This text is part of the special International Cooperation section
Quebec has a long tradition of solidarity finance and international cooperation. The Quebec International Solidarity Investment Fund brings together these two expertises to help partners in the South access credit.
In October 2022, the General Coordinator of the South Solidarity Fund (FSS), Nathalie McSween, visited the village of Mbokhadane, Senegal, to contribute to the Green Circular Economy and Energy (E2CV) pilot project. The village is not electrified and there are two primary school buildings and another for preschool.
“The project supported the establishment of a school canteen in which women are paid to prepare meals for children, using food purchased from local producers,” says M.me McSween. A second component allowed the acquisition and installation of solar panels on the roofs of the three school buildings, which were not electrified at all. These panels were financed by the FSS and the Union of Agricultural Producers — International Development (UPA DI).
The Quebec Solidarity Investment Fund (FISIQ) and the Sen’Finances Foundation, a Senegalese partner, wish to facilitate access to credit thanks to the new Investment Program for green energy in Senegal. “Agriculture and livestock farming require a lot of capital, so improving access to credit is a crucial aspect of development,” says Nathalie McSween.
One of the first loan requests concerns a rapid cattle fattening project (a way of fattening animals more quickly) and the acquisition of a biodigester (a device used to produce biogas) in the canteen. This will increase the income of breeders while reducing the use of butane gas in cooking meals.
Building on trust
Founded in 2018, FISIQ wants to improve access to credit for social and solidarity economy businesses (cooperatives, mutuals, associations, etc.) in Southern countries that collaborate with Quebec international cooperation organizations (OCI).
FISIQ itself works in partnership with the Quebec Association of International Cooperation Organizations (AQOCI) and 15 OCIs. “Some of these OCIs have invested together $750,000 from their own funds, to constitute capital which is used to make loans to partners in the South, which is a first in Quebec,” underlines the president of FISIQ, André Beaudoin.
The Fund benefited greatly from funding of three million dollars provided by the Government of Quebec in 2019. Unfortunately, the requests sent to Global Affairs Canada were met with numerous refusals.
It is Filaction, an impact fund from Fondaction which invests in SMEs and cooperatives in Quebec, which manages the loan requests. “Worker Funds can represent an inspiring financing model for our partners in the South,” believes André Beaudoin. In addition, Filaction’s relationship with Quebec SMEs can help create links between their product and service offering and the needs of partners in the South. »
Faithful to its solidarity finance approach, FISIQ reverses the three main risk management criteria: guarantees, profitability and trust. Trust becomes the number one factor. “If OCIs have been working with a partner for a long time and trust is established, that matters a lot to us,” explains André Beaudoin. Then, we look at profitability, and when possible we take guarantees. »
After its start-up, the Fund encountered some unforeseen obstacles. First the pandemic, which complicated the realization of international cooperation projects, but also the invasion of Ukraine by Russia. In fact, the very first loan offered by FISIQ was intended for a Ukrainian initiative. This funding was unfortunately never used due to the context.
Other projects have been supported since that time. FISIQ notably contributed $500,000 to the E2CV project in Senegal and granted a loan of approximately $400,000 to FOGAL, an international solidarity finance institution active in Peru, Bolivia and Ecuador. Thanks to the FISIQ loan, FOGAL wishes to strengthen the capacity of Peruvian agricultural cooperatives working in the coffee sector to purchase their members’ production and then sell it on national and international markets.
“Very often, in countries of the South, companies or organizations have the capacity to borrow, but have difficulty convincing private donors to obtain credit,” notes André Beaudoin. A fund like that of FISIQ helps to get around this problem. »
A model that is exported
FISIQ’s approach is anchored in a long tradition of solidarity finance in Quebec, as recalled by Gérald Larose, who chaired the Caisse d’ économique solidaire Desjardins (CESD) for 13 years, of which he remains today one vice-presidents. Our first law on cooperatives dates back to 1865. At the turn of the last century, the number of cooperatives increased and we saw the emergence of some of the best known, such as the Desjardins Movement and Solio Groupe Coopératif (formerly La Coop fédérée).
“The social and solidarity economy developed where the market did not meet needs,” explains Mr. Larose. Quebec has proven to be a prosperous land for this approach for at least two reasons. The Quebec Catholic clergy was largely influenced by the encyclical Rerum Novarum published in 1891 by Pope Leo XIII, which promoted a social Christianity as a response to the ravages of uncontrolled capitalism. The situation of Quebec, a small French-speaking nation in North America, has also created a need for this type of solidarity economy.
The CESD itself was born in 1971, in order to support the development of solidarity economy businesses and organizations. We then saw the emergence of other players such as the Chantier de l’entreprises sociale, the Social Investment Network of Quebec (RISQ), CAP Finance, Filaction, etc.
“The intuition of the founders of FISIQ is that there is a model exportable to countries in the South to help partners develop by their own means, as opposed to a tradition of cooperation more focused on donations” , says Gérald Larose.
To get there, the world of cooperation and those who support it will have to carry out their own cultural revolution. “It remains to eliminate certain administrative irritants which complicate the linking of financing in the form of loans to others coming from donations in projects, and also to develop a common working culture between the world of finance and that of cooperation , but we are working on it,” says André Beaudoin.
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