Investment Bank and the Luxembourg Ministry of Foreign Affairs through the trust fund of the Facility for Euro-Mediterranean Investment and Partnership (FEMIP). MicroMED is carried out in partnership with the Tunisian Republic.
21
« »
The MicroMED Tunisia programme is an excellent example of the way in which partners can join forces in order to achieve a higher objective, which in this case is the promotion of financial inclusion though our projects. Philippe de Fontaine Vive Curtaz, Vice-President of the EIB
22 — ADA Strengthening the networks as key actors in financial inclusion
Strengthening the networks as key actors in financial inclusion Regional or national networks play a key role in the development and professionalisation of the inclusive finance sector. Their ability to rally a large number of microfinance institutions (MFIs) and to generate valuable leverage makes them a powerful driver for the expansion of inclusive finance services.
Capacity building
Support for the professional associations in South East Asia
The decisive role played by the professional associations
As part of its approach designed to strengthen professional associations and networks in the microfinance sector, ADA has signed a multi-annual contract in order to provide support to the professional associations in Laos, Cambodia, and Vietnam. The contract provides for the institutional strengthening of the three associations, as well as the development of services for their members. The reinforcement and professionalisation of the associations will enable them to be recognised as legitimate representatives of the microfinance sector, thereby placing them in a position to exert positive influence over its development.
Professional associations are capable of covering a broad field of action, which is essential for the sector’s development: - Information: centralisation and dissemination of information and good practice - Representation: political advocacy with a view towards promoting legislation and encouraging MFIs to become members of a professional association - Services: provision of specific training to MFIs, encouraging transparency and the monitoring of financial and social performances - Funding: searching for lenders and coordinating the involvement of the various development cooperation actors
Partners: CMA, LMFWG, VMFWG
Laos
Vietnam
CAMBODIA
LAOS
Population: 14.5 million
Population: 6.3 million
IDH: 136th out of 187 countries
IDH: 139th out of 187 countries
Percentage of population > 15 years old with an account in a financial institution: 4%
Percentage of population > 15 years old with an account in a financial institution: 27%
Cambodia
VIETNAM Population: 89.7 million IDH: 121th out of 187 countries Percentage of population > 15 years old with an account in a financial institution: 21%
Sources: UNDP (2014) / World Bank (2011)
23
Workshops designed to promote exchanges with the networks ADA and SEEP organise regional workshops for the representatives of microfinance networks in Africa, Asia, and Latin America in order to promote peer learning and strengthen their capacities in a wide range of operational areas. The participants address issues related to the fundamental needs of the microfinance networks in their region. They formulate or revisit their strategies on subjects such as social performance, impact assessment, policy advocacy, and financial viability. In 2013, exchange workshops were organised in: Latin America In collaboration with Prodesarrollo, REDCAMIF, SEEP and Citi. The workshop was held alongside the FOROMIC conference. There were 19 networks represented amongst the participants. Africa In collaboration with SEEP and AFMIN. This workshop was held in Arusha, Tanzania alongside the African Microfinance Seminar and was attended by 13 networks. Asia In collaboration with SEEP, BWTP, and MCPI. Ten networks took part in this workshop which was organised in Manila alongside the Microcredit Summit.
98
people have been trained during these workshops Partner: SEEP
24 — ADA Strengthening the networks as key actors in financial inclusion
Innovation Capacity building Research
Support for the regional network REDCAMIF ADA supports the expansion of inclusive finance in Central America and the Dominican Republic through the REDCAMIF regional network. This regional microfinance network represents seven national networks, which bring together 129 microfinance institutions (MFIs) providing services to more than one million clients in Costa Rica, El Salvador, Guatemala, Honduras, Â Nicaragua, Panama, and the Dominican Republic.
ADA supports REDCAMIF in its development through a financial and technical support programme which is based on three pillars:
The national microfinance network members of REDCAMIF
The development of inclusive financial services A transnational study carried out in 2013 identified two main issues for the region: loans for the rural sector and housing loans. Four pilot products per issue were then selected following a thorough analysis of the needs of the local populations. These products are currently being tested by four MFIs in the seven countries covered by REDCAMIF. These pilot products are supported by a manual which takes into account the specificities of each country. A specialist in inclusive finance products has been recruited within each national network in order to monitor the results achieved. Capacity building Governance, risk management, transparency, and financial and social performance are all key elements in the positive development of the sector. They are regularly addressed during training sessions and workshops aimed at both the staff of REDCAMIF as well as the staff of the national networks and their member MFIs. Knowledge management A plan to strengthen knowledge management was established in 2013. It is due to be implemented within REDCAMIF during 2014.
Dominican Republic Guatemala
REDOMIF
REDIMIF Honduras REDMICROH Nicaragua ASOMIF Panama
El Salvador ASOMI
Costa Rica
REDPAMIF
REDCOM
ADA and REDCAMIF created a support fund of USD 760,000 to reinforce the professional associations over the course
of 5 years.
USD 266,793 were spent in 2013.
Partner: REDCAMIF www.redcamif.org
These funds enable the development of a business culture within microfinance networks and increase the number of new services proposed to MFIs in order to assist them in becoming financially viable.
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African Microfinance Week Arusha, TANZANIA 2-6 December 2013
The annual meeting of microfinance professionals in Africa Since its inception, ADA has helped to set up a series of partnerships between public and private organisations in order to bring them all together around common issues and to develop the sector in its entirety. In 2009, ADA undertook steps to initiate dialogue between the main African regional microfinance networks, namely AMT, AFMIN, and MAIN. They launched their first joint initiative in 2013 when they organised the annual conference for microfinance in Africa. Known as the African Microfinance Week, the event is designed to stimulate reflection on the future of microfinance, create synergies between the different actors, and promote the sector across the entire continent. This new event aims to become the main African event of the year organised by, and for, microfinance professionals.
www.microfinance-africa.org
26 — ADA The first African Microfinance Week
A successful first event The first African Microfinance Week gathered over 250 participants in Arusha, Tanzania, from 2 to 6 December 2013. Five days of lectures, discussions, meetings, and training sessions brought together microfinance practitioners of all levels from 44 countries – including 36 African countries – to discuss the topic of “Regulation in microfinance in Africa 20 years later.” The two days of plenary sessions enabled 30 specialists to address issues related to the implementation and supervision of regulations and their impact on different levels: outreach, ownership, funding, and financial inclusion. The AMT network organised its traditional Investors’ Fair, which is designed to facilitate contacts between MFIs looking for funding and the social investors active in Africa. Finally, the three regional network coorganisers held their General Assembly at the end of the week.
More than
250 participants from
44 countries 36 of which were African countries
The African Microfinance Week is an annual conference open to all microfinance practitioners as well as to sectors related to microfinance. Please take part in the 2014 conference either by helping to shape the agenda for the various sessions (the call for proposals is open until August 2014) or by registering to attend the event:
www.microfinance-africa.org
ADA The first African Microfinance Week — 27
An African initiative On their own, the three regional networks, AMT (African Microfinance Transparency), AFMIN (The African Microfinance Network), and MAIN (Microfinance African Institutions Network) behind this event represent 140 microfinance institutions (MFIs) and 23 professional associations of MFIs from across the continent. The event is organised by these three networks with ADA, with the support of the Luxembourg Directorate for Development Cooperation and Humanitarian Affairs.
The second annual African Microfinance Week will take place from the 1st until the 5th of December 2014 in Ouagadougou, Burkina Faso.
2013 Sponsors As well as the Luxembourg Cooperation, the first African Microfinance Week benefitted from the support of Citi Foundation, the European Investment Bank, and Microfact.
28 — ADA Professionalising the sector
Professionalising the sector ADA designs management tools with the aim of improving the managerial skills of the microfinance networks and institutions. The professionalisation of their activities enables them to consolidate their position and to develop on a sustainable and autonomous basis.
Capacity building
Professional trainings and performance tools ADA develops and perfects management tools for the heads and managers of microfinance institutions (MFIs). These tools are designed to improve their management skills in accordance with the degree of maturity of the MFI in which they work. New tools are currently being developed in order to establish a coherent provision capable of responding to the needs of all MFIs, regardless of their level of professionalisation.
Microfact The Microfact interface is based on data extracted from financial statements and takes the form of an Excel spreadsheet that calculates the evolution of the key indicators of social and financial performance. It shows the results in the form of tables and graphs. The tool has been designed as a Management
Information System (MIS) and can also be used for reporting purposes. The Microfact Compiler, on the other hand, allows microfinance portfolio managers, microfinance networks, and the supervisory authorities to compile data from hundreds of institutions, so as to establish a view of the market at the regional or national level.
Microfact has been developed by ADA and BRS since 2006 and is currently used by more than 600 institutions throughout the world. In order to promote the development of the financial and social analysis skills required to use Microfact, ADA and BRS jointly organise interactive training sessions at the request of the microfinance networks.
Partner: BRS
The Microfact tools are free of charge and are available in eight languages: English, French, Spanish, Portuguese, Lao, Russian, Vietnamese, and Khmer. You can download the Microfact Microfinance and Microinsurance tools free of charge from: www.microfact.org
29
Capacity building
Academic trainings in the North and South For many years, ADA has been delivering modules on a range of degree courses in France, Belgium, and Luxembourg. Today, the aim is to reproduce these modules at the universities located in the countries in the South, so as to contribute to the development of the skills of the local actors involved in inclusive finance.
The ADA training provision changes according to local needs, the progress made by research, and the development of expertise. A catalogue of training courses was put together in 2013 on the basis of the lessons learned during the various innovation and capitalisation courses and the expertise developed over the course of 20 years of support work in the field. This provision includes training sessions in the areas of innovation, social and financial performance, microinsurance, risk management, and the funding of MFIs. Partenariats with universities in the South The courses will be delivered within the training programmes provided the partner universities. The Mohamed VI Centre in Morocco has already expressed an interest in the project, and other universities in the south will follow its example shortly. ADA also works closely with CERMI (Centre for European Research in Microfinance). In this context, it is a partner NGO of the EMP (European Microfinance Programme) and has a placement programme which can accommodate as many as six interns per year, either in the ADA offices or with partners in the field. Furthermore, ADA and CERMi are working together to create a complete provision that will include both courses and scholarships for doctoral students. A similar provision will be adapted to the academic programmes provided at the University of Luxembourg in 2014.
Partners: CERMi, EMP (UMONS - ULB - UniversitĂŠ Paris Dauphine), Universidad Centroamericana, UniversitĂŠ du Luxembourg, UniversitĂŠ de Lorraine
30 — ADA Professionalising the sector
Research
An approach to research shaped by what is happening on the field In order to bridge the gap between the academic world and field practitioners, ADA both identifies and formulates the most relevant areas of research to be studied and then disseminates the results to both the operators and the academics in the sector. In this way, the inclusive finance actors take ownership of and utilise the knowledge, know-how, and results generated by the research, in order to provide innovative responses to the development needs of the target populations.
The launch of a new department dedicated to research ADA’s research activity is characterised by a cycle of activities that are related to one another. The diagram below shows the link between the field project activities undertaken with the partners and the identification of new areas of research. The results of the analysis of these areas are presented in documentation and articles that are not only disseminated in the inclusive microfinance sector, but are also used to improve the know-how of the partners and the project officers.
The areas of research are identified on the basis of a bottom-up approach, starting with field studies that make it possible to identify the needs to be thoroughly analysed regarding topics essential for the development of inclusive finance. The field studies and analyses of the sector are carried out, for the most part, through projects undertaken by ADA and its partners, and also thanks to the academic networks that support the work carried out by the researchers and the students. These field studies are also supported by the links established with the support organisations, political authorities, and international experts.
The analysis of social performance indicators in the microfinance sector is at the very heart of ADA’s research activities. In 2013, the research and development department identified three areas to be addressed in its research on the basis of a cross analysis between social and financial performance in the microfinance sector: rural finance and innovation, client protection policies, and socially responsible investment for sustainable development.
ADA’s and its partners’ projects New avenues for reflection
Information and expertise
Courses, internships and dissertations, working groups
Research, studies, publications New areas of research
As part of this approach to research, in 2013 ADA embarked upon a collaboration process with several international universities and research centres.
Partners: CERMi, Universidad Centroamericana, Université du Luxembourg, Université de Lorraine, ULB, EMP (UMONS - ULB - Université Paris Dauphine), University Meets Microfinance
31
Knowledge Management
Microfinance Gateway The Microfinance Gateway is the leading online resource for professionals seeking French-language microfinance information. The content is managed by ADA and the GRET, and technical support is provided by the CGAP. The Gateway also exists in Spanish and Arabic.
Partners: GRET, CGAP
With more than 1,500 bibliographical references covering all aspects of microfinance, the Gateway’s library is a hub for knowledge management in the sector. You can also help to expand the library’s resources by submitting your own publications through the Gateway’s website at: www.lamicrofinance.org
32 — ADA Our projects across the world
Our projects across the world 18
1 2
7
13
4 17
3 6
12
5
8
14 9
15
Central America REDCAMIF 1 Guatemala 2 Honduras 3 El Salvador 4 Nicaragua 5 Costa Rica 6 Panama 7 Dominican Republic
Innovation Capacity Building Financial Support Research Knowledge Management
8 Ecuador Financial Support
10
11
Network Support
9 Peru Financial Support Innovation Green Energy 10 Argentina Financial Support 11 Uruguay Financial Support
Network Support
Green Energy
Transfers
Central America Supporting a regional network in order to expand financial inclusion
Peru Facilitating access to green energy in rural areas
Senegal Optimising migrants’ money transfers and encouraging savings
page 24
page 12
page 16
ADA Our projects across the world — 33
West Africa 20
12 Senegal Innovation Transfers 13 Mali Innovation Transferts
21
23
22
14 Burkina Faso Innovation Youths
16
15 Togo Financial Support
Southeast Asia
16 Niger Financial Support
20 Vietnam Network Support
17 Cape Verde Capacity Building Support to the National Strategy 19
21 Laos Network Support
18 Tunisia Capacity Building Support to the National Strategy
22 Cambodia Financial Support Network Support
19 South Africa Financial Support
23 Philippines Financial Support Innovation Green Energy
Youths
Support to the National Strategy
Financial Support
Burkina Faso Helping young artisans in their efforts to create their own enterprise
Tunisia Implementing the MicroMed financial inclusion programme
Philippines Assisting microfinance institutions in their search for funding
page 17
page 20
page 6
34 — ADA Our financial data
Balance
(EUR)
2013
2012
ASSETS
7,257,669
5,056,661
Fixed Assets
2,158,442
1,597,959
Tangible fixed assets
667,092
86,942
Financial fixed assets
1,491,350
1,511,017
Current Assets
4,725,091
3,362,013
275,954
280,046
Other receivables associated with management of programmes Other receivables
10,124
10,272
4,439,014
3,071,694
374,136
96,689
Liabilities
7,257,669
5,056,661
Own Funds
2,172,361
2,019,435
Provisions and dedicated funds
4,202,394
2,233,898
Cash at bank, petty cash Prepayments and accrued income
Provisions for contingencies, charges and litigation
30,687
290,155
4,171,706
1,943,743
Debt
813,650
751,077
Debt owed to suppliers
759,441
621,625
54,210
61,436
0
68,017
69,263
52,251
Dedicated funds
Tax owed and debt owed to Social Security Other debt Prepayments and accrued income
ADA Our financial data — 35
Operating Account
(EUR)
2013 Operating Income
2012
10,463,146
7,982,436
Funds carried over from previous year
277,785
1,288,664
National and International cofinancing
9,450,419
6,021,593
350,813
414,889
Contributions and donations
64,536
56,510
Other operating income
52,378
28,844
267,215
171,936
10,489,765
7,968,555
Income associated and development activities
Depreciations and/or provisions written back Operating Expenses Consumable materials and supplies
69,615
65,112
Operating expenses associated with development activities
2,832,691
2,149,963
Support for development and other grants paid out
2,300,111
1,464,547
587,184
522,900
Other operating expenses Taxes and similar levies Staff expenses Charge for depreciation, value adjustments and provisions Outstanding commitments for funds received Operating Balance Financial Income Financial expenses Financial P/L Operating P/L Extraordinary income
739
739
1,800,492
1,467,769
329,798
298,472
2,569,135
1,999,053
-26,619
13,880
30,954
23,080
3,724
1,516
27,231
21,564
612
35,445
68,286
122,353
Extraordinary expenses
2,493
51,405
Extraordinary P/L
65,793
70,948
Annual P/L
66,405
106,393
ADA’s accounts are audited by PricewaterhouseCoopers. The report on ADA’s 2013 audited accounts is available on www.ada-microfinance.org.
36 — ADA Our financial data
Breakdown by geographical area 57.89%
Africa EUR 4,109,890.65
9.38%
28.30%
Asia EUR 665,732.09
Latin America EUR 2,009,488.97
4.43%
Europe EUR 314,490.89
Total programme realisations: EUR 7,099,602.60 9% of which are administration fees
Breakdown of spending by programme Capacity Reinforcement
49.88%
EUR 3,541,342.50 Financial Support
8.82%
EUR 626,002.59 Innovation
22.33%
EUR 1,585,440.23 Management
3.64%
EUR 258,696,080
Research
7.75%
EUR 550,395.12 Knowledge Management
7.57%
EUR 537,726.08
5.3
Changes in overall budget (in millions of EURO) and in headcount between 2008 and 2016
5.6
3.6
14
2008
19
2009
20
2010
ADA Our financial data — 37
In 2013, LMDF invested in 14 countries
1
10 2
13
14
4
3
5 11
6 7
12 8
9
1 United States 2 Guatemala 3 El Salvador 4 Honduras 5 Nicaragua
EUR 14,6 million
2011
25
EUR 10,5 million 10.9
22
11 Togo 12 South Africa 13 Cambodia 14 Philippines
Investments in microfinance:
Net assets:
5.3
6 Ecuador 7 Peru 8 Argentina 9 Uruguay 10 Niger
13.6 9.4
9
43
43
43
2014
2015
2016
6.7 29
31
2012
2013
MFIs
(Provisional)
38 — ADA Institutional data
Our partners Governmental partners
Government of Cape Verde
Technical partners
Project partners
Financial partners
Government of the Republic of Tunisia
ADA Institutional data — 39
Institutional relations
2103 Executive Committee Executive Director: Arnaud Servais Strategic Director: Luc Vandeweerd Programmes Director: Olivier Massart
2013 Board of Directors Chairman: Robert Wagener Vice-Chairmen: Dieter Hartwich, Max Meyer, and Philippe-Fitzpatrick Onimus Secretary: Corinne Molitor Directors: Mark Cunningham, Karin Faber, Elmar Follmann, Rémy Jacob, Michel Maquil, Henri Marx, Jacques Prost, and Bram Schim van der Loeff Advisors to the Board of Directors: Nicole Dochen, Patrick Losch and Bruno Obegi
Come visit us The House of Microfinance ADA’s offices are located in the House of Microfinance in Luxembourg. The House is home to several bodies active in the financial inclusion sector: - European Microfinance Platform www.e-mfp.eu - LMDF www.lmdf.lu - Microinsurance Network www.microinsurancenetwork.org/
Photo credits Cover: Ollivier Girard for Center for International Forestry Research Pages 4, 5, 8: Olivier Minaire Page 7: Michael Foley Pages 9, 12, 13, 14, 15, 18: Felix Sorger Pages 10 et 11: Yousuf Tushar Page 16: Senegalese Press Agency Page 17: Microenergy
Pages 20 et 21: ENDA Page 23: Fabio Silva Pages 26 et 27: Olivier Massart Page 29: Frank Van der Vleuten Page 31: Julie Laurent Page 32: Felix Sorger, Fondesurco, Tounes 2020 Back cover: L. Antonelli / Blitz
Publisher ADA asbl 39 rue Glesener 1631 Luxembourg Tel: +352 45 68 68 1 Fax: +352 45 68 68 68 www.ada-microfinance.org RCS Luxembourg F 199 CCPL IBAN LU64 1111 1189 2705 0000 Copyright: ADA, April 2014 This publication was produced by Cropmark and printed by Faber.
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ADA has been our partner for almost 5 years. We attach a great deal of importance to this relationship because ADA supports MFIs in their process of professionalisation; it makes tools available to us and helps us in our capacity building efforts. Two years ago, we were able to obtain funding from the LMDF thanks to ADA, and this was a very good thing as well. These funds have been used to finance our debt, which has enabled us to support the provision of services in rural areas and, more specifically, to provide funds to promote women’s rights.
Central and Latin America Argentina, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Peru, Uruguay
Asia Cambodia, Laos, Philippines, Vietnam
Inclusive Finance. Increasing Autonomy. Improving Lives.
Réki Moussa Hassan Director General, ASUSU, Niger
www.ada-microfinance.org