Burkina Faso-Based Microfinance Institution and USAID CATALYZE Support Entrepreneurs to “Rise Up” with Innovative New Financial Product
Since 2020, Coopérative Diocésaine d’Epargne et de Crédit de Ouahigouya (CODEC-Ouahigouya), a Burkina Faso-based microfinance institution (MFI), has tested innovative financial products to support entrepreneurs across Burkina Faso.
In 2021, the USAID CATALYZE Finance for Resilience (F4R) Activity partnered with CODEC-Ouahigouya to mobilize financing for micro, small, and medium enterprises (MSMEs) in Burkina Faso’s agricultural sector. By leveraging partnerships with financial institutions and financial facilitators, CATALYZE F4R utilizes blended finance to help agricultural MSMEs access critical financing and mitigate the impacts of ongoing conflict in the region, which has intensified existing threats to food security and livelihoods. To maximize the impact of this approach, CATALYZE F4R employs a pay-for-results approach and incentivizes partners to focus their efforts on populations that are disproportionately impacted by conflicts and crises, including women and youth entrepreneurs, agro-dealers, and animal feed manufacturers.
Since partnering with CATALYZE F4R in 2021, CODEC-Ouahigouya has loaned a total of XOF 743,259,500 (US $1,217,871.82) to MSMEs in the agricultural sector.
In November 2021, CATALYZE F4R worked with CODEC-Ouahigouya to design a new loan product to meet the needs of very small enterprises (VSEs). CODEC-Ouahigouya conducted a six-month, 150-entrepreneur pilot for the new financial product Tik N’Yiki (“rise up”). Tik N’Yiki offers collateral-free with competitive interest rates, a simplified application process, and flexible, cash-flow dependent repayment terms to support VSEs in Burkina Faso’s Nord and Centre-Nord regions. This tailored approach also addresses the needs of youth and women entrepreneurs who often lack the collateral and credit history necessary to access traditional loans.
Following the Tik N’Yiki pilot phase — which lasted from November 2021 through May 2022 — CODEC Ouahigouya used CATALYZE F4R incentives to conduct participant surveys. The feedback collected allowed CODEC-Ouahigouya and CATALYZE F4R to evaluate pilot results and identify areas for product improvement.
Based on participant feedback, CODEC-Ouahigouya made two critical changes to the product design which more than quadrupled the number of VSE’s able to access financial resources through their services:
- Increased the maximum value of an applicant’s first loan from XOF 50,000 (US $82) to XOF 100,000 (US $165), which enabled borrowers to invest in additional resources to grow their business.
- Revised the loan repayment schedule from weekly to bi-weekly, which granted borrowers more time to gather funds for repayment, and therefore, greater short-term financial flexibility.
Tik N’Yiki is not CODEC-Ouahigouya’s only innovative financial product. In 2019, CODEC launched the “M’Zanga” (“my everything”) savings product which enables customers to deposit their daily savings in their account without having to leave their workplace or place of business. To maximize the benefit for their clients, CODEC-Ouahigouya requires customers interested in the Tik N’Yiki tool to also enroll in a subscription to the M’Zanga tool. This two-pronged approach balances the MFI’s risk of offering loans without collateral requirements while lowering the threshold for enterprises to access more formal finance resources. By combining the two products, customers can apply for up to XOF 500,000 (US $825) in loans without the need for collateral, and benefit from a faster (maximum 72-hour) processing time for applications.
Since its official launch in August 2022, Tik N’Yiki quickly gained popularity among VSEs in CATALYZE F4R’s target regions. As of December 2023, over 800 entrepreneurs had used the product and generated an outstanding credit volume of around XOF 150,000,000 (US $248,000).
Tik N’Yiki’s successful implementation has stimulated entrepreneurship, while enhancing access to finance for women and youth entrepreneurs. Moreover, CODEC-Ouahigouya and CATALYZE F4R’s partnership and co-design underscores the potential of financial innovation to stimulate entrepreneurship, transform financial innovation, and contribute to long-term sustainable development in the Sahel region.
