Across the world, microfinance has often been portrayed as a success story given its ability to contribute to economic development and poverty reduction on the basis of sustainable financial results. The impact studies carried out in recent years and the gradual clarification of microfinance institutions’ economic models have resulted in a more realistic vision of the sector, which is positive yet nuanced.
So what is our assessment of this particular activity in France? Besides the professional microinsurance activity, carried out by the Entrepreneurs de la Cité Foundation, most microfinance in France is in the form of microcredit loans. These microcredit loans were developed in the 1980s specifically for professional purposes. From 2005 onwards, personal microcredit loans began to appear, coinciding with the creation of the Fonds de Cohésion Sociale[1] (Social Cohesion Fund).
If we look first at the volume of activity, we are happy to report that its annual growth has been positive since the very beginning, with total outstandings[2] having increased by an average of an annual 10% in recent years. If we look at the number of microcredit loans granted, we can see that the sum of personal microcredit loans, combined with the activity of France Active, Initiative France and Adie, represents a total of 56,000 microcredit or similar loans, of which three quarters were issued by cooperative banks[3]. This is admittedly a significant amount and yet –and here is the nuance– it is still less than half the need estimated by the General Inspectorate of Finance[4].
The reference studies, carried out by France Stratégie[5] for professional microcredit loans and by Caisse des Dépôts[6] for personal microcredit loans, support the social and economic utility of microcredit in France. This is shown by the high employability rate of the borrowers: 91% for entrepreneurs and 65% for individuals. However, these figures should not obscure the fact that 60% of professional borrowers consider the income they make from their activities to be insufficient and that merely over one third of individual borrowers have seen their fiscal situation improve. A stocktaking exercise that is linked to the macroeconomic context and the situation of the labour market in France, which does not detract from the effectiveness of microcredit loans at the microeconomic level.
French microcredit players have all tried in a realistic and decided manner, each in their own way, to expand their range of services, and make them better and more targeted, in order to increase their impact. Without claiming to be exhaustive, we can cite France Active‘s “Cap’Jeunes” programme, Initiative France‘s “initiatives remarquables” or Adie’s “micro-franchise solidaire“. In terms of personal microcredit loans, the Caisses d’Épargne and Renault, in partnership with Action Tank Entreprise et Pauvreté, have developed a car rental offer, financed through microcredit, to enable borrowers to gain access to a new vehicle thus avoiding the difficulties caused by second-hand vehicles in poor condition.
A myriad of examples from an innovative and dynamic sector, whose progress continues sheltered from the classic media spotlight of the early years.
Florence Raineix
Director of the Fédération nationale des Caisses d’Épargne
[1] A guarantee fund managed by the Caisse des Dépôts.
[2] Source: Observatoire de la microfinance (currently the observatory for banking inclusion).
[3] Cooperative bank: Institution in which the customers are owners, and are both business partners and users
[4] Source: Le microcrédit, IGF Report No. 2009-M-085-03, 2009.
[5] Source: Microcrédit professionnel, a BIT study, France Stratégie and CSA, 2014.
[6] Source: Étude d’impact du microcrédit personnel, Caisse des Dépôts, 2010.
This article was published in the 2017 Microfinance Barometer (download).