2007 • 2 - English edition
Microfinance in Georgia
Social Performance: top priority for 2007
Oikocredit’s mission is to provide credit for development. However, random investment does not necessarily lead to effective development. To ensure Oikocredit makes a real difference, we evaluate our loans in terms of social performance, and we are evaluating on an ever-broader scale. read further on page 5
When selecting projects, Oikocredit always carefully considers whether they meet its financing criteria. Loans, for example, must reach groups of disadvantaged people in developing countries, cooperatives or enterprises with real potential for broad social impact. Initiatives must be financially sustainable with suitable management. We favour especially projects with women in management or responsible for implementing policy and devote special attention to any environmental consequences and animal welfare. With an ever-growing portfolio, Oikocredit cannot forget to track the impact of its loans. Accordingly, we have recently taken several initiatives to professionalise further our social performance and monitoring. Testimonials by people like Ketino Parjiani from Georgia or from the Opportunity International Bank in Malawi (both on page 3) provide an insight into the beneficiaries’ lives. And constant evaluation will make it easier for us to monitor the social performance of our partners. Social performance was given top priority in 2007 because it is in the interest of social investors. But most of all, because Oikocredit loans should make a real difference to the lives of disadvantaged people.
Aleksandr Lakubian has a loan with Constanta, an MFI partner of Oikocredit in Georgia. He owns a shoe stall where he sells locally manufactured shoes assisted by his two sons.
2 Editorial 3 Projects: Georgia and Malawi 4 Events 5 Social Performance 6 Product news 7 Facts and Figures 8 Portrait of an investor, Sophie Haesen 8 Colophon and addresses
Corporate Web News
On 5 June 2007 we sent out for the first time our electronic newsletter, the Oikocredit Ezine. The Ezine will be published four times a year and will entail news about Oikocredit, our figures, project partners and information about support associations. If you would like to receive it, please send an email to email@example.com or go to: www.oikocredit.org/ezine to subscribe.
RDC Central America and the Caribbean has a new website! Please visit www.oikocredit.org/rm/cr For the digital version of Oikocredit’s Social Review 2006, please check www.oikocredit.org
Projects Georgia, Crystal Fund
Ketino Parjiani is a refugee from Abkhazia. She lost her husband in the war and fled to Tbilisi with her son and daughter in 1993. When they first arrived, they had nothing, and the compensation the government gave to all internally displaced people was not enough to build up their lives. To supplement the money she received, she took out her first microloan of 500 US dollars, provided by an organisation specialised in assisting internally displaced people. Later she moved to Kutaisi for business, where she received her first loan from Crystal Fund. Crystal Fund is a small regional MFI in the centre of Georgia, with three branch offices and a portfolio of 1.7 million US dollars. It provides loans and credit lines to 4,000 urban and peri-urban micro-entrepreneurs. The organisation played an important role in serving internally displaced peoKetino’s children still live in Tbilisi, where they are studying at the university. She now runs a wallpaper shop in the Kutaisi market where she sells all kinds of fashionable wallpaper. She received her first loan of 1,000 US dollars from Crystal in 2004 for one year at 3% per month. She then received a second of 2,000 US dollars for 15 months at 2.5% per month and now has her third loan of 3,000 US dollars at 2% per month for one year. The loans from Crystal have allowed her to expand her business. She now has an employee and buys her goods in Tbilisi and Turkey.
Ketino Parjiani in her wallpaper shop in Kutaisi market
Oikocredit loans to Chrystal Fund: 300,000 USD Approved: April 2006 Disbursed: June-September 2006
ple from the Abkhazia region. Oikocredit provided Crystal Fund with a loan of 300,000 US dollars in 2006.
Malawi, OIBM: my bank
The Opportunity International Bank of Malawi’s (OIBM) slogan is Banki Yanga. In Chichewa, Malawi’s official language, this means: my bank. And that’s exactly what OIBM wants to be: an institution for the people that gives them a better chance to improve their livelihood. The OIBM not only provides loans – it also offers saving opportunities. It believes that stimulating people to save money is an important part of its services. Customers can open a savings account for as little as five euros and those who deposit money at OIBM can be sure that nobody else can touch it. In Malawi, this is important for women as it is customary for women who marry men from the North to lose all their belongings when their husbands die. Any brothers their husband may have are entitled then to claim their “inheritance”. Human rights organisations are looking into the matter but, in the meantime, the most effective solution for these women is to deposit their money on a secure savings account where their brothers-in-law cannot touch it. Learning to save Chabubo Mzuma, loan officer at Satellite Centre 25 in Lilongwe, has a simple yet effective way of demonstrating the benefits of saving money – a ‘play’. The sketch aims to ‘teach’ the group of Tisawoke women with a loan at OIBM about saving. He shows them three empty plastic bottles and a handful of maize. He asks the three women to walk up and down to one of the bottles, which is now ‘their’ own bottle. One woman is allowed to add a handful of maize each time she reaches her bottle. The second adds only a small amount and the third doesn’t add anything at all. After walking up and down several times, the first woman’s bottle is almost full, the second has a half-full bottle and the third is empty. A simple yet effective way of showing how saving works.
Saving course for women with a group loan at OIBM.
Oikocredit loans to OIBM: 350,000 USD Approved: February 2004 Disbursed: August 2004
Day for change
On 5 May, a promotional event known as the ‘Day for Change’ was organised in the Netherlands to support microcredit. The objective is to make people in the Netherlands more familiar with the principles of microcredit and to demonstrate microcredit’s effectiveness as a tool for reducing poverty. Another goal is to collect money to contribute to the growing need of building capacity for providing microfinance. This includes training loan officers and helping them to make a living, or providing technical assistance to local banks that disburse loans to project partners. To familiarise children with microcredit, eleven and twelveyear-old pupils in some 150 primary schools were given a 20 euros microloan for investment in a microenterprise they would have to run. The Dutch Minister of Development Cooperation, Bert Koenders, promised to double the amount the children made with this loan. A popular Dutch television programme also paid special attention to day for Change on 5 and 6 May. The money collected, some 250,000 euros so far, will be granted to project partners of Oikocredit and seven other large Dutch organisations involved in microfinance. For more information, go to www.dayforchange.nl
Dutch primary school pupils receive a microloan agreement from the Dutch Minister of Development Cooperation, Bert Koenders.
BiD in Peru
Business in Development, BiD, is a business plan competition that aims at contributing via private initiatives to the millennium development goals. Initiated by NCDO, a Dutch NGO, the competition has many Netherlands-based supporters such as Oikocredit International since 2006. The BiD is now extending its activities by developing local BiD competitions in developing countries. It will allow to facilitate participation in the competition from local business initiatives and further extend its network of entrepreneurs, investors and experts. The first new BiD network will start in Peru with a partnership with Oikocredit’s regional office. Oikocredit will assist in handling and monitoring investments in SMEs, channelled through the BiD Network.
World Fair Trade Day
Kids need fair trade
The International Fair Trade Association (IFAT) is the global association of 300 fair trade organisations in 70 countries around the world. Each year, IFAT celebrates World Fair Trade Day on the second Saturday in May. The day’s objective is to celebrate with all fair trade organisations around the world, encourage people to buy more fair trade goods and to stimulate conventional companies to sell more fair trade products. This year’s celebration was on 12 May and the theme was “Kids and fair trade”. Many governmental programmes around the world are ineffective as they fail to tackle the root of child labour: poverty. In 2004, there were 246 million children labourers aged between five and seventeen, 73 million of whom were less than 10 years old. Fair trade aims to reduce poverty, one of the main causes of child labour. Oikocredit will focus its communication on fair trade in 2008 and will take part in the World Fair Trade Day celebrations on 10 May 2008.
One of the 2006 prizewinners, Fairmail, in Peru: packing fair trade postcards made by underprivileged Peruvian teenagers. For more info: www.fairmail.info
“Beneficiaries must really benefit”
Social Performance: top priority
currently conducting a survey with social investors from around the world as to what they find important in social performance. “The idea for us is to learn more about what microfinance donors and investors are looking for in social performance. Although there is great interest in social performance in the microfinance industry, there is still a mismatch between what many MFIs currently report in their systems and what donors and other social investment funds require for their indiviual and corporate investors. We need to improve the dialogue between MFIs and social investors to ensure that monitoring systems meet the needs of both. The group I am chairing hopes to contribute to this process by better understanding the specific demands on the social investor’s side.” Measuring changes According to Rubio, an increasing number of MFIs are upgrading their systems to improve monitoring of their social performance. A good example is Oikocredit’s partner in Peru, EDPYME Confianza, who has recently undergone a social audit to evaluate their current social performance systems. The results of this audit will include a comprehensive plan to increase Confianza’s capacity to report impact on the lives of their clients from the financial services that they provide. At the regional office of the Philippines, a study took place on the indicative impact of microfinance. The study was cofinanced by ICCO, INAFI (International Network of Alternative Financial Institutions), ICSI (Institute of Church and Social Issues) and Oikocredit. The study aimed to assess the impact of microfinance over the last ten years in terms of contributing to the poverty reduction in the Philippines in general and in terms of increased incomes and overall improvement of quality of life for the Filipino poor in particular. Ten MFIs in the Philippines were being evaluated for this purpose: five top MFIs and five bottom MFIs, in terms of assets. The outcome of the survey will be ready this summer.
Luz Escandor is a client of PALFSI, the Philippines. PALFSI is subject to an impact assessment study of Oikocredit this year.
Continued from the cover Oikocredit’s mission is to provide credit for development. However, random investment does not necessarily lead to effective development. To ensure Oikocredit makes a real difference, we evaluate our loans in terms of social performance, and we are evaluating on an ever-broader scale. Managing and assessing social performance has been an increasingly important focus for Oikocredit in recent years and is the top priority for 2007. An example of our social performance management is our new system for tracking and monitoring microfinance institutions (MFIs) partners. The system’s permanent monitors include indicators such as outreach, women’s involvement, average loan size of the MFI’s clients, total and average client deposit and contribution to job creation. Initiatives At Oikocredit International, Lourdes Ledesma, Manager Credit Monitoring and Administration, coordinates the social performance initiatives: “Oikocredit
seeks to empower people to improve their lives and this is the impetus for social performance management. Are we as an organisation empowering people? Are people’s lives changing for the better with access to financial resources? We have established a database for a number of social performance indicators at both the institutional and client level. Efforts are ongoing to improve on this database. It is only through regular monitoring that we can begin to systematically and credibly answer questions relating to social impact. This process requires the commitment of our colleagues at the regional and country offices, the collaboration of our project partners and the support of clients as well.” Social investors “Commitment at all levels is important and many of our regional offices are involved in different initiatives related to social performance”, says Ledesma. Frank Rubio, Regional Manager South America Northern Region, for instance, is the Chairman of the CGAP Social Performance Task Force, an international working group of donors and social investors in the microfinance sector. The group is
Product news Cooperation with banks
In the early days, support associations and other direct members were the only sources of funding for Oikocredit. Now, however, we see greater cooperation between support associations and commercial banks. The reason for the increased cooperation is twofold. On the one hand, support associations and local banks realise it is beneficial for both parties: banks can inform about, or offer their clients socially responsible investments and Oikocredit reaches a greater group of investors otherwise unattainable. There are several recent examples. The support association Austria and Raiffeisen Bank organised a joint seminar about microcredit in 2006. In Germany, GLS bank contacted German support associations: the bank offers microcredit in Germany and wanted to offer their clients investments in microfinance internationally through Oikocredit. In Italy, Südtirol, the local Raiffeisen Kasse Lana bank and the local support association developed an Oikocredit savings product. The savings of the clients are used by the bank to buy Oikocredit shares. And finally, in the Netherlands, ING offers its employees and customers investment possibilities in the Oikocredit Nederland Fonds. In some other countries, cooperation with banks is the result of ever-stricter legal regulation. In France for example, rules for suppliers of financial products offer very little leeway. Therefore in France cooperation is presently explored with a cooperative bank. “We expect the cooperation between Oikocredit and local banks to expand further over the coming years. To increase their outreach, more support associations may try to involve banks. But also legal regulation may be an important factor to seek further cooperation. We generally consider this a positive development. It will bring Oikocredit more brand recognition, we may reach out to new target groups and it is also a sign that we are seen as a professional player by commercial banks,” says Ben Simmes, Director of Membership and Investments for Oikocredit International.
Partnership with ING
from partners like Opportunity International, Women’s World Banking and Oikocredit. The local microfinance institution makes sure that they have someone available to work together with the ING advisor so that knowledge is transferred once the advisor has left. Recent examples include improving the IT infrastructure at Oikocredit Netherlands’ office and sharing marketing advice with Banco Opportunidade in Mozambique. Between 2004 and 2005, 23 ING advisors were deployed in 15 projects, seven of which were in the Netherlands and eight in other countries. In 2006, 22 ING advisors were active in 18 projects. And so far in 2007, advisors have been deployed in 10 projects. Sjoukje Dijkstra, Product Manager Wholesale at ING: “Now that I have seen it with my own eyes, and spoken to the people who benefit from it, I have a very clear image of what microfinance is all about. It is tangible and I am convinced of its effectiveness.”
South Africa: Partnership for development
Developing our portfolio in South Africa remains a major challenge for the regional Office in Pretoria. These challenges have been shared with the Oikocredit members during the AGM on 15 June. Oikocredit has partnerships that could help overcome the difficulties in developing the performance of our portfolio locally, such as in microfinance with institutions like the French SIDI”.
One of the customers of Banco Opportunidade in Mozambique.
To contribute to the further development of microfinancing, ING Microfinance Support sends ING employees on assignments to provide technical project assistance in the Netherlands and abroad. ING receives project requests
Facts & Figures
12 countries with highest capital outstanding
(per 30 April 2007)
Approvals and Disbursals 2006-2007
60 55 50
18 16 14 12
35 30 25 20 15 10
10 8 6 4 2 0
ag u Bo a liv Bu ia lg ar ia In di a Pe r M u ex ic o Gh Bo Phi ana sn lip ia pin an es d He rz . K Co eny st a a Ri ca Ch ile Ni ca r
(per 30 April 2007)
Total share capital (mln €) Number of project partners Active countries MFI* partners (57% of portfolio) Clients reached by MFIs* (appr.) Clients reached by Oikocredit**
285 586 67 333 10 mln 603,146
Approvals 2007 Approvals 2006
Disbursals 2007 Disbursals 2006
Project partners by sector
(of total outstanding - € 223.5 million per 31 December 2006)
Latest project disbursals
Financial services (incl. MFIs*) 76.7%
Milamdec Foundation Inc.
10,000,000 PHP (154,669 EUR) MFI* that provides small credit and other financial services to 33,000 enterprising poor women in Mindanao.
250,000 USD (183,540 EUR) Foundation that provides financial resources to the micro and small entrepreneurial sector with special emphasis in rural communities in the east of the country. Lifestock and fishery 0.8% Agriculture & food processing 10.7% Other 1.3% (Fair) Trade 4.6% Health care and education 3.0% Manu- Construction facturing & real estate 2.2% 0.7%
Cooperative d'Epargne et de Credit de Fass Boye
16,500,000 XOF (25,154 EUR) Savings and Credit cooperative which plays a dynamic role in the horticultural sector.
Agricultural Co-op Vazrazhdane
100,000 EUR Agricultural cooperative that produces, processes and trades grain crops as wheat and maize and oilbearing crops such as sunflower. Serving 600 small landowners to make individual parcels of land productive.
Project funding MFIs* by charter
(of total outstanding - € 167.7 million per 31 December 2006) Non-bank financial institution 32.8% NGOs 25.0%
Planned and actual inflow of member capital 2007 vs 2004 - 2005 - 2006
50 45 40 35
Company / corporation 5.5%
30 25 20 15 10 5 0
Project funding by region
(of total outstanding - € 223.5 million per 31 December 2006) Latin America 43.7% Africa 18.0% Asia 18.2%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Other regions 1.8%
Central & Eastern Europe 18.3%
* MFI = microfinance institution. ** Clients potentially reached by the capital lent to our MFI partners.
Portrait Portrait of an investor
Interview with Sophie Haesen, who lives in the Alsace, France with her husband and four children: Anna, Friederike, Esther and Alexander (1016 years). Why did you opt for a socially-responsible investment? ‘Our children regularly received money from grandparents, uncles, aunts, for example when they were baptised. First, we put the money in a regular bank account, but we were uncomfortable with the way the Sophie Haesen bank approached us and the products they kept on offering the children. So we decided to invest our money in Oikocredit. We are quite privileged, which drives us to solidarity with those who are less privileged. We live in a ‘luxury bubble’. When we complain, it’s about trivial things.’ What triggered you to invest in Oikocredit shares? ‘We heard about Oikocredit through our parish, which regularly publishes small announcements about Oikocredit in its leaflet. We looked for more detailed information on the internet and were enthusiastic about what we found and about the organisation.’ What made you so enthusiastic? ‘We don’t like the idea of giving money to people. It creates an imbalance between us, the generous donor, and the less privileged. By offering loans, the relationship is more equal and enhances the beneficiary’s sense of dignity. We believe in the microcredit system. We received pictures of Oikocredit projects from the support association in our region. One of the pictures showed a microentrepreneur who had been able to buy a refrigerator thanks to an Oikocredit loan. It made the children understand the importance of small accomplishments.’ Why did you involve the children in the investment? ‘From a pedagogic perspective, we think it’s very important to show our children that we are quite privileged.’ How long have you been investing in Oikocredit? ‘Since 2002, when our son was ten years old. Initially, we invested money sporadically when the children received money from family relatives. As of the age of ten, we started regularly investing a fixed amount of money for each child. Our youngest daughter is now ten so that we are now all members of Oikocredit.’
Oikocredit supports productive enterprises of disadvantaged people all over the world with loans, guarantees and investments. Oikocredit offers investors a high social return and historically Oikocredit has had a stable financial return, but this is no guarantee for the future. Information regarding the issuing of Oikocredit shares can be found in the Prospectus (in English only), which is available at the Oikocredit International Office and will be sent to you upon request. The prospectus is available and valid only where permitted by law. More information can be obtained through our website: www.oikocredit.org
Interested in participating in Oikocredit? Churches and church-related organisations can become direct members and can invest directly in Oikocredit. Please contact the Oikocredit International Office at this address:
P.O. Box 2136, 3800 CC Amersfoort, the Netherlands T: +31 33 422 40 40 F: +31 33 465 03 36 E: firstname.lastname@example.org W: www.oikocredit.org
All others can participate through one of the Support Associations nearest to them:
First Oikocredit Canada, Mississauga T: +1 905 808 2160 E: email@example.com Oikocredit British Columbia, Victoria T: +1 250 385 1538 E: firstname.lastname@example.org Oikocredit Atlantic Cooperative, Dartmouth T: +1 902 466 40 48 E: email@example.com
Oikocredit UK South West, Bristol T: +44 117 9743661 E: firstname.lastname@example.org
United States of America:
Oikocredit USA, Washington D.C. T: +1 202 265 06 07 E: email@example.com Northern California Support Association, Sacramento T: +1 916 428 9403 E: firstname.lastname@example.org
Oikocredit Info is a newsletter published by Oikocredit, Ecumenical Development Cooperative Society U.A. Oikocredit. Info is printed on wood-free offset paper, produced chlorine-free, from production wood. The newsletter is distributed free of charge to those who want to be kept informed of our activities. Please visit our website for more information: www.oikocredit.org Editorial Team: Anette Djajadiningrat, Mark Gray, Juliette de Voogd, Karima Wardak Editor: Aline Uit den Boogaart Photographs: Fairmail, Family Haesen, ING, Oikocredit International, Doon van de Ven Production: Xplore - the Netherlands Printing: Albe - Antwerp, Belgium Edition: 8,400 copies
Western Pennsylvania Support Association, Pittsburgh T: +1 412 731 40 84 E: email@example.com