Isabelle Levard is Deputy CEO of MicroCred, a member of the PlaNet Finance Group.
MicroCapital: Please describe MicroCred.
Isabelle Levard: MicroCred is an investment company founded by PlaNet Finance that creates, builds and manages microfinance institutions. In 2005, it was created by Arnaud Ventura, who was then the CEO of PlaNet Finance. (Mr Ventura then became President of MicroCred and Vice President of PlaNet Finance.) MicroCred institutions do not have a bank status in all countries, but we do our best to obtain bank status so that we can collect savings. As of the end of May 2009, we have four operational institutions in Mexico, Madagascar, Senegal and China, which serve more than 30,000 clients and manage an outstanding portfolio of EUR 18 million. We have more than EUR 1 million of savings and around 15,000 savers. We are about to launch new operations in Nigeria and Ivory Coast. Our plan is to launch two new institutions per year, with a goal of having 15 in operation by 2013.
MC: What is your personal background?
IL: Before joining MicroCred, I led the development of Planet Rating and structured it as a private company within the PlaNet Finance Group. Before joining PlaNet Finance, I served on the management team of a leading venture capital fund in London investing mainly in mid-cap and start-up information technology companies. I also spent almost two years traveling the world, particularly in Africa, reporting on the use of information technologies in emerging economies. I joined MicroCred in December of 2006 as Chief Strategy Officer before being appointed to the Deputy CEO position at the end of 2008.
MC: What is MicroCred’s vision?
IL: MicroCred’s vision is to offer responsible financial services to people in emerging countries with no access to financial services. In order to do so, MicroCred establishes start-up (greenfield) microfinance banks and non-bank financial institutions. We are very careful to offer responsible lending products and to behave responsibly with regard to our staff.
MC: What is your process to establish a new microfinance institution?
IL: There are three main stages. The first stage is the identification and assessment stage; it consists mainly of a market study. On a continuous basis we have people identifying new opportunities worldwide. Once we have identified a promising country, we meet with banks, investors, competitors, regulators and central bankers.
The second stage is pre-operational, consisting of the finalization of the equity structure, grants and technical assistance partners; the local pre-operational tasks (offices, MIS implementation and recruiting); and bank licensing. Stage three is the launch of operations.
MC: What are the economics of a start-up MFI?
IL: Actually, it’s quite standard. Most of our greenfield start-ups are made possible thanks to technical assistance grants provided by donors. This funding allows us to break even during the third year and to earn a positive profit during the fifth year.
MC: Who are your investors and what are their expectations?
IL: At the holding level we have a total of EUR 18 million in capital, and we are expecting to receive an additional EUR 3.6 million during the next six months. Our investors are PlaNet Finance, IFC, AXA Belgium, Société Générale, IFD, EIB and Developing World Markets Equity Fund. They are mainly looking for increased numbers of clients served and an internal rate of return of 15 percent – in the long term. The first priority is providing high quality products to our clients and return is a secondary priority.
MC: How does MicroCred make use of technology?
IL: We’ve decided to use the same information system for all our subsidiaries. It is called eMerge, a spin-off of Globus. In terms of mobile money technology, MicroCred participates in the PlaNet Finance-Gates Foundation initiative for Africa and hopes to offer mobile money services to its customers soon. We believe that promoting savings won’t be successful unless we offer strong means of payment. And it’s not just mobile money, it’s also automatic teller machines and credit cards.
MC: How do you ensure transparency?
IL: We follow CGAP best practices. Every month, our subsidiaries have compulsory financial and operational reporting responsibilities and those are posted on our website. Every month we publish their results including classic ratios, number of active clients, income, interest rates, portfolio at risk, etc. We want our clients to know what they are paying for in each of our subsidiaries – what they can expect. We participate in MIX Market reporting and everyone who asks for results will get them.
MC: What do you look for in local and international partners?
IL: We look for many things. First, we like to work with banks and insurance companies that offer long-term investments. On an international level, we look to development finance institutions for technical assistance grants. When we launch a new Microcred in a new country we own 50 percent or more of the capital shares, so we are looking for people to invest with us at the subsidiary level.
MC: On a personal level, what is the origin of your passion for microfinance?
IL: For me it started with finance. I’ve always liked figures and working with numbers. Also, I was born and raised in Africa. I think that the market economy and – more specifically – financial products are key to helping developing countries.
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