fdga award 2010

Giordano Dell’Amore Microfinance Good Practices Europe Award 2010

The Experiences ofthe Finalists 2010 andWinners 2009

This book presents the summaries of the five experiences judged to be the best among the candidates for the second edition of the Giordano Dell’Amore Microfinance Good Practices Europe Award created in collaboration with the European Microfinance Network; we publish also past year winners’ accounts of activities subsequent to the awarding of the prize.The aim of the award is not just to identify excellence in the field, but also to open up a debate and encourage discussion, enabling closer examination of the methodologies, tools and social impact of microfinance in Europe. In this second edition of the Award we focus on four principal aspects corresponding to the criteria chosen for the evaluation of the applications: the innovative character of the experiences submitted; the mechanisms provided to assure the sustainability of the microfinance services offered; the actual and potential impact of the microfinance initiative with specific focus on poor and marginalized people; the replication process, namely the way in which the initiative submitted could be replicated in different contexts to solve the same kind of problems.In consideration of the fact that the European Union has declared 2010 the European Year for Combating Poverty and Social Exclusion, particular attention has been paid to those initiatives explicitly focused on the fight against poverty and social exclusion.In this document we present the activity of those European microfinance institutions that contribute to offer to people socially and financially excluded, a condition of disadvantage increasingly common even in countries considered rich, an opportunity to access the economic initiative.

Giordano Dell’AmoreMicrofinance Good Practices Europe Award 2010

“The Exeperiences of the Finalists 2010 and Winners 2009”.Published by Giordano Dell’Amore Foundation in the framework of the Project “Microfinance Good Practices Europe Award 2010”.

Editor & Technical Consultant David BernoProject Coordinator Maria Cristina NegroGraphic Design www.manolibera.it

Materials developed on the basis of information provided by the finalist institutions. Photographs related to the experiences supplied by the finalist institutions.

Special thanks to the members of the Award Committee and Consulta Tecnica of Giordano Dell’Amore Foundation.

Fondazione Giordano Dell’AmoreVia Monte di Pietà, 1220121 Milan, ItalyPhone +39 02 32168401www.fgda.org Milan, Italy

© Giordano Dell’Amore Foundation, 2010

ContentsForeword, by Federico Manzoni and Philippe Guichandut ........................7

Introduction...........................................................................................................9

The Winners 2009.........................................................................................11ACAF ...............................................................................................................................12PerMicro ........................................................................................................................14

The Finalists 2010 .........................................................................................17Crédal .............................................................................................................................18Microcredit Foundation Horizonti ...............................................................................22Partner MKF ..................................................................................................................26Prince’s Scottish Youth Business Trust (PSYBT) ..................................................30Qredits .............................................................................................................................34

Special Mention ............................................................................................38PerMicro ........................................................................................................................38

Acronyms & Abbreviations ................................................................39

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Giordano Dell’Amore Foundation and the European Microfi-nance Network are glad to present – after the success of last year edition – a volume that summarizes the experiences that an international commission judged to be the best among the applicants to the “Giordano Dell’Amore Microfinance Europe Good Practices Award”

For this year’s edition Giordano Dell’Amore Foundation decided to separate the two Awards, International and Europe, and to announce them in two different moments; therefore we intro-duce here the finalists for the Europe Award, organized also this year in collaboration with the European Microfinance Net-work and associated with the 7th Annual Conference scheduled in London on June 24th and 25th 2010.

Last year’s volume has been considered of great interest by microfinance professionals, our wish is that this second edi-tion could again bring about positive effects among the ac-tors involved in the promotion and growth of microfinance in Europe: microfinance operators, banks, institutions and civil society organizations.

This publication compiles the stories and accounts of the achievements realized by the winners of the first edition thanks to the prize received, with special emphasis on the impact on their activities and particularly on the beneficiar-ies of their work.

This volume is part of the Foundation’s activities: with its new mission Giordano Dell’Amore Foundation aims to ac-tivate and gather the skills and resources of the Italian ac-tors to carry out projects and models of intervention in the microfinance sector in developed and developing countries, implemented in compliance with well-established best practices and able to support the growth and innovation of the microfinance sector.

As far as the Italian context is concerned, the Foundation re-news its commitment to contribute to the progress of microfi-nance institutions in terms of outreach and quality of services,

Foreword

promoting and taking part actively in initiatives devoted to the reinforcement of the sector: vocational training activities, workshops, reflection seminars for the exchange of experienc-es addressed to microfinance professionals, and occasions to spread and disseminate the knowledge of this important tool against financial exclusion.

We renew our thanks to the European microfinance operators for their participation and to the European Microfinance Net-work for having confirmed its endorsement to the realization of the Europe Award.

The collaboration between Giordano Dell’Amore Foundation and the European Microfinance Network has been strength-ened through the organization of the 6th Annual Conference held in June 2009 in Milan: about 350 operators from 30 coun-tries assisted to the event, for the first time organized in Italy, that confirmed the importance and the interest of microfinance as well as the validity of the choice of “networking” to maxi-mize the impact of our actions.As a consequence, networking in Europe and in Italy, too: Giordano Dell’Amore Foundation participates actively in the life of the Rete Italiana di Microfinanza – RITMI – the Italian network that brings together 20 Italian microfinance operators.

To conclude, we wish to extend our gratitude to all those people, numerous indeed, who have believed in our activ-ity and contributed with their reflections, ideas and advice to the achievement of this new project started by Giordano Dell’Amore Foundation: firstly Fondazione Cariplo that with its contribute makes it possible, and the members of the Technical Scientific Committee and of the Consulta Tecnica who devoted their precious time to support our work.In this document we present the activity of those European microfinance institutions that contribute to offer socially and financially excluded people (a condition of disadvantage in-creasingly common even in countries considered rich) an op-portunity to access the economic initiative.

by Federico Manzoni, President FGDA

Foreword

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Giordano Dell’Amore Microfinance Good Practices Europe Award 2010 | Foreword

The European Microfinance Network (EMN) is very pleased to again be associated with the second edition of the Euro-pean Award for Good Practices in Microfinance sponsored by the Giordano Dell’Amore Foundation.

With 88 members in 21 countries, EMN is the leading net-work in the European Union supporting the development of microfinance in Europe as a tool for social inclusion and eco-nomic development. More than ever with the current finan-cial and economic crisis, microfinance can be an instrument for growth, employment and social cohesion. By providing the opportunity for excluded people to obtain access to fi-nancial services for starting or developing their enterprise or becoming self-employed, microfinance represents a real al-ternative for thousands of European citizens. However, in or-der to respond to the challenge of reaching all the people in need of microfinance services, the sector needs to grow and become more and more professional. The growing number of organizations involved in microfinance activities requires, more than ever, coordinated efforts to work together and to share information.

As part of its strategic objectives, EMN believes that the pro-motion and diffusion of good practices in the European con-text is one of the elements for ensuring such growth and pro-fessionalism. There are different ways to share and exchange such practices. One way for sure is to provide the opportunity for institutions to make the practices public and to motivate them into sharing their experiences with others. The establish-ment in 2009 of the European Award for Good Practices with the Giordano Dell’Amore Foundation was a big step forward in that direction. This Award aims to increase the understanding of the importance of microfinance by the public, to encourage European microfinance practitioners to share good and trans-ferable practices in the field of microfinance, innovation and sustainability and to promote and spread those practices to other microfinance agencies in Europe.

This second edition takes place within the celebration of the 2010 European Year for Combating Poverty and Social Ex-

clusion, as declared by the European Union. In that context, particular attention has been given to initiatives with a clear focus on combating poverty and social exclusion. EMN is very pleased to see that 13 organizations (nine of which are EMN members) shared their experiences on the way they are fighting social and financial exclusion at their level. Too often, financial exclusion is not perceived as a real issue for policy makers in the social arena. It’s time that actors work-ing on a daily basis in the field show what can be achieved and how getting people out of financial exclusion by provid-ing them with access to financial services can help them to become active citizens in the mainstream economy.

This award would not be possible without the strong involve-ment and contribution of the Giordano Dell’Amore Founda-tion. EMN would like to take this opportunity to thank the foundation for its strong commitment to making this award a success. The collaboration between EMN and Giordano Dell’Amore Foundation represents what the network wants to promote among its members; a strong partnership where members are the key players in promoting the network it-self and the other members. Such a strong involvement by members is a key to the success of EMN becoming a real membership based organization.

EMN is convinced that this second edition will be as suc-cessful as the first, and that the award will remain an excel-lent opportunity for organizations to learn from each other.

by Philippe Guichandut, Executive Director EMN

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The second edition of the European Award for Good Practices in Microfinance sponsored by Giordano Dell’Amore Founda-tion in collaboration with the European Microfinance Network has three main objectives:

to awaken public opinion in Europe to the importance �of microfinance as a tool able to foster the economic initiative of people excluded from the traditional finan-cial system;to encourage the exchange of experiences and the sharing �of comments and in-depth analyses within the community of microfinance in order to raise the level of professional-ism of the actors involved and to favor a growth path that considers aspects like innovation, sustainability and social impact of microfinance interventions;to highlight and disseminate the best experiences of mi- �crofinance that combine innovation and sustainability, re-warding the ability to systematize the principal features of the intervention model so as to allow its replication in different contexts.

In this second edition of the Award we focus on four prin-cipal aspects corresponding to the criteria chosen for the evaluation of the applications:

the � innovative character of the experiences submit-ted, that is to say in which way the applicant has trans-formed a traditional practice with the offer of a new product or service, or through a new approach, the use of a technological device or the implementation of a groundbreaking idea;the mechanisms provided to assure the � sustainability of the microfinance services offered, that is whether the ap-plicant is going to attain a certain degree of sustainability or he is developing a concrete strategy to achieve it;the actual and potential � impact of the microfinance initia-tive with specific focus on poor and marginalized people;the � replication/transferability process, namely the way in which the initiative submitted could be replicated in differ-ent contexts to solve the same kind of problems.

Introduction

In consideration of the fact that the European Union has de-clared 2010 the European Year for Combating Poverty and Social Exclusion, particular attention has been paid to those initiatives explicitly focused on the fight against poverty and social exclusion.

The Award, open to all European organizations operating for more than twelve months, received pre-registration forms from 14 microfinance institutions, but only 13 out of them submitted their proposal within the deadline of February 7th, 2010, as specified by the Terms and Conditions. The proposals described microfinance experiences in 10 European countries, namely: Albania (2 cases), Italy (2 cases), Spain (2 cases), and one case each for Belgium, Bosnia & Herzegovina, Hungary, Macedonia, Netherlands, Scotland, Turkey.

Regarding the kind of organizations four of them are NGOs: Foundation Horizonti, Fundacion Laboral WWB, Foundation Primom, Kahramanmara Microcredit Office; three are Foun-dations: Qredits, Partner MKF, Foundation Magdala; two are Cooperatives: Mag Roma, Credal; two are Non-Bank Finan-cial Intermediaries: PerMicro, Besa Fund, one is a Limited Company: PSYBT and one a Joined Stock Company: First Albanian Finance Development Company.

The majority (7) of the applications received presented the institution as a whole together with its overall activities, four proposals outlined a specific approach to microfinance activities while two were relative to specific products.

The applications mainly targeted the unemployed and fo-cused on economic support to microentrepreneurs or to employment creation. Three proposals focused only on a particular microfinance product or activity.

After having examined, analysed and discussed each single case, the Award Committee selected five finalists. The Com-mittee believes that each of the five selected experiences offers an interesting approach and stimulating ideas that could be transferable to similar realities.

Introduction

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Giordano Dell’Amore Microfinance Good Practices Europe Award 2010 | Introduction

The five finalists are:

Crédal, Belgium, for its long path of working in name of an alternative economy, closer to the people, with a social dimension and a fair approach, finding in the public institu-tion a strong support.

Microcredit Foundation Horizonti, Macedonia, for its innovative approach for providing sustainable financial serv-ices to the Roma community.

Partner MKF, Bosnia Herzegovina, for its well-structured organization able to deliver its financial services to a rel-evant number of clients in the whole Bosnia-Herzegovina.

PSYBT, Scotland, for its approach constantly oriented to improve the youth entrepreneurial spirit and culture through a unique mixture of private and public supporters.

Qredits, Netherlands, for its innovative approach oriented to sustainability, based mainly on the use of IT to automate processes, maximize efficiency and transparency and to tar-get the beneficiaries.

A Special Mention has been awarded to PerMicro, Italy, winner of the “Italy Award” in the 2009 edition and running again this year, to reward the growth path towards sustain-ability they have undertaken and for the pioneering part-nership agreements they have established with the private banking sector during the past year.

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We present here past year winners’ accounts of activities subsequent to the awarding of the prize. We asked the winners to tell us the experiences, and the impact of last year prize on their activities.

The Winner of the Europe Award 2009 was ACAF (Spain) rewarded for its innovative approach through Self Financed Communities.

The Winner of the Italy Award 2009 was PerMicro (Italy) rewarded for its efficient newly established microfinance institution in Italy.

The Winners 2009

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Giordano Dell’Amore Microfinance Good Practices Europe Award 2010 | The Winners 2009

ACAFThe Association for Self-Financed Communities (ACAF) is an NGO founded in 2004 aiming to con-tribute to local community development through the creation of SFCs. The SFC (Self-Financing Communities) model allows low income – and even middle income – peo-ple to access small credits and small insurances while building stronger communities. Each SFC can be composed of 10 to 50 people, who, through the investment of small sums of money, become the owners and customers of the organization. SFCs allow the community to invest in itself by providing services to its members, such as small credits and small insurances, while generating revenue through the interest on the loans. Our model is innovative because, unlike most financing models for poorer communities that use external funds, the SFCs use community (or internal) funds to provide its services. Additionally, unlike traditional microfinance models, the SFCs allow the microcredits to be provided for any use, not just entrepreneurial actions, helping poor individuals to mitigate fluctuating incomes and constant financial needs.The SFC model is based on traditional practices widely used in poor communities to satisfy finan-cial needs. It is rooted in cultural values, which makes it easier to be accepted than traditional mi-crofinance methods. The SFC model incorporates the traditional principles of microfinance, giving poor individuals access to funds, with the principle that the poor are able to support themselves. The model integrates people into society, both socially and economically, in a self-sustainable way, because every SFC relies upon its own members from the very beginning, and encourages the entrance of new members into the group, since new members means more investors and more borrowers, which in turn, means higher returns.Initially, the methodology is very simple, and the initial financial investment serves as a hook to pull the individuals into the SFC community through a social investment as well. After some months, the small initial investment grows and little by little local credit demands be-come increasingly satisfied. After a while, members can introduce new services that include agreements with private companies like banks and insurance companies that design special services for that population.ACAF works mainly in Catalonia and in 6 years, it has created 79 SFCs with more than 3500 indirect beneficiaries.

CAF La Gaitana

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ACAF

The achievements of ACAF thanks to the ‘Europe Award’ received from Fondazione Giordano Dell’Amore include 10 new SFCs (known as CAF in Spanish):

CAF CICAF � with 8 Spanish members, students interested in knowing more about our model, who meet every month in Barcelona. CAF PY � with 7 members from Paraguay who meet every month in a city called Molins de Rei near Barcelona. CAF Wikicaf � with 10 members coming from different countries who meet every month in Barcelona. CAF Arepa con todo � , the first group of Colombians who meet every month in Barcelona. CAF l’Eliana � with 12 members from Colombia and Uruguay, who meet in Valencia.New CAF in Valencia � with a group of members from Venezuela and Colombia who are work-ing now in defining their internal rules.CAF Abriendo Camino � the first group inaugurated in Las Palmas de Gran Canaria thanks to the support of Caritas Canarias. CAF Fraternidad Africana � with 12 members from Cameroon, Congo and Nigeria who meet every month in Santander.CAF Talude em Acção � – 6 members, all of them second-generation immigrants from differ-ent African countries but with Portuguese nationality. They meet in Catujal, Loures.CAF Casa da Guiné � – 15 Guinean members who meet in Lisbon.

During 2009 and thanks to the ‘Europe Award’ we have been able to expand the methodology to three new cities in Spain: Valencia, Santander and Las Palmas de Gran Canarias and we

keep working in Madrid and Catalonia.During 2009 we have consolidated our expansion to Por-tugal. Stone Soup took over the project in Portugal. They

were responsible for seeking funding, selecting the staff responsible for the project and translating all the material. Considering the fact that ACAF aims to expand to other coun-tries in Europe, it has been an important achievement to ex-

pand to Portugal since the methodological transfer has served as a pilot for transferring to a European country. Stone Soup has pledged to make a report for the entire transfer process that will serve as a methodological basis for initiating similar processes

with other European organizations.In 2008 we started training a new SFC Promoter from Chile who has been able to inaugurate 2 more SFCs in his country during 2009.

Moreover, we will start training a new European association, Au-tonomia from Hungary, in order to create new Self Financed Commu-nities in this country. We are working also to expand the methodol-ogy to France and Germany.

ADESC keeps working in the methodology in Senegal and has already 42 SFCs opened in different cities of the country.Thanks to the support given by Fondazione Giordano Dell’Amore, the SFCs methodology is already present in 3 different continents and 2 Eu-

ropean countries.The information about the SFCs will be published in our new website. In the last quarter of 2009 we started working on our new website to change its design as well as the contents displayed. In the new website, which we will probably be presented during the July meeting, we plan to include information in six different languages.The Award has also allowed the ACAF team to grow and we count already on 10 members to keep improving and expanding the methodology.ACAF received in 2009 the Mercedes Conesa Award for Best Social Initiative of the year given by the Catalan journal El Periódico and has been present in different media including different Spanish newspapers.

CAF PY

CAF Dade Leñol

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Giordano Dell’Amore Microfinance Good Practices Europe Award 2010 | The Winners 2009

PerMicroPerMicro is an Italian Non Banking Financial Intermediary (authorized ex. art. 106 T.U.B. by Banca d’Italia) created in Turin in 2007 and specialized in microfinance products. Its founding members are two important social organizations, Fondazione Paideia (a foundation operating in the area of social wel-fare - www.fondazionepaideia.it) and Oltre Venture (the first Italian social venture capital company - www.oltreventure.com). New shareholders are the fourth Italian banking group, UBI Banca (www.ubibanca.it) and a banking foundation, Fondazione Sviluppo e Crescita - CRT (www.fondazionecrt.it).PerMicro’s mssion is to contribute to the financial inclusion of the most vulnerable parts of society, especially immigrants. PerMicro delivers microcredits up to 15.000 euro to unbankable people, to start or develop small businesses and to improve living conditions, within an innovative “network credit” operational scheme. Recipients must belong to formal or informal reference networks (such as associations, ethnic communities, developmental agen-cies, parishes, cooperatives, or consortiums, etc.), ready to guarantee their reliability through a reference letter and to follow them during their growing path, side by side with PerMicro staff. The social network works as the best guarantee for developing and maintaining confidence with clients and reaching a high social impact.

2009, a year of deep changesIn March 2009, when it obtained the authorization as defined by art.106 of TUB (Testo Unico Bancario) from the Central Bank, PerMicro started to deliver microcredits directly to its clients: while continuing its previous activities, PerMicro can now manage entirely the relation with its customers, from the first contact to the case examination and evaluation, to the disbursement of microcredit and the monitoring until the complete repayment of the instalments. That is the outstanding turning point in PerMicro’s life, which brought a succession of evident transformations and achievements, as well as the affirmation of a new successful operational model in the Italian microfinance context.

Internal organization: from the process standardization to the IT innovationThe new legal form forced PerMicro to review its internal organization, starting from the Administrative Area. Two people were hired in order to follow all issues related to accounting, human resources management and all duties imposed by the Italian Cen-tral Bank. A new IT system has been put in place in order to manage the internal accounting on the one side, and the microcredit disbursement and collection activity on the other. At the same time, the Product Area has been enlarged with two new people in charge of the preliminary evaluation of the microcredit requests. This saving of time allowed the Product Area to define and standardize PerMicro’s internal procedures. A set of documents closely connected to the credit process and to the management of clients (from personal data records on to monitoring of the activities) has been studied and formalized. The use of such documents has consequently reduced the time necessary for the inquiry and evaluation phases and brought down the relative costs.

Commercial developmentIn order to become more and more rooted locally and to ensure proximity and constant monitoring to clients, PerMicro started to develop a network of branches nationwide. Branches in Roma and Pescara became operational in 2008, while 8 more have been

Client’s shop

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PerMicro

Below, traditional food seller

opened in 2009 in Turin, Milan, Genoa, Brescia, Bergamo, Rimini, Vicenza and Florence. Considering a lapse of one year in order to work at full performance, at the beginning of 2010 four out of the ten branches run steadily and the others are expected to reach the same result by the end of the year.

Project management and researchDuring the last year PerMicro started to develop some projects in partnership with public institutions (e.g. districts, municipalities, etc.) in order to build a steady social and institutional network and spread microfinance visibility. The results of such a work can be found in the “Progetto C.A.S.A.” in collaboration with the Asti municipality for the lease start and in the project “O la borsa o la vita!” for the banking alphabetization, in partnership with a local consumer association. Other collaborations with the municipali-ties of Ivrea, Milan, Vinovo, Carmagnola and Verbania are still in progress. Furthermore, at the end of 2009 PerMicro, in partnership with Microfinanza Srl, won the call for tenders of Sviluppo Lazio and today works actively for the microfinance programme in the Lazio region.Moreover, thanks to a research grant financed by Fondazione CRT (Progetto Alfieri), PerMicro started a collaboration with the Faculty of Business and Economics of the University of Turin. The research aims at defining a credit scoring model that can assign a score to the applicant’s credit reliability and then facilitate the standardization of the evaluation process of the single microcredit request by the Credit Committee. In this context, PerMicro started to collaborate with the National Credit Bureau in order to put in place a joint credit scoring model dedicated to microcredit. In fact, one of PerMicro’s declared objectives is the generation of a system of scoring and client management that will integrate the specific experience acquired in the inquiry phase with the results obtained, on to the functions of office automation.

Institutional relationsDuring the last year PerMicro actively cooperated with the Italian Banking Association (ABI), the Central Bank and Ministero del Tesoro in order to observe the microfinance market evolution and its social impact in Italy. Over the last months of 2009, PerMicro has been in contact with the European Investment Fund: on the one side, PerMicro is one of the 15 selected microcredit providers that expect to receive the technical assistance issued by the JASMINE programme, on the other, it actively works with the Financial Support Department in order to explore the equity investment opportunities.

AchievementsSince the beginning of its activity, PerMicro aimed at creating a consolidated network of local partners: PerMicro visited more than 1.600 associations, parishes, consulates and local institutions, involving them in the credit process and in the recipients’ activity management after the loan disbursement.

Furthermore PerMicro took part in a number of events such as ethnic festivals, third sector fairs and exhibitions and supported sport competitions and tournaments for immigrants to foster its link with this part of the population. Up to March 2010 PerMicro provided 542 microcredits out of 3.800 total contacts (14% of the requests). Nearly half of the requests came from Italians, followed by Africans (23%), Asians (11%, mainly Filipinos) and Eastern Europeans (11%, mainly Romanians). The average amount granted is about € 5.490 (minimum €2.000 - maxi-mum €15.000) for a total of € 2.975.688 disbursed. More than two thirds of the loans were disbursed to foreigners (77%), especially Asians (27%), Africans (22%) and East-ern Europeans (22%).Thanks to PerMicro’s business incubator, nearly one third of all microcredits have been employed in the start-up or development of small businesses (28%). Up to now, 151 new entrepreneurs could enter the local labour market, primarily in the trade sector. Due to the strengthening of the marketing and communication strategy, the number of microcredit requests has considerably grown up to 20% on a weekly base. At the same time, the larger number of branches on the territory has boosted the production: the number of microcredits disbursed has doubled, from 5 to 10,3 microcredits per week. This is an encouraging result in view of the achievement of operational and financial sustainability.Although much has been done... the way to sustainability is full of important challenges.Every day we work hard to reach our financial and social goals!

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After having read, analysed and discussed each single application, the Award Committee selected five finalists. The Committee believes that each of the five experiences offers an interesting or innovative approach and ideas that could be transferable to similar realities. The five institu-tions selected are :

Crédal, Belgium - for its long path of working in name of an alternative economy, closer to the people, with a social dimension and a fair approach, finding in the public institution a strong support.

Microcredit Foundation Horizonti, Macedonia – for its innovative ap-proach for providing sustainable financial services to the Roma community.

Partner MKF, Bosnia Herzegovina – for its structured organization able to deliver its financial service to a relevant number of clients in whole Bosnia Herzegovina.

Prince’s Scottish Youth Business Trust (PSYBT), Scotland – for its ap-proach constantly oriented to improve the youth entrepreneurial spirit and culture through a unique mixture of private and public supporters.

Qredits, Netherlands – for its innovative approach, oriented to sustainabil-ity, based mainly on the use of IT to automate processes, maximize efficiency and transparency and to target the beneficiaries.

A Special Mention has been awarded to PerMicro, Italy, winner of the “Italy Award” in the 2009 edition and running again this year, to reward the growth path towards sustainability they have undertaken and for the pioneering partnership agreements they have established with the private banking sector during the past year.

The Finalists 2010

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Giordano Dell’Amore Microfinance Good Practices Europe Award 2010 | The Finalists

Crédal SCRL - FSProject Name The Social Credit, another vision of credit.

Type of organization: .......................... Alternative Financing CooperativeLocation: .........................................................Belgium – Louvain la NeuveFounded in: ...............................................................................................1984Mf products offered: .... Traditional Microcredit & Social Customer CreditPortfolio: ........................... Total: € 16.119.764 - Social Credit: € 1.724.161Av. Loan size: ........ € 3.368 (Walloon region) - € 2.522 (Brussels Region) % of women clients: .............................................................................53,5%

Initiative Presented for the AwardCrédal is a Belgian financing cooperative that offers “social consumer credit” since 2004, a way to offer access to loans and credit educa-tion to financially excluded people.

www.credal.be

Team

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Crédal SCRL - FS

Institutional Profile

HistoryCrédal is an alternative financing cooperative founded in 1984 with a specific social vision: to promote a fairer society and to reinforce social cohesion. Its main objective is to offer savings products for social purposes and to support social projects through credit and counselling. Crédal first activity was to finance non-for-profit organizations and cooperatives through various traditional credit mechanisms at low interest rates. In 2000 Crédal started a microcredit programme (business start-up micro-loans) for credit excluded people. In 2004 Crédal launched another microfinance product: the Social Consumer Credit (consumer credit in connection with a project of life for credit excluded people).

Structure Next to the three credit activities (loans for cooperative and non-for-profit organizations, start-ups microloans and social consumer credit), Crédal offers also consultancy for the social economy sector (Crédal Consulting agency) and a training programme for women who wish to create their own busi-ness (AFFA Programme). In 2009, Crédal is constituted by:

Crédal SCRL-FS: Crédal SC collects the shareholders funds. This structure grants credits. The total ��

portfolio of the cooperative is € 16.119.764.

Crédal asbl: this entity gathers the consulting activities for the social economy sector��

Crédal Plus asbl: this association gathers the activities of support and advice for individuals facing ��

social difficulties and with low incomes.

Since 2004, Crédal has provided 1.240 social consumer credits and has achieved a portfolio of € 1.724.161 for social consumer credit. Currently, 6 employees are working on the social consumer credit activity.

Governance StructureCrédal SC consists of 1.400 shareholders who are integrated into the democratic life of the cooperative by electing its management board. All credits are granted by credit committees equally formed by financial and social experts.

Target Clients and Operational AreaCrédal’s mission statement is based on three main objectives:

to support social projects undertaken by individuals who are excluded from the commercial bank-��

ing system at “moderate” interest rates;

to support initiatives undertaken by disadvantaged individuals – Belgian or migrants; ��

to offer “social” savings facilities on the basis of trust and transparency. ��

Products and Services Crédal offers two microcredit products: social consumer credit since 2004 and traditional microcredit – for business start-up - launched in 2000. Social credit is aimed exclusively at people with low incomes to support basic needs such as transport (cars, etc), trainings or health. Loan’s amount ranges from € 500 up to € 10.000, with a repayment period of 48 months and an interest rate of up to 5%.

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New credit products are under development: social green loans and loans to migrants (to ease family reunification procedures).

Funding Sources Crédal raises funds mainly from its stockholders’ equity, involving the public sector and social workers. Crédal covers a large part of its op-erational costs with subsidies from the Walloon Region, the Brussels Regions and Dexia Foundation – € 460.000 out of a total of € 530.000.

On the left, Veronique Lesobre, a driving client

Below, event

“Having my own car makes the difference!”Veronique Lesobre: My situation was really difficult. My husband and I are separated since 2005 and conse-quently I was raising my four children alone. Unemployment benefits were my only income. In 2007 Sofil, a securities service company contacted me as they were looking for cleaning ladies. One of the problems was that I needed to have a car because I was required to drive from one customer to another. Without a car, there was no possibility of employment… I therefore called my bank and many others, I contacted many credit companies pretending to lend money to someone…but my situation shut all the doors. Sofil’s Director was the one who told me about Crédal. I had a first call-contact and then two meetings at Crédal’s local offices. I was questioned from A to Z. I explained my situation, I gave all the information about my incomes, my expenses, my rent, … I had always paid all my bills so I have never had any debt. I had to be very transparent. On the basis of my budget, they lent me € 4.000 that I had to reimburse over a period of 36 months i.e. € 120 a month. The idea was to find a small car around € 2.500/3.000 and to keep the difference to pay taxes and insurance. I found a 13 years old second-hand car in a perfect state. I started to work beginning of January. I am proud to work again and my car is giving us a lot of independence.

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Crédal SCRL - FS

Innovation Crédal’s innovation is its evergreen idea based on a fairer credit aimed at fi-nancially excluded people. Crédal’s activities are based on four clear axes:

To be poor is expensive; �Only the rich get richer; �To use a credit as a tool to fight over-indebtedness; �To facilitate access to public grants thanks to finance. �

Sustainability The sustainability is achieved through a good mix of elements: the capital used for social consumer credit represents a marginal part of the cooperative funds; a guarantee from the Walloon region on 75% of the granted amounts allows Crédal to keep a low credit interest rate (5%); public and private long term partnerships support Crédal’s activities. With its current financial resources, Crédal may put an upper limit in terms of outreach to avoid a quality decline of its work.

Selection criteria

Financial Achievements

Dec 07 Dec 08 Dec 09

Portfolio at Risk 11,10% 11,29% 7,14%

Write-off Ratio 0,2% 0,4% 0,4%

Portfolio Yield 5,00% 4,99% 4,87%

Debt to Equity Ratio 0% 0% 0%

Operating expense Ratio 81,34% 86,71% 91,36%

Cost per Borrower € 1.523 € 1.916 € 1.087

Staff Productivity 87,31 62,86 80,40

Return on Equity 9,80% 5,69% 2,18%

Return on Assets 9,80% 5,69% 2,18%

Operational Self-Sufficiency 122,94 112,44 107,31

Impact – Outreach Over the last year (2009) Crédal increased largely its outreach (portfolio and number of active clients), keeping the focus on its target clients: women (49%), migrants (20%) and youth (18%). 60% of clients that were granted a social consumer credit live under the poverty line in Belgium (860 €/month). The average loan size is approximately € 4.300.

Replication Crédal’s social consumer credit is not easy to replicate in other countries without public institutions’ awareness. And usually it takes a long time. However, two MFIS visited already Crédal to learn from and share this best prac-tice (Hefboom and ADIE). In order to share its experience, Crédal joined the Euro-pean project MULFI (Mutual Learning on Financial Inclusion) in 2009, promoting the social consumer credit with a large consensus.

Outreach Achievements


Active Borrowers 438 635 1035

Women 54% 56% 49%

Migrants, Minorities 19% 29% 20%

Youth 16% 20% 18%

Below Poverty Line 66% 55% 60%

Average Disbursed Loans € 2.792 € 3.208 € 4.291

Portfolio € 477.477 € 705.788 €1.707.946

Number of Branches 5 6 6

Staff 2,97 4,50 5,95

Loan Officers n.a. n.a. n.a.

Drop Out Ratio n.a. n.a. n.a.

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Microcredit Foundation HorizontiProject Name Innovative approaches for providing sustainable financial services to the Roma community in the Republic of Macedonia.

Type of organization: ............................................................................................NGOLocation: ................................................................................................... MacedoniaFounded in: ........................................................................................................... 2000Mf products offered: ..................................Microcredit for enterprises and familiesPortfolio: ..................................................................................................... € 2.729.508Av. Loan size: .....................................................................................................€ 1.049 % of women clients: ...........................................................................................100%

Initiative Presented for the AwardAs a poverty-focused MFI, Horizonti from the very beginning indentified the Roma community as a potential market to serve, which is in line with the organization’s mission and its social goals. This initiative presents an innova-tive approach for providing sustainable financial services to the Roma com-munity, the most vulnerable, marginalized and socially excluded group in the Republic of Macedonia.

www.horizonti.org.mk

Horizonti agricultural client

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Microcredit Foundation Horizonti


History Horizonti was created in January 2000 as a microfinance programme of Catholic Relief Services - USCC in Macedonia. The project primary goal was to provide access to finance to low-income women entrepreneurs. In addition, project long-term goal was to create a professional and locally-registered microfinance institution. In July 2005 the programme spun-off from CRS by registering a local NGO (Foundation) according to the Law on Citizen’s Associations and Founda-

tions in the Republic of Macedonia.

Structure The programme started to operate in the greater Skopje area, and eventually expanded its opera-tions in seven other cities throughout the coun-try, having 65-70% Roma population coverage. At present, Horizonti has 39 staff members, of which 9 are representing the senior management and ad-ministration and the rest are branch staff includ-ing branch managers, loan officers (total of 20) and branch support staff.

Governance Structure Horizonti is an institution with strong commitment for achieving the social goals and creating positive impact for its clients. The organization is strongly ori-ented to understand client’s needs and preferences.

Horizonti Board of Directors is composed of 5 independent individu-als nominated by the Founder (CRS/Macedonia).

Target Clients and Operational Area In general, Horizonti clients are women microentrepreneurs with an existing business in the retail, services, small production and agri-culture sectors. Those clients are disadvantaged people with limited or no access to financial services. In terms of location, clients are divided into two categories, urban and rural. Urban clients are mainly people with small businesses in the retail, services and small produc-tion sectors; their loan purpose is mainly working capital. On the other side, 100% of Horizonti rural clients are individual farmers with small farming activities, cattle-breeding and crop production, whose needs are primarily for purchasing seeds, fertilizers and other materials as well as buying additional cattle and purchase of equipment. In terms of the business status, only 50% of Horizonti clients, excluding the farmers, have registered business according to the existing laws in Macedonia. This is not the case of Roma clients of which approximately 90% of the businesses are non-registered.

Delivering certificates- Business traning for Roma women entrepreneurs

Retail client

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Products and Services Horizonti financial services are short and long-term business loans to microentrepreneurs and small housing loans for recon-struction and repairs. In addition, Horizonti activities include providing consultancy services to clients and access to non financial services provided by its partner organizations. Hori-zonti’s loan products are divided into two categories: small business loans and housing loans. Loans amount range from € 250 up to € 4500. In terms of methodology, it offers group and individual loans. Horizonti delivers its microloans through bank intermediation.

Funding Sources Horizonti has launched its microfinance programmes with the support of Catholic Relief Service-USCC. The institu-tional capital (around € 1.9 mil as of Dec 2009), consisted of grants provided during the period 2000-2005 by the fol-lowing main donors:

Caritas Norway – € 1.1 mil ��

Catholic Relief Services – € 400.000 ��

Open Society Institute (OSI) and CEB – € 400.000��

In addition, the remaining funding sources (around €1.6 mil) is debt financing, through:

€ 500.000 commercial loans from local banks��

€ 600.000 soft loans (concessional rate) from local development organizations��

€ 500.000 soft loan (concessional rate) from SEDF ��

Client story: Ljubica SelimLjubica is a 43 years old mother of two. She was one of the first Horizonti clients, in March 2000. Ljubica started her business in 1991, dealing with baby’s underwear, investing just a few dollars. She used all her loans, currently 11, to develop her business by renting well located stands at the market and diversifying her products, in order to be more competitive. Nowadays Ljubica has regular customers and works at the market with all her family.She is very thankful to Horizonti for trusting her ideas and plans, and for supporting her to achieve good results. Ljubica expects a future expansion of her business, in order to offer a job to other people.Client story: Zorica Banskolieva Zorica Banskolieva is a 22 years old woman who lives in the rural area of Strumica, with her husband. She contin-ues the family tradition: agricultural production. Zorica found out about Horizonti from other existing clients. Zorica appreciated the idea of the solidarity group model, and she didn’t have any problem to form a group with other people from her village. She borrowed 60.000 MKD (€ 1.000) from Horizonti to buy seeds for lettuces, pota-toes, tomatoes, cucumbers and to buy rubber pipes.“Horizonti is the first financial institution that entered in our village and offered us financial support. I’m very satis-fied of the relationship created with Loan Officers, and hope for long-term collaboration”, Zorica said.

Horizonti client - mechanical services

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Microcredit Foundation Horizonti

Innovation Horizonti innovation lies in the specific approaches implemented to provide continuous access to finance to Roma women clients and ensure a good client’s loyalty.The innovative approach in accessing to this target group consists of: lo-cating operations in Roma community; recruiting Loan officers who are not prejudiced against Roma people; developing a specific method of communi-cation; hiring Roma staff.The introduction of the group lending product was not enough in itself to en-sure a successful outreach within the Roma community.

Sustainability The sustainability of this initiative is determined by the number of potential Roma clients that join this programme (Horizonti succeeded to reach 35% of Roma households in the area where it operates), by the high retention rate of this group (41% of active Roma clients are above a 6th loan cycle or have been for at least 4 years with Horizonti, and 27% are above a 10th cycle or have been for at least 6 years with Horizonti, which is much more than other Horizonti clients), and by a good repayment rate (97-98% for the period 2000-2007, 93- 94% over the last two years due to the economic crisis).The criteria for measuring sustainability, including financial sustainability, are verified through the clients’ retention and repayment rates. From the above we gather that sustainability was achieved as Roma clients demonstrated strong willingness to continue borrowing and keeping correct repayment records.

Selection criteria




Write-off Ratio 1,75% 1,98% 2,3%

Portfolio Yield 31,77% 28,57% 23,77%

Debt to Equity Ratio 0,59% 1,07% 0,95%


Cost per Borrower €157 €141 €126

Staff Productivity 150 157 155

Return on Equity 5,57% 2,49% 2.4%

Return on Assets 3.57% 1.35% 1.2%

Operational Self-Sufficiency 120.8% 106% 102%

Impact – Outreach With this initiative, Horizonti succeeded to achieve its goals in the area of poverty reduction and women empowerment. The fact that 100% of Roma clients are women is one of the greatest achievements in this community, taking into account the discrimination that exists in the region. Another positive impact on this population is the improvement of literacy of Roma women through the assistance provided by Loan officers so women are able to sign the loan contracts and other documents, and feel more com-fortable with financial transaction records. The best evidence of the success of this initiative are the results achieved since the inception or for the period March 2000 – Jun. 2009.

Replication The replication of this model to programmes in other countries/regions is possible but with the following pre-conditions:

Making quality assessment of the general position of Roma population within 1. the country/community;Need for strong commitment by the MFI’s top management to serve this population;2. Select, train and hire Loan officers that can work and communicate with this 3. population.

Horizonti’s long-term experience shows that the staff, or Loan officers in particu-lar, is the key factor for success in this population outreach. Designing just the right loan product that suits the needs and repayment capacities of Roma client’s businesses is not sufficient to ensure long-term relationship and sustainability.

Roma Community Outreach

No of Roma Clients Reached 2.834

% of Women Clients 100%

No of Loans Disbursed 11.610

Value of Loans Disbursed € 6.55 mil.

Average Loan Amount € 564

No of Active Roma Clients, June 2009 1.182

% of Roma Clients of Total Clients 39%



Active Borrowers 2.853 2.976 3.044

Women 100% 100% 100%

Migrants, Minorities 37% 38% 39%

Youth 14% 14% 14%

Below Poverty Line n.a. n.a. n.a.

Average Disbursed Loans € 953 € 1.105 € 1.091

Portfolio € 1.901.640 € 2.465.836 € 2.729.508


Staff 35 39 39

Loan Officers 18 19 20

Drop out Ratio 15.4% 16.8% 17.7%

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Partner Microcredit FoundationProject Name Overall innovative approach in delivering microfinance.

Type of organization: .......................................................... Non Profit FoundationLocation: .............................................................................Bosnia & HerzegovinaFounded in: ..........................................................................1997 (2001 as Partner)Mf products offered: ...................................... Business loans and housing loansPortfolio: ...............................................................................................€ 68.657.049Av. Loan size: ................................................................................................€ 1.618 % of portfolio to women: .............................................................................. 44.2%

Initiative Presented for the AwardPartner is a microcredit non-for-profit foundation, multiethnic, inter-entity with 59 offices in Bosnia Herzegovina. The programme presented consists on a new way of providing financial services to microentrepreneurs and to the population, with a focus on rural areas.

www.partner.ba (1€ = 1,95467 BAM at 30.12.2009)(1 BAM = € 0,5115 at 30.12.2009)

27

Partner Microcredit Foundation


History The operations began in April 1997 when the European branch of Mercy Corps entered into an Agency Agreement with the Local Initiatives Department (LOIN). After the signing of this agreement, Mercy Corps established the Economic Development Department in Bosnia and Herzegovina, which was registered as a local microcredit organization on December 11, 2000 and continued operating under its new name, Partner Microcredit Organization on January 01, 2001. After the passage of a new Entity Law on Microcredit Organizations in 2006, Partner transformed into a microcredit foundation.

Structure Partner is very dedicated and constantly promoting edu-cation among the staff. During the year 2009, a total of 463 employees received some kind of training, education or attended seminars on different subjects (some employ-ees attended more than one training). Partner is also co-financing formal education of its employees: 40 employ-ees on graduate studies, 12 employees on post-graduate studies and 1 employee on doctoral degree.

Governance Structure The Board of Directors comprises five members. It was established in July 2007 and it coordinates all activi-ties in accordance with the Statute of Partner Micro-credit Foundation.

Target Clients and Operational Area In addition to the Head Office in Tuzla, Partner has 59 offices across the whole Bosnia and Herze-govina, serving clients in over 100 municipalities. Out of a total of 24 branch offices, Partner’s team of loan officers cooperates and approves loans in the whole Bosnia and Herzegovina.The target group suitability criteria were defined as follows: the value of initial business capital may not exceed €10.230 (BAM 20.000); the income per household member may not exceed €179 (BAM 350); and the number of persons employed in the business may not exceed four persons, including the client.

Products and Services Partner’s unique approach and focus on communities straddling the former demarcation lines of the 1992-1995 war ensures service provision to the populations that suffered the most. It also enables clients to use services through offices in numerous locations in case they decide to return to their pre-war homes. Partner provides low-income entrepreneurs and women with individual loans both for registered and unregistered businesses. Partner’s clients are returnees, displaced persons and resident population. 73.54% of the total number of loans was disbursed to rural clients.Partner is devoted to preventing clients’ overindebtedness, by providing different types of education to its clients (eg. financial education), promoting positive credit history (brochures,

On the other page, picture of our staff from Zivinice near Tuzla

Below, client receiving award on the training of financial education for poor people “Plan your future”

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leaflets). Moreover, Partner has a very developed systematic way to conduct clients’ assessment and affordability.

Loans are designed for agriculture purposes, business improve-ment, housing, liquidity and commodity. Loans amount range from € 255 (BAM 500) up to € 5.115 (BAM 10.000) with an interest rate ranging from 18% up to 29%. Partner has limited clients’ charging with no hidden costs and is one of the very few MFI that cancelled upfront fees and penalties for delayed payments. Partner has very competitive prices within the country context (the country average portfolio yield is 25.3%; Partner’s portfolio yield is 192%).

Funding Sources At 31 December 2009, Partner had at its disposal a capital of 41 million BAM, of which 8 millions of grant capital. Based on the credit agreements signed, Partner has 130 million credit obliga-tions. From 1 January 2009 to 31 December 2009, Partner Micro-credit Foundation disbursed a total of 28.285 credits amounting to BAM 74.535.537.

Above, an opening ceremony of our branch in the city of Zenica

Right, Lisica Dragan, a client

Dragan, the story of a Golden ClientLisica Dragan, from Laminci village, near Gradiška, a small town at the Croatian border, has been a long-time cli-ent of Partner. Hard-working people living in the fertile Lijev e field have traditionally been involved in agriculture and cattle-breeding, due to the natural advantages and the nearness of Sava River.Dragan has continued the tradition of his ancestors, and, willing to engage in the production more seriously, took another Partner loan in 2004 of € 2.500 to purchase dairy cows. The loan was repaid before due date, and the following year he expanded the business by taking another loan of € 5.500 to purchase basic livestock, working livestock and livestock offspring. Currently, Dragan is using his third, long-term “Golden loan“, of € 10.000, cre-ated for special and successful clients. Having been involved in agricultural production and cattle breeding the whole time, he had continuously been developing his business. Dragan has reimbursed all his loans before the repayment due date, and has therefore gained a privileged status at Partner. Namely, Dragan has gained himself the “Golden Client” status, which enables him to obtain loans under more favorable terms of repayment. Dragan intends to continue to engage in cattle breeding, and the youth, life energy and enthusiasm that this young man possesses, are giving him hope for a greater business and private success.

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Partner Microcredit Foundation

Innovation Partner introduced an innovative approach, a step ahead from the world-wide ac-cepted approaches, by launching new products which are a combination of finan-cial and non-financial services, aimed at increasing the clients’ self-sustainability and competitiveness.

Youth Loan (loan + free business training + mentorship for clients �age 18 – 30);Fruity Loan (in cooperation with USAID, created a new loan for agricul- �ture & soft fruits cultivation);Loan + life insurance (to simplify the procedure for the clients without �guarantors);Systematic market research and market-oriented new product �development (48 volunteers, employees who are continuously making researches in different fields).

Sustainability To reduce the credit risk, Partner will continue focusing on the character and ca-pacity of clients. One of the specific requirements of the achievement of Partner’s financial stability is the diversification of income sources. Therefore, in 2010 and 2011 Partner will submit to the Federal Banking Agency its development project to transform itself into a bank. The new scenario would increase Partner’s flex-ibility of fund raising thanks also to cheaper access to financial sources.

Selection criteria




Write-off Ratio 0.49% 1.00% 4.84%

Portfolio Yield 19.95% 19.55% 19.03%

Debt to Equity Ratio 4.19 3.77 3.29

Operating expense Ratio 8.93% 7.06% 7.60%

Cost per Borrower € 194 € 89 € 106

Staff Productivity 210.45 261.69 184.36

Return on Equity 14.20% 18.44% -8.23%

Return on Assets 3.22% 3.71% -1.87%

Operational Self-Sufficiency 133.49% 136.72% 94.70%

Impact – Outreach The market research findings initiated a special project for young people, with the aim to use a holistic model to increase self-employment opportuni-ties for young people between 18 and 29 by providing access to loan capital in addition to market-oriented business training and mentorship services for young clients. Youth Loan has already been disbursed to 120 young entrepre-neurs, while Fruity Loan has been disbursed to 206 rural farmers.

Replication Many aspects of the Partner’s approach could be considered for replication:

A loan tailored for rural development - Fruit Loan - with the technical �assistance of an agricultural expert;Cooperation with suppliers. Partner made cooperative agreements with �many suppliers who have outlets all over the country;A partnership with a local NGO to promote and inform potential clients �about Partner’s offer;A toll-free info line to receive requests/complaints. �



Active Borrowers 50.510 63.593 54.572

Women 57,47% 42,44% 42,73%

Migrants, Minorities 20,16% 17,97% 17,72%

Youth (18-29) 21,84% 23,03% 20,72%

Below Poverty Line 86,82% 90,05% 92,43%

Average Disbursed Loans € 1.568 € 1.418 € 1.220

Portfolio € 81.570.260 € 93.459.624 € 68.657.049


Staff 240 243 296


Drop out Ratio 19,13% 67,34% 50,26%

National poverty line is below €197/year

30


The Prince’s Scottish Youth Business Trust (PSYBT)Project Name Microfinance Institution (MFI)

Type of organization: ...... Company Limited by guarantee with charitable statusLocation: ...................................................................................................ScotlandFounded in: ...................................................................................................... 1988Mf products offered: .................................................................Loans & coachingPortfolio: ...............................................................................€ 996.447 - £ 6.211.498Av. Loan size: ................................................................................................€ 2.983 % of portfolio to women: .................................................................................38%

Initiative Presented for the AwardPSYBT presents itself and all its operations. Its focus is supporting the young people in starting their own businesses. PSYBT offers financial and non financial services in all Scotland.

www.psybt.org.uk

31


History The PSYBT is a limited company with charitable status and is funded by both the public and private sector. During the last 20 years since PSYBT was formally constituted (1988) the Trust has supported over 11,000 young people in Scotland to start almost 10,000 businesses and provided some £ 34 million in funding alongside a whole package of other assistance tailored to the needs of each individual.

Structure The PSYBT is firmly established throughout Scotland in 18 Regions. Regional Manag-ers, located within the Business Gateway, are responsible for organizing pre-start training and aftercare support for young people helped by PSYBT. Regional panels of volunteers interview all applicants and make decisions on awards. The Head Office in Glasgow sets policy, establishes procedures, directs training, manages most admin-istration centrally and devolves operational matters to the 18 Regions. PSYBT has a staff of 36 people and over 750 volunteers providing a range of advice, guidance and mentoring support to young businesses across Scotland.

Governance Structure The Prince’s Scottish Youth Business Trust (PSYBT) was formally constituted in April 1988 with a Board of Directors comprising representatives from the public and private sector with a mission: “to provide essential finance and professional support to young

people in Scotland aged 18 to 25, whoever they are and wherever they come from, so that they can start up and continue to run their own business”.

Target Clients and Operational Area PSYBT’s task is to help those young people with the imagination, energy and determination to start their own business. Crucially, PSYBT is prepared to back only those young people who have failed to find support for their idea from other sources, whether this is because of social or economic disadvantage. Although very much a national initiative, PSYBT is given a local focus via a Regional Structure throughout Scotland.2009 was the 20th Anniversary of PSYBT and provided a perfect reason to cel-ebrate the success of over 11,000 young people who have received PSYBT’s support in starting up and continuing in business. This support to over 11,000 young people has seen investment of over £ 34 million (€ 30 million) with a current Loan Fund of £ 6.2 million (€ 7,12 million) and total repayments to the loan fund being 82.5% of the original principal.

Products and Services PSYBT offers loans to young people for start up business and for de-veloping business. Loans range from £ 1.000 (€ 1.148) up to £ 25.000 (€ 28.718). It also offers services in pre-start phase including training, advice and test marketing.The PSYBT Aftercare Programme has been a key part of its product port-folio since its inception in 1989. The provision of aftercare begins as soon

Other page, Peter McLean of The Food-ie Company with some of his products. Below, Eunice Olumide with Scotland’s First Minister Alex Salmond.

The Prince’s Scottish Youth Business Trust (PSYBT)

PSYBT Staff

32


as the young person receives the funding and continues for a minimum of 2 years. A volunteer is matched with the young business owner and his/her role is to:

Provide support and guidance;��

Facilitate learning using practical examples and experience of business;��

Motivate and encourage;��

Help with forward planning; ��

Capture business performance data that PSYBT can use to dem-��

onstrate impact.

Funding sources Funding to sustain the work of PSYBT is secured from loan repay-ments made by the young people we help (40%), core funding from Scottish Enterprise (20%), private sector fundraising (30%) and support from the European Union (10%).

Gillian Parker of Sew Vintage with some of her own range of clothing made using recycled material from curtains, etc.

Regis Banqueting LtdRyan Longmuir started his business Regis Banqueting Ltd in 2003 after spotting a gap in the market for high quality catering at an affordable price.Regis Banqueting Ltd cater for all occasions such as weddings, parties and corporate hospitality events and count Bentley motor cars and O2 mobile phones amongst their customer base. In 2009 they catered for over 300 events throughout Scotland including dinners in historic castles, marquees and hotels.Ryan, who grew up on a council estate just outside of Glasgow, now lives in an affluent area with his wife and two young children. He left school with no qualifications or career ambitions. Before long he began abusing drugs and soon his life spiralled out of control. Ryan said, “Sadly drugs had become a part of my life and I didn’t much care about anything else”. At 20 years old Ryan hit rock bottom and decided to make serious changes in his life. He found support and guidance from a local church group and slowly started to turn things around. Over the next three years, he worked with recovering drug addicts and helped them to overcome their own addictions. “I’m happy to be open about my life story because I want people who might be having a tough time to realise there is a way out, that you can change your situation for the better. I was able to turn my life around thanks to a lot of support, and so can other people. I love life.”With growing ambitions to be financially secure and continuing his work helping others from disadvantaged back-grounds, Ryan considered the idea of starting his own business. He attended various training courses and found a work placement at a local café.It was then that he approached PSYBT who gave him the necessary finance and support to get his catering busi-ness off the ground. “I presented my business plan and while I didn’t have any business experience I had done all my research and I was determined to make a success of things. Thankfully, they shared my enthusiasm and believed in me.”Seven years on, Ryan’s business has grown considerably and he has ambitious plans for the future. Ryan will continue to provide employment opportunities for disadvantaged young people. Ryan is also a PSYBT Ambassador and helps to raise the profile of the Charity’s work across a variety of sectors. He makes regular donations to the Trust.

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Selection criteria

The Prince’s Scottish Youth Business Trust (PSYBT)

Innovation PSYBT is unique in that it brings together a mixture of public and private sector supporters, some 700 volunteers, and partnerships with local councils and cham-bers of commerce. This network allows the organization to reach out to any young person in Scotland who would like to start their own business. A recent inde-pendent evaluation recognised that the one to one support offered by PSYBT and the experience of the network of Aftercare mentors is a critical success factor in the delivery of tailored support to young entrepreneurs. The network of Volunteer mentors is the lifeblood of PSYBT. In 2009, PSYBT launched an Innovation Fund pilot for young entrepreneurs who have an early-stage business idea, but lack the resources and expertise. PSYBT also runs the Elevator programme that helps young business owners to develop their own business network.

Sustainability PSYBT covers its costs partially with loan repayments made by the young people it helps. Other important resources come from: Scottish Enterprise, private sector fundraising and support from the European Union.PSYBT does not envisage that it will ever be completely independent from public funding but over the next 5 years aims to achieve financial sustainability of mi-crocredit activities.

Financial Achievements – PSYBT year is July to June

2006-07 2007-08 2008-09


Write-off Ratio 7,91% 3,26% 0,88%

Portfolio Yield 6,00% 6,18% 6,13%

Debt to Equity Ratio 0 0 0


Cost per Borrower € 1.856 € 1.579 € 1.158

Staff Productivity 69 88 115

Return on Equity n.a. n.a. n.a.

Return on Assets -7% -7% -8.00%

Operational Self-Sufficiency 55,11% 55,33% 47,41%

Impact – Outreach The evaluation undertaken by DTZ Consulting in 2007 confirmed that PSYBT has a strong fit with the Scottish Government strategy to support Scotland’s business birth rate, contribute to the pipeline of growing businesses and to encourage a culture of entrepreneurship. The report also measured that every £ 1 (€ 1.15) of public sector investment in PSYBT generates £ 26 (€ 29.87) of net additional sales. In 2005/06 the total impact of PSYBT was esti-mated as £ 22.6 million (€ 25.96 million) and 489 full time jobs demonstrating significant added value.

The average investment per business is £ 3,417 (€ 3,925). �The average age of a beneficiary is 23 years. �Over 80% of the loan funding is paid back. �Some 52% of the young people we help were unemployed. �38% of business owners are female. �

Replication PSYBT delivers a simple model of support to young entrepreneurs in Scot-land and places significant emphasis on creating individual solutions for in-dividual needs - the focus is on building relationships with businesses rather than offering off the shelf products or programmes. By combining access to microcredit with a package of wrap-around support activities, delivered by a core team of staff and volunteers, PSYBT has been able to offer a service to aspiring young entrepreneurs, which helps them to overcome the barriers they face in creating their own self-employment. The contribution of volun-teer mentors is a particularly significant feature of PSYBT and one that could be easily replicated in other similar programmes.PSYBT continues to work closely with The Prince’s Youth Business International (YBI) to be able to share best practice and intellectual property with other estab-lished YBI programmes across the world as well as providing a model for new and/or evolving programmes. In 2008 PSYBT hosted a major conference on Youth Enterprise. It was attended by some 150 delegates from 38 countries, all totally focused on supporting young people in enterprise and entrepreneurship.


2006-07 2007-08 2008-09

Active Borrowers 640 653 678

Female 243 258 270

Male 397 395 408

Unemployed 333 321 312

Disabled 35 34 61

Criminal Record 19 21 32

Average Disbursed Loans € 3981 € 4079 € 3.618

Portfolio € 3.938.535 € 3.786.159 € 3.527.407


Staff 20 21 22


1 € = 0.90400 £ (at 30.12.2009) / 1 £ = 1.106194 €

34


Dutch Microcredit Foundation – QreditsProject Name A new sustainable approach to microfinance. Blend of traditional banking and sophisticated IT support.

Type of organization: ................................................................Private FoundationLocation: ......................................................................................The NetherlandsFounded in: .............................................................................................31/10/2008Mf products offered: ............................................... Individual Loans & CoachingPortfolio: ................................................................................................ € 9.926.335Av. Loan size: ..............................................................................................€ 21.176 % of portfolio to women: .................................................................................31%

Initiative Presented for the AwardQredits, a Dutch Microcredit Foundation presents its innovative approach ori-ented to sustainability, based mainly on the use of IT to automate processes, maximize efficiency and transparency and to target the beneficiaries.

www.qredits.nl

35


History Qredits is a private foundation, founded on 31 October 2008, by a group of public and private partners. These partners are: the Ministry of Social affairs and employment, the Ministry of Economic affairs, four banks - the ABN AMRO bank, Fortis bank Nederland, ING Nederland and Rabobank Nederland - and a fund for employment and living.

Structure Qredits has one central branch in Almelo that provides the back office for all loan officers, who work locally. At the moment there are 8 locations – Almelo, Amsterdam, Den Haag, Breda, Eindhoven,

Zwolle, Groningen, and Utrecht - throughout the Neth-erlands were loan officers are stationed. At the mo-ment Qredits has 22 employees in total, 10 of whom are credit officers.

Governance Structure As a foundation Qredits has no profit goal and there are no shareholders. Qredits has a board whose members have the voting rights concerning the run-ning of the foundation.Qredits works to provide financing to the target group at a sustainable level and at the best possible interest rates.

Target Clients and Operational Area The target population, in principle would be anybody who wants to start or to develop a small enterprise in the Netherlands and cannot obtain financing through regular channels.Currently, Qredits serves different types of populations, in detail: 31% of loans are granted to women, 16% are granted to migrants or ethnic minorities, 21% are granted to young people (age < 31 years), 65% are granted to start-ups. Since its start, Qredtis covers 8 regions through-out the Netherlands.

Products and Services Qredits provides loans up to € 35.000 – fixed interest rate currently 9,5% and maturity maximum 10 years – to start ups or already existing small and medium enterprises based on a viable business plan. Clients, at least for the first year, are followed by a coach to support their businesses and to maximize the survival chances of the enterprise. The intensity of the coaching depends on the degree of risk associated with the business proposed.

Funding sources The funding, 15 million Euros in total for financing purposes and 2 million Euros for operational costs, was awarded for the first two years, after which the pilot will be evaluated. As Qredits and its approach to microfinance are even more successful than expected, the estimation is that current funding

Other page, Fanny met KlantBelow, Qredits’Office

Dutch Microcredit Foundation – Qredits

Qredits’car

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will run out by April 2010. By 31-12-2009, 530 loans of an average of € 21.176 had been granted. Qredits is currently looking at additional funding opportunities, European funds and funding by banks under commercial conditions among others.

Inside Qredits

Outstanding Professional ItemsHe could already clean well, and sell well, too. Bas Baak was able to make a flying start with his own cleaning business, Baak Schoonmaak,

but without the professional materials that a cleaner really needs. A microcredit from Qredits offered the solution. “I feel more confident. And

we’re growing nicely, too.”

Bas Baak was a car salesman, until he shattered his lower leg in an accident. He couldn’t walk easily anymore, so he went to work at a call centre, first

answering phones and later as a sales manager. After a few years he wanted something else. In late 2008, he could walk well again, and he decided

to start out on his own. Baak explains: “I liked selling, but I was tired of the call centre and in the car industry there wasn’t any work. More than that, I

wanted to start my own business. The freedom of entrepreneurship really appealed to me. Because I had previously cleaned as a second job, I got the

idea to start a cleaning company. I knew that I could earn a good living doing it.” Six months later, he cut the ties and resigned from the call centre to

focus entirely on his own business, Baak Schoonmaak, in Leidschendam. His sales talent didn’t fail him, either; he soon had four offices and a number

of apartment staircases to clean daily or every other day: at night the offices, stairwells during the day.A costly joke So far, so good. Baak enjoyed his freedom. His customers were satisfied with his work as well as his additional services such as clearing off conference

tables and loading and unloading the dishwasher. But he still was not working very professionally yet because he had not built up a sufficient buffer to be

able to invest in all the required machines and equipment. After a few months this became a growing problem; he says: “I sometimes rented a cleaning

machine, but it gradually became a costly joke. Also, I had only one set of cleaning supplies that I dragged everywhere. It’s of course much easier if you

can leave your materials at each office. But then you need a lot of supplies.” At one of the Chamber of Commerce’s Starters’ Days, Baak was advised of the possibility of microcredit. That was exactly what he needed. He wrote a

business plan and had it looked over by an adviser from the Chamber of Commerce. With that, he went to Qredits, Microcredit in the Netherlands. “Requesting a microcredit could be done simply on the internet via the Qredits website.”

Within a few days Baak received a notice that his application was pending. Within one week Baak was visited by a Qredits business advisor. Together

they discussed the business plan and Baak’s future plans. “What amazed me the most was Qredits confidence in my plans. Naturally, they were critical,

but their trust gave me a definite helping hand!“ continues Baak. The microcredit of € 9,000 was approved and Baak had room to invest in his company.

He bought a cleaning machine, window cleaning equipment, a few vacuum cleaners, ladders, mop buckets and cleaning supplies.

Since then, things are going much better; according to Bass: “Even better than I had hoped. I like my work, I like my customers. It is great to be my own

boss. And I don’t have to drag around my supplies anymore.”Microcredit has helped him enormously, he adds. “Without professional materials I just couldn’t go any further. The fact that I now have everything I

need makes me feel much more confident with acquisition. I find that fact the most important because I am busy again with acquisition. If it goes well,

I’ll soon have too much work for myself alone. In June, I am going to hire someone. Yes, it is growing very well.”

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Dutch Microcredit Foundation – Qredits

Innovation Qredits is trying to develop a sustainable approach to deliver microfinance, based on the use of highly sophisticated IT and using voluntary coaching to support its clients. IT is a key factor in many stages of the process - operational procedures; marketing; matching coach and client; accountability & reports.Qredits uses an affordable coaching provided by employees of big financial companies, supported by these companies as Corporate Social Responsibil-ity (CSR) activities. Fortis Bank and Aegon insurance are examples of compa-nies who have formed voluntary coaching pools among their employees, to coach entrepreneurs with a microcredit as a CSR activity.

Sustainability Qredits was born as a pilot project, to offer microfinance in a sustainable way. For this reason the foundation has developed a strong IT system to reduce time con-suming in many activities. With this approach, in two years-time Qredits expects to be sustainable and to reduce the interest rates and minimize the default rates of the credit portfolio.According to the projected demand for microfinance in the Netherlands, sustain-ability can be reached by 2012. The necessary volume for the long term, 5000 new loans a year, can be reached within the next 5 years. To obtain this volume, it is essential to reach the target group, through internet and referring parties.

Selection criteria


Dec 09

Portfolio at Risk 1,23%

Write-off Ratio 0%

Portfolio Yield 9%

Debt to Equity Ratio 7,5%

Operating expense Ratio 15,9%

Cost per Borrower: € 3.412

Staff Productivity 26,84

Return on Equity 0,88%

Return on Assets 0,1%

Operational Self-Sufficiency 101

Impact – Outreach Operations were launched in January 2009. Since that date Qredits has received more than 3.400 requests: 548 were successfully granted, 1398 were rejected, 999 were not treated at all and more than 500 are under evaluation.

Replication Qredits and its innovations - the use of sophisticated IT & voluntary coaching - could be applicable to any MFI. The system could be copied easily and only requires Internet infrastructure. Qredits is ready to assist if help is needed.


Dec 09

Active Borrowers 510

Women 158 (31%)

Migrants, Minorities 82

Youth 107

Below Poverty Line 87

Average Disbursed Loans € 21.176

Portfolio € 9.926.335

Number of Branches 1

Staff 22

Loan Officers 10

Drop out Ratio 72%

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Giordano Dell’Amore Microfinance Good Practices Europe Award 2010 | Special Mention

The Institution

Mission and Values: Providing microcredit to those excluded from the traditional credit system both for business and personal purposes through a rooted territorial development and with a focus on the standardization of procedures.PerMicro aims to distinguish itself within the panorama of Italian microfi-nance institutions by achieving self-sufficiency as quickly as possible.

Established in: Formally created in June 2007, PerMicro started to provide microcredit in January 2008.

Type of Organization: PerMicro is legally a non-bank financial intermedi-ary, as defined by the Italian Banking Law (art. 106 of TUB, Testo Unico Bancario - Legge 385/95). PerMicro is the first and only Italian professional microcredit provider. It can grant loans directly to clients but cannot accept deposits nor deliver guarantees.

Geographical Area of Operation: Operating initially in the multi-ethnic neighbourhoods of Turin, PerMicro planned to develop to national level by opening a series of territorial branches: during 2008, offices were opened in Rome and Pescara, while in the first half of 2009, nine new offices were opened in Turin, Milan, Bergamo, Brescia, Bologna, Genoa, Florence, Rimini and Bassano del Grappa.

Funding Sources: PerMicro was founded by two large social organiza-tions, Fondazione Paideia, based in Turin and Oltre Venture, the first Italian social venture capital fund, based in Milan.The initial share capital amounted to 600.000 euro and was later increased by the arrival of new shareholders: a big banking group, UBI Banca, and Fondazione Sviluppo e Crescita CRT, a venture philanthropy organization based in Turin.

The Product Presented

Nowadays, the model most utilised by the Italian MFIs to deal with credit risk is the so-called “triangular model”. PerMicro presents a new model of Microcredit for enterprises and families where the pri-mary objective is the implementation and continuing perfection of these products, by differentiating them in order better to adapt to the clients’ needs, and combines three different activities normally performed by different subjects (volunteers, a foundation and a bank) under the single head of one actor: PerMicro.

Launching of the product: 2008

Portfolio: € 2.453.253

Average loan disbursed: € 5.732

Annual interest rate: from 9% to 12%

Target Population: persons excluded from the traditional financial system.

Number of Clients: 428

Credit Evaluation: is based on assessing the general credit application: the applicant’s personal characteristics, the applicant’s monthly balance, the aim of the request, presence of guarantors or network credit.

Disbursement Period: once approved, the loan is disbursed within 24/48 hours.

Staff involved: PerMicro’s organizational structure is characterized by a clear allocation of functions, subdivided in accordance with four principal areas of responsibility each of which has one manager and several employ-ees. These areas are: Product Area, Development Area, Administration and Control Area, Marketing Area.

Collection System: monthly, direct from the client’s bank account.

PerMicro www.permicro.it

Special Mention

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Special Mention to PerMicro

Other page, conference in the squareLeft, taylor’s workshop

Special Mention

Special MentionA Special Mention has been awarded to PerMicro, Italy, winner of the “Italy Award” in the 2009 edition and in the running again this year. It rewards the growth path towards sustainability they have undertaken and the pioneering partnership agreements they have established with the pri-vate banking sector during the past year.

PerMicro has been developing its microfinance activity by following a model that is innovative and pioneering by comparison with the various other experiments carried out in Italy. The model is: “3 in 1” operational model: Network Credit – Professional Team and Standardized Procedures and Credit Scoring.

Phone center

ABI Italian Banking Association ACAF Association for Self-Financed CommunitiesADIE Association pour le droit à l’initiative économiqueCRS Catholic Relief ServicesEIF European Investment FundEU European UnionEMN European Microfinance NetworkFGDA Fondazione Giordano Dell’Amore – Giordano Dell’Amore FoundationJASMINE Joint Action to support microfinance institutions in EuropeIT Information technologyMFI Microfinance InstitutionNGO Non-Governmental OrganizationPSYBT Prince’s Scottish Youth Business Trust SFC Self-Financing CommunitiesSME Small and medium enterpriseUSAID United States Agency for International DevelopmentYBI Youth Business International

Acronyms & Abbreviations

Giordano Dell’Amore Microfinance Good Practices Europe Award 2010

The Experiences ofthe Finalists 2010 andWinners 2009

This book presents the summaries of the five experiences judged to be the best among the candidates for the second edition of the Giordano Dell’Amore Microfinance Good Practices Europe Award created in collaboration with the European Microfinance Network; we publish also past year winners’ accounts of activities subsequent to the awarding of the prize.The aim of the award is not just to identify excellence in the field, but also to open up a debate and encourage discussion, enabling closer examination of the methodologies, tools and social impact of microfinance in Europe. In this second edition of the Award we focus on four principal aspects corresponding to the criteria chosen for the evaluation of the applications: the innovative character of the experiences submitted; the mechanisms provided to assure the sustainability of the microfinance services offered; the actual and potential impact of the microfinance initiative with specific focus on poor and marginalized people; the replication process, namely the way in which the initiative submitted could be replicated in different contexts to solve the same kind of problems.In consideration of the fact that the European Union has declared 2010 the European Year for Combating Poverty and Social Exclusion, particular attention has been paid to those initiatives explicitly focused on the fight against poverty and social exclusion.In this document we present the activity of those European microfinance institutions that contribute to offer to people socially and financially excluded, a condition of disadvantage increasingly common even in countries considered rich, an opportunity to access the economic initiative.

fdga award 2010

Documents