It's not just about growth [interview]
Laura Pool, Director of Finance & Risk
Laura Pool, Director of Finance & Risk says: “It's not only about growth in the portfolio, but the quality.” In this interview she provides her insights into the financial results, reflects on Oikocredit’s development as an organisation, and talks about how these results and developments will help Oikocredit face the ongoing coronavirus crisis.
What were the highlights of the 2019 financial results?
The theme of our Annual Report 2019 is ‘a year of renewal’. 2019 was indeed a period of transition for Oikocredit. We made strategic decisions to go for a healthy, secure, and sustainable growth that comes with maximum social impact and we managed to achieve positive financial results.
Our ambitious projections for growth were not quite reached, but for me, it's not only about growth in numbers but also the quality behind the numbers. We ensured the quality of the portfolio by thoroughly assessing the risks and applying criteria in selecting partners such as minimum thresholds for environmental, social and governance criteria.
We also deliberately slowed down the growth in some areas where we saw risks increase, particularly in some Latin American countries facing political uncertainty and in our agriculture portfolio. Risks are traditionally high in the agriculture sector, but so is the social impact our financing can support.
We successfully reduced our costs in line with our plans and charged prices that were more realistic and financially sustainable, allowing us to continue our work. To sum up, I am satisfied with the positive financial results and I see plenty of possibilities for us to build on that going forward.
We are of course revising our forecasts as we learn more about the impact of coronavirus, but it is reassuring that we are starting from a position of strength.
How is the coronavirus impacting Oikocredit’s work, and what is Oikocredit doing in response?
We’re still continuing our business activities and monitoring the situation closely. Staff across many of our offices are currently working from home in line with local guidelines. This is working quite well, thanks to the good infrastructure we have in place and the tools we were already using to stay connected with each other across the 19 countries in which we have an office.
We’re working closely with our 600+ partners to understand how they are or potentially will be affected by the coronavirus, what support they need and what we can offer. For example, some partners may need to delay their loan repayments.
At this stage it’s too early to say what the full consequences of the coronavirus will be. It is, however, likely that the low-income people our partners serve will be greatly affected by the coronavirus and its economic consequences. This means our partners and the low-income communities they serve will need extra support at this time.
We understand that our investors may also be concerned about the situation in their countries, as well as their own financial situations. We’re thankful to our investors for their continued support of Oikocredit, because the situation with our partners requires us to be patient and look for solutions for the medium-term together. With previous crisis situations in the countries where we work, our partners have shown resilience and flexibility. We look forward to continuing our work with them, even in these uncertain times.
The number of new investors doubled in 2019, bringing the total number of people and organisations investing in Oikocredit to 59,000. What does this mean for Oikocredit?
Our investors play a leading role in our growth and financial stability, by providing the finance we need for our partner organisations to support low-income people and communities. In 2019 the total funds available for development financing grew by 3.5%, including our member capital that rose by 4.4%. We owe a great deal to the energic campaigning of our network of support associations, their staff and volunteers.
As social investment has become more popular and with more competition in place, we really appreciate the trust Oikocredit receives as the social impact investor of choice. This trust is especially important to us now, as we want to be in a position to offer our partners and the low-income people they serve the extra support they’re going to need.
While the annual report is mainly about the numbers, is there anything you’d like to add?
If you read the report in full, you'll see that there is a lot that stands behind the numbers. It shows that Oikocredit is firm in its mission and vision – with a financial strategy in place that prioritises impact before growth. It also showcases the trust of our investors and the great work of every person who contributed to 2019 being a very positive year for Oikocredit, its partners, and the low-income communities we serve. I would like to thank everyone who made this possible.
You joined Oikocredit just over two years ago, how has the organisation developed since then?
From the very beginning I was really impressed by the expertise and commitment of the people working and volunteering for Oikocredit. The last few years have been marked by organisational changes which we started in 2018. They were crucial to help Oikocredit stay relevant to the people we serve in an ever evolving world and to strengthen our foundations for the future. Even though it has meant saying no to certain regions or sectors, Oikocredit still has a diverse portfolio.
We have become more vigorous, clearer in our processes, and more robust in achieving the best possible impact where it is most needed. This of course wouldn’t have been possible without the change in the way we work. I now hear people asking questions like: "How can this be done better, faster, and at a lower cost?" Personally, it really amazes me. Oikocredit's culture of unity and continuous improvement has had a high impact on successfully implementing this change, and achieving positive financial results even during a time of transition. I’m certain this same culture will be of great help to us in overcoming the challenges the coronavirus is creating for us all.
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