Microfinance: a multifaceted offer in Asia
Microfinance provides financial services like loans to people with limited financial resources to help them develop an income-earning activity. In addition to promoting financial access, many MFIs also offer services relating to healthcare, education, training and even housing. That’s the case of the MFIs chosen to receive support from BNP Paribas for their efforts to support women entrepreneurs in Asia.
In light of the region’s large population and low standard of living, these added services optimize the success of projects led by female micro-entrepreneurs. In turn, that success benefits every member in the entrepreneur’s family. According to the 2016 Microfinance Barometer, Asia accounts for more than 80 million beneficiaries, while loans issued in South and East Asia total over 25 billion dollars.
More than 98% female
In Asia, more than 98% of micro-entrepreneurs that BNP Paribas helps are women. Why women? Because women are in greater need of autonomy, and are also considered more reliable borrowers than men. They devote their income to repaying their loan and make sure to meet their family’s needs, while men have a tendency to make more unnecessary purchases.
Loans increase sevenfold in India
In these countries, the Group supports around 15 MFIs, including 11 in India alone, where loan authorizations multiplied by seven between December 2013 and March 2017 to reach a total of 48 million euros. As of March 31, 2017, BNP Paribas had invested 65 million euros in microfinance in Asia to aid a total of 250,000 micro-borrowers. The average loan amount was 244 euros per borrower.
Since BNP Paribas does not operate a network of branches in this part of the world, the Group wanted to build especially strong partnerships with local MFIs that lend to micro-borrowers. Money is the “fuel” that powers the proper operation of MFIs, so they need to receive their own loans in order to expand their customer base.
MFIs are selected not only through financial criteria, but also for social criteria like their social mission, efforts to combat excessive debt, ethical collection practices, etc. Our partner MFIs share the same values as the Group.
Benefits for the economy and society
In Indonesia, for example, BNP Paribas helped students from the (IM)PROVE association to perform a study aiming to measure the social impact of loans granted by the Group to KOMIDA. The study brought to light the benefits of the MFI’s microloan, both on an economic level and in terms of education. The children of women entrepreneurs who were receiving the microloan stayed in school an average of three years longer than their mothers. Another impact study performed in 2015 by Ujjivan, an Indian MFI, revealed that 73% of customers contribute to savings on a monthly basis, and 65% play a larger decision-making role in their families. This means that microfinance not only improves financial inclusion, it also promotes financial autonomy.
Every year in Asia, funding from BNP Paribas enables more than 250,000 women micro-entrepreneurs to benefit from a microloan.
BNP Paribas supports STEP
BNP Paribas became the first financial backer of STEP, and has supported the NGO for the past five years. Based in Kolkata (formerly Calcutta), STEP works with female entrepreneurs from slums who do not have access to the banking system. The average amount of each STEP loan is €102!
Aside from its financial education programs, the institution also employs social workers to help its customers and their families. The Group was notably drawn to the “human approach” of the MFI, which thinks of the micro-entrepreneurs as its “partners.”