FINANCE - BANKS

Interview with Anne Contreras-Muller

‘Social impact is central to Microlux’s mission’



Anne Contreras-Muller is a recognised specialist in inclusive and impact finance. Photo: Arendt & Medernach

Anne Contreras-Muller is a recognised specialist in inclusive and impact finance. Photo: Arendt & Medernach

Anne Contreras-Muller, of counsel at Arendt & Medernach, has succeeded Rémy Jacob as chairman of the board of Microlux. She takes stock of her ambitions and of the projects that await the leading microfinance institution in Luxembourg.

At the beginning of the summer, you took over the chairmanship of the Microlux board of directors. Why did you apply for this position?

Anne Contreras-Muller: After the real surprise of having been contacted to join the board of directors and take over the chairmanship of Microlux from Rémy Jacob, I was seduced by the idea of participating in a microfinance project in Luxembourg, which aims to develop entrepreneurship and financially support those who, due to a lack of financial means, do not have access to the traditional banking system. My legal work at Arendt has been dedicated to microfinance in developing countries for many years. Although the situation is obviously not comparable, the fact remains that even in Europe, people in fragile situations do not have the possibility of developing economic activities due to lack of access to banks. In my opinion, this is an important issue and a great opportunity for Luxembourg to provide and develop concrete answers to these questions, and I am delighted to be involved.

And what are your plans and ambitions for the Luxembourg microfinance institution?

Microlux is celebrating its fifth anniversary and, thanks to the hard work of the team, the board of directors, the shareholders and the volunteers, the results achieved are very positive, as shown by the first impact report published. We now need to consolidate and develop our support and financing activities for entrepreneurs. One aspect that is close to our hearts is to expand upstream partnerships with institutions, but also with public authorities, so that Microlux can position itself as a tool for the support and financing of business creators. Being as close as possible to the needs of entrepreneurs by adjusting and diversifying the service offer is obviously also at the heart of Microlux's ambitions.

Where do you think the balance between financial autonomy and your social impact objective should lie?

The social impact objective is central to Microlux's mission. We are particularly happy that Microlux can now, thanks to its first impact study, communicate concretely on this social impact measured against precise indicators. For example, at the time of their first contact with Microlux, almost half of the beneficiaries were unemployed. Thanks to microcredit, we have managed to reduce this percentage to 10%. Profitability is not the primary objective of Microlux. We prefer to talk about financial autonomy, which allows us to ensure the sustainability of our action. Our own experience in microcredit for the past 5 years in Luxembourg and the different models of microfinance institutions that have developed over the past 30 years in western Europe show that the financial model must be a hybrid between self-financing and support from public and private players.

Launching loans of honour

What is the status of your project to launch a fund of loans funded by donations, a project launched last February?

Following our call for donations last February, we have received donations from individuals and have just established a new partnership with a local player who will support the development of this project. This allows us to launch the loans of honour at the beginning of next year and we thank very warmly these financiers who trust us! The honorary loan is indeed a fundamental complementary tool for financing entrepreneurs. In addition to benefiting from advantageous conditions (zero interest rate, no deposit or guarantee), the honorary loan benefits from an equity contribution that can be decisive for the financial development of the company.

What has the covid crisis changed in your way of working and in your clients' expectations?

The covid crisis has not fundamentally changed the way we work. After the two months of lockdown in 2020, during which we made sure to maintain a close and regular link with all our clients to check on them and to listen to their needs, our team quickly regained direct contact with our clients--while respecting the sanitary measures, of course. Having a physical meeting with microcredit applicants is important for the effectiveness of our support services, but also for the decision to grant a microcredit. As you know, trust is essential in the microcredit philosophy.

The demand for microcredit has clearly increased since the beginning of 2021, and we have doubled the number of microcredits disbursed in 2021 compared to previous years. This is proof that entrepreneurship is still alive and well among micro-entrepreneurs.

New strategic plan in preparation

Do you have plans to expand your range of services? And if so, in which directions? I am thinking of microinsurance products or your plans to expand into the Belgian province of Luxembourg. Where do you stand on this?

We are indeed working on several projects, starting with the loan of honour mentioned earlier. We are also continuing to expand our support services for the entrepreneurs we support with a catalogue of services at preferential rates, such as accounting, the creation of a website, etc.

As far as our development in Belgium is concerned, our partner Microstart now covers the province of Luxembourg, except Arlon and its surroundings. We are therefore still welcoming applicants from this region without actively developing our activity there.

More generally, after the startup phase of Microlux, we are in the process of establishing, in close consultation with our backers, the strategic plan for the coming years. As you can imagine, this covers many aspects, the most important of which are the financing of our ambitions and the adequacy of our legal status to our social impact mission. We are not yet at the stage of announcements, but the involvement and motivation of everyone within Microlux are the first things that have strongly marked me since I took office.

Originally published in French by Paperjam and translated for Delano