FMO ventures into Burkina Faso by leveraging on ACEP microfinance expertise
07-09-2020 12:50:00 | by: Pie Kamau | hits: 3650 | Tags:

Dutch development financier, FMO, announced the closing of its first loan to the microfinance sector of Burkina Faso, with the signing of €3 million loan facility to Alliance de Credit et d'Epargne pour la Production Burkina Faso (ACEP BF).

The transaction will support on-lending to micro, small and medium sized enterprises (MSMEs) and will be funded by MASSIF, a financial inclusion fund that FMO manages on behalf of the Dutch Ministry of Foreign Affairs.

ACEP BF is active in one of the poorest countries in the world; with heightened security threats and political instability. The country ranks 183rd out of 189 in the Human Development Index, is on the UN list of Least Developed Countries (LDCs) and can be considered a fragile state. Roughly 45 persons out of 100 live below the poverty line; only 14% of population has a bank account in a formal financial institution; and only 5% has ever contracted a loan.

In this context, ACEP BF is a young microfinance institution aiming at fighting poverty by providing financial services adapted to micro entrepreneurs and to promote financial inclusion. It mainly provides microloans (80% of the loan portfolio; 20% SME loans) to its clients, thereby providing much needed financing to underserved customers and supporting local employment.

ACEP BF is part of the newly founded ACEP Group, a French microfinance network which currently has operations in four countries and is looking to carefully expand its network further.

Managing Director ACEP BF, Ousseni Kirakoya: “We are pleased to announce to our customers that we have signed a loan agreement with FMO, now a partner of choice for ACEP. Thanks to this partnership, ACEP mobilizes nearly 2 billion FCFA (€3 million). In this difficult context of the Covid-19 crisis, this envelope allows ACEP to participate in the economic recovery, by providing adequate solutions to the financing issues of the informal sector, the lung of the Burkinabe economy.”

Jeroen Harteveld, MASSIF Portfolio Manager, said: “This loan will help improve access to finance in Burkina Faso, a fragile country with a large financially underserved population. Our loan is geared towards driving financial inclusion, a critical factor in reducing poverty and achieving inclusive economic growth. By targeting small entrepreneurs, ACEP BP supports job creation and reduces inequalities.”

The loan from FMO comes at an important time as microfinance institutions weather difficult market conditions following the COVID-19 outbreak. FMO’s funds will allow ACEP BF to maintain sufficient liquidity while continuing its support to micro-entrepreneurs and SMEs in their recovery.

ACEP’s support to entrepreneur during the COVID-19 pandemic

Ms. Sylla Awa is an entrepreneur marketing food products in Burkina Faso. She buys raw materials in the countryside, processes them and then sells the finished products in urban markets. To run this business, Sylla has hired three people who support her. Sylla has benefited from an ACEP BF credit for over 3 years now. Her last loan dates from March 2020 and amounts to 4,000,000 FCFA (the equivalent of 6,000 EUR). Following the advent of COVID-19 and the restrictive measures taken by the Burkinabe government to prevent the spread of the pandemic, she found it impossible to sell her goods.

As a result, she could no longer honor the payment of loan maturities and her commitments to her partners. For this reason, Sylla requested and obtained a two-month payment deferral for her loan without being faced with the obligation to pay penalty fees and interest. ACEP BF granted the suspension of penalties for late payment of instalments to all its customers for a 3-month renewable period. This support allowed Sylla to reorganize and adapt to the situation. This month, Sylla was able to resume the repayment of her loan maturities.