Offering services that promote people's development through financial inclusion
In 2020, Africa remains a continent with very few banks with, in the countries where Societe Generale is present, bank penetration rates ranging from 8% (Burkina Faso) to more than 60% (Maghreb countries). 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. These institutions in which SG is still a shareholder were serving at the end of 2019 ~520,000 clients of which about 20% were borrowing clients (with an average outstanding loan of less than €2,200).
- 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, Société Générale'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. Société Générale Group's exposure exceeds €85 million.
It is notably its knowledge of the local economic fabric and the mechanisms of MFIs that has reinforced Societe Generale's conviction that there is a real need in terms of alternative banking models and room for all to accelerate financial inclusion in Africa.
This is why Societe Generale is developing, alongside these indirect contributions via MFIs, its own services such as its YUP mobile banking model launched in 2017.
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, Cofina, etc.) or in an ALM management approach to offset the volatility of deposits with long-term financing. Societe Generale will double its outstanding amounts by 2022.
At the same time, the Group will position itself as a preferred partner for corporate finance operations at subsidiaries or holding companies of 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.
Simple and accessible quasi-bank products for a wide population today majoritarily unbanked thanks to YUP
YUP was launched with a target of 1 million wallets and 8,000 agents in 2020 and this target has been confirmed.
In the third quarter of 2020, YUP already has close to 2 million customers (of which an estimated 70% are unbanked) and more than 16,000 registered agents in 7 countries: Senegal, Ivory Coast, Burkina Faso, Cameroon, Ghana, Madagascar and Guinea.
YUP will also be able to enlist and include rural populations.
Many concrete examples already exist: operation with ACF in the North-East of Senegal, farmers and planters in remote areas of Burkina Faso with FAO, payment of salaries on plantations, multiple payments to beneficiaries of MSF teams in Cameroon and Senegal. In addition, partnerships with governmental organizations such as the National Agency for Economic and Social Inclusion (ANIES) in Guinea allows for financial inclusion in the most remote areas of the state.
YUP and Societe Generale subsidiaries are working together to make bank clients vectors of YUP's virality, and thus of financial inclusion.
The synergies between YUP and the banking networks are numerous, whether through :
- The Mobile Banking application "Connect", which customers of many Société Générale subsidiaries in the sub-region are equipped with, which allows direct provisioning of the YUP wallet,
- the possibility of distributing Société Générale products via the YUP channel,
- or the financial support of YUP agents, a factor of loyalty and emergence of agents or operators.