AFD Group reiterates its support for microfinance by renewing a €10 million guarantee to the Foundation

A €10 million guarantee has just been granted by the Agence Française de Développement (AFD) Group, represented by its subsidiary Proparco, to the Grameen Crédit Agricole Foundation. This financing will enable the Foundation to continue supporting microfinance institutions in Sub-Saharan Africa. Proparco has also just granted a new €5 million loan to the Grameen Crédit Agricole Foundation, which will enable it to consolidate its support for its partner microfinance institutions in the exceptional context of the Covid-19 crisis.

A historic partnership to support microfinance

The partnership between AFD Group and the Grameen Crédit Agricole Foundation is long-standing. One of the flagship joint projects is the African Facility (1) program launched in 2013. It allows the Foundation to offer financing and technical assistance tailored to small and medium-sized rural microfinance institutions in sub-Saharan Africa.

The AFD Group also supports the Foundation in financing its partner microfinance institutions through a portfolio guarantee mechanism, the ARIZ guarantee, which covers 50,% of the loans it grants to microfinance institutions. This mechanism has just been renewed for the sixth time, providing coverage for the loans the Foundation will grant to microfinance institutions in Sub-Saharan Africa over the next two years. Together, the AFD Group and the Foundation have adapted the eligibility conditions, in particular to include microfinance institutions with a highly social vocation but which are less mature.

A special Covid-19 funding envelope of €5 million

The health and economic crises generated by Covid-19 are particularly affecting the most vulnerable populations. According to the World Bank, the crisis could push 150 million people into extreme poverty by 2021 (2). This issue is at the heart of the work of the Grameen Crédit Agricole Foundation, which for 12 years has contributed to the fight against poverty through financial inclusion and entrepreneurship. The Foundation finances and supports microfinance institutions that serve populations excluded from the traditional banking system, mainly women (88%) and rural populations (84%), in around forty countries.

“The AFD Group is a leading partner of the Grameen Crédit Agricole Foundation. It has supported us for many years and enabled us to increase our impact, primarily in rural areas of emerging countries. In the context of Covid-19, the Foundation's mission takes on a very special significance. We are working to enable vulnerable populations to escape poverty by providing them with access to financial services through socially efficient microfinance institutions. The health crisis has severely tested local economies. Alongside the AFD Group, we are innovating, adapting, and providing enhanced support to these institutions to strengthen their resilience and their ability to cope with the economic effects of this global crisis,” said Eric Campos, Managing Director of the Grameen Crédit Agricole Foundation and Director of CSR at Crédit Agricole SA.

“After 10 years of cooperation in the service of financial inclusion, Proparco and the AFD Group are delighted to once again support the Grameen Crédit Agricole Foundation in the midst of 2020, which saw the Foundation’s partner microfinance institutions severely affected by the crisis. As a key player in access to finance, particularly for vulnerable populations in rural areas, the Foundation plays a major role in supporting its partner institutions and their clients during this difficult period. The renewal of the portfolio guarantee envelope granted by the AFD Group to the Foundation, as well as the financing lines granted in 2020, aim to strengthen the Foundation in its social mission to promote financial inclusion,” said Guillaume Barberousse, Head of Banking and Financial Markets at Proparco.

These new measures will strengthen the collective action of the AFD Group and the Foundation to promote the resilience of microfinance institutions and their clients in the face of this unprecedented crisis.

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(1) //www.gca-foundation.org/technical-assistance/african-facility/
(2) Access the World Bank Communique (2020) here