Kafo Jiginew, a network of credit cooperatives, was founded in 1987 to serve mainly cotton farmers, craftsmen and micro- and small-scale entrepreneurs. Today, it is a leading microfinance institution in Mali, catering to more than 400 000 members of 19 credit unions. Through loans provision to smallholders and low-income entrepreneurs, Kafo Jiginew contributes to the financial inclusion of under-banked populations, enabling them to expand their business activities and improve their living conditions. In particular, in rural areas, through investment in equipment and diversification of their crops, farmers are able to strengthen their resilience to climate change and cotton prices’ volatility.

In 2020, the European Investment Bank granted a EUR 10 million facility to Kafo Jiginew to expand the impact of their engagement across Mali. On top of this financial support, Kafo Jiginew is benefitting from the technical assistance programme to EIB financial sector operations in West & Central Africa, which helps the institution build capacity in a number of areas.

Strengthening risk management

Risk management is a key function in microfinance institutions as they are exposed not only to credit risk related to their lending activities, but also to numerous risks resulting from their daily operations or strategic decisions. Kafo Jiginew is no exception in that regard, and the technical assistance provided by the EIB helped improve procedures and tools used to identify and monitor risks. This allows Kafo Jiginew to take informed decisions on measures to be put in place to mitigate and reduce risks and react quickly in the case of deteriorating risks indicators.

Planning liquidity

Liquidity management is also a key element for a microfinance institution which permanently needs to have its financial resources and cash available to disburse loans, serve clients and sustain its operations. This means that the institution should be able to forecast and optimize its cash flow. In the case of Kafo Jiginew, this is even more challenging as the environment is marked by seasonality and important lending activities to agricultural and rural communities. In this area, the EIB supported Kafo Jiginew in developing relevant tools that enable efficient liquidity planning. As a result, Kafo Jiginew will also be able to run stress tests, which are very useful in the event of cash pressure as is the case with the Covid-19 crisis or the decrease of the price and production of cotton.

Thanks to the EIB technical assistance programme, Kafo Jiginew was able to build its capacities in several key management areas and as a result, the financial institution is now better prepared to face risks that may arise in the future.