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Crédit Epargne Formation (CEFOR)
Approved to post Kiva loans from: Madagascar
CEFOR is a socially-oriented MFI that targets serving people who have not accessed credit in the past. The organization has developed a social categorization ranking in order to ensure that it focuses its efforts on the most vulnerable populations in the Analamanga region. CEFOR operates 11 branches in and around Antananarivo, the capital and largest city in Madagascar.
CEFOR's additional services include mandatory health insurance, trainings, and at-home coaching delivered by designated training officers. In addition to its microcredit program, CEFOR runs a vocational training program with the goal of helping young people enter the job market.
A unique lending approach:
CEFOR offers one basic loan product, the enterprise loan, which targets the poor with income-generating activities. Loans are given without collateral. Borrowers must join a mutual health insurance program for a low monthly fee depending on the loan amount. Borrowers also benefit from mandatory business and loan management trainings, voluntary health and hygiene trainings, as well as regular individual coaching at their home or business.
A note on CEFOR's portfolio yield:
We care deeply about the cost that Kiva borrowers pay for their loans, which is why fair pricing is a core part of our initial due diligence process for Field Partners. With Kiva's 0% capital, many of our Field Partners are also able to add additional value to their loans by reducing interest rates, offering non-financial services or creating new loan products.
For partners with reported portfolio yields or average APRs higher than 50%, Kiva takes steps to check that the high rates are justified by the impact of the loans. Kiva also verifies that the partner is not generating unreasonable profits or paying inflated salaries, and that the partner’s elevated operating costs are justified by its operating environment and/or the design of its loan products.
We seek to support loans that don’t impose an unjustifiable cost burden on hard-working borrowers. We nevertheless recognize that in order to reach vulnerable and excluded people with high-impact products and services, some of our partners incur high costs that necessitate charging higher-than-average costs to borrowers in order to allow for sustainability and scale.
Factors that drive up the costs that this partner organization charges its borrowers include:
They operate in Madagascar, which is classified as a fragile situation by the U.N. This can greatly increase the cost of safely delivering financial services to borrowers.
They provide very small loans. This leads to higher operating costs, since providing each individual loan presents a minimum per-unit cost.
They provide more than just cash to many of their borrowers, including costly wraparound services such as healthcare, financial or business training, agricultural extension services, insurance or access to education.
They work in areas with very poor infrastructure, such as limited roads. This increases the costs of finding clients and maintaining branch offices.
They’re based in an area with a high cost of living and doing business. This is often due to the high demand and low supply of adequate housing and goods.
They’re a small company or organization that hasn’t yet achieved the scale and efficiency necessary to reach sustainability and reduce pricing, but the impact of their services merits the opportunity to prove their business model.
This partner is working in a country where doing business is difficult and costly due to regulatory, procedural and governance issues.
They operate in an area with a limited or poorly functioning banking system. This makes it difficult to access funding locally, and makes it more challenging to send and receive payments on loans from outside the country.