The microcredit activity is part of the broader microfinance framework that includes other financial services such as insurance or savings. It allows a population excluded from the banking system to benefit from loans of generally small amounts .
In addition to operations intended to finance the creation of a business, social microcredit, as proposed by the Red Cross, is mainly used to help people in situations of great precariousness.
The reasons for the bank exclusion
While many microentrepreneurs find it difficult to finance their professional activity with the traditional banking network and too often face funding refusals, it is primarily because the latter considers that the risk is too great .
On the one hand, the bank considers that business contingencies are more important for a new company and, on the other hand, that at the start-up stage, it lacks visibility on the sustainability of the business.
This situation is even more glaring in poor countries where the means of control are sometimes non-existent and there is often no accounting register to assess the risk.
For those who do not know the origins of microcredit, the story of MUHAMMAD YUNNUS deserves to be told. In the sixties, this young Pakistani student in the United States. Back in Bangladesh in 1972, he first taught economics at a university in the country.
It was then that he met a woman whose business was to make bamboo chairs. It was forced every day to borrow from a usurer the amount needed to buy the raw material it needed. The chairs were then resold to his lender for a profit of barely two cents a day. Muhammad Yunnus then realizes that the whole economy of the village lives in this way.
He then decides to lend all the women of the village the necessary sum, without interest . The result was immediate. The daily profit finally allows them to live with dignity. Thanks on the one hand to the economy realized on the interests that they do not have anymore to pay to their lender, but mainly because they are free to sell their production on the markets at a cheaper price than they do not sold it to the usurer. The microcredit was born.
The Grameen Bank
In 1977, with the help of a banker friend and his students. MUHAM® YUNNUS then decides to create a bank in his village. The Grameen Bank will soon spread to the whole region and then to the whole country. Today it has 7 million customers, employs 24,000 people and its model has spread to all emerging countries of the planet.
In May 2011, 70-year-old Muhammad Yunnus, in conflict with the Bangladeshi government’s 25 percent stake in the bank, was forced to resign.
The United Nations has declared 2005 the international year of microcredit , proving that the activity is now an instrument to fight against exclusions.
The Role of Associations
Microcredit associations are at the heart of the system. These are most often non-governmental organizations (NGOs) that rely on partnerships with the traditional banking network, but also public authorities across the state and local communities.
Banks benefit from a network of analysis and monitoring of loan applications that allow them to make significant savings and better understand the risk.
To date, there are about 10,000 institutions serving 120 million customers worldwide. In France, the number and importance of the associations involved in this type of financing show how dynamic this activity is, but also that it has finally found its social and economic benchmarks.
Maria NOWAK, who initiated micro-credit in France, founded ADIE in 1989. The association currently handles between 10,000 and 13,000 cases per year through 130 agencies. It has been recognized as a public utility since 2005 and supports micro-entrepreneurs excluded from the traditional banking network.
But the work of the 450 employees of the association and 1700 volunteers is not limited to analyzing the file and to transmit it to the bank. It also involves providing advice and monitoring micro-entrepreneurs. This role is essential to give maximum chance to the success of projects. It is part of the European Microfinance Network.
Created a little over twenty years ago, the France Active association is chaired by Christian SAUTTER. It works with people in difficulty, wanting to create their own business and usually excluded from the banking network.
But, like ADIE, its role is not limited to transmitting loan files. It offers support and follow-up capable of giving every opportunity to the project of the entrepreneur. It operates through a network of about forty “territorial funds” with 500 advisers and more than 2000 volunteers. It benefits from the support of the State and the local authorities, but also from the Caisse de Dépôts et Consignations.
Created in 1988, La Nef presents itself as a solidarity finance cooperative. It also develops a solidarity savings activity and benefits from the approval of the Banque de France, which allows it to directly grant loans to micro-entrepreneurs and associations. With its 31,000 members, La Nef plays a important role in microfinance in France. It is part of the European Federation of Finance and Ethical Banks and Alternatives and participates in the establishment of an Ethical Bank at European level.
The France Initiative association is present throughout France through 230 structures. With a very large network of volunteers (more than 14,000), she brings her expertise and support to entrepreneurs who are excluded from the banking system. Chaired by Louis SCHWEITZER, she has forged strong partnerships with local communities . Each local platform enjoys a real independence and is federated within the association.
Some organizations, such as the Red Cross, offer a social microcredit, that is to say a personal loan, of up to 3,000 euros. It is mainly intended to help people in precarious situations.