FIDES - FINANCIAL SYSTEMS DEVELOPMENT SERVICES AG is a company focusing exclusively on the development of sustainable rural microfinance institutions.
FIDES is a joint stock company with head office in Fribourg, Switzerland (since 2007) and a liaison office in Montpellier, France. FIDES was founded in 1996 by microfinance specialists from six countries, all having long- term experience in the field of financial systems development and small business promotion. Together with institutional partners, FIDES has since set up successful microfinance institutions in several countries, mainly in Africa and Eastern Europe, and has provided expert support to a large number of other microfinance institutions. FIDES is owned by its leading staff members. Staff size is 22.
FIDES is a consultant, investor and manager of microfinance initiatives. Our main institutional partners are the Swiss Agency for Development and Cooperation (SDC), Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ/German Technical Cooperation), the World Bank, the International Fund for Agricultural Development (IFAD), KfW Bankengruppe and other bilateral development agencies.
Building sound microfinance institutions in rural areas is the core competence of FIDES.
FIDES has been innovative in developing approaches for rural areas. Most of them entail technical and organizational innovations that allow transaction cost and risk reduction. Sustainable institution building concepts lead to excellent repayment rates, outreach to under-serviced market segments and significant growth capacity. Such institutions have had a considerable impact on income-generating activities and employment creation.
FIDES is playing a leading role in this sector by
-Designing and implementing innovative approaches to the creation of sustainable rural microfinance institutions.
-Providing professional training and technical support to existing microfinance institutions.
-Creating and supporting research and development units in microfinance institutions, key to sound product development and social performance measurement. Providing microfinance research relevant to academics and the microfinance sector.
-Providing expertise to governments and development agencies.
Swiss Microfinance Holding
In 2007, FIDES has created a Microfinance Holding in Switzerland. This Holding will own on a long term basis the majorities in the banks and thus influence the social orientation and bank policy. It is open to private and institutional investors in order to accelerate the setting-up of new banks (e.g. work started in Senegal and Ghana) and to further capitalize the growth of existing ones.
ACTIVITIES
CREATION OF SUSTAINABLE MICROFINANCE INSTITUTIONS
The core competence and key activity of FIDES is the greenfield creation of sustainable microfinance institutions in rural areas. When targeting rural areas, adjustments to local conditions are necessarily stronger than in urban contexts, requiring innovative approaches that are based on international best practices for microfinance and at the same time take into account a wide range of specific environments.
Over the last ten years, FIDES has been involved in the creation of microfinance institutions in Eastern Europe and in Africa ranging from classical microfinance banks to Savings and Loans Associations Networks and Islamic financial institutions. None of these institutions failed.
As a general rule, FIDES develops the concept of the institution and confirms its feasibility through a pilot testing phase which verifies its hypotheses on markets, products, clients and organizational settings. In a subsequent stage joint investment is sought, often with institutional and private investors, in order to allow institution building and the expansion of activities on a larger scale.
All the programs developed with FIDES participation have the following common characteristics:
-Repayment rate close to 100%
-Strong client outreach capacity
-Financial sustainability as a main objective after an initial growth
-Clear governance structure
-Strong links with the commercial banking sector
-Reliable institution-building strategy, based on an appropriate legal framework
TRAINING
FIDES considers that human resources development is the key issue for a further expansion of microfinance institutions. It has organized a large number of training seminars and sessions in partner countries and provides significant support to building local training capacity. FIDES is the technical input provider for the Master of Science in Microfinance, a one-year postgraduate training program organized by the University of Montpellier, France.
EXPERTISE
On the micro-level, FIDES carries out feasibility studies and/or evaluations for donor agencies and investors, develops strategies for microfinance institutions, and supports the introduction of technical and organizational innovations. On meso- and macro-level, FIDES has provided expertise for the development and implementation of countrywide sectorial strategies and has been involved in the designing of conducive legal and regulatory frameworks for microfinance, especially in Eastern Europe and Africa.
RESEARCH is a core component of FIDES activity, and its purpose is to enable FIDES to innovate in its institution-building programs. Strong partnerships with universities and research centres have been developed.
An important research program implemented by FIDES and funded by the Swiss Government involves leading microfinance institutions from Asia, Eastern Europe and Africa. Its objective is the development of new financial products and the creation of in-house research capacities in microfinance institutions. The program has now expanded to micro-insurance.
Another main line of the research program is Social Performance Monitoring. FIDES and its partners aim to fight poverty and reach the rural poor through sustainable microfinance institutions. To pursue and effectively monitor this "double-bottom line," the Research and Development Unit created a social performance monitoring system for clients in both Namibia and Mali. The social performance monitoring system complements the financial and portfolio data providing key information on clients, their households, their enterprises and level of rurality on a quarterly and annual basis.
The social performance monitoring system allows FIDES' microfinance institutions to compare client poverty levels with national statistics which is useful for benchmarking with other microfinance institutions. The system also creates client segmentation in four categories: highly vulnerable; moderately vulnerable; low vulnerability; relatively stable. This segmentation tool is useful for market research, product development and client profiling. The basis of the system is a 5-7 minute interview, called a poverty score-card, with clients conducted entirely by the field staff.
One of the main challenges that rural microfinance will face in the next years will be the development of technical and organizational innovations in order to lower transaction cost when expanding financial services to poorer people. This involves further development of our IT-technology, including management information systems, software for service points, GSM-banking facilities, smart card systems for clients, and facilities for illiterate clients (e.g. touch-screen systems). It also involves further research on client demand and financial product development in the fields of loans, savings and micro-insurance.
