Financial inclusion

In 2023, Africa remains a continent with very few banks with, in the countries where Societe Generale is present. In these countries, Societe Generale has been a major player in local economies for many decades and naturally contributes to the financial inclusion of populations.

Microfinance operators make this the core of their mission, by providing access to financial services to populations that remain far from and/or have limited access to banking services. The ambition of these operators is to broaden the scope of their action and ensure its sustainability. Financing their activities is a key issue.

In 2005, faced with the scale of the needs and the emergence of these new microfinance players, Société Générale decided to participate in the development of the sector and to contribute, through them, to the development of banking services for the local population or the development of VSE-SMEs. In this way, the Group has played a role that is quite unique for a commercial bank in the sector. Its intervention has taken several forms:

• Participation in the capital of the Baobab Group (formerly Microcred) when it was founded in 2005 and support as a shareholder of this group, which is particularly well established in African microfinance, until 2016 (transfer of shares to new shareholders). 
• The creation as founding shareholders of five microfinance institutions that have become ex-nihilo reference institutions in their respective countries (AccessBanque Madagascar, Advans Cameroon, Advans Ghana, Advans Côte d'Ivoire and Acep Burkina Faso) alongside bilateral or multilateral development institutions.
• The granting of lines of credit, which respond very concretely to the financing needs of "bankable" microfinance institutions by providing them with resources in local currency, positions our Group as a sustainable banking partner for the institutions it supports.
• Arranging and/or placing bonds in local currency with investors.

     
Today, Societe Generale's African teams are the contacts of choice for microfinance institutions. They draw on their accumulated expertise and proximity to operators to best meet their needs.

The Group's exposure at the end of 2022 exceeded EUR 120m¹, with a target of EUR 200m by the end of 2025.

Societe Generale's commitment with microfinance sector players

The Group's ambition is to capitalize on this franchise by developing relationships with microfinance institutions or groups in good conditions of profitability, risk and compliance.

This ambition is divided into three parts:

1. Increase the Bank's relationship and share in financing the continent's robust institutions by meeting their local debt financing needs (or marginally in capital when a "capital" role makes sense)

It is a necessity in Maghreb where microfinance institutions are not allowed to collect deposits from their clients; less structural, the need is just as significant in sub-Saharan Africa to support growing networks (Advans, Baobab, ACEP, etc.) or in an ALM management approach to offset the volatility of deposits with long-term financing.

On a selective basis, certain subsidiaries of the Société Générale Group in Africa may be involved in equity transactions in order to strengthen links and develop relationships with certain microfinance groups.

2. Build a risk policy on these players and a dedicated device to manage risks taking and monitoring on these players

Credit guidelines for microfinance operators have been validated. This evolution will be accompanied by internal work of commercial organization and management as well as training of the concerned sales and risks teams.

3. Define and implement a compliance system adapted to the Group's ambitions through a dedicated project

Societe Generale's requirements regarding microfinance institutions in the fight against money laundering and terrorist financing will be adjusted on the basis of an internal study of laws and regulations in terms of microfinance in the African scope of the Group. The standards thus defined will be communicated to the client microfinance institutions.

Société Générale's commitment to young people

As a responsible bank, Société Générale is committed to helping young people enter the workforce. With this in mind, the Bank has several initiatives:

• facilitating the financing of students
• intensifying relations with schools
• supporting students through skills sponsorship

Within this framework, Société Générale is committed to providing twice as many student loans between 2022 and 2025, to reach EUR 100 million.

¹ Including EUR 21.2m of bonds arranged by Société Générale but only partially subscribed by the Group, the balance being fully invested.