FPM ASBL provides technical and financial support to the Microfinance Company IFOD to face the effects of the Covid-19 crisis
The FPM through its technical assistance vehicle the FPM ASBL signed on Tuesday, September 15, 2020, a partnership agreement with the microfinance company IFOD in order to bring to this institution a technical and financial support to help it mitigate the negative effects related to the institutional risks caused by the health crisis of the Covid-19.
The Managing Director of the FPM ASBL Jean Claude THETIKA came back on this signature in these terms : “the world is going through a serious and unprecedented health crisis which affects all vital sectors of the economy. The Congolese financial sector has not been spared and is already paying a high price, particularly the microfinance sector. All indicators are in the red. We must therefore react and act quickly. It is within this framework that the FPM ASBL, technically and financially supports IFOD to mitigate the effects of the covid on the institution because for us there is no better time to do it“.
The impact of the health crisis on the Congolese financial sector is significant. There has been a drop in the volume of loans from financial partners, leading to a significant reduction in the funding of micro, small and medium enterprises (MSMEs) and their savings. The risk of non-payment has greatly increased, sometimes doubling, causing enormous provisioning and thus significant losses of income with an impact on the level of equity capital, which is dwindling.
In his turn, the Managing Director of IFOD SA, Paul EBOMA says he welcomes the support of the FPM ASBL and confirms the readiness of the institution under its management to benefit from this management experience after the crisis: “It is important to underline that the FPM is and remains a major partner of IFOD in terms of technical support. It agreed to support the IFOD from the very beginning. Today, it must be said that the effects of the pandemic are unfortunate at the global level. We are a microfinance company. All these vulnerable but bankable populations who believe in IFOD and deposit their savings here and benefit from microcredits, need to be secured. They need to feel the trust between the relationship between IFOD and its clients. It is important that we can adapt in a crisis situation. And in this adjustment, our partner is offering us new management practices to make us much more useful in guiding clients after the crisis. We welcome this assistance. We are very happy to benefit from this experience of post-crisis management. “
For each of these risks following the health crisis, the FPM ASBL has formulated an adapted response to relieve its partners. Thus, the FPM ASBL offers to IFOD a technical crisis support with the aim of reinforcing the resilience of the institution in front of the crisis which affected the quality of its portfolio and its profitability.
The emergency intervention plan proposed by the FPM is limited in time and focused on actions with greater added value. It includes the following main activities: improving risk management, optimizing the information system, supporting the digital strategy and implementing a responsible finance framework.
Created in June 2016 by the national episcopal conference of the Congo “CENCO” in acronym, IFOD SA is a microfinance company working in the city province of Kinshasa with a project of extension in Lubumbashi in the near future. As of June 30, 2020, the company had 1,016 borrowers and 7,941 savers. In the absence of the crisis, these achievements could have been high; taking into account the 2020 forecasts.
As a reminder, the FPM, Fund for Financial Inclusion in DR Congo, is a fund that contributes to poverty reduction in DR Congo by promoting the development of a sustainable offer of financial services accessible to Micro, Small and Medium Enterprises (MSMEs) and low-income populations.
To achieve this, the FPM relies on financial institutions, to which it provides technical assistance services and financing. The technical assistance services include the following areas:
- Direct technical assistance (for the benefit of partner financial institutions);
- Forums and training for Congolese financial market professionals;
- Market studies aimed at improving financial inclusion.