Project objectives
To facilitate and co-finance in a first phase the elaboration of a diagnostic analysis and of an action plan and in a second phase the implementation of digital solutions by MFIs.  

Areas of intervention
Benin, Burkina Faso, Burundi, Cameroon, Côte d’Ivoire, Guinea, Madagascar, Mali, Senegal, Democratic Republic of Congo, Republic of Congo, Sierra Leone and Rwanda.

Responsible for the project
Matthew Genazzini:

Project managers (DFI team)
- Arnaud de Lavalette (based in Luxembourg):
- Catherine Liziard (based in Burkina Faso):

 


All videos on digital finance


In developing economies only 54% of adults reported have an account.


2 billion people lack a financial account in emerging economies.


Up to 90% lower cost from providing digital rather than physical accounts.

The Digital Finance

Finance digitale

Whether as a means of reaching people in areas that are difficult to access, of offering fast and secure services to customers, or of reducing costs, the opportunities offered by digital solutions are numerous and promote financial inclusion. For this reason, ADA helps microfinance institutions (MFIs) integrate digital solutions into their strategies. In Africa, through the Digital Finance Initiative, and in Central America.


In Africa: Digital Finance Initiative (DFI)


Objectives

The Digital Finance Initiative (DFI) has been established over a 5 year period. It began in 2017 and will run until 2021.

The DFI’s objective is to help microfinance institutions (MFIs) to define and to implement their digital strategy in order to improve their financial and social performances and, as a consequence, to favour financial inclusion in their country.

ADA’s Digital Finance Initiative (DFI) represents an opportunity to accelerate the development of financial inclusion by supporting the MFIs and encouraging them to open up new alternative distribution channels to improve their geographic coverage and to offer new innovative products and services to their beneficiaries and/or to improve their operational efficiency.

In order to do this, these MFIs benefit from the support of a dedicated team of which helps them to identify their needs, to identify the digital solutions and to implement them by providing a financial contribution, as well as support to manage the project.

The DFI is therefore able to provide strategic, methodological and technical support, as well financial support to those who reach the stage of implementing the chosen solution.


3-step support

Step 1: initial workshop to identify the priorities
The DFI workshop brings together MFI senior managers for a week. It provides the MFI with the content and methodological tools needed to define a digital strategy and identify its priorities.

Step 2: pre-project phase: establishing a digital project

During this phase, which may last from 3 to 6 months, ADA supports the MFI in defining its digital project (preparing specifications, publishing calls for tender, selecting technical service providers, etc.). The MFI then drafts a co-financing dossier which, if approved by the selection committee*, may be co-financed by ADA and other donors for up to 70% of the investment costs, for a maximum of EUR 100,000.
*The selection committee is composed of members of the Board of Directors of ADA, Deloitte Digital, POST Luxembourg, LuxFLAG, LHOFT (Luxembourg House of Financial Technology) and Alpha Financial Markets Consulting.

Step 3: pilot phase: implementation of the digital project
After acceptance of the file by the Committee, the implementation of the project can start with a pilot on the scale of one or two agencies. At this stage, ADA offers the MFI financial support, as well as technical support in all areas impacted by the project: redefinition of procedures, staff and client training needs, risk management. As soon as the test phase is complete and conclusive, the MFI deploys the project throughout the network. It is at this moment that the accompaniment of ADA stops, having then considered the institution as autonomous.


Support for 3 types of projects

- integrating telecom operators to enable customers to perform tasks with their mobile phones;
- setting up a network of fixed or mobile agents to work as closely to customers as possible; and
migrating the current MFI management information system (MIS) to the Cloud. This is one of the prerequisites for implementing the first two solutions.

MFIs can also select other types of projects (e.g. process digitisation, credit scoring).


Target: Least Developed Countries

Initially, the Digital Finance Initiative is aimed at the small and medium-sized MFIs (Tier II and Tier III) based in sub-Saharan Africa, the majority of which are members of the group of the Least Developed Countries (LDCs): Benin, Burkina Faso, Burundi, Cameroon, Côte d'Ivoire, Guinea, Madagascar, Mali, Senegal, Democratic Republic of the Congo, Congo Republic, Rwanda, Sierra Leone, Togo, ….

ADA is convinced that the digital finance tools will make it possible to open up access to financial services at an unprecedented pace in these countries which still have a low rate of financial inclusion.

 

Creating a Toolbox

In response to the growing demand, ADA has created a toolbox specifically designed to meet the needs of MFIs in the field of digital finance. It is composed of :

- Tools to define operational needs
- Grids for analysing responses to calls for tenders
- Impact calculation tools
- Project coordination tools


Status of the DFI - 2017 / 2019

Stages of the project Quantity
Training courses provided 56
Workshops 9
MFIs reached 23
Current pre-projects 5
Validated pre-projects 11
Pre-projects stopped 2
Current projects 2
Completed Projects 7


9 workshops were held for a total of 23 MFIs. The satisfaction rate is between 85 and 90%. Since 2018, in order to better meet the individual needs of MFIs, it was decided to hold only one MFI per workshop. This requires, in addition to the pedagogical input, a better knowledge of the MFI beforehand. ADA has 2 levers to carry out this action. On the one hand, the due diligence carried out by our Investment team and on the other hand, the organisation of field visits.

Moreover, the workshops will no longer be exclusively aimed at French-speaking MFIs, but will also include English-speaking MFIs, which are very much in demand for this type of initiative.

Equipe DFI

Workshop in Kigali in February 2019 with UFC and COOPEC-CAHI


2019: a good year for the DFI

At the end of the project in 2021, the DFI aims to support and implement 20 digital projects at MFIs, benefiting 1 million end customers. The year 2019 made these results a viable reality.

Phase 1: four individual workshops (one-to-one) were held in 2019, allowing for bespoke support tailored to the MFIs’ needs. These MFIs include: UFC (Rwanda), COOPEC-CAHI (Democratic Republic of Congo), LAPO (Sierra Leone) and Millenium Microfinance (Togo).

Phase 2: following these workshops, one MFI (UFC) carried out its digital project using its own resources, without the support of the DFI. Another (LAPO) finalised its project with the support of the DFI, and two others (COOPEC CAHI and Millenium Microfinance) are in the project development phase. At end-2019, a total of 5 MFIs were in the process of designing their digital projects. During the year, the selection committee, made up of members of the ADA Board of Directors and professionals based in Luxembourg, approved 3 applications. This included co-financing of EUR 130,000, for a total project amount of EUR 342,000.

Phase 3: following the approval of the dossiers, four projects were completed in 2019. Most of these projects were for migration to a new MIS, including mobile solutions. 38% of the projects implemented were co-financed by the DFI (i.e. EUR 205,000).

  • ACEP (a multi-country MFI network), benefited from ADA’s support in setting out and finalising the ACEP group’s digital strategy and compiling their financing application dossier.
  • U-IMCEC (Senegal): the MFI has completed the migration of its new MIS, PERFECT- Vision (from CAGECFI), in Cloud mode. A mobile solution integrated into the MIS for internal staff is in the pilot phase.
  • LAPO (Sierra Leone): the MFI has completed the migration of its new MIS, INSTAFIN (from ORADIAN), in cloud mode. A mobile solution integrated into the MIS for internal staff is in the pilot phase.
  • GRAINE (Burkina Faso): the MFI has completed the migration of its new MIS, PERFECT-Vision. A mobile solution integrated into the MIS for loan officers and Tontine collectors is operational.

Finally, 40 MFIs and investors completed the training course “Digital finance: what solutions, what impacts? ” held at the SAM in Ouagadougou in October 2019.


Success factors of the "Digital Finance Initiative" project

After 3 years and several completed projects, the DFI team is now able to identify the key points on which MFIs must focus to succeed in their digital transformation:

  • Governance: need to involve the management team, have a competent project manager, good governance and an up-to-date business plan.
  • Funding: digital transformation projects are expensive. The MFI must therefore have the financial means to cover these investments (self-financing and donors), and, for example, the capacity to hire new resources to manage new alternative distribution channels.
  • Operations: having good portfolio management and understanding the needs and expectations of their customers.
  • Regulation: staying up to date with the digital finance texts in force in their target areas.
  • Technical: having a technical environment that supports setting up digital solutions (MIS open to third-party solutions, centralized databases, interconnected branches, access to the Internet and electricity, etc.).
     

Arnaud de Lavalette

« The project’s success factors are dependent upon the comprehensive support of the governance structure, the project leader’s attitude and commitment in terms of time, spirits and resources, as well as the involvement of the entire department. »
Arnaud de Lavalette, Senior Project Manager "Digital Finance Initiative" at ADA

 


In Central America: digital transformation


In 2018, ADA renewed its support for the regional microfinance network in Central America and the Caribbean, REDCAMIF, through a second support programme for MFIs affiliated to the network. As part of this, a methodology was established to support the implementation of digital solutions for MFIs. In collaboration with Amarante, it offers a comprehensive approach focused on the needs of both customers and the MFI. First, the MFI’s current model and available resources are analysed, and areas for improvement for an optimal customer experience are identified. Based on these results, the MFI, which now has precise data on the behaviours and preferences of its customers, designs a strategic plan for its digital transformation.

The three-year project aims to test the methodology with 10 MFIs by end-2021. At end-2019, the following seven MFIs have already finalised their digital transformation strategy: FAFIDESS (Guatemala); Hermandad, Banco Popular and ODEF (Honduras); Banco ADEMI (Dominican Republic); SAC Integral (El Salvador); and Banco Delta (Panama). 3 other MFIs will be selected in 2020 to continue this process.

 

News
Atelier DFI - EBO SACCO

February 2020

EBO SACCO trains in digital finance

EBO SACCO is a microfinance institution operating in the rural Mbarara region of western Uganda, providing financial services to more than 47,000 members.

From 10th to 14th February 2020, the management team of EBO SACCO participated in a "Digital Finance" workshop at the institution's headquarters in Bwizibwera (Uganda). This workshop was facilitated by Catherine Liziard, Project Officer "Digital Finance Initiative" at ADA.

The team defined the digital strategy of the institution. This strategy was immediately validated by the decision-making bodies on February 17th. EBO SACCO is taking advantage of its migration project on a new Information and Management System (GIS) to implement digital solutions with high added value for its beneficiaries.


October 2019

ADA engages MFIs and their suppliers in a dialogue

Meeting organized during SAM 2019 between Léon Houndjago, CEO of CAGECFI, Ousmane Thiongane, General Manager of U-IMCEC Senegal and Arnaud De Lavalette, Digital Project Manager at ADA.


October 2019

Millenium Microfinance defines its digital strategy

The microfinance institution Millenium Microfinance based in Lomé, Togo, participated in a "Digital Finance" workshop led by Catherine Liziard, senior digital project manager at ADA, from September 30th to October 4th, 2019. The MFI defined its digital strategy and identified the following solutions.

Millenium Microfinance
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