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1 Microcredit in France: Adie’s experience Milano, october 15th 2013.

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Presentation on theme: "1 Microcredit in France: Adie’s experience Milano, october 15th 2013."— Presentation transcript:

1 1 Microcredit in France: Adie’s experience Milano, october 15th 2013

2 Long time predominance of wage labor Welfare State culture High administrative complexity High level of social contributions for businesses High density of bank branches Microcredit in France : institutional context 2

3 13.4 % of population lives under the poverty threshold households live on welfare (June 2013) employees are considered working poors (2011) Unemployment rate is 10.8% in Q The figures for business creation have grown and reached in 2012 Creating its own job is now recognized as a way to fight against economic exclusion Microcredit in France : employment context 3

4 Business pyramid : 93% of businesses stay small (less than10 employees) Secteur informel 7 (0,3%) 25 (0,8%) 163 (5,6%) 984 (33,6%) (59,7%) 200 employees and more Between 50 and 199 employees Between1 and 9 employees Between10 and 49 employees 0 employee In thousands Péfecture de Région IDF 15/11/11 Microcredit in France : entrepreneurial context 4

5 Today BIRTHGROWTHLEGITIMITYMATURITY May 15th 2001 Non banking microcredit institutions are allowed to borrow from banks to onlend to their clients. (Article L du Code monétaire et financier). August 2 nd 2005 Cancellation of the interest rate cap on professional loans for self-employed people January 18th 2005 Non banking microcredit institutions are allowed to lend for needs related to job integration. Non banking microcredit institutions have access to the National Bank debtor files August 4th 2008 Non banking microcredit institutions are allowed to disburse professional loans to entrepreneurs, regardless of their social situation July 1st 2010 Non banking microcredit institutions can borrow from individuals to onlend to their clients Microcredit in France : legislative context 5

6 Deliver microcredits and business development services to the largest possible group of people with professional needs to create or develop a business and no access to classical bank loans.  Finance micro-entrepreneurs  Deliver BDS to micro-entrepreneurs  Contribute to improve the legislation regarding microcredit and business creation Adie’s missions 6

7  Unemployed, people on welfare, working poors, micro-entrepreneurs…  Strong activity in the poor suburbs (23% of new clients)  Special effort to target the rural areas (23% of new clients)  Strong activity among migrants (28% of new clients were born abroad)  Historical activity with the gypsy communities (10% of new clients)  All type of economic activities represented … People excluded from the classical bank loans 7 Adie’s clients

8 8 Examples of the variety of activities conducted by Adie’s clients

9 In 2013 (up to September 30th) : 9051 business microcredits disbursed 1679 family microcredits disbursed Average business loan: 3650 € active clients 734 micro-insurance contracts subscribed = Business Development Services + Business Microcredit and Family Microcredit € persons benefited from at least 1 BDS 5842 benefited from at least 2 BDS 9 Tools to fight against economical exclusion + Micro-insurance

10 Conditions No access to traditional bank loans Business creation or business existing for less than 5 years Total cost of the project < € Co-signer up to 50% of the loan amount Product The business microcredits can finance whatsoever need (working capital, investments, supplies, etc.) Up to € Interest rate : from 6.76% to 7.76% Upfront fee: 5% Possibility to have access to further funding : quasi-equity loans, grants 10 Business microcredit

11 Conditions No access to traditional bank loans or credit institutions loans Co-signer up to 50% of the loan amount Product The family microcredits can only finance job inclusion needs : strong focus on transportation expenses Up to 3000 € Interest rate : 7.76% Upfront fee: up to 5% 11 Family microcredit

12 Micro-insurance products target new businesses or existing businesses Products have been tailor-made to meet Adie’s clients needs Products are delivered through Adie and managed by two insurance companies : Axa and Macif Multi coverage product for activity which requires commercial premises: Professional liability Store related coverage (fire, water damages…) Damages on professional assets up to 10 K€ Financial support in case of accident or hospitalization Multi coverage product for activity without premises Auto Insurance: Third-party liability Damages on transported goods Assistance in case of accident or breakdown 12 Micro-insurance

13 13 Business development services adapted to clients All BDS are free for clients and non clients

14 Campaigns to meet with clients Adie Connect A website dedicated to clients 15 regions/ 119 branches in metropolitan France and overseas 450 employees & volunteers A national call center for appointments set-ups 14 An extensive and multichannel network

15  Since 1989  microcredits disbursed  business created or sustained 15 Social impact

16  Creation of a « social and financial exclusion rating » to evaluate the fidelity to the most excluded people 16 Social impact

17  SPI report (Social Performance Indicator) once every three years to assess the alignment of the organization and process with the social goals of the institution SPI report issued by Cerise, a French NGO Last report in 2011 : grade 63/100 (medium 54/100 for 500 MFI in Europe and developing countries ) 17 Social impact

18  « enterprise sustainability and job inclusion » study once every three years 18 Social impact

19  Adie received the agreement to borrow from banks or financial institutions to onlend to its clients in Business model for credit funds

20  Adie built up an extensive garantee scheme thanks to French public devices and to banks 20 Business model for credit funds

21 Adie’s model is relying - On the expense side, on a mix of employees and volunteers workforce - On the revenue side, on a mix of subsidies and financial income from microcredits 21 Business model for operating expenses In M€2012 Operating expenses 31,7Subsidies and donations 24,9 Financial expenses 1,2Financial incomes (including investments products) 6,3 Exceptional income 0,2 TOTAL32,9 TOTAL 31,4

22 22 22 Business model for operating expenses

23 Current strategic plan : the stress is on productivity 23 Business model for operating expenses trend 2014 expectation Nb of loans disbursed Amount of loans disbursed (M€) 32,934,136,850,457,8 Outstanding capital (M€) 48,352,65871,889,2 Operating expenses (M€) 28,428,229,128,731,3 Financial margin 4,254,75,97,7

24 24 Thank you for your attention


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