Microstart

Microstart: Empowering people who have more idea’s than money

Belgium
Project Stage:
Scaling
Budget: 
$1 million - $5 million
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

microStart combats unemployment and social exclusion in Belgian Cities through microfinance. The target population is the entrepreneur who falls outside of the traditional banking system - like unemployed people, underprivileged population or (re)-starters. microStart grants microcredits from € 500 to €15,000 €, as well as free tailor-made guidance by volunteer experts, for the candidate to create its own job.

About Project

Problem: What problem is this project trying to address?

People with good ideas but limited resources (no money, bad track, immigrants, ) hardly gets loans from traditional banks to develop their business. The main reasons are (1) the risk is too high (2) the amount is too low for the benefit to cover the running cost of the banks (3) their entrepreneurial skills are often underdeveloped.

Solution: What is the proposed solution? Please be specific!

Empowering the target population to develop their own business. Microfinance creates value through new entrepreneurs, reduces public spending through savings in social budgets and increases public revenues while creating additional tax-sources. Mitigation of : Risk : market knowledge (ADIE) + risk-efficiency approach and industrialized processes (BNP Paribas Fortis) Low profitability : microfinance experts (the director is coming from ADIE) + knowledge sharing (ADIE) + efficient process approach (BNPPF) + fast-expansion to reach the critical mass (network BNPPF) +working with volunteers (BNPPF) Lack of knowledge from the entrepreneurs : training and guidance for the micro-entrepreneurs (expertise from ADIE + volunteers from BNP)
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

microStart comes as the first MFI in Belgium focusing only on professional micro-credits below 15k €. The major innovation in Belgium is to limit the need for public money thanks to BNP Paribas Fortis’ volunteering’s program for its own employees (more than 60 volunteers). Professional bankers are volunteering today, which is an incentive for its own employees’ motivation. The innovation is also to extend the service to the target population via the CSR programs of partners of BNP Paribas in Belgium : micro-leasing with Arval, micro-saving with Bank of the Post, micro-insurance with Ageas

Spread Strategies: Moving forward, what are the main strategies for scaling impact?

Since 2011, microStart was only active in Brussels. But in 2013, the idea has been replicated in another 2 new cities (Ghent and Liège). The presence of BNP Paribas Fortis in those cities is facilitating the networking with local authorities and the engagement of local volunteers. Antwerpen and Charleroi are in the program for 2014.
Sustainability

Marketplace: Who else is addressing the problem outlined here? How does the proposed project differ from these approaches?

microStart comes as the first MFI in Belgium focusing only on professional micro-credits below 15k € and with a clear objective to limit the need from public money. It is a complementary offer on a market where some other institutions’ are granting microcredits (Credal, Hefboom, BruSoc). The major difference is that those institutions are often coming from public initiatives and relay on public subsidies for 85% up to 100% (microStart 10%). Some competitors (Hefboom, BruSoc) also focus on a different segment : startups and SME’s having needs up to 50-60 K € (v/ microstart max 15K). Credal is granting consumer micro-credit as well as professional (v/ microStart : professional only).
Team

Team

The top managements were immediately supportive : Maria Nowak (founder of ADIE) became the President of microStart, Luc HAegemans represents BNP (General Secretary and member of the executive committee). EIF is represented in the board as well and the current president is the former president of the EIB Philippe Maystadt. Also at the executive level, the interactions are very strong. For instance , Patrick Sapy, executive director of microStart , is a former director from ADIE and Pierre Lemaire, president of the credit committee in Liège, from BNP Paribas Fortis.
About the Lead Co-Creation Partners
Organization:
BNP Paribas Fortis
Visit website
LEAD SOCIAL-MISSION ORGANIZATION
Type of organization (e.g. NGO, association, not-for-profit, foundation, social enterprise)

Social enterprise, micro-finance institution

Total Number of Full-Time Employees

453

Lead Contact First Name

Patrick

Lead Contact Last Name

Sapy

Title

Director MicroStart

Country

France

Website
LEAD CORPORATE PARTNER
Organization Name

BNP Paribas Fortis

Total Number of Full-Time Employees

15500

Lead Contact First Name

Alex

Lead Contact Last Name

Houtart

Title

CSR Director

Country

Belgum

Basic Info
Project Starting Year

2009

Primary European Country where this Project is creating social impact
Additional European countries where this Project is creating social impact

France

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What awards or honors has the project received?
Project Summary
Co-Creation Model: Tell us about your main strategic partners and how the partnership truly create value. For each Partner please include its type (business/social/public), its name, a short description, its key motivation to participate in the co-creation project, and the key contributions it is making in the co-creation project. Please follow the format displayed below:

-ADIE
-Social
-Major Microfinance institution in France
-Duplicate its French experience to develop microfinance in Belgium and learn from the co-created new model to bring back to France some best practices if any.
-Expertise in microfinance, specific grid analysis, enthusiastic market approach and excellent knowledge of this specific segment of clients

-BNP Paribas Fortis
-Business
-Largest bank in Belgium covering retail, companies and investment markets financing needs
-Help combatting financial exclusion in Belgium, supporting entrepreneurship, provide motivating volunteering experience to employee’s in their own field of expertise (finance)
-Funding as well as process efficiency, risk control, a pool of volunteering bankers and a connection with large existing network

-European Investment Fund
-Public
-European Public fund supporting projects improving the European economical situation
-Supporting microfinance in Europe, experiencing a microfinance model close to self-supporting
-The role of EIF is merely financing. However, thanks to its strong implication in the board of directors, it can nearly be considered as a partner

Impact
Impact: What is the impact of the work to date? Also describe the projected future impact. Please specify using qualitative and quantitative data (e.g. # of indirect and direct beneficiaries); help us understand how this solution truly makes a difference.

Since the opening (2011) :
- 3000 projects analysed ;
- 775 micro-loans granted = 775 persons no longer excluded from financial services and creating value in the following sectors : trade ( 44 % ) , services ( 19 % ) , transport ( 12 % ) , trade ( 11 % ) , arts & culture ( 6 % ), construction ( 4 % ) , crafts ( 3 % ) , agriculture ( 1%) ;
- Average amount of loan : 4,700 euros ;
- 40% of the micro-entrepreneurs are women ;
- 92 % of the loans are paid back smoothly, 6% are paid late, only 2% remains unpaid ;
- 400 jobs created : more than 50% of the beneficiaries have today a successful activity ;
- 100 active coaches , including many volunteers for a total of 750 coaching actions ;
- Planned for 2014 : 2 new branches, micro-savings, micro-leasing and micro insurance.

Sustainability
Funding: How is your project financial supported? [select all that apply]

Foundations, NGOs, Businesses, Regional government, Customers, Loans, Other.

Sustainability Plan: Has your project already reached financial sustainability? If not, what is this solutio’s plan to ensure financial sustainability? Do the main partners have enough stake to sustain the solution? If this project requires limited budget, how will other resources be secured to maintain or grow this work?

The financing mix is very diverse in order to ensure the business continuity.
The major source is the results of the operational credit activity. The running costs of the branches will be self-supported by 2017 when the activity will generate 1.200 microcredits.
The support of BNP Paribas in Equity and Credit comes in second place.
Then the support of the other partners (Equity from ADIE, Guarantee from EIF).
The coaching of micro-entrepreneurs is supported by volunteers coordinated by employee’s paid by private partnerships + public subsidies (about 10 % of the costs).
Partners renewed their confidence in the project in order to support during the next 4 years after presentation of the new business plan period 2014-2018.

Team
Founding Story: Share a story about the "Aha!" moment that led the Partners to get started and/or to see the potential for this to succeed.

Adie is a French IMF supporting people excluded from financial services and the labor market. ADIE wanted to replicate the system in Belgium. One of the issue was the economic and financial crisis : fund raising was difficult, most especially for public money and subsidies. The idea raised to try to limit the need for external donation and subsidies by increasing efficiency and limiting costs. At the other side, BNP Paribas Fortis was the biggest bank in Belgium, already actively involved in the local community and willing to extend its CSR activities. It was an unique opportunity to combine strengths : ADIE with its IMF expertise could offer an attractive CSR volunteering program to the bank and in return, BNP Paribas Fortis could offer a strong local network and a process efficiency expertise.

About the Co-Creation
Barriers: What main barriers may you have encountered to co-create during the creation and implementation of the project and how did you try to overcome them?

The barriers are linked to the size of big organizations like BNP Paribas Fortis. The decision to operate in a field that is, a priori, outside of the banking area, is not an easy decision and requires to have the full support of the top management.

The way to overcome was the following : ADIE sent some experts to make the feasibility study in order to give a full objective information to the bank’s executive committee, supported by the President Maria Nowak, . Inside of the bank, some key persons needed to influence the C-suite. The current CEO of the bank, Maxime Jadot was one of the major supporter and decided to co-sponsor microStart. The combination of full objective information and internal consensus building created both necessary enthusiasm and risk control to kick off the project.

Governance: What is the type of the relationship between the partners? (e.g. joint venture, contractual relationship, joint project...)

Joint Venture « ADIE + BNP Paribas Fortis + EIF ». Each one is represented in the board, EIF playing a more financial role mere than real operational role. But ADIE + BNP Paribas Fortis are both playing an active role in the daily management.

Interaction model: How is the project a transformative partnership? How is the interaction transforming the partnering organizations and their employees/ leadership in terms of creating a new vision, new management practices, new skills and new organizational structures? Please provide for concrete examples

With microStart, ADIE benefits from the efficiency of the risk and process approach of a major bank. One of the consequence is an on-going benchmark study to compare the SWOT of different MFI in France, Belgium and Italy, aiming at sharing best practices and optimize the resource-allocation.
For BNP Paribas Fortis, microStart is the first CSR experience in its own core-business (i.e. in the banking activity). Until then CSR programs were pretty oriented towards internal organisation, diversity or own carbon footprint. The link with external world was limited to charity actions. microStart was the opening towards Shared Value. It helps the bankers to realise that the fundamentals of their core activity (transformation of deposits into credits) has a socially responsible role : supporting the progress of the society through financial inclusion. The volunteering program is considered

How did you find out about this competition?

Business & Society, Ashoka, Kauri