The FIDES Track Record

In many developing countries, financial institutions targeting farmers and small entrepreneurs have failed. Microfinance banks have proven to be a successful vehicle but mainly for urban clients. Only a few have succeeded in providing reliable services to rural and urban poor on a larger scale.

Firm in the belief that microfinance institutions can be sustainable and at the same time reach a considerable number of borrowers and savers, even in rural areas, FIDES has been innovative in developing approaches for clients in rural areas. The approaches have included technical and organizational innovations that allow the reduction of transaction costs and ensure careful risk management. An approach based on sustainable institution building and strong operations can lead to excellent repayment rates, outreach to under-serviced market segments, significant growth capacity and financial viability. Such institutions have had a considerable impact on income-generating activities and job creation.

FIDES has been involved in leading initiatives in Africa and in some of the most important rural microfinance systems in Eastern Europe. Examples of successful greenfield creations of microfinance institutions by FIDES are:

• ALBANIA: Initiated as a World Bank project (the Rural Finance Fund, building a network of the village-based Savings and Credit Associations), the Albanian Savings and Credit Union (ASCU) today represent one of the biggest microfinance systems in Eastern Europe, with more than 200 outlets covering most of the country. Targeted beneficiaries are farmers and small entrepreneurs who started their business after the dismantling of collective farms in 1992. FIDES was instrumental in the development of the Rural Finance Fund and its successor, the ASCU.
• CÔTE D'IVOIRE: FIDES was involved in the creation of savings and credit associations (SCAs) for women in the Northern Savannah Region, which subsequently grouped into a federation (FAFEC) under the provision of the Mutual Financial Organizations Act. While the FAFEC remained active in the beginning of the political crisis and military conflict, the program is currently inactive. The experience gained in the north has shown nonetheless that FIDES can be successful there.
• MOLDOVA: Created with technical assistance from FIDES, Moldova Microfinance Alliance (MMA), a non-governmental organization, was founded in 1997 with the mission to create and develop new institutions: credit and savings associations, cooperatives, micro and small-scale enterprises. MMA provided these institutions with on-site advice, training and assistance in obtaining financial resources in order to stimulate private initiative, social and economic development. In 2003, in recognition of innovation in financial services for very poor clients, MMA won The Rural Pro-Poor Innovation Award provided by The Consultative Group to Assist the Poorest (CGAP). In the same year, the Soros Foundation Moldova and the MMA went on to establish MICROINVEST to provide development finance to small business initiatives in rural and urban areas in the Republic of Moldova. MICROINVEST took over the regional staff and branch network of MMA, which during its lifetime, 1997-2003, formed 235 Savings and Credit Associations ("SCAs").
• MALI: FIDES supported a network of regional MFIs created in the North of the country. A significant effort was made to train staff and governing bodies in an environment where no banks existed previously. Expansion of the network was interrupted in 2009 due to a dramatically deteriorating security situation in Northern Mali and the detection of a fraud case in one of the banks of the network, which FIDES has worked assiduously with its partners to resolve. In this context, plans to create "Mali Nord Finance" were put on hold.
• ALGERIA: FIDES created in 2008 FIDES Algeria, the first Algerian private company offering access to finance for very small enterprises excluded from the banking sector, designing Sharia-compliant financial products adapted to the values and the social organization of the Ghardaia region. This initiative is supported by GTZ within the Programme de Développement Economique Durable (DEVED). This service company was created in partnership with Bank al Baraka, an Algerian Islamic bank. The first credits were disbursed in November 2008. Credits are guaranteed by an international guarantee put into place by FIDES and international partners.
• NAMIBIA: FIDES Bank Namibia, the result of the transformation of the Ohangwena Pilot Program, received its banking license in February 2010. It targeted the needs of the rural population in the North of Namibia, which was excluded for the most part from access to the formal banking system. FIDES Bank Namibia is the first microfinance bank in Namibia, the first bank whose headquarters is in the North and the first bank created since independence. The Bank aims to contribute with reliable and sustainable solutions to facilitating economic development in Namibia by creating access to financial services for people living in rural areas in northern Namibia who are excluded from the formal banking system
• SENEGAL: St Louis Finances is a "Société anyonyme" headquarterd in St. Louis, Senegal, operating within the framework of the "Règlementation des Systèmes Financiers Décentralisés". The company's objective is to expand finaical services to clients in rural and semi-urban areas of Senegal that are normally excluded from the formal financiao sector be developing appropriate products and innovative marketing channels. Operations began in May 2011 and the ramping up of microfinance (group) operations is following the institution's business plan.

All the programs developed with FIDES participation put a focus on achieving repayment rates close to 100%; strong client outreach capacity; financial sustainability as a main objective after an initial growth stage; reliable institution-building strategy; clear governance structures; and strong links with the commercial banking sector.

The Pipeline

The FIDES pipeline includes the following initiatives in preparation:

• GHANA: FIDES is in the process of creating a rural finance institution in northern Ghana: FIDES Ghana Savings and Loan Company. The objective of this initiative is to create an MFI capitalized by institutional investors whose mission is to expand financial services in the under-served market of northern Ghana. Under the sponsorship of SMH, the Business Plan has been submitted to investors for due diligence. The licensing process with the Bank of Ghana is foreseen to begin as soon as technical assistance and equity funding have been secured.
• NAMIBIA: FIDES is preparing the launch of an initiative introducing basic insurance services to the low-income populations of northern Namibia and beyond. An eighteen-month pilot program started in the second quarter of 2011. The longer-term goal is the establishment of an autonomous insurance company, FIDES Insurance Namibia, serving the low-income market in Namibia with an increasing range of appropriate products.
• ALBANIA: FIDES is supporting ASCU in preparations to launch a rural bank specializing in rural and semi-urban microfinance. The bank will work through the ASCU Savings and Credit Associations (SCAs) to refinance the SCAs and to sell more complex products, with the SCAs acting as agents on behalf of the bank. The five year Business Plan has been submitted to SMH and other potential investors. FIDES will provide management capacity to the bank through a Management Services Contract. The biggest challenge is at present the securing of the banking license.
• PALESTINE: FIDES will launch a 12-months pilot test of savings products in a MFI in Palestine in the fourth quarter of 2011. This market is evolving, with new donor policies pushing the institutions towards commercialization and sustainability. A new banking legislation and regulation to be finalized is including microfinance and providing a route for deposit collection. The pilot project of FIDES has the objective to support institutions not only to increase their outreach and financial sustainability but also to develop new products allowing them to respond to the client needs, notably savings products.
• SENEGAL: FIDES will conduct a pilot project to introduce better and more inclusive financial services in rural areas of Senegal through the use of mobile phone technology. During the 12-month pilot phase in 2011/2012, the necessary infrastructure will be put into place on a limited scale, front office and back office systems as well as products will be modified to accommodate the test, staff training will take place and client capability support will be provided. The project will be implemented in two MFIs in Senegal, one of them being Saint Louis Finances SA.
• MOZAMBIQUE: FIDES is in the process to prepare the business plan for a new rural MFI to be started in 2012. On one side the uncovered demand for financial services in rural areas is considerable; on the other side Bank of Mozambique is favorable to the creation of a more inclusive financial system.