Interview with Philippe Guichandut, Head of Development and Technical Assistance at the Grameen Crédit Agricole Foundation
As the result of a partnership between Grameen Trust and the Crédit Agricole S.A group, the Grameen Crédit Agricole Foundation has been helping to develop business projects in developing countries since 2008. Most of the beneficiaries of these projects are women.
To understand why and how microfinance can be one of the innovative ways that we can all participate in economic development, we spoke to Philippe Guichandut, Head of Development and Technical Assistance at the Grameen Crédit Agricole Foundation.
He sees things very clearly: lending money to people we don’t usually lend to is essential…but it must be an integrated approach that encourages the overall empowerment of the people involved.
EVE blog: Hello Philippe, you are responsible for the development of the Grameen Crédit Agricole Foundation. Can you tell us about the foundation, its role and how it works?
Philippe Guichandut: First of all, it is indeed a foundation, and independent from the Crédit Agricole group. It has its own board of directors, its own mission, and absolute financial autonomy.
Next, we could say that the foundation is geared towards the economic development of disadvantaged populations that are excluded from traditional financial systems. We don’t give donations, but we are involved in supporting local players in economic development such as microfinance institutions and social businesses. Our support comes in the form of loans, guarantees or equity investments for these emerging or expanding businesses.
I would also like to add that we work all over the world, particularly in Africa, the Middle East, Central Asia and Southeast Asia.
EVE blog: Even though the foundation is independent from the Crédit Agricole group, does it share its core values, its DNA, in supporting local economic players in their approach to development?
Philippe Guichandut: Absolutely. Considering its history, it is very logical that the Crédit Agricole group has started working in partnership with a foundation like this one. You are right to refer to the mutual values of Crédit Agricole which are indeed an integral part of its DNA: proximity, cooperation, and access to financing for those who deserve it have certainly been the core principles of the group since its creation in the 19th century.
This culture has been nurtured at Crédit Agricole, which is why when we started talking about microfinance, it was so clear that the group should become involved in this sector. The meeting between the executives of the Crédit Agricole group and Muhammad Yunus, just as he was about to receive the Nobel Peace Prize, clinched the deal.
EVE blog: According to Muhammad Yunus, the bank’s approach is very “challenging” for an international banking group…
Philippe Guichandut: Yunus’s outlook calls many things into question, if not least when he stated that banks lend money to rich people, to men and individuals, and he suggests that we also lend to the poor, to women and to groups. However, I think that this outlook also puts things into perspective, and forces us to ask the very simple economic question “Why are we here?”
This outlook has the advantage that whilst being essentially human and social, it is also economic: in “social business”, there is society and there is business. In our approach, and in our actual daily work, these two elements are always balanced.
EVE blog: What are the criteria on which you select the microfinance institutions that you want to support?
Philippe Guichandut: They are based on “social” and on “business” criteria as I said. “Business” criteria are typically based on financial analysis, we check achievability, durability, business potential, etc.
“Social” criteria lead us to the real focus of our topic: first we must be sure that we are indeed lending to those who don’t qualify for traditional bank loans, but we also evaluate the social benefits and the direct and indirect impacts that these projects will have on the local community.
EVE blog: The expected social benefits can be difficult to predict, how do you anticipate them?
Philippe Guichandut: We always visit the sites. We meet the people involved, we discuss how they expect the business to financially integrate into the fabric of the local community (Who are they going to employ? How will they train their employees? How do they plan on developing their staff as the business grows?).
Quality of service is vital in our assessment of a microfinance institution or a social business: it is training, management structure and the approach to leadership that really make all the difference. As you know, good initial intentions don’t always give us the results we expect. Microfinance isn’t all just a “fantasy land”. We are not the judges of peoples’ honesty, nor are we here to impose our Western vision of business by ignoring other cultures, but we want to fully ensure the integrity of projects that first and foremost benefit the people who create them, and then their community.
When our microfinance partners prioritize women for money loans, it’s because they need them most, because their projects deserve them, because they have the entrepreneurial skills which justify them, but we have to be careful that women don’t become a “blind criterion” which would allow us to use them purely as “loan puppets” without ensuring that they are really empowered.
EVE blog: It is often said that women are good candidates for microcredit. However, this is a discussion that provokes some criticism: we blame it for prioritizing women but also for limiting them to a very “micro” role in economic development…
Philippe Guichandut: We need to really be cautious of any criticism that starts to question the differences between men and women’s skills. It has, however, been established that women generally take on projects that have a larger impact on their families, and that they are more focused on the future. These women are often mothers whose priority is their children’s education. Having said that, this doesn’t justify the vision of women as only mothers, nor does it imply that men are less preoccupied with the future of their families, but it is founded on socio-cultural realities that do actually give women these responsibilities, in order to give them more than these responsibilities.
This brings me to respond to the second criticism that you mentioned: the challenge of microcredit is to promote something that allows the autonomous development of our beneficiaries. That is why we are particularly careful to ensure that the business plan is centered around the empowerment of the entrepreneur and of the company. Essentially, microfinance should not just enable a company to become established, it should also encourage the development of members who are responsible for their own communities, who act as representatives with the authorities and with other economic players.
The same is true for the social businesses that we support. A project leader is someone who receives a loan, but it is also and above all someone who can take responsibility and be a spokesperson. Nevertheless, it’s true that microfinance will basically finance micro businesses, with a “micro” impact, typically the beneficiaries and their families, whereas the support that a company gets from a social business can have a larger impact on local development.
EVE blog: What developments do you have in the pipeline for the Grameen Crédit Agricole Foundation?
Philippe Guichandut: We are working on setting up a specific fund aimed at social business companies. The Foundation already supports 11 social companies in 8 countries, as well as 35 microfinance institutions. We are also working on agricultural microinsurance, with the support of the experts at Pacifica and other companies. The idea is quite new, but we believe it could be a very beneficial answer to the issue of financing agriculture through support for family farming in developing countries.
Our work makes us very humble, “social finance” accounts for just 1% of the money in the world. But despite that, we are proving that other methods are possible by creating real, concrete and measurable value. I think that this deeply resonates with the demand for meaning today. I urge that we should have a clear but hopeful view of the relationships between finance, businesses, and non-governmental organizations in both developed and developing countries.
Interview by Marie Donzel and Clotilde Jardel (CASA) for the EVE blog.
Translation: Ruth Simpson