Microfinance
Objective :
- Support the lasting development of microfinance in the countries in which our Retail Banking Outside France division is present.
Priority :
- Become the benchmark partner for local microfinance structures, particularly in Africa and the Mediterranean.
Highlights in 2009 :
Microfinance strategy
Société Générale has chosen to focus its microfinance activities in those countries in which the Group provides universal banking products and services. Its strategy is implemented via its overseas network of subsidiaries which are encouraged to finance the different microfinance institutions of the countries in which they are located, particularly as these institutions have enormous difficulty in securing local credit facilities which are very much sought after*. Microfinancing affords them access to resources which they can pay for in their local currency, thereby avoiding exchange rate risks. Local "financiers" are long-term partners and close ties are forged and built on mutual trust over time.
The Group's involvement in microfinance comes in addition to its standard banking services. The institutions supported by Société Générale are able to offer communities that are unable to open a bank account access to banking products and services and, in doing so, feed their local economies.
Inventory at end of 2009
Société Générale works alongside some 30 institutions, primarily on the African continent. The main countries in which it is involved include :
- Sub-Saharan Africa: Benin, Burkina Faso, Cameroon, Ghana, Guinea, Madagascar and Senegal,
- Middle East and North Africa: Egypt, Morocco, Tunisia and Jordan,
- Eastern Europe: Albania, Moldavia and Georgia*.
The credit lines set up by Société Générale are primarily for institutions in Africa, the Mediterranean and the Middle East.
This geographic ‘focus’ is particularly important since Africa currently receives only 18% of the world's microfinance funding which is estimated at € 14.8 billion (Source: CGAP). The Group's subsidiaries are therefore a precious source for the continent's institutions.
In 2009, Société Générale's largest customer institutions cut their activities and repaid part of their bank borrowings, highlighting the vulnerability of the sector. The rapid growth model that has underpinned microfinance for several years is more at fault than the global recession: in strong growth and highly competitive markets, the vigilance when it comes to granting loans and increased capacity have suffered from current customer preferences to buy flat out. This was the case in Morocco where Société Générale is a key financier within the sector. Repayment rates have deteriorated, as institutions rapidly seek to streamline their portfolios and revise their loan distribution and control processes. Things should return to normal in 2010.
At the end of 2009, Société Générale's commitments amounted to € 104,7 million*.
Investment in Africa's microfinance institutions
Five Société Générale subsidiaries have invested in the capital of newly-created microfinance institutions in Sub-Saharan Africa as founding shareholders. These include :
- Madagascar: AccesBanque Madagascar
- Ghana: Advans Ghana
- Cameroon: Advans Cameroun
- Mauritius (pending certification)
- Burkina Faso (pending certification)
A project is also in the process of being finalised in Ivory Coast.
Furthermore, Société Générale is also a founding shareholder in MicroCred which was set up by the PlanetFinance Group in 2005, with the aim of setting up a group of MFIs.
Investments in institutions are considered according to their social impact and their long-term feasibility and development potential.
* verified by Ernst & Young
