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AFD’s Experience in Cooperative Finance Aude FLOGNY-CATRISSE Agence Française de Développement,

Cooperative Finance Global Good Practices Washington D.C., April 10-11, 2007. AFD’s Experience in Cooperative Finance Aude FLOGNY-CATRISSE Agence Française de Développement, Head of Financial Sector and Private Sector Development. AFD : French Development Agency.

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AFD’s Experience in Cooperative Finance Aude FLOGNY-CATRISSE Agence Française de Développement,

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  1. Cooperative Finance Global Good Practices Washington D.C., April 10-11, 2007 AFD’s Experience in Cooperative Finance Aude FLOGNY-CATRISSE Agence Française de Développement, Head of Financial Sector and Private Sector Development

  2. AFD : French Development Agency • The main operator for French bilateral development aid • Operating in over 60 countries: Africa, Mediterranean, Asian and Caribbean areas • A public financial institution, under French banking regulation: rated AAA • A large customer base and a comprehensive range of financial tools • 2006 Commitments: 2.5 billion €

  3. 20 years of experience • 267 M€ cumulated investments in the microfinance sector • A main objective: direct support to the MFIs (50) • 28 active investments with 17 in Sub-Saharan Africa • A dedicated team of 3 people who appraised 12 projects amounting to 36 M€ of commitments in 2006

  4. Microfinance institutions financed by AFD 1988 - 2006

  5. AFD’s member based MFI’s portfolio • 36% of MFI’s currently supported by AFD are cooperatives or other type of member based institutions (rural & urban) • 100% of coop in Sub-Saharan Africa. A model promoted by the regulators (UEMOA, Madagascar) • 24 coop financed: 5 closed, 9 still operating without AFD’s support, 10 currently supported (5 since the 1990’s) • 2001 CMG failure (Guinée)- depositors’ compensation

  6. Challenges for cooperatives in Sub-Saharan Africa • Increasing competition, various business models • Expansion and governance issues: balance between the financial and social objectives (board & management) • Integration of banking principles and functions: • IMS, Products diversification & marketing • Internal audit, risk management • Complexification: legal, fiscal, valuation issues (institutionnal tranformation, creation of « faitière ») • One strength: ability to collect deposits

  7. Evolution of the MFIs’ needs • New skills, capacity building funding and the critical role of the technical partner • Improved articulation with the banking sector with more transparence • Flexibility of DFI’s support: AFD’s answer -The Microfinance Investment Facility and ARIZ Guarantee Fund

  8. Microfinance Investment Facility • 20 M€ subsidies (25M$), • Equity and quasi-equity (differed profitability, high risks), local currency and soft loans (small size investments) • Cost and repayment depend on performance and institutionnal structure, • Contractualisation of subordinated debt between MFI and AFD with exit and repayment conditions, • Possible combination with other AFD products (TA, guarantee, etc.)

  9. ARIZ Guarantee fund • Fund procedures adapted to MFIs’ specific needs • Guarantee up to 75% of a bank’s loan or line of credit with a guaranteed ceiling of 0,75 M € (almost 1M$) • Fees: 2% of guaranteed amount • Quick credit decision process

  10. THANK YOU FOR YOUR ATTENTION AFD’s micro-finance team:

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