The bank for a changing world

Our actions in favor of financial inclusion

Microfinance

Supporting social entrepreneurship, microfinance is one of the major commitments of the BNP Paribas Group's CSR policy.

The essential

First appearing in the 1970s, microfinance enables low-income populations, especially those residing in developing countries, to benefit from access to financial services (e.g. loans, savings, insurance, money transfers, financial education, etc.). How does it work? Simply put, donors distribute microloans to support the development of small economic projects, such as an entrepreneurial initiative or the purchase a manufacturing tool. Microloans like these are usually granted by microfinance institutions (MFI).  

At BNP Paribas, we have made financial inclusion and social entrepreneurship key commitments in our corporate social responsibility (CSR) policy, in line with Sustainable Development Goals 1,8 and 10. That’s why we grant loans to microfinance institutions, so that they in turn can offer microloans to disadvantaged populations who are excluded from the traditional banking system

BNP Paribas’s support for microfinance includes:

  28  

years of action in favour of financial inclusion

248 M€

of loans and investments in 2016

 +18% 

of support in 2016 compared with 2015

309,000

BENEFICIARIES OF MICROCREDIT THROUGH THE GROUP IN 2016

Financing projects, restoring hope

Lasting peace cannot be achieved unless large parts of the population find ways to break out of poverty […] Microcredit is one such means.” That is how Ole Danbolt Mjoes, President of the Nobel Committee, presented the 2016 Nobel Peace Prize to Mohammed Yunus, for his unusual bank project .

As the son of a jeweler in Bangladesh, Mohammed Yunus studied economics in the United States before returning to his home country, one of the poorest in the world, to offer aid to disadvantaged populations. In 1976, he created Grameen Bank, an institution that still today delivers microloans ($130 on average) with no financial guarantee to the poorest populations, including those residing in the most remote regions of his country (Grameen means “village” in Bengali).

Lasting peace cannot be achieved unless large parts of the population find ways to break out of poverty.

Microfinance institutions and banks: joint action in favor of micro-entrepreneurs

Microfinance institutions operating in various forms (associations, NGOs, mutual funds, cooperatives, commercial businesses, banks, etc.) issue microloans to those excluded from the traditional banking system. MFIs also deliver non-financial services to their customers. They may subsidise their family’s urgent needs, support their mobility for employment or offer training. Revenue generated by the economic activity of micro-borrowers allows them to repay their microloan. 

Most MFIs finance their loans exclusively from their own borrowing. That’s why loans granted by classic banks like BNP Paribas are so important: they enable microfinance institutions to maintain their activity. 

Between 2015 and 2016, BNP Paribas’s outstanding sums in the microfinance sector increased by 18%. BNP Paribas has indeed strengthened its commitment in favor of microfinance by developing solidarity savings funds intended for BNP Paribas customers or employees of major groups. These funds invest a small portion of sums in social enterprises like MFIs. That is notably the case with BNP Paribas Asset Management. Through its support of ADIE, Initiative France, Acted, Sidi and other major microfinance companies in France, it has supported 18,806 microenterprises in 2016, including 61% receiving continuous funding over three years.


Esther - South Africa
Pan & Qi xin - China

BNP Paribas takes action for emerging countries

Brazil, Colombia, China, Ivory Coast, India, Senegal, South Africa, Tunisia, Morocco and Vietnam: BNP Paribas finances a portion of the microloan portfolios of MFIs in these developing countries. Aside from MFI loans, the Group also finances the RIF II Fund, which invests in 26 MFIs. 

We play an indirect role in providing greater financial inclusion and improving the living conditions of almost 290,000 people who have used this loan to create a microenterprise or invest in the purchase of a lasting asset. 

We play an indirect role in providing greater financial inclusion of almost 290,000 people in these countries.

In Indonesia, for example, microloans supported by BNP Paribas for Komida, an MFI dedicated to supporting women, enabled customers to double their revenue. After four microloans  taken out with Komida, these women saw their revenue grow from 81 to 161 euros per month on average. Proving the success of this operation, children of these customers stay in school an average of three years longer than their mothers’ generation. (*)
In India, where the need for microfinancing is massive (the country accounts for 41% of micro-borrowers worldwide), the Group supports 15 MFIs, all of which focus exclusively on women. BNP Paribas’ loan commitments grew by a factor of eight, jumping from 6.6 million euros in 2013 to 47.6 million euros in 2016. An impact study carried out in 2015 for the MFI Ujjivan showed that 73% of customers contribute to savings every month and 65% play a more active role in making their family’s decisions.

(*) Source: IMPROVE 2016 study 

Nga - Vietnam / Deisy - Colombia / Gudiya - India

Microfinance in developed countries: a powerful lever for financial inclusion

Microfinance also helps vulnerable populations in mature economies. In Europe and the United States, for example, the Group’s support for microfinance institutions helps boost the financial credibility of people living in rural areas and/or excluded from the traditional banking system. The financial support and education they receive encourages their reentry into the workforce. The Group is an active member of EMN and E-MFP, two major networks that support microfinance in Europe. Throughout 2016, several major advances occurred:

  • In France, the Group structured the first Social Impact contract in France on behalf of ADIE, for a total of 1.3 million euros.
  • In Italy, PerMicro, the country’s 1st MFI, which is financed and owned at over 20% by BNL, revealed through a study carried out by Università Politecnico that 51% of customers receiving support obtained financing from “classic” banks in the three years following their first microloan, demonstrating their financial inclusion. In addition, microenterprises financed by PerMicro generated 12.4 million euros in revenue (taxes and contributions), as well as three million euros in savings (social benefits) for Italian public services.
  • In Luxembourg, BGL BNP Paribas founded MicroLux, the first MFI in Luxembourg, by providing 83.3% of its capital.

Andrea Marino - PerMicro.