SIDI - 2008 Annual Report

8/14/2019 SIDI - 2008 Annual Report

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INTERNATIONAL SOLIDARITY FOR DEVELOPMENT AND INVESTMENT

THE ACTIVITIES

OF SIDI

AND ITS PARTNERS


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2 2008-THE ACTIVITIES OF SIDI AND ITS PARTNERS

A brief guide toSIDI

Review of the workcarried out in2008Solidarityfinancingin 2008

A portfolio of 9.3 million invested in 62 partners in 28 countries

Disinvestments in line with forecasts

A dual priorit confirmed inAfrica and in the rural world

Risk-taking in accordance with the shareholders objectives

Solidarity support in 2008

A multiple and adapted form of support

Support financed b theSolidarit Chain

Generatingsocial added value

1. Providingaccessible andflexiblesupport

Adapting to partners difficulties

Promoting management of the social dimension

2. Sharing therisks adequately and patiently

Participating in the capital of the LFSs

Lending in local currencies

Making a difference in crisis zones

3. Adaptingservices to thelocal context

Financing the producers organisations

Promoting value-added in rural areas

Promoting solidarit credit unions

4. Ensuring theinstitutional viabilityandsocialgoals of LFSs

Reinforcing the governance of the LFSs

5. Sourcesof support

Consolidating the Solidarit Chain for Financing

Investing in refinancing tools

Investing in second-tier structures

Networking and alliances

SIDIs 2008 Financial StatementsandPortfolio

Balance SheetatDecember31, 2008

IncomeStatementatDecember 31, 2008

SIDIs 2008 MapofFinancialPartners

2008 List ofPartnerships

Governance at June 12, 2009 19

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17

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Table of Contents

ACP: Africa, Caribbean, Pacific

EU: European Union

JIF: Joint investment Fund

LFS: Local Financial Services

MFI: Microfinance Institution

MFIC: Microfinance Institution engaged in a process of consolidation

MFIP: Microfinance Institution with a high potential

Leverage effect: When each SIDI financial contribution is

accompanied by financial contributions from other public or private

sources.

MUSO: Solidarity Credit Union

PO: Producers' Organisation

PAVRA: Promotion of Added Value in Rural Areas

SCF: Solidarity Chain for Financing

TA: Technical Assistance

Umbrella: so-called secondary level institution whose role is to

support MFI

INTERNATIONALSOLIDARITY FORDEVELOPMENTAND INVESTMENT

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production:SIDI-

Poussires

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-CourtaboeufPhone:33(0)1

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SOLIDARITINTERNATIONALEPOURLE DVELOPPEMENTET L'INVESTISSEMENT

ACTIVITS DE LA SIDI

ET DE SES PARTENAIRES

12, rue Guy de la Brosse / 75005 ParisPhone: 33(0) 1 40 46 70 00Fax: 33(0) 1 46 34 81 18Website: www.sidi.fr


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32008-THE ACTIVITIES OF SIDI AND ITS PARTNERS

Chairmans message25 years of financial solidarity

Dear friends, dear solidarit shareholders, I wouldfirst of all like to warml thank all of those whogave a positive response to the call launched inOctober of last ear to increase SIDIs capital inorder to provide our instrument with the fi-nancial resources required to continue to fulfil its

mandate as a social investor. After 25 ears ofworking at the service of solidarit financing, thesuccessful rights issue confirms the vitalit of thesolidarit chain for financing, which is aimed atthose who are excluded from financial servicesthroughout the world.

The completion of the 2006-2008strategic plan.

On 31 December 2008, SIDI completed the im-plementation of its three ear plan for the period

2006-2008, in which it established the priorit oftargeting the rural world, particularl on the Afri-can continent. All of the financing provided overthe course of this period has been directed at therural areas: toda, 63% of SIDIs loans are provi-ded in those areas. Furthermore, the work carriedout in the rural areas led to the definition of amore inclusive approach known as the Pro-motion of Added Value in Rural Areas - PAVRA.Moreover,, the work carried out over a three earperiod to seek social and developmental viabi-lit in our actions and those of our partnersconfirmed SIDIs Social Added value.

Thanks to the choices made b its shareholders,SIDI is able to go a long wa in terms of sharingrisks with its partners. An analsis of the portfolioshows that the solidarit investment work carriedout does, indeed, bear fruit in the long run. Seve-ral investments made some ten ears ago in coun-tries that were experiencing difficulties at thattime, but which benefited from regular and conti-nuous support, are now showing prospects of areturn on investment and this encourages SIDI toopen up new fronts for solidarit financing in dif-ficult contexts (Palestine, Haiti...).

SIDI is therefore striving to strike the right balancebetween the level of return on its investments and

the institutional, financial and social consolidationof its partners.

The 2009-2012 plan

For the 2009-2012 period, SIDI has decided topursue its goal of financing the rural worldthrough different categories of partners and tools,in order to provide a range of services adapted tomeet demand and to optimise the resources andthe Social Added value of its action: Local actors striving to develop the PAVRA, bfavouring the access of people living in the ruralareas to the local and/or international marketwhich, in turn, guarantees them fair pament. Networks of MUSO (solidarit credit unions). TheMUSO are not onl effective savings and finan-

cing instruments, but also provide a platform forexchanges and mutual aid. The are also condu-cive to the creation of dnamics that drive localdevelopment and social change. MFI that require consolidation: this tpe of part-ner is at the ver heart of SIDIs core activities. MFIare institutions that require support at both the fi-nancial and institutional levels. The often havegreater technical assistance needs and require aparticularl demanding and patient form of sup-port. MFI that have a great level of potential and havealread been SIDI partners for several ears. SIDI

continues to be attentive to their investment re-quirements with a view to establishing comple-mentarities between the social partners and aspart of the on-going efforts to maintain a balancebetween SIDIs financial and social viabilit. National or sub-regional institutions that refi-nance the Local Financial Services (LFS). Since SIDIonl has limited resources, it seems appropriate toconcentrate its interventions through secondarlevel - umbrella - instruments and to search ad-ditional financial resources from public and pri-vate donors, in order to create a leverage effect.

Continental funds: SIDI has embarked on an in-tervention strateg with other European alliances

in order to provide an effective response to thesectors needs (thanks to the leverage generatedthrough the mobilisation of public funds) and alsoto share risks. New funds specificall designed toaddress the needs of rural financing are currentlbeing created for Africa (FEFISOL) and Central

America and the Andean countries (FOPEPRO).

Finally, here are the main lines of ac-tion that will guide us until 2012:

Contribute to the long-term improvement ofrural producers income

Guarantee, support and communicate on theSocial Added Value and the environmental res-ponsibilit of both SIDI and of its partners

Guarantee SIDIs equilibrium and social and fi-nancial continuit

Thanks to our recent rights issue, the amount ofloans planned between now and 2012 reaches14 million. The leverage effect that is expectedto be generated through the regional financingmechanisms should enable us to achieve a port-folio of 60 million.

I would now like to invite ou to discover the ac-tions undertaken and the values promoted withthem as ou read this 2008 activit report.

Christian SchmitzChairman of the Board, Ma 2009.


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Review of the work carried out in 2008

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The remarkable expansion of microfi-nance has shown that, despite its li-mitations, it is an effective development

tool, notably because it serves to re-duce the vulnerability of its benefi-ciaries when confronted with theunexpected. SIDI takes part in this pro-cess in an original way by supportinga network of partners who provide fi-nancial services to the local populationswho are excluded from the traditional

banking circuits.

Solidarity financing in

2008

In 2008, the microfinance sector was mar-ked b two phenomena that were some-times contradictor. On the one hand, theappearance of new actors (commercialbanks, specialised investment funds, inter-net-based direct collection sstems) has at-tracted more capital to the sector, often

designed, above all, to be financiall profi-table. On the other hand, the financial, fol-lowed b the economic, crisis hasaggravated the difficulties encountered bman LFS. Not onl have the seen an in-crease in the number of late repamentsb their clients, but the have also expe-rienced greater difficulties in financingthemselves.It is in this difficult context that SIDI, withthe support of the Solidarit Chain for Fi-nancing (fig. 1), has continued its activities,

maintaining its focus on the rural worldand Africa.

A portfolio of9.3 million invested in 62partners in 28 countries

During the course of 2008, SIDI has provi-ded financial support for 62 partners for atotal of 9.3 million. This significant in-crease (+24% compared to 2007) has

been coupled with several important mo-vements, with 2 million of disinvestmentsand the commitment of a further 3.8 mil-lion.

Six new partnerships were established du-ring the ear: ADAPS in Madagascar, ES-CALES JAPPOO in Senegal, FECECAV inTogo, CORECAFE in Ecuador, CAFEPERU inPeru and FAIR TRADE LEBANON in Leba-non. These partnerships represent onl10% of SIDIs investments over the course

SIDI, International Solidarit for Developmentand Investment, is a limited liabilit solidaritcompan created in 1983 b the developmentNGO CCFD -Terre Solidaire (the Catholic Com-

mittee against Hunger and for Development).SIDI promotes a social and solidarit economb locall consolidating individual and collectiveeconomic activities in the countries of the Southand the East.

Its activit consists of financial and technical sup-port to Local Financial Services (LFS), which pro-vide financial services tailored to groupsexcluded from traditional banking circuits. Thegoal is to promote the consolidation of thesestructures so that the can offer sustainable ser-

vices such as savings, loans, training, market ac-cess and risk-pooling.

SIDI supports its partners via two complemen-tary means:

B increasing their financial resources, in the

form of equit financing, loans, guarantees andsearches for additional resources from interna-tional institutions.

B offering tailored technical support to im-prove governance, strateg, management, trai-ning, diversification, networking, etc.

SIDIs capital of 9 million euros, which was raisedto 13 million euros in April 2009, is invested in62 partners in 28 countries and its consultancbudget amounted to 1.76 million euros in 2008.

Its activities, led b a team of 11 geographicaldesk officers, assisted b 15 volunteer experts,strive to make sustainable improvements in thewell being of the populations.

SIDI is active in solidarit financing, mobilisingindividuals and institutions in the North whochoose to give SIDI the financial means to carrthrough its actions and who give priorit to

human, social and environmental benefits. As aresult:

SIDIs shareholders share the risk taken on bthe institutions in the South, without an expec-tation of financial dividends; Savers from the Hunger and Developmentmutual investment fund share the proceeds fromtheir savings in order to defra a portion of SIDIstechnical support.For 25 ears, this Solidarit Chain for Financinghas enabled SIDI to conduct sustainable actions

with its partners and to promote their own in-dependence.

A brief guide to SIDI.

A freezer in Senegal, powered by solar panels

provided by the UGPMs programme


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of the ear since the majorit of the fi-nancing provided in 2008 was designed tobolster the means of its long-standingpartners. The average amount of invest-ment per partner rose to 150,000 (com-pared to 134,000 in 2007).

Disinvestments in line with forecasts

The disinvestment figure of 2 million refersto the repament of maturing loans (81%)and the withdrawal of guarantees (10%).The remaining 9% represents the sale ofequit shares taken in the LA-CIF fund inLatin America, which closed at its maturitdate and the AMRET fund in Cambodia,from which SIDI withdrew to the benefit ofnew social investors whose means are inkeeping with the needs of the rapidl ex-

panding institution.

A dual priority confirmed in Africa and inthe rural world

All of the new partners accord priorit intheir work to the rural world and the majo-rit of the investments provided over thecourse of the ear were targeted at rural fi-nancing. B the end of the financial ear,support for the rural world represents 63%of the total portfolio. .

Furthermore, Africa continues to be a mainfocus of SIDIs attention, since the amountof its portfolio dedicated to this continentremains stable at 43% (fig. 2).

Risk-taking in accordance with the sha-reholders objectives

As of 31 December 2008, 56% of SIDIsportfolio was committed in local currenc,down from the previous ears figure of66%. This is explained b the number of in-vestments made in the countries that usethe dollar as their currenc of reference,such as those in Latin America.Furthermore, investment in the capital of anLFS continues to represent SIDIs favouredform of intervention tool, due to its long-term and solidarit-based nature and such

interventions have remained stable andconstitute 43% of the portfolio.SIDI is alwas present in the areas that areconsidered to be at risk (Palestine, theAfrican Great Lakes Region) and in 2008 ithas strengthened its presence in Lebanonand Madagascar and has renewed its in-vestments in Haiti.Finall, SIDI strives to invest in structuresthat develop financial services for theirmembers, even though the are not MFI:30 of its partners are associations, produ-

cers organisations and rural enterprises.Half of SIDIs portfolio is invested in MFI thathave a great deal of potential (fig. 3)

Solidarity support in 2008

SIDI is currently supporting 85 part-ners in 32 countries (62 of whichhave benefited from financial sup-port).

A multiple and adapted form of support

The aim of the support provided b SIDI is toensure the sustainabilit of the actions un-dertaken b the LFS so as to bring about a

long-term improvement in the situationfaced b their beneficiaries.

In 2008, this support focused on 5 mainareas: the internal organisation of the LFS: ac-counting, information sstems, human re-sources; governance, strateg, creation of new pro-ducts; analsis and monitoring of their portfolio; reflection upon their Social Added Value;

Africa 43%

Latin America 20%

Figure 2. Geographical breakdown of the portfolio in 2008

Asia 11%

Eastern Europe 16%

Mediterranean Basin 10%

DIF

LFS LFS LFS LFS

Capital9 million

Refinancing fund Technical Assistance fund

Revenue from joint in-

vestment fund and CCFD

1.1 million/year

Mobilisation of funds

from alliances

PO PO

LFS : Local financial services

PO: Producers organisations

DIF: Development Incentive Fund

Figure 1. The Solidarity Chain for Financing


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negotiation of complementar resourcesfrom third part entities (banks, NGO, publicagencies).This support is provided b SIDIs team of 11geographical desk officers who, in turn, areassisted b volunteers, all of whom are reti-red professionals in the banking, finance orenterprise sector. In 2008, the support pro-vided b volunteers represented almost onequarter of the 2,181 das dedicated b SIDIto the provision of support/advice to thepartner LSF (with a further 1,142 workingdas dedicated to the identification of newpartners and horizontal issues)In 2008, these support and accompaningmeasures represented an average of 23

das per partner, mostl taking the form ofon the ground support missions.A budget of 1.76 million was required tofund these support measures (or 73% ofSIDIs operating costs, with the remaining27% being dedicated to head office ex-penditure), up 9.5% on the correspondingfigure for 2007. This increase is due, in part,to the considerable amount of preparatorwork carried out prior to the creation of twoinvestment funds, namel the Fund for LatinAmerica (FOPEPRO) and the Fund for Africa

(FEFISOL), as well as the follow up work re-

quired on the third and final ear of the Eu-ropean Unions co-financing (EU/ACP).Finall, in accordance with the objectives ofthe strategic plan, 66% of the time spent toprovide support and advice has been dedi-cated to SIDIs African partners (fig. 4). Fur-thermore, 18% of the time has been spentwith partners engaged in a process ofconsolidation and 28% with rural structures(producer organisations, rural enterprises,solidarit credit unions).

Support financed by the SolidarityChain

The support provided to SIDIs LSF partners,

which enables them to benefit from a cus-tomised form of support in a wide range ofareas, is generall provided free of charge.Indeed, SIDIs economic ethos is foundedupon a Solidarit Chain for Financing,which makes it possible to mobilise funds inthe North in order to support the partnersin the South and the East:- First of all, the CCFD-Terre Solidaire fi-nances SIDIs action through the shared re-venue generated b the Faim &Dveloppement (fig. 1) Joint Investment

Fund, which covers 48% of the costs (and,

more specificall, 66% of the costs relatedto the provision of support and accompa-ning measures).- Furthermore, SIDI has negotiated534,000 in co-financing, 68% of whichcomes from support provided b the Euro-pean Union (UE/ACP). The African continenthas been the main beneficiar of this co-fi-nancing (81%).The remainder of SIDIs income comes fromthe revenue generated b its own activities:- SIDIs portfolio generated 563,000 in2008, which represents a significant in-crease on 2007 (+79%) thanks, notabl, toan increase in the dividends received as wellas the interest earned on loans.

- Finall, SIDI has benefitted from an ex-ceptional income of 879,000, thanks tothe negotiated sale of a part of its invest-ments. Rather than withdrawing from itspartners capital in order to generate anadded value, SIDIs decision in that case wasmotivated b the fact that the partner inquestion is now autonomous and in theprocess of becoming financiall viable.


MUSO 1%

Figure 3: Breakdown of the portfolio per category in 2008

MFIP 45%PO 6%

FUNDS 10%

PAVRA 9%

Umbrella 10%

MFIC 19%

Umbrella: so-called secondary level institutionwhose role is to support MFIMFIC: Microfinance Institution engaged in aprocess of consolidationMFIP: Microfinance Institution with a high

potentialMUSO: Solidarity Credit UnionPO: Producers OrganisationPAVRA: Promotion of Added Value in Rural Areas

Figure 4: Breakdown of support per region in 2008 (not including identificationof new partners and cross-cutting issues)

Africa 66%

Caribbean 3%

Asia 8%

Latin America 11%

Eastern Europe 6%

Mediterranean Basin 13%


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The 2009-2012 strategic plan is fully in line with the Social Viability and De-velopment (SVD) work that began in 2001. It confirms the unyielding conti-nuation of one of SIDIs essential pursuits: to give impetus to the partnerssustainable social change with the help of the Solidarity Chain for Financing.

One of the most salient conclusions to emerge from the SVD work was a definitionof the five areas where SIDI generates social added value:

1. Support - SIDI provides accessible and flexible support, designed to meet thespecific needs of each partner.

2. Risk - SIDI shares risks in an adequate and patient wa3. Adaptation of services - SIDI adapts its services to the local context in order

to generate social added value.4. Governance - SIDI is committed to institutional viabilit and to maintenance

of its partners' social purpose.5. Leverage effect - SIDI mobilises additional resources for its partners.

A social audit of activities will be prepared starting in 2009 and will detail SIDIs resultsfrom these five areas, accompanied b ke figures. The various facets of SIDIs activitiesin 2008, as explained below, are in step with these five areas.

Generatingsocial added value

A solidarity credit union meets inBukavu, in the Democratic

Republic of the Congo

Photo

SIDI


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1. Providing accessible

and flexible support

SIDI strives to give individualised responsesto its partners expectations. It tailors itsservices and its volume of support to re-quests and to the tpe of partner. Further-more, thanks to donations from the SCF,SIDI is able to adapt its financial circums-tances to local needs and contexts, contri-buting technical assistance that isappreciated, useful and seldom charged tothe partner.

Lastl, SIDI does not set prior limits on thelength of its partnerships, thereb enablingit to appreciate the context in which it acts,

build relations of trust with its partners andunderstand and promote its partners so-cial added value vis-a-vis the beneficiaries.In 2008, this support activit involved anumber of partners in difficult. SIDI wasalso able to boost its support to the ma-nagement of the social dimension.

Adapting to partners difficulties

When an LFS is in financial straits owingto difficulties in repaing loans, SIDI takes

the time to work on the causes in order to

suggest sustainable solutions.

In application of that polic, SIDI expandedits original offer for financial support to theFdration des Pasans du Fouta Djalon(Guinea) b paing for certified potatoseeds for its members. SIDI was then reim-bursed from the proceeds generated b thesale of the crop. This arrangement enabledthe farmers to pursue their livelihood withqualit inputs at a reduced cost to thecash-strapped Fdration grappling with ahighl inflationar context.

Another example concerns the Mogtedorice farmers co-op in Burkina-Faso thatwas confronted with a sharp reduction inthe harvest caused b the dring up of a

retaining reservoir, which jeopardised itsabilit to repa its loans. After conductingan evaluation mission, SIDI agreed to re-negotiate the loan, which meant that theco-op could allocate and resume its loanrepaments.

Promoting management of the so-cial dimension

SIDI maintains that it is essential for thepartner LFS to follow practices that are in

line with their social vision. The all aspire

to benefit their customers above andbeond a purel financial procedure. Butwhat social goals do the pursue and whatmeans do the have to achieve them?To answer that question, SIDI set up in2001 a Social and Development Viabilitgroup that, along with voluntar partners,prepared a methodolog to ensure that theLFS are able to do the following:- clarif their social goals,- set in motion the right guidance forthese goals over time.

The aim is to lead all these partnersthrough this procedure.

In 2008, along with the partners, severalinitiatives were started or made progress.

Hereafter are some examples:

With a local consultanc, SIPEM set up amonitoring tool for customer vulnerabi-lit, using criteria such as health, educa-tion, level of schooling and familsavings.

In Mali, BMS and SIDI organised at theend of 2008 a workshop on social per-formance in the microfinance sector; theevent was highl appreciated b theman participants and led to concrete re-

sults (see focus 8).

Focus n 1:Ten years walking along with theUGPM in Senegal

SIDI and the UGPM began their partnership

in 1995, initiall to develop solidarit creditunions in the area (90 villages and 10,000inhabitants) and then to finance the instru-ment created b these credit unions, namelthe CREC (Caisse Rurale d'Epargne et deCredit Regional Savings and Loans Fund),which collects savings, grants loans and re-finances the credit unions.

Since SIDI and the UGPM both believe fa-mil-run farms (rural economic entities thatbring together parents and their offspring,

who have established their own famil,under the same roof) to be ke economicentities in the rural world, their next stepwas to launch a specific financing pro-

gramme. The UGPM first of all closel as-sesses the applicant families, enabling themto put together a project meant to getthem out of a hole (usur and seasonalshortfalls) b creating or increasing econo-

mic activities that correspond to their know-how. Then, with the support of SIDI, theUGPM finances the famil-run farm, in ac-cordance with the adopted plan.So far 80 famil-run farms have benefitedfrom the support of the UGPM, with mixedresults: in a difficult context (poor soil qua-lit, lack of finance) it is not eas to esta-blish an appropriate structure for a familseconomic activities (farming, livestock rea-ring, small-scale commercial and craft acti-vities, market gardening, seasonal

emploment in the cit).However, one observation has emergedquite clearl: in order to promote the goodsproduced in the rural areas, one has got to

process them (and therefore make joint in-vestments); in order to obtain the right price,one must avoid using itinerant traders. Adouble strateg was therefore devised tofind new marketing circuits and to generate

solar energ. This energ provides power forhomes (mainl to help children in their stu-dies), for irrigation pumps, and for freezers(that make fish available at a lower cost).

This partnership between the farmers or-ganisation and SIDI has enabled both struc-tures to evolve. It is essential to speakclearl and openl to one another and tomaintain the rigour and discipline that is re-quired b solidarit financing. Walkingalong together requires the establishment

of real human relationships, regardless ofthe membership basis or situation of thepartners.


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With CAC la Florida in Peru, SIDI finali-sed a diagnosis b zone of the situationof the members and their families. CACused it as a basis for decisions relatingto its 2008-2013 strategic plan, whichcontains clear social goals. This methodwas also adopted b the CorporacinCaf Peru that brings together six co-ops,including CAC.

A mission was sent to Fondefer in Nica-ragua and Red Fasco in Guatemala, witha view to initiating SIDI support for trai-ning and management of the social di-mension in co-ops that belong to thesenetworks.

Management of the social dimension isfundamental for SIDI in the sense that it

leads to closer ties between the institutionand its customers, better adaptation andinnovation capacit and, consequentl, re-duced costs and an improved position inrelation to competitors. Furthermore, thisis an important issue for financiers who areconcerned about the efficienc of aid.Above all, management of the social di-mension is a prerequisite to measuring theeffective and sustainable improvement ofthe beneficiaries well being.

Focus n2: Hattha Kaksekar Ltd. inCambodia (HKL)

When SIDI began to invest in AMRET inCambodia in 2000, it felt that a second part-

nership in the countr would enable it towork more efficientl and also to get a bet-ter understanding of the national environ-ment. SIDI therefore decided to bothfinance and support HKL. Unlike the greatmajorit of the local MFI, at that time HKLwas not led b a foreign donor and wasworking with a Khmer team. It also haddeeper roots in the local rural context. In-deed, its ver name, Hattha Kaksekar (thefarmers hand or the farmers outstretchedhand) onl serves to emphasise its inten-

tions.

The following ear, the authorities grantedHKL approval to become a formal MFI and

to be supervised b the central bank. At thattime, SIDIs support took the form of activeparticipation in the drafting of the institu-tions constitutive documents and its gover-nance.

However, in 2002 the central bank decidedthat, since there had been a significant de-terioration in the loan portfolio, the rene-wal of its approval would be subject to aswift stabilization of HKLs operations and inincrease in its capital. SIDI then chose toprovide enhanced technical assistance tothe Khmer management of the MFI.A volunteer consultant (a former banker)was heavil involved in this technical sup-port, which took the form of 4 to 5 field vi-sits per ear, the establishment of an action

plan, the redefinition of ke positions, takingpart in recruitment procedures, almost dailmonitoring of the development of the ope-rations, the search for finance (loans and ca-

pital), as well as assuming chairmanship ofthe Board even though SIDI onl held aminorit shareholding (19.5 %).For its part, the HKL leadership team sho-wed great loalt to the institution, assumed

an increasing volume of work with great in-telligence and energ and established atrust-based relationship with SIDI. In 2000,HKLs portfolio was worth close to $1.2 mil-lion, whereas at the end of 2008 this figurewas close to $30 millionToda, HKLs success is attracting man newinvestors that have significant financial re-sources. SIDIs participation and role will bereduced over the course of time. However,this partnership validates the vision, missionand ambition of the founders of SIDI with

regard to its role supporting local organisa-tions in the developing countries, at the ser-vice of micro- entrepreneurs.

An ADAPS cocoa beanproducer in Madagascar


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cant commitment to SIPEM, amid growingcompetition, at a time when SIPEM wants tostart accepting savings deposits.

Lending in local currencies

MOGTEDO (Burkina-Faso), EACD (Egypt),FONHSUD (Haiti), JEMENI and NIAKO (Mali),AL AMANA (Morocco), KOKARI and TAANADI(Niger), SMEA (Uganda), CREC, JAPPOO, MECPROPEM and UGPM (Senegal), FECECAV, UC-MECS and TIMPAC (Togo).

In the microfinance landscape, it is custo-mar for lenders to grant loans in dollars oreuros in order to avoid the risk of exchangerate losses at reimbursement. The exchangerate risk is therefore borne b the borrowing

institution, which does not alwas have thefinancial capacit to take it on. SIDI wantedto share this risk and has therefore set up aguarantee fund called the Development In-centive Fund that is replenished b womensreligious orders and is endowed with 2.3million euros to cover a share of the ex-change rate losses. Under this mechanismpartner LFS can be granted loans in localcurrencies. Fort-four percent of SIDIs loansare now denominated in local currencies.

For example, despite the ongoing risk of a

Focus n 3: The need to strengthentechnical assistance in the AfricanGreat Lakes Region

At the end of a three ear period during whichit had carried out missions in the Great LakesRegion, SIDI decided to question the relevance

of its method of intervention in that area. In-deed, whilst it carried out a large number ofdas of mission (365 das of mission in 3ears), with a major increase over the last twoears, SIDI also realised that it does not pro-vide a sufficient response to its partners needsand that it does not reall know the environ-ment.The working area is vast and the means oftransport between the various areas are slowand unreliable. Furthermore, the partners alsoreflect the unstable situations in those areas

and although there is a strong desire to movethings forward, there is a huge amount of tasksbe done, without necessaril having the quali-fied human resources to accomplish thesetasks.

Therefore, the situation requires more than justfinancing and support, rather it requires lo-call-based technical support that is not onllong-term, but is also provided on a regularand frequent basis. For example, man das ofmission were required in 2008 to train the

CCRD accountant, since it was necessar totrain a person who had little accounting know-ledge to manage the production of accountinginformation.On the basis of these observations, SIDI deci-ded to use a method of intervention adaptedto the needs of the region, spending more timefor the partners, and to locate itself as closelas possible to the areas in which its partnerswork. To this end, in 2009 the geographicaldesk officer will be relocated to Bukavu in Sou-thern Kivu on a full-time basis.

The relocation of the desk officer will facilitateaccess to Rwanda and to Burundi and will alsomake it possible to provide a swift service to alarger number of clients.

devaluation of the CFA franc, SIDI is main-taining its commitments in this monetarzone and in 2008 granted an initial loan of50 million CFA francs (76,000 euros) to FE-CECAV, a savings and loan institution inTogo that wants to expand its agriculture fi-nancing activities. SIDI has also increased itsloan in Haitian gourdes to Fonhsud, in orderto refinance solidarit credit unions.

Making a difference in crisis zones

SIDI is continuing its involvement with part-ners who are struggling with difficultcontexts in Haiti, the Middle East and inAfrica. In these areas, SIDI helps locall com-mitted partners to increase their support forthe beneficiar populations for whom access

to financial services is more difficult and per-haps more necessar than elsewhere.

As a result, SIDI has completed the crea-tion of a guarantee fund devoted to mi-crofinance institutions in Palestine (seefocus 4), has reinforced its assistance andfinancial involvement in Haiti in the formof a loan to Fonhsud and new partnerships.In the Great Lakes region, SIDI has acqui-red a stake in the capital of the CCRD andexpanded activities of the geographical of-

ficer (see focus 3).

2. Sharing the risks ade-

quately and patiently

One advantage of SIDIs interventionis that it can accept risk to its owncapital, as authorised by the share-holders.

Participating in the capital of the LFSs

Equit financing in an LFS is a fundamentalmeans to contribute cheap and stable re-sources to the LFS so that it can finance itsactivities in a sustainable wa. SIDI prefers toforgo dividends until the institution has rea-ched significant financial independence.

At the end of 2008, SIDI held shares in 26

structures. It also converted three of its loansto capital in order to bolster its ties with um-brella institutions in South America, such asFondefer, a financial instrument of a co-opnetwork in Nicaragua; Fortalecer, a jointstructure created b the rural microfinanceassociations of Peru; and Caf Peru, a coffeeprocessing and marketing compan createdb eight producers co-ops. Lastl, SIDI hassupervised several capital increases in Tan-zania, Cambodia, Kosovo (see focus 5), Mol-davia, the DRC and Madagascar. In this last

countr, SIDI decided to maintain its signifi-

A meeting between an ACAD team andclients in Palestine


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Focus n 4: SIDI innovates in Palestine

The bombardments subjected upon the civil population in Gaza at the endof 2008 onl served to confirm the difficult of establishing long-term andfair peace in the region. And et the Palestinian population continues to live(or to survive).

SIDI has been working in Palestine for 15 ears and has been supportingthe Arab Center for Agricultural Development (ACAD) for almost 10 ears.The ACAD grants loans to small rural farmers and entrepreneurs through 7satellite offices in the West Bank and in Gaza.

The missions carried out b SIDI in recent ears have highlighted the verparticular conditions related to the work of providing solidarit financing forthe Palestinians. Indeed, as well as the risks that are inherent in microfi-nance, one also has to add the risk related to the illegal occupation of Pa-lestine b Israel, notabl with the ongoing construction of Israeli colonies,which reduces the rural areas in which the Palestinians can live and produce.The Palestinian partners discreetl refer to this issue as the contextual

risk. The central problem faced b SIDI in providing its support is there-fore that of strengthening the securitization of ACADs portfolio and that ofthe MFI sector in general.

A long process was then initiated to address this new challenge: how can

we support an MFI that performs to a highl acceptable level from a tech-nical and financial point of view, in the context of a structural crisis that canjeopardise its ver existence? This process has enabled SIDI and ACAD to: gain a better understanding of the nature and the realit of the risk borne

b MFI in Palestine and, more specificall, of the effects of the political si-tuation on ACADs portfolio. To this end, the ACAD team therefore car-

ried out a surve in its agencies. examine was of covering this risk, whilst at the same drawing a dis-

tinction between the entit that grants the credit and the guarantor: it isnot possible to respond to the particular nature of this risk with all gua-rantee sstems.

design and implement a sstem to cover the contextual risk. mobilise their efforts on a large scale around a complex issue for Inter-national Solidarit Organisations in both France and across Europe.This led to the creation of the guarantee fund, which has been operationalsince 1st Januar 2008. ACAD provides the guarantee fund partners withdetails about its risk portfolio on a quarterl basis: an loans which havebecome impossible to reimburse as a result of a contextual problem is

examined b an impartial consultant in Ramallah and is then submitted toSIDI. In fact, SIDI manages the guarantee fund on behalf of its partners.The existence of this guarantee fund is bringing about a profound changein the frame of mind of the ACAD loan officers and is enabling them to re-commence loan activities straight awa.


3. Adapting services

to the local context

SIDI does not wish to standardise its assis-tance to partners but instead seeks to adaptto each situation in order to provide themost efficient aid possible. This approachhas led SIDI to move beond the microfi-nance sphere and to innovate, in order torespond to the particular needs of rural po-pulations and farmers organisations.

Financing the producers organisations

MOGTEDO (Burkina-Faso), FAPECAFES (Ecua-dor), FPFD (Guinea), ALAOTRA (Madagascar),FONDEFER/FENACOOP (Nicaragua), CAC LA

FLORIDA (Peru) and UGPM (Senegal).

In rural areas, especiall in Africa, microfi-nance for farmers is barel getting off theground. This is due to the wariness of finan-ciers who point to recurring risks in the ruralareas, i.e. climate, prices of commodities, etc.

Farmers in these countries have explicitl ex-pressed their need for financial services. Ser-vices tailored to their needs can providesustainable change. That is wh SIDI is fo-

cusing on rural areas, in support of the pro-

ducers organisations that, as local deve-lopment vectors, set up savings and loanservices that are adapted to their membersas a complement to other actions thecarr out.

Promoting added value in rural areas

CORECAFE and MCCH (Ecuador), LAO FAR-MERS PRODUCTS (Laos), FAIR TRADE LEBA-NON (Lebanon), ADAPS (Madagascar),KOKARI (Niger), CAFEPERU (Peru) and ES-CALES JAPPOO (Senegal).

This work in rural areas with producers or-ganisations, conducted as a priorit overthe last three ears, has highlighted a re-curring lack of financial services. In parti-cular, few MFI finance the processing of

farm products, despite the fact that far-ming and the processing of foodstuffs area ke factor for the development of ruralareas. For that reason SIDI began to fi-nance producers organisations and ruralbusinesses that process and market pro-ducts, locall or via fair trade or organicoutlets. Thanks to its results and promisingfuture, the Promotion of Added value inRural Areas (PAVRA) has become a leadingtheme of the 2009-2012 strateg.

The goal of the PAVRA is:

To enable rural populations to receive agreater share of the added value generatedfrom the processing of farm products. Envisage the export of these productsand their sale b local production net-works. Become environmentall friendl andpromote local know-how.

In this context, SIDIs role is: To identif producers organisations and

ascertain the viabilit of an export mar-keting project or of local sales.

Identif qualit importers interested insuch products, connect them to produ-cers and provide support during the pro-cess.

Search for subsidies for organic certifica-tion or conversion and grant pre-finan-

cing. Support producers in the creation of fi-nancial services for their members, or inestablishing relationships with MFIs (Ma-dagascar, Morocco, Lebanon, Tanzania,etc.).

For example, SIDI joined with Fair Trade Le-banon (FTL), an association devoted to themarketing of products from farm co-ops.Following an evaluation mission and a visitto the co-ops in 2008, SIDI supported it in

its search for fair trade importers and


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wants to assist it in creating a procedurefor analsing and selecting co-ops.

In Madagascar, the Association pour le D-veloppement de l'Agriculture et du Pa-sannat du Sambirano (ADAPS), created in2001, works in the market gardening sec-tor and with producers who grow vanilla,coffee, cocoa and pepper. SIDI has had tiesto ADAPS since 2004. In 2008, SIDI gua-ranteed a loan granted to ADAPS b a local

bank, a subsidiar of BNP Paribas, to en-

sure pament to farmers upon deliver ofcocoa to ADAPS. Thanks to the support ofa volunteer consultant, it has set up toolsto manage and monitor the amounts ofcocoa sold and stored. Lastl, SIDI, withADAPS and AFDI Picardie*, is looking intoan arrangement with a local MFI to enablefarmers to bu rice at harvest time (so at abetter price), in order to store it and eat itduring lean times.

In 2008, SIDI began working in Ecuadorwith the CORECAFE compan, whose aimis to sell qualit coffee on the national andinternational markets and to promote theecological and social values of small cof-fee producers.Producers organisations own 80% of CO-RECAFE so the control the compans vi-

sion and use it to enhance the value oftheir production. CORECAFE is the first as-sociation of its tpe in the countr to suc-ceed in placing its coffee on the shelves oflarge supermarkets.CORECAFE continues to expand with thesupport of SIDI, which granted it a$35,000 loan to help develop its produc-tion. A project is underwa to organiseroasting, grinding and bagging of coffee inthe co-ops and to transfer a maximum ofeconomic and social added value to the

producers.

Focus n5: SIDI and KRK in Kosovo in 2008

KRK was created in Januar 2004 following a project initiated b

ADIE International at the end of the Kosovo war. Toda, KRK is theleading rural microfinance institution in Kosovo and in 2008 it hadmore than 17,000 members in its network of 37 village savings andloans associations. Indeed, 75% of its loans are granted to the agri-culture and livestock sector.

SIDI acquired part of KRKs capital and took a seat on its boardwhen it became a limited compan. In 2007-2008 it strongl sup-ported KRK in its rights issue process, enabling the institution to ac-cess the funds required for its growth with favorable conditions.

SIDI and ADIE International have been instrumental in renewing the

shareholding and have also deploed major efforts in order to main-tain a balanced form of share ownership between the Kosovars

(FIEK, a federation of KRKs 37 savings and loans associations, which

holds 26%) and the foreign shareholders.

The consolidation of its equit enabled KRK to borrow from new fi-nance bodies. SIDI has made a major contribution to the search forthis finance. It has even granted a loan of 700,000 through theFaim et Dveloppement JIF, together with a bridge loan of300,000 from its own equit. Toda, KRK is read to carr on withits activities with sustained growth and to respond to the substan-tial ongoing demands of its rural clients.

SIDI has been appointed to replace ADIE International to chair theboard, thereb placing it in a good position to collaborate with the

other board members.

Laos: traditional silk weaving

*Agriculteur Franais et Dveloppement International


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ESCALES JAPPOO is a chain of restaurantsin Senegal that makes use of local farmproducts in its kitchens and pas its em-ploees a decent wage. The first two res-taurants opened up in the tourist zone ofSal and 25 direct jobs were created, in ad-dition to secondar jobs of musicians,crafts people, etc.Despite some hitches, such as electricpower problems, competition and a fall intourism, the restaurants have managed tooffer qualit cuisine and service. Most ofthe emploees are their families bread-winners, which has improved the lives ofhundreds of people. Man locals, such asvegetable farmers and fishermen, havesold their production at higher prices to therestaurants than those offered b itinerantmerchants.

The example of ESCALES JAPPOO showsthat it is possible to create companies inAfrica for the benefit of rural people andouth. However, it requires sizeable invest-ment in time and mone.

Promoting solidarity credit unions

West Africa (Senegal, Mali and Burkina Faso),Central Africa (DRC, Rwanda and Burundi),Haiti and Madagascar.

Solidarit credit unions are a unique orga-nisation, invented b Senegal farmers in1995 and later disseminated b SIDI toother countries. The are self-help groupswhose members make equal contributionsto set up a peoples self-managed savingsand financing tool. The also help to struc-ture and give cohesion to the sector, in thesense that the enable the group to ex-change views on their activities and pro-blems and to launch joint projects in areassuch as healthcare, collective investment,seed purchases, etc. It is also a self-helpgroup, for example its emergenc fund canimprove access to healthcare.SIDI works in training, information techno-log, strateg and financing with around adozen organisations that promote solida-rit credit unions, particularl in far-flung

rural areas.At the end of 2008, these promoters (far-mers organisations, development NGOsand religious orders), were working witharound 48,000 people who had decided to

join one of the 2,400 listed solidarit cre-dit unions, more than half of which are lo-cated in the DRC.

While the solidarit credit unions cannotmeet all financing needs, the have provento be efficient at mobilising local savings.

For example, in six ears, in North Kivu

(DRC), more than $1 million in savings hasbeen built up and been put to work in eco-nomic activities b the members of 600 so-lidarit credit unions, who then became80% owners of their own savings and loaninstitution.

Focus n6: Review of the EU/ACP support projectto further develop activities in rural areas

In 2005, SIDI, MAIN, the African network and Alterfin/Belgium ob-tained a grant of 790,000 from the European Union for a periodof three ears, in order to develop financial services in underservedrural areas in 12 African countries and Haiti, and to increase trans-parenc in the sector. The main focus of the project was: to support the diversification of the financial products made avai-lable to the beneficiaries to strengthen governance within the institutions through techni-cal assistance and training missions the development of solidarit credit unions in rural areas.Completed in 2008, the project is now at the capitalisation stage,but it is alread possible to sa that it has led to a considerable in-

crease in support for the beneficiar institutions. Indeed, we candraw the following conclusions in particular:

an extra 120,000 beneficiaries in rural areas have been accoun-ted for in the 10 institutions supported b the project between De-

cember 2005 and December 2008 (an increase of 70%), eventhough this increase is not solel due to the support provided bthe EU project; following the studies and support missions, 13 new products havebeen created, notabl at OMIPA/Uganda and JEMENI/Mali. Fur-thermore, savings sstems have been introduced within several part-ners; the project has financed more than 60 support and training mis-sions (in the areas of governance, social performance, computer li-terac, portfolio...) ; Finall, more than 720 board members and managers have re-ceived training thanks to the workshops and training sessions held

b the MAIN and the KNFP/Haiti on social performance and theMUSO sstem.


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Beond its role as an active social investor,SIDI seeks to boost the long-term activities ofits partner LFS, without undermining their so-cial vision.

First off, the aim is to ensure the qualit ofthe investors who seek equit investment inthe LFS. This is particularl important at timesof capital increases, when the arrival of newinvestors must be done in harmon with thepartners social vision.

In 2008, SIDI plaed an active part in thesearch for new investors on behalf ofKRK/Kosovo and ensured that KRKs benefi-ciar credit institutions be also part of theshareholding (see focus 5). As a founding

4. Ensuring the

institutional viability

and social goals of LFS

The role of SIDI, as a patient investor, is tosupport over the long-term the LFS partnersso that the are able to offer financial ser-vices, also over the long-term. To achievethat, their role as an institution must be sho-red up, the must be supported in the use oftools for monitoring and managing their acti-vities and, lastl, their good governance mustbe supervised.In addition, SIDI must see to it that the part-ners social vision is in step with their prac-tices. This entails the preparation of andactive participation in the 23 boards of direc-

tors of which SIDI is a member alongsideother directors and making sure that theirdecisions are implemented.

Reinforcing the governance of the LFS

TEMBEKA in South Africa, ASIENA in Burkina-Faso, HKL in Cambodia, CRG in Guinea, KNFPin Haiti, KRK in Kosovo, AMSSF in Morocco,MICROINVEST in Moldavia, TAANADI and KO-KARI in Niger, OMIPA in Uganda, FORTALECERand CAC la FLORIDA in Peru.

Figure 5 : Breakdown of SIDIs capital at31/12/08 (9 M)

CCFD-Terre Solidaire26.8%

FOUR

FINANCIALINSTITUTIONS 11.2% AUXILIATRICES

17,3%

URSULINES DEJSUS 7 %

ESD26 %

EIGHT EUROPEANPARTNERS 5.9%

Other 5.7%Focus n 7: A finance tool for produ-cers organisations in Latin America:FOPEPRO

The importance of agriculture as a source of em-ploment in Latin America and therefore as ake sector in the efforts being made to reducepovert, was confirmed in a stud carried out bSIDI in Bolivia, Colombia, Ecuador and Peru. Thisstud also analsed the problems encounteredb small farmers and their organisations whentring to increase their productivit and high-lighted the need for adequate finance and tech-nical assistance. The fund that SIDI proposes toset up is therefore designed to provide financial

support for small farmers organisations.

The originalit of the fund lies in its targeting ofthe rural world, the financing of agricultural pro-

duction activities and its capacit to support thewa in which the farmers organisations are ma-naged, thanks to partnership agreements.

Having undertaken preparation and identifica-tion missions over a period of 4 ears, SIDI andALTERFIN have now decided to move on to thenext stage and to proceed with the joint crea-tion of this regional finance institution, whichfits perfectl within the strategic guidelines ofthe two organisations. The two partners havedecided: to create the FOPEPRO Fund in 2009 for a 10ear period, in order to support small producersin the Andean and Latin American countries.

to invest $700,000 each to the fund. to mobilise donors funding for the FOPEPROfund.

Partners, the SIDI team, shareholders andalliances all met in Paris in October 2008 to

celebrate SIDIs 25th anniversary


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5. Sources of support

In its capacit as a social developmentplaer SIDI seeks to mobilise those around itwith the goal of promoting its vision of so-lidarit financing and to secure additionalresources for its partners. Although its ownsolidarit resources are stable, the are notenough to meet the needs conveed b itspartners. Furthermore, at a time when com-mercial microfinance activities are growingapace, SIDI is reaffirming the need to backlocal, in particular rural, developmentplaers who, despite their social usefulnessand potential, are not et profitable.

Consolidating the Solidarity Chainfor Financing

The ear 2008 was marked b three majorevents: First, CCFD-Terre Solidaire and the CrditCoopratif launched a new shared investmentfund designed to finance SIDIs activities, cal-led Faim et Dveloppement Agir CCFD. It isavailable at all French banks under the ISINcode FR0010627232. Next, in order to fund its development inthe next four ears, SIDI launched in Octo-ber a 4-million euro capital increase. Des-pite the financial crisis, or perhaps thanks

to it, new and old shareholders alike mo-


Focus n8: Creating leverage in Mali

In 2004, SIDI decided to invest in the BanqueMalienne de Solidarit (BMS-SA), the onl fi-

nancial institution of its kind throughout thewhole of Western Africa. SIDI has a seat on itsBoard and provides a stead technical bankingassistance (the costs of which are borne b theBMS).

The mission of the BMS, created in 2002, is tofavour the financing of SME/SMI through MFIand also to directl finance small producerswho are not able to access bank credit. Thefact that most of the capital is held b MFI re-flects the intention to make the BMS become

a financial instrument supporting microfinance.

B the end of 2008, having existed for five anda half ears, BMS had 10 agencies spreadacross the countr and more than 20,000 ac-

counts, with a loan portfolio of 50 million anddeposits of 72 million. It also had a net in-come (not including subsidies) of 2 million.

The BMS works with more that 40 MFI thatoperate in both rural and urban areas. All ofthe requests for credit from viable structureshave been satisfied, with an annual averageof 11 million in outstanding loans. The BMSalso carries out its actions through associa-tions, cooperatives and other groupings inorder to reach out to the largest possible num-ber of low-income Malians; accordingl, al-most 200 associations benefited from loansbetween 2003 and 2008.

Toda, MFI are major financial actors in the fi-nance sector in terms of resources mobilised,credits distributed and number of people co-vered. From this point of view, their social andfinancial performances have a direct impact on

the banking sector in general and the BMS inparticular. It is for this ver reason that, in De-cember 2008, the BMS both hosted and sup-ported the organisation of a national

workshop on the social performance of MFI,which was conducted b SIDI and was aimedat the whole sector. This meeting led to thecreation of a permanent support function forthese performances, located within the MalianProfessional MFI Association.

This tpe of collaboration between SIDI and anational level partner, which in turn maintainsrelations with man local institutions, serves togenerate institutional, financial and social le-verage.

shareholder, SIDI was also mindful of howthe capital increases plaed out in SIPEM,HKL (focus 6) and Microinvest and, finall,took part in the transformation of CCRD intoa limited liabilit compan.

Moreover, SIDI makes sure that its partnersdecision-making bodies are in a position toget the tools necessar to monitor activitiesand to acquire the skills needed for the ef-fective management of their structure. SIDIorganises training sessions for board mem-bers on the preparation and holding of boardmeeting and on how to monitor the appli-cation of decisions.In 2008, SIDI did some positive work to in-troduce tools for monitoring and managingactivities in the Great Lakes Region, and hel-ped TAANADI, UCMECS and TIMPAC to ob-

tain a cash monitoring tool. SIDI alsoparticipated in the strategic planning of Tem-beka, AMSSF, Asiena, Fortalecer and CAC laFlorida. In addition, it pursued the deplo-ment of software for monitoring solidaritcredit unions. Finall, training for boards ofdirectors was provided thanks to financingfrom the European Union (focus 6): SIDI trai-ned directors from CRG, Timpac, Taanadi, Ko-kari and Omipa.

bilised in significant numbers. Lastl, SIDI took the opportunit of its 25thanniversar to invite 25 partners from theSouth and East to an event in October 2008,during which everone increased their awa-reness of SIDIs solidarit financing and pre-sented their activities to the CCFD/SIDIaudience, to the public at large and to jour-nalists. The man partners who attended of-fered the chance to set up a series of workingmeetings on a range of themes, such as fi-nancing, agriculture, meetings with alliances,etc., and headwa was made in man issues.This gathering of Northern and Southern par-ticipants was highl beneficial for the share-holders, savers, the SIDI team and its partners.It also served to strengthen shared convic-tions.

Investing in refinancing tools

SIDI has established a financial and technicalrelationship with nearl 70 partners. Most oftheir needs are increasing, however SIDI onits own does not have the means to keeppace. SIDI therefore introduced an interven-tion strateg via regional funds. This tpe ofinstrument offers a better response to the sec-tors financial needs, thanks to the leverageeffect achieved b the mobilisation of donoragencies, and serves to pool and share risks

more efficientl.

15


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Two new funds, targeting rural financing, arein the process of being created b SIDI and itsalliances, one for Central America and the An-dean countries, under the name of FOPEPRO(see focus 7), and the other under the nameof FEFISOL, devoted to Africa and more spe-cificall rural areas, combining financial andtechnical support. Their technical arrange-ments, strateg and tools were established in2008.

Investing in second-tier structuresTEMBEKA in South Africa, REDFASCO in Gua-temala, BMS in Mali, SMEA in Uganda andFORTALECER in Peru.Sometimes, in countries where financial ser-vices are plentiful, SIDI believes it is useful toconcentrate its actions on second-tier struc-tures (Umbrella institutions) and in that wa

optimise its contribution via a leverage ef-fect.

For SIDI, these are strategic instruments thatmake it possible for the MFIs to refinance.The also encourage reflection on microfi-nance, thereb generating greater know-ledge of the sector and facilitating theapplication of studies on the financial, so-cial and institutional performance of the LFS(see focus 8).

Since the end of 2007, SIDI has held 10% ofthe shares of Stromme Microfinance EastAfrican (SMEA), a regional refinancing fundfor MFIs in Uganda, Kena, Tanzania andSudan, created b the Stromme Foundationof Norwa. This fund is managed in Ugandab local staff. SIDI also provided a $500,000bridge loan to SMEA in 2008 and took partin governance as a member of the commit-tee that grants loans.

Furthermore, SIDI began in 2008 to transferits investments in Peruvian MFI to Fortalecer,

an Umbrella institution set up b rural mi-crofinance associations in the countr. As aresult, the loan granted to Edaprospo wasfull converted into Fortalecer equit capi-tal.

Networking and alliances

Several ears ago SIDI took steps to mobiliseadditional resources: from its alliances and structures in theNorth that share its development vision, theprimar one being CCFD-Terre Solidaire; from public financiers and social investors.

In addition, SIDI is involved in several net-works where it shares its practices, meetsother like-minded plaers and develops jointprojects.

For several ears now, SIDI and CCFD-TerreSolidaire have been making an effort towork together in the field, a move that wasformalised in 2008. Both structures supportgroups working for social change and sharethe same vision of a solidarit econom. Theaim is therefore to capitalise on their com-mon experience in development and solida-rit financing, as well as to work together inthe field.Eight partnerships are alread benefiting

from the joint support of SIDI and CCFD: thesolidarit credit unions in the Great Lakesregion, the Fonds Coopratif in Laos, theMAIN network, Fonhsud and KNFP in Haiti,FENACOOP/FONDEFER in Nicaragua, CACla Florida in Peru and TITEM in Madagascar.Furthermore, SIDI mobilised in 2008 nearl400 million euros for the direct financing ofits partners (fig. 6) via its alliances with (inaddition to CCFD) Cordaid in South Africa,the Caixa Cataluna Foundation for Peruand Andean producers, as well as the North-South investment fund that has granted

large loans in Cambodia, Eastern Europe,Peru and Ecuador.

SIDI also mobilised 534,000 euros in co-fi-nancing for the MAIN network (CCFD, Fon-dation GILLES/Belgium), for the structure ofthe FOPEPRO Fund in the Andean countries(the Ford Foundation in the USA, FUSM inSpain and CORDAID in the Netherlands),the Fonds Coopratif in Laos (MISEREOR inGerman and MAE in France) and the GreatLakes region and Senegal (CCFD).

Lastl, SIDI is pursuing its work with the net-works. In 2008, it did the following:

Continued its commitment to the Euro-pean Federation of Ethical and AlternativeBanks (FEBEA) in order to pursue its projects

in the South. Activel took part in the board of INAISE,a worldwide network of groups involved inthe social and solidarit econom and, moreimportantl, took part in its first World Soli-darit Finance Summit that brought toge-ther 150 delegates from 42 countries. Participated activel in the work of the FO-ROLACFR network in Latin America, whichbrings together 370 MFIs and works to im-prove financial services in rural areas. Maintained its commitment to MAIN (Mi-

crofinance African Institutions Network), anetwork of 90 African MFI that exchangeexperiences, organise training schemes andconduct studies. This commitment was givenshape b financing (cash advances andloans) and technical assistance (accoun-tanc, workshops on social performanceand searches for finances). SIDI took part inthe preparation and guidance of an impor-tant MAIN seminar in Uganda, with 120participants from throughout the continentwho exchanged practices on microfinancein Africa.

AFRICA 17%

ASIA 23%

CEECS 11% THE CARIBBEAN 1% AFRICA/MAIN 8%

LATIN AMERICA 40%

Figure 6 : Geographical breakdown of financial resourcesmobilised from alliances in 2008


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SIDIs 2008financial statements

ASSETS2008 2007

Net intangible assets 78 89Net financial assets 8,978 7,182

of which shares and claims 4,159 3,423of which loans 4,634 3,622of which other financial assets 185 137

Total fixed assets 9,056 7,271

Claims (net value, including co-financing) 545 438

Cash assets 1 5,302 5,706

Accruals 19 22TOTAL 14,922 13,437

LIABILITIES2008 2007

Capital 9,000 9,000Reserves 269 259 Profit/loss for the year 277 10

Total equities 9 546 9,269

Provisions2 138 125

Loans 1,284 611

Other debts 611 562

Subscribed capital capital increase 546 -Shareholders, current account 149 122F.I.D. International guarantee fund 3 2,292 2,292C.D.C. Fund 358 351CCFD-guarantee - 106

TOTAL 14,922 13,437

2008 2007Income Total 1,828 1,833

Services (CCFD and additional income) 1 1,694 1,725Other products and provision reversal 2 134 108

Charges Total 2,417 2,258Current operation income 832 718Wages and salaries 1,140 1,103Depreciation expense 19 20Provision for charges 14 -Additional co-financings transferred to partners 3 412 418

Operating profit/loss -589 -426Income Total 750 584

Income from portfolio (loans and shares) 4 572 315Income for current assets 29 38DIF resources 99 56Exchange rate gains 41 4Provisions reversal 5 30Other 5 142

Charges Total 763 165Provision for financial risks, translation differential 5 5Provision for risks on shares and loans 480 -Loan write-down 77 -Interests on loans 26 26Disposal of shares, Investment securities 44 18Exchange rate losses 116 115Other 15 20

Financial profit/loss -13 419Exceptional products5 1,069 117Exceptional charges 190 100

Exceptional profit/loss 879 17Income taxes 0 0

Net profit/loss 277 10

SIDIs income statement at December 31, 2008 in thousands of euro

3 Provisions onloans and equitinvestment havesince 2004 beencovered b theF.I.D., a hedgingmechanism that

applies, with afew exceptions,to all investmentconducted bSIDI. Itcomprisescurrent accountsof shareholderswho areconvinced of theimportance forSIDI to targetdifficultinterventionareas.

3 These are co-financingsfrom international partnerstransferred directl to thepartners. These funds onltransit through SIDI.

4 Income from the portfolioincreases b 82%

5 Capital gain from disposals ofequit capital

2These areprovisions forrisks andfinancialprovisions forexchange ratelosses.

1 Cash (includingF.I.D.), investedin ethicalsecurities andinvestment realestate.

1 This heading mainl comprises contributions received from the CCFD

to finance support activities (1,1million euro). Most of these resourcesare provided to the CCFD from theproceeds of the Faim etDveloppement investment fund(604,335 in 2008)

resources from international partners,which are either transferred to thepartners or are spent on financingSIDI support.

2 Other proceeds include fees forattending board meetings,application fees, etc.

"S.A. SOFIDEEC BAKER TILLY, external auditor, a member of CRCC in Paris, represented by its chairman Mr Fouad EL

M'GHAZLI, has certified without reservations SIDI's annual accounts, ended December 31, 2008."

SIDIs balance sheet at December 31, 2008 in thousands of euro


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Mapof SIDIs financial partners* in 2008

* and Southern networks


19/20


Africa FEFISOL Africa FUND - ****RESEAU MAIN Africa NETWORK - ****EAFUND / SMEA FUND Central Africa FUND 497.7 ****ASIANA BURKINA MUSO - ***FNGN BTEC BURKINA PO - ***MOGTEDO BURKINA PO 22.9 ***CAPAD BURUNDI MUSO - ***COSPEC BURUNDI MIFC - **PREFED - BURUNDI BURUNDI MUSO - *ADI-KIVU DRC MUSO - ***

CCRD DRC MUSO 17.4 ****COODEFI DRC MIFC 10.5 *FAEF DRC MIFC - *PAIDEK DRC MIFC - *CRG GUINEA MIFP 17.8 ****FPFD GUINEA PO - *ADAPS MADAGASCAR PO 20.0 ****ALAOTRA/SILAC MADAGASCAR PO 100.0 ****SIPEM MADAGASCAR MIFP 541.9 ****TITEM MADAGASCAR MUSO - ***AOPP MALI PO - ***BMS SA MALI UMBRELLA 152.5 ****JEMENI ADER MALI MIFC 38.1 **NIAKO MALI MIFC 45.7 *CAIXAS COMUNITARIAS MOZAMBIQUE MIFP - **UGC-CPC MOZAMBIQUE MIFC - ***KOKARI NIGER MIFC 178.7 ***

TAANADI COOPERATIVE NIGER MIFP 155.5 ****PREFED-RWANDA RWANDA MUSO - ***ASACASE SENEGAL MIFC - ***CGRH NIANING SENEGAL PO - **CREC SENEGAL MIFC 141.2 ****ESCALES JAPPOO SENEGAL PAVRA 50.0 *JAPPOO INVESTISSEMENT SENEGAL PAVRA 236.3 ****MEC PROPEM SENEGAL MIFC 160.1 *UGIE SAPCA / EGAS SENEGAL PO - *UGPM SENEGAL PO 96.6 ****TEMBEKA SOUTH AFRICA UMBRELLA 380.9 ****AKIBA TANZANIA MIFP 419.6 ***FECECAV TOGO MIFC 76.2 **MICROFUND TOGO MIFC - **TIMPAC TOGO MIFC 57.2 ***UCMECS TOGO MIFC 61.0 ***WAGES TOGO MIFP - **CERUDEB UGANDA MIFP 475.4 *

OMIPA UGANDA MIFC - ****Latin America FOROLACFR Latin America NETWORK - **

RCF - FOPEPRO Andean Countries FUND - ****ANED BOLIVIA MIFC 155.2 **DOSBRAZOS BOLIVIA UMBRELLA - **INDES CHILE MIFP 85.1 *CONSOLIDAR COLOMBIA MIFC 78.8 *BANCOSOLIDARIO ECUADOR MIFP 165.4 *CORECAFE ECUADOR PAVRA 22.2 *FAPECAFES ECUADOR PO 140.9 **MCCH ECUADOR PAVRA 190.6 **RED FASCO GUATEMALA UMBRELLA 193.3 ***FONDEFER/FENACOOP NICARAGUA PO 140.1 ***CAFEPERU PERU PAVRA 165.3 ***CONFIANZA PERU MIFP 142.0 **CREDIFLORIDA PERU MIFP 67.9 ***EDAPROSPO PERU MIFC - **FORTALECER PERU UMBRELLA 180.0 **LA FLORIDA PERU PO - ****SAINDESUR URUGUAy MIFC 108.7 *

Asia MAF- ASIA Asia FUND 156.7 *AMRET CAMBODIA MIFP 389.8 *HATTHA KAKSEKAR CAMBODIA MIFP 238.1 ****FONDS COOPERATIF LAOS MIFC 187.6 ****LAO FARMERS PRODUCTS LAOS PAVRA 83.7 **

Mediterranean

Basin ANJCE ALGERIA MIFC - ***EACD EGyPT MIFC 264.4 ***FAIR TRADE LEBANON LEBANON PAVRA 60.0 ***NAJDEH LEBANON MIFC 28.1 **AL AMANA MOROCCO MIFP 245.6 ****AMSSF MOROCCO MIFC - ***ACAD PALESTINE MIFC 101.3 ****ASALA PALESTINE MIFC 33.0 **CD-HOUSING PALESTINE MIFC - *

Fonds de garantie Palestine PALESTINE FUND 166.0 ****Caribbean FONHSUD HAITI MUSO 42.9 **KNFP / IMOFOR HAITI NETWORK - ****

Europe S.E.F.E.A. Europe FUND 135.0 *KRK KOSOVO MIFP 1248.6 ****MICROINVEST MOLDOVA MIFP 129.3 ***TOTAL 9 298,7

GOVERNANCEAT JUNE 12, 2009

BOARD OF DIRECTORS

SCHMITZ ChristianChairman of the Board ofDirectors

GUENARD GeneviveBoard Member

RICARD XavierBoard Member

SUPERVISORY BOARD

AURENCHE GuyChairman

MESNY PhilippeVice-chairman

CAISSE DES DEPOTS ETCONSIGNATIONSRepresented b CHABRILLATPascale

COMITE CATHOLIQUE CONTRE LAFAIM ET POUR LEDEVELOPPEMENTRepresented b LESAyMartial

CONGREGATION DES SURSAUXILIATRICESRepresented bSister Marie-Thrse GAUD

CONGREGATION DES URSULINESDE JESUSRepresented b

Sister Christiane GROSSINCREDIT COOPERATIFRepresented bMORET Laurence

EPARGNE SOLIDARITEDEVELOPPEMENTRepresented bDEQUEKER Gu

BITSCH GrardMember

AREA PARTNERS COUNTRy CATEGORy

SIDIS PORTFOLIOAT31/12/08. INTHOU-

SANDS OF EURO(CAPITAL, LOANS,

GUARANTEES)

VOLUME OF SUPPORT INTIME SPENT ByTHE SIDI

TEAM

The portfolio is invested as follows: 43.3% in equity capital, 50.4% in loans and 6.3% in guarantees.


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INTERNATIONAL SOLIDARITY FOR DEVELOPMENT AND INVESTMENT

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Documents

SIDI - 2008 Annual Report