This is a submission from the Advans Group, a leading international financial inclusion player, approved by CEO of Advans International, Steven Duchatelle and Deputy CEO Grégoire Danel-Fédou, to attest to the financial and technical support provided to the company from British International Investment (BII) since 2008.

BII’s support as one of our key investors not only serves Advans mission which focuses on the financial inclusion of small businesses but also enables us to go further in that mission – to react during a crisis for example to ensure we can help more vulnerable populations, or to conduct the necessary research and analysis to develop our impact strategy for the future, focusing on the key topics of Gender and climate. BII’s backing has been key in our development as a leading responsible microfinance group over the past 17 years. Thanks to BII’s support we aim to continue to build and strengthen the economic, social and climate resilience of small business owners and their families in developing economies, in line with the UN’s Sustainable Development Goals (1, 5, 8, 10 and 13)[1].

Introduction to Advans Group

Advans is a leading responsible microfinance group created in 2005. Advans mission is to provide customer centric financial services to small businesses and under-served populations in a sustainable and responsible manner. Advans invests as majority shareholder in the creation of new financial institutions (greenfield Microfinance Institutions (MFIs)), and as lead investor in existing MFIs which have similar goals. Advans actively participates in the governance of its financial institutions and provides support to its subsidiaries via Advans International. Advans SA’s shareholders are Development Finance Institutions EIB, KfW, FMO, BII, FISEA (AFD Group), IFC and a staff investment structure Advans Invest. BII became an investor in 2008 and currently holds 14.9% of the company’s €74.1 Million Share capital.

The Advans Group has made one lead investment (Amret in Cambodia) and launched eight greenfields in Africa and Asia since its creation 17 years ago – Cameroon, Cote d’Ivoire, Democratic Republic of Congo, Ghana, Myanmar, Nigeria, Pakistan and Tunisia. As at end December 2022, the group served over 1.2 million customers and employed 8,400 staff, with a Gross Loan Portfolio of over €1.9 billion and a total of €1.1 million in deposits.

The creation of Advans comes from a key conviction: small businesses employ a large percentage of the active population and therefore play an essential role in social and economic development in low income and lower middle-income economies[2]. But these businesses are often lacking adapted access to finance through traditional player: the estimated formal MSME finance gap in Advans’ markets is 248 billion, and that is not even considering potential informal demand.[3] Advans’ goal is to democratise access to financial services for small businesses, and therefore contribute to long term inclusive economic growth. Our core business is providing loans to both informal and formal small businesses to increase their working capital or to invest in productive assets. We aim to identify their needs and imagine how we can serve them in a sustainable manner, whether they are an urban entrepreneur or a farmer. Our lending methodology is based on cash flow analysis - we look at the income, expenses, and financial history of each customer, and ensure that the loan we are offering fits the customer’s needs and can easily be repaid.

We have also developed a full range of financial services and channels adapted for small businesses and low-income populations including services such as current accounts, savings, transactions and insurance, as well as channels like Mobile banking, third party agents or field cash collection. This enables our customers to have a better everyday management of their money, deal with emergencies, and to plan for future projects.

Today Advans customers are largely female (64%), based mostly in urban areas, but Advans also supports agricultural activities and rural customers in several markets with 17% of our outstanding loan portfolio dedicated to agricultural loans. In 2022, the 60 Decibels Financial Inclusion Index survey, which covered 7 of Advans markets and 1,784 customers, showed that Advans loans had helped to develop the business activity of 81% of our customers, and had helped to improve quality of life for 80% of customers.[4]

Now we have created a solid and widespread network of MFIs we are focusing on widening and deepening our impact and outreach in our countries of operation. To do this we are focusing on implementing a new digital strategy which aims to offer a better quality of service to our customers, with a more efficient and agile use of data to better respond to customer needs, and to increase productivity and efficiency. We are also looking to increase our focus on better serving women, who encounter more barriers to growth, and on building our customer’s resilience in the face of the climate crisis.

Support of British International Investment

As mentioned above, BII has been a key shareholder for Advans since 2008 and has made a great commitment to ensuring the responsible development of the group. As a key shareholder, BII has a representative on Advans SA’s Board of Directors. Advans SA's Board of Directors meets at least every quarter and is chiefly responsible for the overall management of Advans SA in accordance with the company's statutes and Luxembourg law. Advans SA has also created committees to support the Board of Directors, the Audit and Risk Committee, and the HR and Governance Committee, and a Social & Environmental Performance Champion has also been nominated on the Board. This position is currently held by the BII representative who has been proactive in promoting a better integration of all Social & Environmental topics at Board level. Having a BII representative as an active member of the Board of Directors means that BII is involved in approving Advans overall strategy, budget, key policies and the general direction of the group. BII also has a shareholder representative who is more focused on general investment decisions and approvals.

As well as this role as a key shareholder and partner for Advans, BII has recently brought additional grant support to the group for technical assistance projects. This support firstly enabled Advans to react quickly and deploy some key solutions to help vulnerable customers during the Covid-19 epidemic, and secondly gave the company the resources needed to launch some new impact focused projects, notably gender smart financial inclusion, and climate change.

BII Business response fund support during the Covid 19 epidemic

When the Covid-19 crisis hit in 2020, Advans was impacted across its network. The epidemic had both internal effects on operations and external consequences on customers’ businesses. Lockdown restrictions meant that our branches had to close or reduce staffing and opening hours, with many staff working from home. The crisis severely hit our small business customers in many markets, due to the restrictions on business and travel, the blocking of trade and overall economic slowdown. Over 80% of customers saw their financial situation worsen because of the crisis and 36% experienced a decrease in food consumption[5].

This meant that Advans had to quickly move to ensure that we could remain in contact with our customers to continue supporting them. After offering an exceptional grace period to customers in need across our network, while supporting customers from some vital sectors, we needed to keep track of the evolving situation. Advans Customer Relationship Officers (CROs) needed to follow up closely with customers by phone to understand their individual situations. But this proved difficult remotely because banking and Customer Relationship Management systems were mostly only accessible in branches, access to customer information was an issue and it was difficult to consolidate information and provide an efficient and coherent response on a large scale.

Thanks to the support of the BII Covid 19 Business Response Fund created in April 2020[6], Advans was able to obtain some technical assistance funding to put a solution in place to address this problem and to continue to help customers during the crisis. The funding helped Advans to launch a “Restart” campaign, to better understand each customer’s business challenges, adapt loan methodology and products in line with needs, and train staff on any changes. Advans piloted a partnership with Juakali[7], to create a cloud-based platform which could be quickly deployed enabling staff to organise their customer follow up and remotely access customer information. The platform, accessible on a smart phone or computer, facilitated data sharing and communication between teams.

Through this digital solution, customers were classified into categories of business, going from those who were doing business as usual to those who were suffering long term business impacts. Advans’ could then consolidate the data, compare the situation between different markets and analyse trends, and make modifications to products, policies and processes accordingly. After initial testing in Tunisia, the funding from BII enabled the Juakali platform to be deployed in seven countries, with 89,724 borrower customers contacted with this tool. In addition, BII helped to finance the roll out of a digital learning solution during the same period in three subsidiaries, with digital training modules created to help staff understand how customers were impacted by the crisis and train them on new policies and processes around the solutions offered. Over 1,500 staff were trained with this tool.

Overall, during the Covid period Advans was able to deliver adapted product solutions to more than 150,000 customers. Advans also was able to keep its portfolio at risk very low and resume growth coming out of the crisis in 2021. Thanks to the quick and flexible support received from BII, Advans was able to weather the Covid-19 crisis and continue to support its most vulnerable customers in a time of need, as well as accelerate the digitalisation of its business model[8].

BII Plus support on Gender Inclusive Financial inclusion

While our female customers were slightly less impacted at the start of the pandemic, with 82% of women declaring their financial situation had worsened compared to 83% of men[9], it seemed to take longer for women’s situations to improve, with 85% still saying their financial situation had worsened compared to 80% of men[10] at end 2020. The impact of the crisis on men and women was especially different in some markets: in Cameroon 77% of female customers said their financial situation was much worse compared to 59% of men. Advans has always sought to champion gender equality and offer equal access to financial services but these insights into women’s financial vulnerability encouraged Advans to explore how it could better support female customers going forward.

BII Plus was a key supporter of Advans to kick start our gender strategy, with technical assistance enabling Advans to benefit from the expertise of Palladium Impact Capital[11], who helped us to understand that having a more systematic gender-smart approach, was a necessity to better financially include women. As well as looking at Advans’ global strategy, Palladium supported gender projects in Advans Cameroun and Advans Ghana. The project consisted in analysing the data on Advans female customers, performing qualitative field studies with customers in both markets, as well as a staff surveys. These elements were all used to create a gender strategy and define training needs for field staff.

The key learnings from this first project were as follows:

A  segmented gender  strategy is  essential to have  an  adapted approach to barriers women  can meet  within  each  segment and  context: In every market female entrepreneur customers are for the majority in what Advans considers the micro segment and are less present in the small and medium segments. Advans needs to develop a deep understanding of the challenges to growth each female business profile is facing in each market.

Both  financial  and  non-financial  services  can  help  female  entrepreneurs  overcome  barriers  to business growth: Access to capital remains one of the key barriers to growth for women at all levels often  because  of  lack  of  financial  security  or  formalisation.  Advans therefore needs to:  i) make loan conditions more flexible for women and ii) develop additional services like  coaching  or  digital  accounting  tools  to help  women  businesses  better formalise in  the  long term.

Actively  assisting  and  better  communicating  with  female  customers  can  help  them  benefit  from products  and  services: Women  often  have  lower  savings  balances  and activity rates on accounts fluctuate. Female customers want more information on services and lack trust in  digital  services  especially. It is therefore essential  to  provide  the  right support  to  female  customers, to help  them  use  services and adapt and simplify value propositions to align with their goals.

Serving women better may help Advans have a wider impact on communities and livelihoods: In Ghana, women tended to be more likely to report that Advans had a positive impact on their quality of life than men, with women especially increasing their spending on home improvement, education and healthcare[12]. This shows that women customers are probably more likely to invest in key life improvements for their families, by supporting women customers, Advans can therefore have a wider impact on the communities in which it operates.

Thanks to the support from BII Plus, Advans was able to define an overall gender strategy, share experiences between subsidiaries and refine its global gender-smart road map for the years to come with one overall objective: a better approach to women’s financial inclusion for a wider impact on their businesses, families, and communities. Advans is currently piloting several of these ideas in Cameroon, Ghana and Tunisia and will look to expand the strategy in other markets. Even though Advans has group ambitions, each country needs to define its own path to improve financial inclusion for women, adopting these key learnings to their specific context.

BII Support on Climate Strategy through FSG Plus

The geographies in which Advans operates are very vulnerable to climate change with   long term changes and natural disasters becoming more frequent and intense. In 2022 unprecedented floods hit Pakistan, impacting Advans customers. Floods also hit Côte d’Ivoire and Tunisia has been affected by several heat waves. Advans is aware that "disadvantaged and vulnerable populations" (including MSMEs), are at “disproportionately higher risk of adverse consequences with global warming of 1.5°C and beyond (high confidence)" (IPCC, 2018). For this reason, Advans has defined an ambitious Climate Strategy, which kicked off in 2021, to incorporate the effects and impacts of climate change into our business model.

BII grant support has been instrumental in supporting Advans to develop this strategy along with two other Advans shareholders, EIB (European Investment Bank) and FMO (Dutch Entrepreneurial Development Bank). This support will allow Advans to work on a global approach including: the assessment of the risks and probable impacts of climate change, the identification of the most vulnerable areas and populations, raising awareness amongst staff and customers and defining adaptation strategies. The objective for Advans is to help its customers build their resilience while continuing to support them in growing their businesses.

Advans is piloting its climate strategy in three countries - Ghana, Côte d'Ivoire and Tunisia. The project launched with an analysis of the impacts of climate change on our customers, looking at the situation today and the projections for 2040, with the help of consultant Horus Development Finance, jointly selected by Advans and FSG Plus. Advans wants to build a comprehensive understanding of the current and future impacts of climate change on its customers' activities. This means considering their level of vulnerability to physical and transitional risks according to their geographical location, income levels, and business sector.

By identifying the risks most likely to occur and those that will be most affected, Advans wants to help its customers face climate change and adapt to the changes it will bring. Advans will therefore develop and deploy, with the support of partners, tools to raise awareness on the main impacts of climate change and on transition risks. This will aim to help customers better identify actions that will enable them to reduce or mitigate the potential impact of climate risks on their businesses and households.

Advans will use and capitalise on the experience acquired on environmental and social risks, the impact of climate change and the level of resilience of our customers to develop adapted products and services. These products and services will aim to mitigate the physical and transitional risks of climate change on customers' operations, promote adaptation, and support climate-smart agriculture and low-carbon growth strategies for urban customers.

Advans wants to ensure that we can accompany our customers in adapting to the new challenges that the climate crisis will bring. We want to do everything possible to ensure the security of our customers and preserve their livelihood, and BII’s support is crucial for us in developing this strategy.