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Published on 29/09/2016

40 years of development via the market

GRET’s involvement in support to small and medium businesses started in the early 1980s. At that time, working with businesses was frowned upon. How to reconcile social objectives and economic profitability? By focusing on the subject upstream, GRET attempted to solve this equation by supporting small businesses and microfinance.

In the 1990s, GRET began experimenting support for small businesses: it created a “cities and businesses” department and launched the concept of “commercial public services” for access to energy in Mauritania. It conducted the initial experiments using an entrepreneurial approach to services providing access to energy and water in Haiti, Laos and Cambodia. Among the outstanding projects, it created the first “komite dlo” in Haiti, which were committees of inhabitants in charge of managing drinking water in disadvantaged districts in Port-au-Prince. “It was the first time anyone suggested delegating water services to communities,” says Daniel Henrys, GRET’s first representative in Haiti, and former Haitian minister of Public health. The quality of their work was recognised by all parties, and the committees acquired management capacities and were able to negotiate directly with donors. This made it possible for them to support families in difficulty and to launch new projects, such as the creation of dispensaries in districts.” GRET also strengthens local organisations, such as Cite in Madagascar, in their mission to support micro, small and medium businesses. Development must be sustainable and to achieve this, “what is important, apart from the issue of sustainability, is to have an entrepreneurial spirit”, says Haingonirina Randrianarivony, director of Cite. Over the years, GRET’s areas of expertise evolved: “as well as the technical dimension, we are now including phases of entrepreneurial diagnosis in order to identify the activities that could be developed in a territory,” explains Julien Cerqueira, energy expert with GRET.

The entrepreneurial approach can also be applied to microfinance to provide a range of financial services to 150 million people who are excluded from the traditional banking system. GRET has been working for 25 years so that vulnerable populations can have sustainable access to financial services. In 1988, GRET tested a microfinance system in Cambodia, and subsequently institutionalised it in 2000 in the form of a commercial company in which it became a shareholder. When GRET withdrew from Amret’s capital in 2015, the MFI became one of the most important in Cambodia, with 300,000 clients in 5,900 villages. The sector has evolved and faced up to new challenges. Risks of debt distress, slow-down in growth, the issue of social impact, the myth of self-regulation of the market… “microfinance is not necessarily a tool to combat poverty”, explains Solène Morvant-Roux, an economics researcher at the University of Geneva. To ensure access for the poorest to services, although “best practices will not be enough”, potential solutions are emerging among which the coordination of microfinance with local currency, developing an offer in urban areas to maintain activities in rural areas and methods of governance for microfinance that would guarantee achievement of social objectives.

More information on GRET and microfinance

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