Offering services that promote people's development through financial inclusion
In 2018, Africa remains a continent with very low banking. In countries where Societe Generale is present, banking rates range from 8% (Burkina Faso) to more than 60% (Maghreb countries).
Societe Generale has for many decades been a major player in local economies, with the aim of participating in the financial inclusion of populations.
At the same time, for some 15 years, microfinance operators have endeavored to serve people who have been out of the banking system or who have been excluded from traditional banking models by giving them access to financial services. The ambition of these operators is to expand the scope of their activities and make them sustainable. Financing the activities of these microfinance actors is a key issue for their sustainability.
Conscious that the action of the banks to increase the banking industry encountered some limits, and faced with the emergence of these new actors of the microfinance, Societe Generale decided very early to participate in the development of this sector and to contribute by this means and therefore indirectly to the banking of the local population or to the development of very small businesses and SMEs. It has been acting on this sector for more than 10 years and in different forms:
- The provision of credit lines to meet the financing needs of "bankable" microfinance institutions by providing them with local currency resources and generally by positioning themselves as sustainable banking partners for the institutions they support.
- Creation and support as a founding shareholder of five microfinance institutions in Madagascar, Cameroon, Ghana, Côte d'Ivoire and Burkina Faso by local Societe Generale subsidiaries alongside bilateral or multilateral institutions development (AFD, IFC, FMO etc.). These institutions now serve 400,000 clients, of whom approximately 20% are borrowers (with average outstanding loans of less than € 2,500).
Thus Societe Generale has played a unique role in the microfinance sector and has acquired from these partners a solid experience which is reflected today in:
- Outstanding loans amounting to € 60 million, which represents around 10% of the gap between loans and deposits of the institutions present in its African perimeter;
- A synergy partnership with Advans Group and its African subsidiaries;
- A close relationship with Baobab group (GENEFINANCE, a subsidiary of Societe Generale, was one of the founding shareholders of Microcred Holding in 2005 - a stake sold in April 2016).
It is in particular his knowledge of the local economic fabric and the mechanisms of MFIs that reinforced Societe Generale's conviction that there is a real need in terms of alternative banking models and the place for all to accelerate financial inclusion in Africa.
This is why Societe Generale, in parallel with these indirect contributions via MFIs, is developing services of its own, such as the Manko model in Senegal since 2012 or its mobile banking model YUP 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 has doubled 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 goal of 1 million wallets and 8,000 agents in 2020 and this goal is confirmed.
In the fourth quarter of 2018, YUP already has nearly 300,000 customers (including an estimated 70% of unbanked) and more than 4,500 agents referenced in 5 countries: Senegal, Côte d'Ivoire, Burkina Faso, Cameroon and Ghana. YUP will be deployed in 3 other countries in early 2019.
YUP will continue to gain functionality and is committed to opening credit and savings to a larger customer base.
This will be the case with a payday advance offer via Manko in Senegal, or the granting of credit based on a behavioral analysis on the YUP wallet (via a predictive algorithm).
YUP will also be able to enlist and include rural people.
First concrete examples already exist: operation with ACF in Northeastern Senegal, farmers and planters in remote areas of Burkina Faso with FAO, wage payments on plantations. An enhanced connectivity solution is also being tested with the statup Bebound, allowing remote populations to enlist or do their operations even if the area is not covered by a quality internet (if at all).
Financial inclusion will also include social inclusion through new non-financial services.
Thus YUP has signed partnerships with Universal Music, Youscribe, MyJouleBox, and supports and incubates start-ups (InvestEd, Weebi, Cooffa, Dothan Group) that allow YUP to bring new uses.
YUP and Societe Generale subsidiaries work together to make banking customers vectors of YUP's virality, and therefore financial inclusion.
Synergies between YUP and the banking networks are numerous, for instance:
- The Mobile Banking application "Connect", which equips the clients of the Societe Generale subsidiaries in the sub-region, allowing them to directly supply thei YUP wallet,
- the possibility of distributing Societe Generale products via the YUP channel,
- or the financial support of the YUP agents, factor of loyalty and emergence of agents or operators..