Alain Lévy, you are the Microfinance and Social Entrepreneurship Manager for the Americas and Asia at BNP Paribas. How is the Group helping women entrepreneurs in emerging countries?
First of all, by financing microcredit institutions, which in turn finance borrowers with limited financial resources. Our efforts to promote access to credit for populations with no assets largely target women, mainly because the local environment (rural area, specific cultural aspects, unequal access to education) means that it is harder for them to access traditional financing channels than it is for men.
It’s also important to remember that most microfinance lenders see women as more responsible borrowers, as they repay their loans with a better recovery rate than men. As a result, financing microcredit in emerging countries allows us to promote the integration of women into a country’s economic fabric.
“ lending to women provides more than just money: microloans help speed up their emancipation from the domestic sphere, build their self-esteem and improve their social and familial roles ”
Microfinance and Social Entrepreneurship Manager for the Americas and Asia at BNP Paribas
What percentage of micro-borrowers are women?
That varies by country and by microfinance institution. Across the globe, the number of women receiving funds increases as these institutions grow. In India, women represent 99.8% of entrepreneurs receiving funding, 100% in Indonesia, 90% in China, 62% in Colombia, 64% in Tunisia and 45% in Morocco. Among our entire “emerging countries” portfolio, they represent 90% of borrowers, compared to 50% in more developed countries.
Business or philanthropy?
Our microfinance activities are fully part of the Group’s CSR (Corporate Social Responsibility). That means we consider these activities as a “social business” – on one hand, it is a full - fledged banking activity that must at minimum cover its costs and be properly managed in the long term, pursuing growth opportunities. It’s not philanthropy, but a set of credit commitments linked to credit risks.
On the other hand, our ultimate goal is to improve living conditions. We do not offer financing unless there is a proven social performance. That’s why we have outlined several very precise CSR criteria, which take precedence over financial growth.
In addition, the increase in the number of micro-borrowers financed by MFIs that we finance constitutes one of the Key CSR indicators : a portion of the performance-based executive compensation is indexed on this.
It is true that microfinance cannot be decoupled from social performance; otherwise it would become a “classic” economic activity.
our ultimate goal is to improve living conditions.
You help them get funding, but isn’t it also important to create change at an early stage?
That’s certainly true, and in this case, lending to women provides more than just money: microloans help speed up their emancipation from the domestic sphere, build their self-esteem and improve their social and familial roles.
Specific assistance models vary by microcredit institution based on their philosophy and development level. But in most cases women microborrowers also receive basic financial education (how loans work, what debt burden is, etc.) and, in some cases, access to healthcare or special schools.
Some Microfinance Institutions also insist on the benefits that group-lending can have on a particular social fabric. For example, issuing loans to four or five women in joint liability can foster extremely strong bonds among them. Another example that comes to mind is an NGO in Calcutta that surveys the needs of its members on a regular basis and acts as a go-between for customers and suppliers.
Are funds typically used to start a new activity or instead to develop an existing one?
We’re talking about countries where it’s fairly easy to start a new business. Consequently, MFIs typically begin offering loans for that reason: to start an informal activity that requires little capital, such as street restaurants, making saris or small scale farming.
Next, depending on the microcredit institution’s specific criteria, it may be possible to increase loan amounts to certain levels. Accessing these levels depends on each woman’s personal ambition. Some start their project and do not require any further help, while others continually grow and expand.
For example, a South African woman who received an initial loan to buy cattle later contracted a second loan in order to purchase a van. Then she came up with an idea for a bus transport service to connect the surrounding villages. Now her business has four vans! In parallel, we also met an Indonesian woman who was financed by an MFI in order to buy and sell crabs and needed funding to buy more crabs. Then she asked for another loan to buy her own fishing boat, then a second and a third boat. In the end, she built a small factory to process the seafood into tin cans.
Of course, all these women already had good business acumen. The microloan simply helped them turn their talents into tangible assets.