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www.planetfinance.org
The Microfinance Platform
An introduction to GIRAFE Solidaire A
project to create an evaluation tool for European
Social Finance Institutions May 2004
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Table of contents
1- PlaNet Finance and the GIRAFE
methodology 2- The positioning of PlaNet
Finance 3- Social Finance Institutions
(SFIs) in France 4- PlaNet Finance and
French SFIs 5- The GIRAFE methodology 6-
Evaluation and Rating of SFIs why for
whom? 7- GIRAFE-S achievements and
objectives
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1- PlaNet Finance the GIRAFE methodology

• PlaNet Finance is an international
  non-governmental organization, created in Paris,
  France, in 1998 and dedicated to alleviating
  poverty through the development of microfinance.
  To this end, PlaNet Finance brings together
  Microfinance Institutions (MFIs), and provides
  them with the following services
• Reduce the digital divide (technological
  assistance) by connecting MFIs to the rest of the
  world by providing them with computers, Web site
  creation and hosting under PlaNet Ring, and
  specific IT training
• Knowledge transfer and capacity building of
  microfinance practitioners, by providing training
  through an online university dedicated to
  microfinance and information technology, a
  virtual library on microfinance and information
  sharing and training activities in the field
• Increase transparency by establishing a rating
  system specific for the MFIs
• Increase funding dedicated to MFIs and
  microentrepreneurs via PlaNet Finance Revolving
  Credit Fund, an international debt fund helping
  young MFIs to build their own credit history.
• As of today, PlaNet Finance has worked with over
  700 MFIs. Over 90 ratings have been completed, in
  25 countries, in four years of rating experience
  across four continents.

Created by PlaNet Finance, GIRAFE is a well-known
evaluation and rating tool dedicated to
microfinance institutions (MFIs) in Southern
countries. It provides comprehensive performance
and risk evaluation with a clearly identifiable
rating.
     
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The positioning of PlaNet Finance
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3- Social Finance Institutions in France
Frameworks

• Social Finance Institutions SFIs provide
  financial services, loans, guarantees and equity
  to various types of Small and Medium Enterprises
  (SMEs), including
• SMEs created by socially excluded people,
• SMEs creating jobs for long term unemployed
  people,
• - Non-profit organizations (Associations 1901)
  that create jobs or services for disadvantaged
  areas.
• SFIs all have in common their mission of
  solidarity, but their frameworks are different.
  In France, financial services can be provided
  under various types of legal frameworks, such as
  
• Non-profits the biggest networks of micro
  credit institutions in France are Associations
  1901 (ADIE, FIR, France Active)
• - Investment companies, or Venture capital
  companies (SIFA, Autonomie et Solidarité) or
  conventional financial institutions under the
  control of the financial public authority (NEF,
  France Active Guarantees, )

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3- Social Finance Institutions in France
Figures (Source Finansol)

• Assessment per year
• - funding of about 8 000 projects (launching or
  development of SMEs)
• - about 12 000 job creations
• 13 of 31 150 SMEs launched in 2002 by long-term
  unemployed people were created thanks to social
  funding (source INSEE)
• Success Rate for SMEs funded and followed by
  Social Finance 80 after 5 years (source France
  Active).

Characteristics

• All SFIs have difficulties reaching financial
  self-sufficiency, for the following reasons
• they are too small (especially compared with
  traditional banks)
• they serve small SMEs and low income people
• they provide a small amount of loans or other
  services
• they have very high transaction costs (compared
  with the loan amount)
• they often supply advice and training services
  to their borrowers, thereby increasing their
  costs.
• ?? Consequently, they need public support to
  accomplish their goals.

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4- PlaNet Finance and French SFIs
Objective Promote Social Finance in France and
encourage business creation in France
Actions of PlaNet Finance France
Improve transparency of the sector
Strengthen the skills of microentrepreneurs
Promote Social Finance in disadvantaged
neighborhoods

• Market studies
• Support to SFIs-implementation in these
  neighborhoods
• Mobilisation of capital funds

• Training
• Technical support

• Rating
• Harmonisation of indicators

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5- The GIRAFE-S methodology
The CDC (Caisse des Dépôts et Consignations), the
largest public-owned financial institution in
France, has asked PlaNet Finance to adapt GIRAFE
to the French Social Finance Institutions (SFIs).
GIRAFE-S takes into account the financial
performance as well as the SFIs social goals.
Seven areas of evaluation G Governance and
Decision-making I Information and Management
Tools R Risk Management A Activities Products
and Services F Funding and Liquidity E Efficiency
and Profitability S Solidarity
 
The method is supposed to answer three main
questions 1- Is the SFI really solidarity
oriented? (does it really target people who
excluded from banks?) 2- Does the SFI well manage
its assets? (is its equity safe, even if not
profitable?) 3- Is the team efficient and
productive?
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6- Evaluation rating of SFIs why and for whom?
Three types of clients are interested in SFI
evaluation and rating

•  Public authorities SFIs depend on public
  subsidies, for a part of their production costs
  public authorities want to know if public money
  is usefully invested
• Shareholders some SFIs raise money not only
  from public authorities or donors, but also from
  savings so they have to show if savings are
  invested in a safe way
• Mutual funds There is a new type of mutual
  pensions fund in France, launched from two laws
  passed in 2001 and 2003 (PERCO). A small part of
  the assets from these funds can be invested in
  SFIs (entreprises solidaires). The managers of
  these mutual funds have to justify to their
  investors if the investments in the solidarity
  are safe.

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7- GIRAFE-S Achievements and objectives
GIRAFE-S French SFIs

• The GIRAFE-Solidaire methodology was tested on
  six French SFIs
• It will be discussed again within the next weeks
• Its accuracy and efficiency on French SFIs is
  therefore proven

GIRAFE-S European SFIs

• Thanks to its experience on French
  institutions, we believe the GIRAFE-S tool to be
  well adapted for Western European countries,
  despite differences such as
• - the SFIs types of funds,
• - the financial tools used by SFIs,
• - the financial aims and the bottom line,
• - the macro economic context.
•   The objective is to propose GIRAFE-S to
  European projects

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Contact
PlaNet Finance76, rue du Faubourg Saint
Denis75010 ParisFrance Tel [phone]
31Fax [phone]Site Web
http//www.planetfinance.org E-mail
contact_at_planetfinance.org