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Microfinance Antilles
Small businesses and entrepreneurs with few resources can find it extremely difficult to obtain loans and get off the ground. Microfinance however, can be a source of invaluable support. AFD Group has just granted a €34-million loan to the Association for the Right to Economic Initiatives (ADIE) for its overseas microcredit program. We speak to two experts in microfinance to find out how it can help small entrepreneurs and the communities they serve.

Jérôme Trinelle is Director of Antilles-Guyana for ADIE, and Clara Dufresne is Advisor to AFD's Atlantic Ocean Regional Director.

What are the aims of this loan?

Jérôme Trinelle: The actions led by ADIE in French Overseas Territories reach entrepreneurs who have little or no access to the traditional banking system. The majority of beneficiaries are women under 30, without qualifications, living in rural areas and sometimes under the poverty threshold. The AFD loan provides us with extra security in terms of microcredit refinancing for the coming 2 years. This loan corresponds to 25% of total loans granted by us in Overseas Territories over this period. 

Clara Dufresne: AFD has been supporting ADIE since 2005, and is renewing its commitment, with a 2-year loan of €34 million (€16 million in 2023 and €18 million for the following year). This will enable ADIE to grow through the microcredits it allocates to individual entrepreneurs and very small beneficiary companies, in line with the strategic goals of AFD for the economic and social development of Overseas Territories. 

What are the founding principles of microfinance?

J.T.:  Microfinance provides a range of increasingly sophisticated financial products, which include saving, insurance or transfer services, in addition to loans, to people who have been excluded from the banking system up to now, and are looking to launch an activity but lack the funding, research and network to do so.
In the 1980s, Maria Nowak, the founding president of ADIE, met Muhammad Yunus [Bangladeshi economist and winner of the 2006 Nobel Peace Prize], who explained to her the key role of microcredit organizations in the Global South. During this same period, France created the basic guaranteed income (revenu minimum d'insertion).

Maria Nowak realized the relevance of microcredit in the European system and founded ADIE in 1989. ADIE expanded to French Overseas Territories in the 2000s and thus opened a passageway to traditional banking for communities in the French Antilles and Guyana who had been excluded from this system up to that time.

See also: 3 Drivers of Sustainable Transitions in French Overseas Territories

C.D.:  Seemingly trivial actions, such as depositing money in a safe place, investing to launch or develop a business, reimbursing a friend via bank transfer, or receiving advice on savings, are impossible for the 1.7 billion adults throughout the world who do not have an account with a formal financial institution. Banks often perceive these people as high-risk customers because they lack sufficient capital according to industry standards. Financial inclusion provides a way to address this issue and offers individuals and micro-businesses financial services which are adapted to their needs. 

Who are the main beneficiaries of microfinance in the Antilles-Guyana region? 

J.T.:  Microfinance is accessible to a lot of people! In Martinique, Guadeloupe and Guiana, which has a combined population of nearly one million, around 3,000 people used our services this year. A majority of them are women, from priority urban districts or immigrants, with a highly entrepreneurial spirit. 

Exclusion from the traditional banking system is more common in Overseas Territories than in mainland France. Unemployment rates are high and local authorities and the private sector can no longer meet the demand. Given the exodus rate in our territories, it is crucial to find solutions rapidly to retain young people and create local wealth, as well as non-relocatable businesses and employment. Microfinance is an ideal answer. 

What microfinancing services does ADIE provide? 

J.T.:  ADIE offers micro-loans ranging from €500 to €15,000 to project owners. Our organization also provides guidance before, during and following the creation of a business. This support is fully adapted to beneficiaries and their requirements, to prevent them from becoming discouraged. 

We developed a simple, accessible and customizable offer, for example a week of training to review all the issues linked to business creation, or two years of personalized coaching to guide people from the informal system towards the formal system. Our aim is to deconstruct preconceived ideas about business creation and remind people that anyone can become an entrepreneur. Lastly, ADIE provides micro-insurance solutions aimed at insuring entrepreneurs against unforeseen events, and to facilitate access to offers suited to their needs.

How does AFD boost financial inclusion? 

C.D.:  AFD Group has a comprehensive range of financial tools geared towards the sector and can intervene all along the chain; directly with financial institutions, in support of sector initiatives and market infrastructures, and more broadly through support for the regulator, to name a few. The Group’s commitment to financial inclusion amounted to around €6 million in 2021.

AFD is a partner of ACME (Action for Cooperation with Micro-Enterprises) in Haiti, which mainly funds micro-entrepreneurs, in particular women, despite operations being impacted by Covid-19 and by the country’s political instability. 

In the Dominican Republic, Proparco works with the NGO FONDESA and its banking subsidiary Banfondesa, which has funded student loans, agricultural projects and social housing.

To learn more, see the web-documentary Protecting Clients in Microfinance, including interviews with experts, managers of microfinance institutions, clients and NGOs in Cambodia, Senegal and Morocco.

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