Dilemmas and compromises
Jesus Angel is a taxi driver in Peru’s capital Lima. As he lacks the money to buy his own taxi, he was happy that Acceso Crediticio provided a loan to do so. Like most of the 11,500 taxistas with an Acceso loan, Jesus’ car runs on natural gas, which produces the least exhaust gases of all fossil fuels, keeping Lima’s air breathable for its ten million inhabitants. Of course, renewable energy would be better still, but its cost would be too high for the taxistas.
Acceso charges the taxistas 500 dollars per month for the loan and for car insurance, while its sister companies offer car maintenance, financial and legal advice. When covid-19 hit Lima, the city went into the longest lockdown in the world, and virtually all taxi drivers were out of work. So was Jesus. His wife is at home to take care of the children, so no money is coming in. The family is in survival mode and can no longer pay for the lease. Since March 2020, the taxistas’ payments have dried up, slashing Acceso’s income, while it has to continue paying ongoing costs and debts, including – but not limited to – BIO’s EUR 8.5 million loan.
Faced with Acceso’s debt servicing difficulties, what should BIO do? Should we provide additional liquidity to help Acceso stay afloat until the taxistas can roam Lima’s streets again? Or should we not risk additional money – keeping in mind that BIO’s capital comes from Belgian taxpayers - as Acceso may not survive the crisis? Eventually, we decided on a moratorium, but the outlook remains uncertain. In the meantime, our thoughts are with the thousands of taxistas and the endangered livelihoods of their families.
With great impact
come great dilemmas and compromises
Battling the covid-crisis is only one of many issues complicating BIO’s aspiration to achieve decent, sustainable livelihoods wherever we invest. Gender and race inequality, climate change and feeding growing populations are a few others. In view of the millions for whom a decent living is still a mirage of sorts, scale is our ambition. In this respect, we can report that in 2019, our investments supported over 4 million jobs.
BIO is invested in large agriculture companies that produce staple foods for over one hundred thousand people. Those companies are major employers in rural areas, providing a steady income to thousands of workers. These always receive at least the legal minimum wage, but often less than a “living wage” needed for a decent livelihood. Raising these wages, however, would make food too expensive for most locals.
Another example: We invested more than EUR 30 million in Azito, the biggest gas-fired energy producer in Côte d’Ivoire. The “second cycle” installed will enable Azito to produce 50% more electricity per tonne of gas, creating another dilemma: should we invest in improving a fossil fuel plant today, giving more people access to electricity and a chance of a better life, while reducing the emissions per MW produced, or should we exclusively invest in renewable energy – knowing that it will be at least another decade – and many more millions – before renewables have achieved the scale needed to provide clean energy to the millions of people in Côte d’Ivoire who don’t have electricity now?
In trying to conciliate our aspirations with the harsh reality, BIO is confronted with such dilemmas almost every day, especially concerning the environmental, social and governance aspects of investments. Our strategy is to require basic standards, to be complied with at all times, like the eight ILO labour conventions, no major environmental pollution, etc. Then, on a case-by-case basis, we assess the potential for improvements over time, and seek to include these in our investment contracts.
This means that, sometimes, we have to accept that, upon initial disbursement, a factory hasn’t stopped discharging dirty water into a river. That some workers only have temporary contracts. That in precolonial times local communities worked the land now owned by the company. Yet, our objective is not only to work with entrepreneurs who already tick all the boxes. We support all those who are trying hard to make a difference under dire circumstances, struggling to meet the highest standards. BIO assists them with investment capital, brokering expertise, business development subsidies and, when invested in equity, through its participation in companies’ governance.
We put our heart and soul in dealing with the dilemmas inherent to the struggle for real change.
Thank you for your (critical) support in this endeavour. Please keep challenging us to find the best solutions to our dilemmas.
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Dr Jessica Schicks is a Senior Investment Officer at BIO, in charge of Financial Institutions. She has a specific focus on digitalisation.
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BIO has granted a € 3 M loan to Advans Côte d’Ivoire and technical assistance of € 123 K.
Mariam Djibo is the managing director of Advans CI. This is her story.
Mcvin Mbesa Muia owns a dairy farm in Kyambutho. She received a loan from the Kenya Women Microfinance Bank, which is supported by REGMIFA.