Credits Editors: Jean-Baptiste Imatte, Michaël Knaute, Alexis Surun, Tiago Santos Pictures: William Daniels, Gwenn Dubourthoumieu, OXUS, ACTED

Transcription

1 Annual Report 2013

2 Credits Editors: Jean-Baptiste Imatte, Michaël Knaute, Alexis Surun, Tiago Santos Pictures: William Daniels, Gwenn Dubourthoumieu, OXUS, ACTED 2 OXUS Annual Report 2013

3 Table of Contents OXUS Presentation A Message from the Chairwoman A Message from the CEO OXUS Geographical Footprint OXUS Key Figures Review of the Last 12 Months The Road Ahead OXUS Structure OXUS Development Network (ODN) Our Management Information System (MIS) Our Investors Our Network of MFIs OXUS Tajikistan OXUS Afghanistan OXUS Kyrgyzstan OXUS Democratic Republic of Congo (DRC) OXUS Consolidated Statements ACTED Contact us

4 A Message from the Chairmwoman of the Board of Supervisors This year again, it is a pleasure for me to introduce the annual results of OXUS for As Chairwoman of the Board of Supervisors, I am very pleased with what the group has achieved, in a context marked by several major changes has been indeed a turning point in the history of the company. Moving ahead of the first phase of its development, OXUS drafted a Destination 2018 plan aiming at creating a world-class innovative microfinance group. Our three affiliates in Central Asia performed well and saw their loan portfolio expand strongly in They contributed largely to the net income of the group while carefully maintaining risks low and serving a large share of female, rural and low-income clients. Operating in a difficult context, these institutions are building the conditions of tomorrow s growth which will allow them to fulfill their financial and social goals even better. This year also saw the beginning of our operations in the Democratic Republic of Congo (DRC), the first OXUS affiliate in Africa. Though the challenge was demanding, we have dealt with it very well so far. The portfolio growth is stellar-like and risks are monitored efficiently. The promises in this country are enormous and OXUS has plans to expand soon outside the capital Kinshasa. The institution is also set to start launching new services to better cater to the population s needs. For all these successes, we have to thank the competent and highly motivated team, working for OXUS both in Paris and on the field. They have proved to be our best asset, contributing to the success experienced by the group. In the rapidly-changing world of microfinance, OXUS strong links with ACTED are a decisive competitive advantage. A prominent international NGO and the main shareholder of OXUS, ACTED has consistently helped us create the conditions of sustainable growth and expand our outreach. ACTED is also providing us with its experience of operating in difficult countries and helping us strengthen our resilience to crisis. Both institutions complement each other and will certainly continue walking on parallel and complementary paths. Finally, I would like to thank all those who contributed to the group this year and will continue doing so in the coming ones. I hope this report will make you share our passion for microfinance and that the success and determination shown by OXUS will attract more partners so as to create a stronger, larger and always as committed microfinance group. Priscilla de Moustier OXUS Holding Chairwoman of the Board of Supervisors 1 VISION To improve the sustainable livelihoods of our customers and be the microfinance organization of reference where we work. 1 MISSION To be a transparent and responsible enterprise engaged in providing financial services to the working poor and the underbanked worldwide. OXUS is dedicated to building teams of recognized professionals and creating and providing the most efficient microfinance services. 4 OXUS Annual Report 2013

5 A Message from the CEO In 2013, our loan portfolio grew again by 30% from USD 28.1m to USD 36.5m. Since its inception, OXUS disbursed around 187,000 loans for an amount of around USD 187m in 3 and now 4 countries of operations : Tajikistan, Kyrgyzstan, Afghanistan and the Democratic Republic of Congo. A member of the 7% growth club, Tajikistan managed again to grow its GDP by 7.4% with rising remittances from Russia and higher prices for certain natural resources. The microfinance market in the country keeps maturing but still retains a very important potential with low access to financial services for a significant part of the population. One of the leading institutions in the country, OXUS Tajikistan wants to remain true to its financial and social goals that have allowed it to be strongly profitable in the last four years while serving a large poor and rural population. Growing concerns over security and political issues have considerably affected the Afghan economy. In this context, OXUS Afghanistan has achieved very good results. The portfolio growth, at 8.6%, was small but in line with the sector s average. Risk management was overhauled strongly to prepare for the challenges of tomorrow. As a result, OXUS Afghanistan was one of the first MFIs in the country to break even in Although the Kyrgyz economy is doing well, its microfinance sector is consolidating due to over-indebtedness and rise in credit risk. The authorities have gotten more efficient and decided to regulate more strongly microfinance practices in the country. OXUS Kyrgyzstan had to adjust to the new regulatory framework. The institution also started a restructuration plan to increase its productivity and re-focus its product and service lines in a more competitive market. Although the net income for this year was negative, the institution grew its loan portfolio by 31% and we are certain that the current turn-around will bear fruits as early as next year. Additionally, OXUS started activities in the Democratic Republic of Congo (DRC) in the summer of The first few months of activity of this institution were very promising as OXUS DRC reached out to 2,551 clients through a portfolio of USD 856k in one single branch in just 6 months. We expect the institution to develop strongly in the coming year with the opening of new branches in Kinshasa and in the provinces as well as the development of new service lines will be an important year for OXUS as the group enters a new phase of its development towards our Destination 2018 goals. A strengthening of our social performance strategy is taking place, and this plan was devised to better adress the role of technology. We fully recognize that technology will be a major driver for microfinance in the near future, and that is why we are constantly investing in innovative solutions should see the beginning of savings at OXUS, with mobile banking being on its way as well. I would like to finish this brief message by thanking all of our 865 staff. They have done amazing work in all our countries of operation and have remained committed to our vision and mission throughout. We are certain that they will continue doing so in the future with even more enthusiasm and passion. Michaël Knaute OXUS Development Network Chief Executive Officer 5

6 OXUS Geographical Footprint as of December 2013 OXUS affiliates Octopus clients Headquarters located in Paris 10 staff 2,551 active clients kusd 856 portfolio 2 offices 67 staff 10,121 active clients kusd 9,524 portfolio 14 offices 320 staff 4,151 active clients kusd 5,262 portfolio 15 offices 101 staff 10,540 active clients kusd 20,816 portfolio 52 offices 355 staff 13 clients kusd 205 turnover 12 staff Gross Loan Portfolio, musd Gross Loan Portfolio Net result Net result kusd Number of clients, k Number of clients Number of employees Number of employees 6 Note : In this report kusd stands for thousands of dollars and musd for millions of dollars OXUS Annual Report 2013

7 OXUS Key Figures Consolidated income statement, kusd December 2013 December 2012 (12 months) (12 months) Total operating income 11,892 8,997 Total financial & operating expenses 12,464 10,012 Net operating profit/(loss) before tax & grants (573) (1,015) Total consolidated profit/(loss) after tax & grants 146 (75) Consolidated balance sheet, kusd December 2013 December 2012 Total assets 48,030 34,683 Total liabilities 44,515 33,376 Total equity 3,515 1,306 Key operational figures December 2013 December 2012 Countries of intervention 4 3 Number of clients 32,363 23,454 Outstanding portfolio, kusd 36,458 28,086 Total staff Number of loan officers Number of offices Number of loans disbursed since 01/01/ , ,051 Amount of loans disbursed since 01/01/2006, kusd 187, ,311 Average outstanding loan balance, USD 1,127 1,197 PAR 30, % 0.97% 1.02% Write-off ratio, % 0.3% 0.4% Annualized yield on portfolio, % 34% 37% Number of clients in rural areas, % 65% 70% Group lending clients, % 9% 9% 7

8 Review of the Last 12 Months Strong growth of the portfolio The Gross Loan Portfolio increased by 30% between 2012 and 2013, reaching USD 36.5m by the end of the year. The loan portfolio comprised 32,363 clients overall in four countries, a rise of 38% on an annual basis. The portfolio growth was strong and of high quality. Portfolio at risk (PAR) over 30 days remained very low during the year and stood at 0.97% as of end of December This shows the very good performance of the group in achieving important yet cautious growth. Adaptating to changing environments 2013 saw several changes in the environment in which our affiliates work. In Kyrgyzstan, the microfinance sector heated up and the Kyrgyz Central Bank adopted a stronger and tighter supervision. Several Microfinance Institutions (MFI) defaulted and regulators stepped in. They created an interest rate cap, set at the end of the year at 36.99%, to be reviewed monthly. This forced OXUS Kyrgyzstan to reduce its rate so as to be compliant. In Afghanistan, the security context kept deteriorating in the wake of the spring 2014 presidential elections and the departure of foreign troops from the country. OXUS Afghanistan launched a new risk management program with the help of external consultants to improve the monitoring of risks on this particular market. Opening of a new affiliate in the DRC One of this year s key events for OXUS was the start up of operations in the newly-created affiliate in the Democratic Republic of Congo (DRC), the first since 2008 at OXUS. 40% of the shares are owned equally by PROPARCO/FISEA and the investment fund Investisseurs & Partenaires (I&P/IPAE). Led by a team of local and international managers, OXUS DRC disbursed its first loans in July 2013 in Kinshasa. A second office was quickly opened, also in the capital city. As of December 2013, the loan portfolio reached USD 856k, none of which was at risk. It counted 2,551 clients and 67 employees. An expansion plan is due to start in Q2 2014: new branch opening in Kikwit, in the provinces, and deposits should be offered by the end of the year. Higher social performance goals Social performance is an important feature for any MFI. Investors, clients and governments, all stakeholders alike are pressing for higher standards. OXUS, whose main shareholder is a Non-Governmental Organization, has always had strong practices. In 2013, it decided to go even further by reinforcing its Social Performance Management strategy so as to have a clear picture of what it does and what it could improve. An SPM committee is being put in place in all four affiliates. 51 objectives were identified and quantified, the monitoring of which is done regularly. Other tools such as staff training, compliance of manuals and SPM-related Octopus module are currently being implemented. 8 OXUS Annual Report 2013

9 The Road Ahead New investors The whole development strategy of OXUS is encapsulated in the Destination 2018 Plan. To finance it, we have raised EUR 3.3m in the beginning of 2014 from our historical shareholders. This allowed us to build the capital base of our affiliates. We plan to raise approximately the same amount from external investors until This opening of our shareholding structure to external investors will reinforce the transformation undertaken by OXUS since 2012 to be more professional and attractive. New markets Microfinance is now considered by some as an established business activity which is even experiencing saturation in some markets. However, in a 2013 report, the World Bank stated that 2.5 billion people worldwide still do not have a bank account. Based on its mission to serve the working poor and underbanked, OXUS has started in 2013 a new expansion phase by opening OXUS DRC. It is the first affiliate located in Sub-Saharan Africa and represented therefore an additional challenge in terms of business practices adaptation. The results after the first few months are very encouraging and tend to indicate an enormous potential to grow in the country and in this region as a whole. OXUS plans to open one or two more affiliates in this region in accordance with its logic of portfolio diversification. By 2018, the OXUS network should comprise 5 or 6 institutions spread across Central Asia and Sub-Saharan Africa. OXUS projected portfolio by % 84% Asia Sub-Saharan Africa Expansion plan: 5 to 6 affiliates in 2 sub-regions by 2018 New products & delivery channels We believe that microfinance will be profoundly changed in the next few years. One of those changes will be the emergence not of new products per se but of completely new delivery channels. Microfinance will be swifter, more virtual and less costly. OXUS is preparing itself for this future. We have already instilled a culture of innovation within our affiliates. New products are frequently developed to better cater to our clients needs. OXUS Afghanistan recently launched Zahra, a Sharia-compliant loan product aimed at women working in the agricultural sector. OXUS Tajikistan is finalizing energy-efficiency products for micro-entrepreneurs. But we aim higher than loan products. OXUS DRC will be the first MFI of the group offering savings by the end of At the same time, the presence of Octopus Microfinance Software, our Information Technology (IT) affiliate, in Kyrgyzstan is helping our Central Asian MFIs to create a mobile banking offering, starting with SMS notification. Launching of deposit-taking facility 9

10 OXUS Structure Where we come from OXUS was formally incorporated in 2005 when it took over the Tajikistan microfinance activities of ACTED, a Paris-based international relief NGO operating since The same logic applied when OXUS replaced ACTED as microfinance service provider in Kyrgyzstan and Afghanistan in 2006 and Targeting the working poor and the underbanked worldwide, OXUS believes in providing the most efficient microfinance services in order to break the poverty trap and give better opportunities to the poor. Our loan portfolio in December 2013 reached USD 36.5m with 36,363 clients. The opening of a new affiliate in DRC, the first one in Africa, opens up a new area of development for the group. True to the heritage of ACTED, this development will be socially conscious and sustainable. This is indeed a trademark of OXUS approach to microfinance and to the people it serves. What we are now The group is structured with a holding as the apex, two support companies and five microfinance affiliates: OXUS Holding is the investment vehicle of the group and the mother company of OXUS. It provides loans and equity to OXUS MFIs and is owned at 86% by ACTED; ODN, a service company, was created to provide technical assistance to other entities of the group. It is fully owned by OXUS Holding; Octopus Microfinance Software is the Management Information System (MIS) company of the group. It develops the software used by affiliates as well as external institutions around the world. It is fully owned by OXUS Holding; 4 operating OXUS MFIs in Tajikistan, Kyrgyzstan, Afghanistan and DRC, which provide microfinance services; 1 registered OXUS MFI in Uzbekistan, on hold until microfinance regulation becomes more favorable; Private investors Majority shareholders 86% Minority shareholders 14% Proparco & I&P 10 Note: Figures as of December 31, 2013 OXUS Annual Report 2013

11 Oxus Development Network (ODN) OXUS Development Network (ODN) was set up in It is a services company that provides technical assistance, manages governance and funding, and drives the group strategy. It was decided end of 2013 to reinforce the technical assistance provided to affiliates so as to better align our goals across the group and to implement our Destination 2018 Plan. Technical assistance & governance of MFIs ODN provides technical assistance to all OXUS affiliates. Its competencies range from business operations and investor relations to audit and marketing. It is in charge of uniting the group by creating commonalities and helping affiliates adopt the same procedures and methods. ODN also manages governance within affiliates and organizes the different committees in charge of governance. It serves as a link between all entities of the group and leads strategy definition, ensuring equal implementation across affiliates. Fund management & investment services for OXUS Holding Moreover, ODN is the fund manager of OXUS Holding. It looks for prospects on its behalf, performs financial analysis for potential investors and drafts legal documentation related to investments. It also takes care of all financial reporting duties of OXUS Holding. Recent recruitment at ODN has allowed the investment team to focus more on its core activities. With capital invested this year from shareholders and more to be raised from external investors, this function will be crucial to OXUS development in the future. ODN organizational chart as of June 2014 M. Knaute (CEO) Operations Unit Finance & admin. Unit Investment Unit Audit Unit C. Striffling (Senior Operations Expert) Operations Intern G. Debaig (DCEO & COO) C. Thieulin (Operations Expert) X. Chantraine (CFO) G. Tamacoldi (Administration Manager) E. Cullard (Accountant) A. Surun (Investment Manager) Investment Intern Audit Manager OXUS Afghanistan OXUS Kyrgyzstan OXUS DRC Salim Khan (CEO) Hachem Bdeir (CEO) Eric Marquer (CEO) Yacine Aziez (CFO) Lucile Brachet (Junior Operations Expert) Aristide Dabire (Senior Operations Expert) 11

12 Octopus Microfinance Next Generation Microfinance MIS Our Management Information System (MIS): Octopus Microfinance Octopus Microfinance Software When beginning its activities, OXUS was confronted to the technical management information system (MIS) challenges of microfinance. In response to this issue, ODN created a company, Octopus Microfinance, to develop a highly adaptable software for microfinance institutions. Its team, based in Bishkek in Kyrgyzstan, comprises 12 professionals with various skills encompassing technical development and testing, business development and management. Octopus has become an important provider of MIS technology that is both robust and intuitive, based on the Agile methodology. Octopus was assessed as one of the most userfriendly solutions by the World Bank/CGAP review. Since 2006, Octopus has successfully assisted 90 institutions in establishing greater efficiency, transparency and timely reporting. Founded on best practices principles, Octopus supports all aspects of microfinance operations. It aims to reinforce microfinance institutions efficiency, transparency and sustainability. Our international clients range from greenfield institutions to established Tier 2, Tier 3 and Tier 4 microfinance organizations. Octopus Users Worldwide Octopus is used in 13 countries supported by the Bishkek center : Key dates 2006: creation of Octopus with IT company Octo and first implementation at OXUS Tajikistan 2008: implementation in Afghanistan, Kyrgyzstan and France 2009: beginning of commercial activities, partnership with Naxos IT 2010: community reaches 500 members, Spanish translation implementation in India, Central Asia, Mali : 6,500 downloads in the year 2013: change of business model (open to closed-source) and internal reorganization 2014: launch of Octopus 7.x, OSP (Octopus Support Platform), OPP (Octopus Partnership Program) Octopus Bishkek Dominican Republic Cameroon Zambia Tajikistan India Nazufe is a Tier 4 MFI that plays the role of Value- Added Reseller of Octopus in Central and Latin America, and translated the MIS solution to Spanish. When Nazufe implemented Octopus in 2010, it was a small MFI. It now has more than 3,000 active clients. 12 OXUS Annual Report 2013 IDEV is a Tier 3 MFI that migrated to Octopus in 2011 and in doing so was able to serve 2,000 SMEs with savings services in the Douala area. Thanks to Octopus, IDEV can provide advanced services such as bank checks, current accounts with overdrafts and tax management. Thanks to the collaboration between Octopus and the Agora network, Agora Microfinance Zambia has developed strongly since its inception in 2011 and now serves more than 9,600 clients from four branches. It has reached a nationwide rural coverage. OXUS Tajikistan is a Tier 2 MFI that originally implemented Octopus in 2006 to support its credit operations. Seven years later the organization is the fourth-leading MFI in the country, serving 80% of rural clients. OXUS Tajikistan improves the lives of 16,000 customers and their families through credit loans. AMIL is an MFI based in Mumbai providing loans to poor entrepreneurs in the slums and has more than 5,000 clients. It switched to Octopus in 2012 when evolving from an NGO to an MFI model. The possibility to integrate the software with an accounting system and to make efficient reports was particularly appreciated.

13 Our Investors OXUS Holding Equity Investors ACTED ACTED is an international relief agency founded in Its mission is to support vulnerable populations worldwide and to guide them in building a better future. With a budget close to EUR 141m in 2013, the organisation developed 388 projects across 35 countries in fields as diversified as emergency relief, food security and advocacy. Nanzenji Nanzenji is a private company working in the energy sector. Nanzenji CEOffice CEOffice is a family office specialized in the support of business managers. It addresses a fortunate clientele having a minimal net worth standing at around EUR 10 million. CEOffice 2MMF 2MMF is a private real estate company created in 2007 and based in Paris. 2MMF Arnaud Moor Arnaud Moor is the Chairman of Proxis Développement, an industrial holding company active in the areas of lactic ferments, perfume, water treatment and active pharmaceutical ingredients. Tiaré Groupe Tiaré Groupe is organised around four business lines: wealth management; strategic consulting services; foundations and assotiations; and coaching to family members. among other retail investors. OXUS DRC I&P Afrique Entrepreneurs Investisseurs & Partenaires is a family of investment funds created in Its goal is to support a new generation of responsible African entrepreneurs and thereby to contribute to the emergence of a sustainable and dynamic private sector in Sub- Saharan Africa. PROPARCO Proparco is a Development Finance Institution (DFI) created over 30 years ago on the conviction that the private sector plays a key role in the development of Southern countries. Proparco is owned at 57% by the Agence Française de Développement (AFD). 13

14 Our Investors Debt Investors Banks Microfinance Investment Vehicles 14 OXUS Annual Report 2013

15 Our Investors Donors ACTED s Charity Bond Suscribers Local Banks 15

16 Our Network of MFIs OXUS Tajikistan 16 OXUS Annual Report 2013

17 OXUS Tajikistan Background OXUS Tajikistan was founded in 2005 to take over ACTED s microfinance activities in the country started in It has now become the biggest and most profitable affiliate in OXUS. As of December 2013, it was also the country s fourth largest MFI. It has operations in three of the four regions of Tajikistan, namely Sughd, Dushanbe area and Khatlon. The microfinance sector in Tajikistan is competitive. Yields are decreasing and an increasing number of MFIs are venturing into Small and Medium Enterprises (SME) and consumer lending. OXUS Tajikistan, for its part, has a small portion of its portfolio invested in SMEs. The vast majority of its clients live in rural areas. Tajikistan economic and political setting Tajikistan is the poorest country in former Soviet-dominated Central Asia. However, it has enjoyed a rapid and constant growth since the end of a civil war in In 2013, the GDP grew by 7.4%, pushed by remittances (representing more than 50% of the total) and natural resources output (aluminum and cotton mainly). Meanwhile inflation was at a moderate 5%. The political system in Tajikistan is stable. The situation in Afghanistan however might impact the security setting in Tajikistan which has, for the moment, remained peaceful. Key country indicators Population, millions HDI (*) Population below national poverty line Life expectancy at birth GDP (**) per capita, USD Source: World Bank Data & UNDP Report 2013 (*): Human Development Indicator (**): Gross Domestic Product 8.21 (2013) (2013) 47% (2012) 68 (2012) 1,037 (2013) OXUS Tajikistan key figures December 2013 December 2012 Number of active clients Number of clients in rural areas, % Gross loan portfolio, USD PAR 30, % Average loan balance per active client, USD Annualized yield on portfolio Operational self-sufficiency Number of staff Number of offices 15,540 81% 20,816, % 1,340 31% 113% ,847 80% 15,388, % 1,419 33% 112%

18 OXUS Tajikistan Highlights of the year A lasting issue for OXUS Tajikistan in 2013 was the portfolio growth being limited by available funds. The capital increase at OXUS Holding in 2014 allowed to increase in return the capital base of the affiliate and support its future development. There was no major geographical expansion plan and it was decided to focus on areas where OXUS was already a leader. One trend was however a rise in operations in the Khatlon region. The organizational structure was also changed with regional centers being set up with more power. No important change was noticed in terms of human resources. The staff allocation ratio climbed slightly to 52% while the management team remained the same. 25% 8% 21% 1% 45% Trade and Services Handicrafts and Manufacturing Agriculture Livestock Others Portfolio and products OXUS Tajikistan managed to increase its portfolio by 35% to USD 20.8m. At the same time, the number of clients rose by more than 43% and reached 15,540. Six loan products are being offered, targeting the agricultural sector, micro-enterprises and individual customers. The individual agro loan is the most popular of them. Additionally, products for start-ups and energy efficiency are being developed. Risk and profitability For several years now, the PAR 30 has been consistently low and 2013 is no exception. Except for two months, it stayed below 1% and stood at 0.79% as of December excluded, OXUS Tajikistan has been profitable since This year, it posted a positive income of USD 521,383, representing a return on equity of 17% and a return on assets of 3%. Gross Loan Portfolio (kusd) Portfolio development and number of borrowers Dec Jan Fev Mar Apr May Jun Jul Aug Sep Oct Nov Dec Gross loan portfolio Active number of clients Active number of clients 2014 strategy OXUS Tajikistan will benefit from a USD 1.2m equity increase in 2014, allowing it to increase its productivity and profitability while pursuing strong social performances. In terms of products, the savings scheme at OXUS DRC will be closely looked at and services such as SMS notification and terminal payment are in the pipeline. 2,0% 1,5% 1,0% 0,5% PAR 30 evolution, % 0,0% Dec Jan Fev Mar Apr May Jun Jul Aug Sep Oct Nov Dec PAR 30 ratio % 18 OXUS Annual Report 2013

19 OXUS Tajikistan OXUS Tajikistan balance sheet - kusd December 2013 December 2012* ASSETS Cash and bank balance Net portfolio 20,501 15,044 Other current assets Long term assets Total assets 21,843 16,755 LIABILITIES Total current liabilities Total long term liabilities 17,445 12,725 Total liabilities 17,886 13,313 Capital Equity Subordinated debt Total Tier 1 & 2 Capital 3,338 2, ,958 3,442 OXUS Tajikistan income statement - kusd December 2013 December 2012* INCOME (12 months) (12 months) Interest/service charge on loans 6,041 4,575 Other operating income 8 - Interest on investment Total Operating Income 6,089 4,646 EXPENSES Total financial expenses 1,751 1,439 Total operational expenses 3,630 2,709 Total expenses 5,381 4,147 Net operating profit/loss before tax & grants Non operating income, grants & expenses 1 1 Income tax (188) (149) Total consolidated profit/loss after tax * Figures restated following adjustment related to the taxation of commissions worth USD -76k 19

20 OXUS Afghanistan 20 OXUS Annual Report 2013

21 OXUS Afghanistan Background The institution was founded in 2007 and was the smallest player to receive funding from the Microfinance Investment Support Facility for Afghanistan (MISFA). It has since then grown significantly and now stands as the third biggest MFI in the country as of December Its operations are located in Kabul and in Northern regions. The microfinance sector in the country experienced consolidation in recent years and fears over the security context have heightened the need for stronger internal control and risk management practices. Afghanistan economic and political setting The Afghan economy has improved greatly since 2001 and the fall of the Taliban regime. International assistance, recovery of the agricultural sector and growth in the services sector explain this economic rise. However, 2013 was a tough year, with the GDP growth falling 10 points to 3.1%. Security concerns fuelled by upcoming elections and the withdrawal of foreign forces from the country in 2014 are a major impediment to economic activity. The situation is tense yet under control. Furthermore, the microfinance sector is more experienced and potential for growth is still very important. Key country indicators Population, millions HDI (*) Population below national poverty line Life expectancy at birth GDP (**) per capita, USD Source: World Bank Data & UNDP Report 2013 (*): Human Development Indicator (**): Gross Domestic Product 30.5 (2013) (2012) 36% (2009) 49 (2012) 678 (2013) OXUS Afghanistan key figures December 2013 December 2012 Number of active clients Number of clients in rural areas, % Gross loan portfolio, USD PAR 30, % Average loan balance per active client, USD Annualized yield on portfolio Operational self-sufficiency Number of staff Number of offices 10,121 55% 9,523, % % 99% ,679 52% 8,343, % % 86%

22 OXUS Afghanistan Highlights of the year With the perspective of challenges to come, the economic activity in the country decreased sharply and OXUS Afghanistan was no exception to that trend. Security became a major concern and the affiliate implemented a new risk management policy. Nonetheless, efforts were made to achieve growth and two new offices were opened, in Faizabad and Bamyan. A Deputy CEO was recruited and will take over the current CEO very soon. An external risk consultant was hired and the risk manager underwent training with ODN to prepare for the new risk policy. Portfolio and products The difficulties in operating businesses in the country led to a modest increase of the portfolio, which expanded by only 4% to USD 9.5m. Clients were however more numerous and, at 10,121 by December 2013, had increased by 17% on a year-to-year basis. OXUS Afghanistan offers six different loan products. Most of them are designed for either micro-businesses or SMEs. The latest product is Zahra, a Sharia-compliant product for women working in the agricultural sector. Risk and profitability Better risk management will be the key to success in the months to come. That is why OXUS Afghanistan has invested strongly in that area. For the moment, success shows in a very low PAR30, at 1.4% as of December The institution also became one the very first to break-even in the country. For the year 2013, OXUS Afghanistan posted a net income after grant of USD 225,164. Its Operational Self-Sufficiency almost broke even as it stood at 99%. Gross Loan Portfolio (kusd) Portfolio development and number of borrowers % 3% 9% 87% Trade and Services Handicrafts and Manufacturing Agriculture Livestock Others Dec Jan Fev Mar Apr May Jun Jul Aug Sep Oct Nov Dec Gross loan portfolio 0 Active number of clients Active number of clients 2014 strategy The strategy to be followed will largely depend on the outcome of presidential elections whose results should be known by Q3 2014, as well as by changes in the security situation. OXUS Afghanistan will continue to strengthen its internal control and risk management policies. At the same time, a greater emphasis shall be put on employee retention, both at field and management levels. 2,0% 1,5% 1,0% PAR 30 evolution, % 0,5% 0,0% Dec Jan Fev Mar Apr May Jun Jul Aug Sep Oct Nov Dec PAR 30 ratio (%) 22 OXUS Annual Report 2013

23 OXUS Afghanistan OXUS Afghanistan balance sheet - kusd December 2013 December 2012 ASSETS Cash and bank balance 1, Net portfolio 9,368 8,630 Other current assets Long term assets Total assets 11,403 10,370 LIABILITIES Total current liabilities Total long term liabilities 10,202 9,293 Total liabilities 10,750 9,903 EQUITY Total equity OXUS Afghanistan income statement - kusd December 2013 December 2012 INCOME (12 months) (12 months) Interest/service charge on loans 3,333 2,180 Other operating income 9 10 Interest on investment 12 - Total operating income 3,354 2,190 EXPENSES Total financial expenses Total operational expenses 2,936 2,379 Total expenses 3,398 2,539 Net operating profit/(loss) before tax & grants (44) (349) Non operating income & expenses (including grants) Income tax - - Total consolidated profit/(loss) after tax

24 OXUS Kyrgyzstan 24 OXUS Annual Report 2013

25 OXUS Kyrgyzstan Background OXUS Kyrgyzstan was founded in 2006 as the second MFI of OXUS. After difficult first years, it took off in 2011 and is the seventh largest microfinance institution of the country as of December Microfinance has become very popular in Kyrgyzstan which is now one of the most competitive markets. This has led to overindebtedness in some cases and internal control issues. Kyrgyzstan economic and political setting Kyrgyzstan is one of the poorest countries in Central Asia, particularly reliant to the Kazakh economy, remittances from abroad and natural resources. It has however enjoyed a strong economic growth in the past 20 years and the economy grew by 10.5% in After ethnic clashes broke out in 2010, the political and social situation has remained calm. Though very small compared to the formal banking sector, microfinance is very competitive in the country to the point of showing some signs of overheating. And the government has started to intervene in it. Key country indicators Population, millions HDI (*) Population below national poverty line Life expectancy at birth GDP (**) per capita, USD Source: World Bank Data & UNDP Report 2013 (*): Human Development Indicator (**): Gross Domestic Product 5.7 (2013) (2013) 38% (2012) 67.5 (2013) 1,263 (2013) OXUS Kyrgyzstan key figures December 2013 December 2012 Number of active clients Number of clients in rural areas, % Gross loan portfolio, USD PAR 30, % Average loan balance per active client, USD Annualized yield on portfolio Operational self-sufficiency Number of staff Number of offices 4,151 69% 5,262, % 1,268 40% 95% ,928 85% 3,966, % 1,010 42% 98%

26 OXUS Kyrgyzstan Highlights of the year 2013 was a difficult year for OXUS Kyrgyzstan. Faced with productivity and therefore profitability issues, it decided to close four branches and to implement a large scale revamp of its strategy. The effects of this plan have started to materialize in a positive way. Lack of funding also hampered the portfolio growth and quickened the need for a restructuration. However, the recent equity increase at OXUS Holding has solved this issue and should put OXUS Kyrgyzstan back on the growth track. Finally, regulation tightened in 2013 and the authorities introduced an interest rate cap at 36.99%, to be reviewed quarterly. 19% 33% 16% 37% Trade and Services Handicrafts and Manufacturing Agriculture Livestock Others Portfolio and products Because of the above difficulties, no new products were developed in 2013 and management was cautious on this front. However, although evolving in a difficult context, OXUS Kyrgyzstan managed to grow its loan portfolio from USD 4m to more than USD 5.2m, a rise of 31.4%. During the same period, the number of clients rose by 5.6% to 4,151 at the end of Portfolio development and number of borrowers Risk and profitability The microfinance context in Kyrgyzstan is characterized by rising risk indicators. Our institution managed to decrease its PAR 30 to 1.02% as of December 2013, down from 1.55% a year ago. Lack of productivity and a decrease in the yield hampered our profitability. OXUS Kyrgyzstan posted a negative net income of USD 97,772 for the year. This was also the result of a change in accounting policies brought about by our auditors strategy Our main objective for 2014 is to go forward with our restructuring plan so that we can achieve better productivity and higher profitability. We will not increase our outreach and focus on areas where we already operate. Helped by a now stable management team and a significant equity increase of USD 1.34m, OXUS Kyrgyzstan is fully capable of changing the course of events and reaping the fruits of its efforts. Gross Loan Portfolio (kusd) 2,0% Dec Jan Fev Mar Apr May Jun Jul Aug Sep Oct Nov Dec Gross loan portfolio Active number of clients PAR 30 evolution, % Active number of clients 1,5% 1,0% 0,5% 0,0% Dec Jan Fev Mar Apr May Jun Jul Aug Sep Oct Nov Dec PAR 30 ratio (%) 26 OXUS Annual Report 2013

27 OXUS Kyrgyzstan OXUS Kyrgyzstan balance sheet - kusd December 2013 December 2012* ASSETS Cash and bank balances Hedging deposit 3,042 2,359 Net portfolio 5,154 3,924 Other current assets Long term assets Total assets 8,657 6,413 LIABILITIES Total current liabilities 2,902 3,518 Total long term liabilities 5,159 2,654 Total liabilities 8,061 6,172 Capital Equity Subordinated debt Total Tier 1 & 2 Capital OXUS Kyrgyzstan income statement - kusd December 2013 December 2012* INCOME (12 months) (12 months) Interest/service charge on loans 1,907 1,528 Other operating income 22 4 Interest on investment 0 0 Total operating income 1,929 1,532 EXPENSES Total financial expenses Total operational expenses 1,387 1,078 Total expenses 2,027 1,566 Net operating profit/(loss) before tax & grants (98) (35) Non operating income & expenses (including grants) - - Income tax - - Total consolidated profit/(loss) after tax (98) (35) * Figures restated following retroactive IAS 39 adjustment of USD -52k 27

28 OXUS Democratic Republic of Congo OXUS Annual Report 2013

29 OXUS Democratic Republic of Congo (DRC) Background The latest affiliate in the group, OXUS DRC, was created and registered in 2012 with the help of two partners: the French Development Agency (AFD) through its private arm PROPARCO/ FISEA and the investment fund Investisseurs & Partenaires (I&P/ IPAE). The institution started its operations in the summer of It offers loan products to micro-entrepreneurs in the capital Kinshasa. Microfinance is a blooming field in the DRC. Very few international players are present and local banks are confined within a handful of cities. DRC economic and political setting The DRC is one of the world s poorest countries. The World Bank ranks the country 186 out of 187 for HDI. It is estimated that 71% of the population lives below the poverty line while the banking penetration rate in the country is of 3% at most. After a decade of war, the country has signed several peace agreements and safety is now a reality in most regions. This has led to a surge in investments and economic activity. In 2013, the GDP increased by 8.5%. Yet, the population s needs remain extremely important, in terms of infrastructure, health, education If the country manages to maintain a stable security situation, its enormous potential for growth could materialize in coming years. Key country indicators Population, millions HDI (*) Population below national poverty line Life expectancy at birth GDP (**) per capita, USD Source: World Bank Data & UNDP Report 2013 (*): Human Development Indicator (**): Gross Domestic Product 67.5 (2013) (2012) 71% (2005) 48.7 (2012) 454 (2013) OXUS DRC key figures December 2013 Number of active clients Number of clients in rural areas, % Gross loan portfolio, USD PAR 30, % Average loan balance per active client, USD Annualized yield on portfolio Operational self-sufficiency Number of staff Number of offices 2, % 855, % % 9%

30 OXUS DRC Highlights of the year OXUS DRC is a greenfield institution that only had six months of operations by the end of However, we can say that results were very positive and that its future looks bright. A management team combining Congolese nationals and expatriates was put in place. It is noteworthy that both Octopus and OXUS Tajikistan helped set up the MFI, for IT and audit matters respectively. Several funding sources (Cordaid, European Union and AFD) were found, including one with a local bank: Bank of Africa. Discussions are underway with many lenders and interest for OXUS DRC is surely very strong. 1% 99% Trade and Services Handicrafts and Manufacturing Agriculture Livestock Others Portfolio and products The loan portfolio grew very fast and reached USD 855,523 by December Although the average loan amount, at USD 375, is smaller than expected, rapid growth continued through the first months of OXUS DRC counted 2,551 clients by the end of For the moment, OXUS DRC offers only three types of loans: group, personal and small personal. No SME lending is performed. Savings Accounts should be implemented by the end of 2014 and regulatory clearances are being obtained. Risk and profitability Because operations started in an efficient and resilient way, there was no PAR 30 as of December The net income of OXUS DRC for 2013 was negative, at USD -85,712. Several grants lightened the loss, which was in line with our estimates. Gross Loan Portfolio (kusd) Portfolio development and number of borrowers Dec Jan Fev Mar Apr May Jun Jul Aug Sep Oct Nov Dec Active number of clients 2014 strategy OXUS DRC needs to grow to a comfortable size in order to benefit from economies of scale. This will be done through an important rise in portfolio size and outreach. A new office in Kikwit, the first outside Kinshasa, will be opened in the summer of Launching Savings Accounts are a serious challenge, but the project was prepared for a long time now and demand is very high among our clients. This will also allow us to widen our funding base. 2,0% 1,5% 1,0% Gross loan portfolio PAR 30 evolution, % Active number of clients 0,5% 0,0% Dec Jan Fev Mar Apr May Jun Jul Aug Sep Oct Nov Dec PAR 30 ratio (%) 30 OXUS Annual Report 2013

31 OXUS DRC OXUS DRC balance sheet - kusd December 2013 ASSETS Cash and bank balance 466 Net portfolio 856 Other current assets 1,810 Long term assets 230 Total assets 3,361 LIABILITIES Total current liabilities 727 Total long term liabilities 369 Total liabilities 1,095 EQUITY Total equity 2,266 OXUS DRC income statement - kusd December 2013 INCOME (12 months) Interest/service charge on loans 113 Other operating income 5 Interest on investment 0 Total operating income 118 EXPENSES Total financial expenses 75 Total operational expenses 1,264 Total expenses 1,339 Net operating profit/(loss) before tax & grants (1,221) Non operating income & expenses (including grants) 1,138 Income tax (3) Total consolidated profit/(loss) after tax (86) 31

32 OXUS consolidated statements 32 OXUS Annual Report 2013

33 OXUS consolidated statements OXUS consolidated balance sheet - kusd December 2013 December 2012 ASSETS Cash and bank balance 2,204 1,850 Hedging deposit 3,024 2,343 Net portfolio 35,660 27,240 Other current assets 3,233 1,794 Long term assets 3,908 1,455 Total assets 48,030 34,683 LIABILITIES Total liabilities 44,515 33,376 EQUITY Total equity 3,515 1,306 OXUS consolidated income statement - kusd December 2013 December 2012 INCOME (12 months) (12 months) Interest & commission on clients 11,734 8,423 Other operating income Interest on investment Total operating income 11,892 8,997 EXPENSES Total financial expenses 3,052 2,392 Total operational expenses 9,412 7,621 Total expenses 12,464 10,012 Net operating profit/(loss) before tax & grants (573) (1,015) Non operating income & expenses (including grants) 1,110 1,260 Income tax (426) (320) Total consolidated profit/(loss) after tax 146 (75) 33

34 ACTED History and main facts Created in Afghanistan in 1993, ACTED has since become the second largest French Non-Governmental Organization with a budget of EUR 141m in 2013, implementing some 380 projects in 35 countries, and providing support to over 8 million beneficiaries, with the support of over 4,000 staff. Every human being has a right to live in dignity. ACTED chooses to act for immediate change in the lives of those in urgent need and co-creates new possibilities and sustainable change by investing in people s potential. ACTED s mission is to support vulnerable populations affected by wars, natural disasters and/or economic and social crises, and to guide them in building a better future. As such, the French NGO responds to emergencies, builds disaster resilience, promotes inclusive and sustainable growth, and strengthens civil society, effective governance and social cohesiveness. The interventions of ACTED seek to cover the multiple aspects of humanitarian and development crises through a multidisciplinary approach which is both global and local, and adapted to each context. Through its long term commitment, ACTED aims at establishing a link between emergency, rehabilitation and development was a year marked by a strong increase in funding, supporting ACTED s emergency response operations to major crises such as the Syrian refugee crisis across MENA, South Sudan and the Central African Republic where programmes were set up to respond to the vital needs of vast numbers of displaced persons and refugees. ACTED also responded to major natural disasters, notably Typhoon Yolanda (Haiyan) that struck the Philippines in the same year. ACTED and microfinance ACTED s outreach Budget evolution Sources of funding in 2013 ACTED recognized the importance of providing communities with the tools to pave the way for economic development at an early stage. In 1997, a first microfinance programme was launched in Tajikistan. Eight years later, OXUS Tajikistan was created. After OXUS, ACTED launched Convergences, the first platform for thought in Europe that aims to build new convergences between public, private, and solidarity-based actors to promote the Sustainable Development Goals and to alleviate poverty and privation in developed and developing countries. Every year, Convergences publishes the Microfinance Barometer that evaluates the state of the microfinance sector around the world. ACTED was also instrumental in the creation of Babyloan.org, the leading peer-to-peer lending platform in Europe as well as the South-Asian Microfinance Network (SAMN), the microfinance association of the South-Asian region. Paris Geneva Washington Kyrgyzstan Uzbekistan Tajikistan Tunisia Syria Lebanon OPT/TPO Iraq Amman Jordan Afghanistan Pakistan Libya Delhi Nicaragua Haiti Senegal Dakar Mali Niger Chad Sudan Yemen India Myanmar Thailand Cambodia Bangkok Philippines Côte d'ivoire Central African Republic South Sudan Somalia Sri Lanka Congo, Rep. Congo, Dem. Rep. Uganda Kenya Nairobi Indonesia 34 OXUS Annual Report 2013 Melbourne

35 Notes 35

36 OXUS Development Network 33, rue Godot de Mauroy Paris, France Phone: +33 (0) OXUS Tajikistan Tolstoi Street, 73 Dushanbe, Tajikistan Phone: OXUS RD Congo 139 bis, avenue Kasa Vubu, Quartier Tshibangu Commune of Bandalungwa, Kinshasa, DRC OXUS Afghanistan District 10, Qala-e Fatehullah, Street# 06, House# 600 Kabul, Afghanistan Phone: +93 (0) OXUS Kyrgyzstan Manas Str. 101/1 Bishkek, Kyrgyzstan Phone: OCTOPUS Microfinance Software Mederova Street 111 Bishkek, Kyrgyzstan Phone: