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Microcredit in France: Adie’s

experience

Milano, october 15th 2013

Long time predominance of wage labor

Welfare State culture

High administrative complexity

High level of social contributions for businesses

High density of bank branches

Microcredit in France : institutional context

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• 13.4 % of population lives under the poverty threshold • 2 230 000 households live on welfare (June 2013)• 1 536 000 employees are considered working poors (2011)• Unemployment rate is 10.8% in Q4 2012

The figures for business creation have grown and reached 549 976 in 2012

Creating its own job is now recognized as a way to fight against economic exclusion

Microcredit in France : employment context

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Business pyramid  : 93% of businesses stay small (less than10 employees)

Secteur informel

7 (0,3%)

25 (0,8%)

163 (5,6%)

984 (33,6%)

1 746 (59,7%)

200 employees and more

Between 50 and199

employees

Between1 and 9 employees

Between10 and

49 employees

0 employee

In thousand

s

Péfecture de Région IDF 15/11/11

Microcredit in France : entrepreneurial context

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2001 2005 2008 2010 Today

BIRTH GROWTHLEGITIMITY MATURITY

May 15th 2001

Non banking microcredit institutions are allowed to borrow from banks to onlend to their clients. (Article L.511-6 du Code monétaire et financier).

August 2nd 2005

Cancellation of the interest rate cap on professional loans for self-employed people

January 18th 2005 Non banking microcredit institutions are allowed to lend for needs related to job integration.Non banking microcredit institutions have access to the National Bank debtor files

August 4th 2008

Non banking microcredit institutions are allowed to disburse professional loans to entrepreneurs, regardless of their social situation

July 1st 2010

Non banking microcredit institutions can borrow from individuals to onlend to their clients

Microcredit in France : legislative context

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Deliver microcredits and business development services to the largest possible group of people with professional needs to create or develop a business and no access to classical bank loans.

Finance micro-entrepreneurs

Deliver BDS to micro-entrepreneurs

Contribute to improve the legislation regarding microcredit and business creation

Adie’s missions

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Unemployed, people on welfare, working poors, micro-entrepreneurs…

Strong activity in the poor suburbs (23% of new clients)

Special effort to target the rural areas (23% of new clients)

Strong activity among migrants (28% of new clients were born abroad)

Historical activity with the gypsy communities (10% of new clients)

All type of economic activities represented …

People excluded from the classical bank loans

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Adie’s clients

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Examples of the variety of activities conducted by Adie’s clients

In 2013 (up to September 30th) :

9051 business microcredits disbursed

1679 family microcredits disbursed

Average business loan: 3650 €

34 000 active clients

734 micro-insurance contracts subscribed

=Business Development Services

+Business Microcredit and

Family Microcredit

€

12 092 persons benefited from at least 1 BDS5842 benefited from at least 2 BDS

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Tools to fight against economical exclusion

+Micro-insurance

Conditions

• No access to traditional bank loans

• Business creation or business existing for less than 5 years

• Total cost of the project < 20 000 €

• Co-signer up to 50% of the loan amount

Product

The business microcredits can finance whatsoever need (working capital, investments, supplies, etc.)•Up to 10 000€ •Interest rate : from 6.76% to 7.76%•Upfront fee: 5%

Possibility to have access to further funding : quasi-equity loans, grants

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Business microcredit

Conditions

• No access to traditional bank loans or credit institutions loans

• Co-signer up to 50% of the loan amount

Product

The family microcredits can only finance job inclusion needs : strong focus on transportation expenses•Up to 3000 € •Interest rate : 7.76%•Upfront fee: up to 5%

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Family microcredit

• Micro-insurance products target new businesses or existing businesses •Products have been tailor-made to meet Adie’s clients needs•Products are delivered through Adie and managed by two insurance companies : Axa and Macif

Multi coverage product for activity which requires commercial premises:•Professional liability•Store related coverage (fire, water damages…)•Damages on professional assets up to 10 K€•Financial support in case of accident or hospitalization

Multi coverage product for activity without premises

Auto Insurance:•Third-party liability•Damages on transported goods•Assistance in case of accident or breakdown

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Micro-insurance

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Business development services adapted to clients

All BDS are free for clients and non clients

Campaigns to meet with clientsAdie Connect

A website dedicated to clients

15 regions/ 119 branches in metropolitan France and overseas

450 employees & 1 300 volunteers

A national call center for appointments set-ups

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An extensive and multichannel network

Since 1989

127 000 microcredits disbursed

91 205 business created or sustained

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Social impact

Creation of a « social and financial exclusion rating » to evaluate the fidelity to the most excluded people

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Social impact

SPI report (Social Performance Indicator) once every three years to assess the alignment of the organization and process with the social goals of the institution

SPI report issued by Cerise, a French NGO

Last report in 2011 : grade 63/100 (medium 54/100 for 500 MFI in Europe and developing countries )

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Social impact

« enterprise sustainability and job inclusion » study once every three years

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Social impact

Adie received the agreement to borrow from banks or financial institutions to onlend to its clients in 2003

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Business model for credit funds

Adie built up an extensive garantee scheme thanks to French public devices and to banks

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Business model for credit funds

Adie’s model is relying

-On the expense side, on a mix of employees and volunteers workforce

-On the revenue side, on a mix of subsidies and financial income from

microcredits

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Business model for operating expenses

In M€ 2012 2012

Operating expenses

31,7 Subsidies and donations

24,9

Financial expenses

1,2 Financial incomes (including investments products)

6,3

Exceptional income

0,2

TOTAL 32,9 TOTAL 31,4

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Business model for operating expenses

Current strategic plan : the stress is on productivity

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Business model for operating expenses

2010 2011 2012 2013trend

2014expectation

Nb of loans disbursed

12 023 12 261 13 157 14 623 16 820

Amount of loans disbursed(M€)

32,9 34,1 36,8 50,4 57,8

Outstanding capital (M€)

48,3 52,6 58 71,8 89,2

Operating expenses (M€)

28,4 28,2 29,1 28,7 31,3

Financial margin

4,2 5 4,7 5,9 7,7

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Thank you for your

attention