DID and BIO join to help develop small enterprises in Central and East Africa

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Développement international Desjardins (DID) and the Belgian Investment Company for Developing Countries (BIO) have signed a strategic agreement aimed at helping develop small enterprises in Central and East Africa. The agreement is specifically designed for investment in the entrepreneur financial centers (EFC) set up in that region by DID. The EFCs are specialized financial institutions that provide small entrepreneurs with the financial products and services they need to develop business and fulfill their role in stimulating economic growth and job creation.

The agreement provides for a combination of investment and technical assistance for EFCs, with an initial investment going to an EFC established by DID in Uganda. This institution, which has just opened its doors for business, will meet a crying demand for financing of entrepreneurs in Uganda where up to now such financing has been lacking. The investment will allow the EFC to take a strong position in the large market available to it.

“We are extremely pleased with this new partnership designed to support a strategy that has already produced excellent results to date. In fact, the EFCs set up by DID in Zambia and Tanzania have helped maintain and create over 6000 jobs since their creation* in the East African region. This is a major contribution to local social and economic development,” states Claude Royer, DID Vice President for Investment and Management Contracts.

“We are convinced that this collaboration is an excellent way to implement the BIO mission. DID is, in fact, pursuing the same development goals and has demonstrated that it has solid experience in deploying effective and reliable microfinance institutions in difficult markets. Its expansion strategy covers countries that have established partnerships with the Belgian cooperation program such as the Democratic Republic of Congo, Uganda and Tanzania,” notes Carole Maman, Manager Financial Sector at BIO.

In order to ensure the success of the EFCs it establishes, DID introduces products and methodologies that have already demonstrated their effectiveness in numerous supported community finance institutions. These include lending methods, procedures to assist operations and management, technological solutions, training programs, auditing, supervision and control operations and procedures to organize governance. In addition, to ensure that the EFCs are deeply rooted in the community, DID has developed an EFC client and employee ownership program. A portion of the incentive remuneration offered to EFC clients and borrowers is used as leverage for purchasing shares in the institution.

By helping improve access to financial services tailored to micro-entrepreneurs, this strategic agreement is fully aligned with BIO’s mandate. The partnership will draw on its extensive experience investing in microfinance and other sectors and will benefit from its wide network of partners in Europe and Africa. BIO will also look to maintain a balance between financial return and social performance while keeping a special focus on client protection, as it does for all its projects.

* The EFC set up by DID in Zambia started operations in January of 2009 while the one set up in Tanzania opened its doors in July of 2011. In Zambia, the EFC reached profitability at the start of 2011 after only two years of operations. Today, this institution serves 12,000 entrepreneurs (half of whom are women) and has already established its relevance by moving up to take first place among the microfinance institutions in the country in terms of assets (CAN $13 million, or 40 percent of the market in Zambia). It posts the largest loan portfolio in the sector (CAN $7 million, or 35 percent of the market) and the largest volume of voluntary savings deposits (CAN $3 million, or 58 percent of the market).