Why AFIN is so important

Daniel Sorrosal - Secretary General at FEBEA - European Federation of Ethical and Alternative Banks and Financiers  


19 years ago, to the surprise of many around me, I ended a promising career in finance in London to return to university and start a Masters in Anthropology and Development Studies. The masters program was followed by an internship in Ecuador in a microfinance foundation.


And there started my journey into Social Finance. And when I say journey, I mean that literally. In a rural small town, 3000m up in the Andes, I learned how important was the work of providing loans to those who really needed them.


To the farmers that were planting broccoli instead of potatoes like everyone else, to the ladies making cheese and bringing it to the markets, to the grower go guinea pigs that was exporting them to Spain, for the migrants who miss home.


Taking buses up and down the mountain, jumping on the back of the motorbike of the loan officer, I felt like an adventurer, surrounded by the beauty of the Andes, I also felt like a conquistador 500 years too late. And felt humbled, when I accepted the hospitality of people that had so little compared to myself, and yet where honoured to share with me. What more could you ask for life at 29 years old.  


My 3 month adventure ended. But the lessons I learned there have stayed with me since. That as a financier, you can do wonders if you really try to help those who believe in doing things differently, those who want to do things better for themselves and others, that you have to take risks as much as they do, and that is the only way to make lasting positive change


My career since then has evolved from microfinance in developing countries, to microfinance in Europe and then to ethical finance.


Ethical Finance perimeter


Most of you know what Microfinance is, making small loans to entrepreneurs that do not have the collateral to get them from a bank and need this funds to start or grow their on little business. Romania is one of the countries in Europe where Microfinance is most developed.


But let me elaborate a bit on Ethical finance. Ethical finance is not micro, it is banking but not directed to entrepreneurs but to organisations, to collective efforts.


Banca Etica


The term was coined it Italy in the early 90’s by a newly created bank that was launched by the fair trade sector, the social economy sector, Italian civil society and a part of the church. These sectors with growing economic activities were so frustrated by not being able to access finance from normal banks that they decided to start their own bank. Hundreds of organisations mobilised and thousands of citizens to raise the starting capital needed to obtain a banking license. And they succeeded.


But once they had their bank they decided it had to be different, it had to be ethical. What does this mean? The bank was created as a cooperative so that all those who had mobilised to launch it, remain its owners, control the bank and appoint the executives.


Ethical Finance mission


The bank mission explicitly excludes any activity that is harming to society or the environment and all forms of speculation or tax evasion. So the bank cannot accept "dirty" money, coming from illegal activities, from criminal groups, armament industry, highly polluting industries, or undeclared money.


And cannot lend to any controversial sector such as tobacco, gambling, GMOs, weapons, nuclear energy, pornographic productions or productions that exploit violence, exploitation of animals, collaboration with oppressive governments, human rights violations, etc..


In turn the ethical bank is dedicated to investing in the real economy and actively promoting social inclusion, sustainable development, social economy and social entrepreneurship. Too good to be true, right?




And yet it works, it Italy, in France, in Belgium, in Ireland, in Greece… in 15 European countries we have ethical financiers that share that DNA and try each in their own context to do the right thing with their money, supporting social economy, the environment, including people through finance. And they cooperate together within FEBEA, the European network that I represent.


In common


And what do they have in common is that they have developed their own tools for financing the social economy: cooperatives where citizens investment is transformed in loans to the social economy, regional investment companies, ethical banks, etc.




Empirically we can easily see that where there is a well developed social economy, at the center of it there are one or several social finance organizations that have supported the growth, the professionalisation of the social economy




And in 2020 I received an interesting call from Romania, with a question. How could we develop an ethical finance financier in Romania.


My first advice was, do not start a bank, instead try to create a flexible organisation that can help grow the social economy in Romania.


This call was followed by another call, a zoom and the idea of AFIN started to emerge. A dedicated social finance organisation that focuses on the social economy in Romania.


And then we won an EU project with ADV Foundation, and we started to work together, pointing AFIN to the best actors in Europe, to bring their experience to Romania


Joining AFIN‘s Board


So I decided to join AFIN’s Board to prove that I believed in its future and then to include AFIN in our network to make it visible at European level and connect it with European private investors.


And two years later, I find myself before you, very excited to see that the idea of AFIN is now being presented to all of you.


Why do we need AFIN?


Because we need someone dedicated and specialised on financing the social economy.


An organisation focused not on the individual start-up that is super hot today and then might disappear in two years time.


Collective effort


But instead focused on collective efforts, on social enterprises that include people, that create jobs, that promote local development, focusing on the organisations that can produce lasting change. In essence building and fueling an eco-system of socially oriented companies that work together, that innovate, that turn problems into opportunities.


Idealistic, not really


This which may sound a bit idealistic, is being done already for decades in many European countries, and to be honest, when they started no-one believed in them, and yet 20 or 30 years later they proved everyone wrong.


The Social Economy sector in countries like Spain or France creates around 10% of jobs, quality jobs and contributes to the economy more than the automotive or tourism sectors.


We need AFIN to extend to those who do not believe today, to convince them to join this movement tomorrow.


We need AFIN to build the first social finance initiative created bottom up in Central Europe.


We need AFIN to contaminate and inspire those beyond Romania who want to develop a Social Economy Sector too, in Europe, but also in Moldova, in Ukraine, in Georgia or Armenia, who are looking at Romania with interest.


We need AFIN to prove that we believe in young people who want to create social enterprises, in those like Alatori de Voi that create enterprises to provide opportunities to those neglected by the work market, to support existing cooperatives, foundations and associations who want to grow their economic activities.


We need AFIN to show that we believe in those who want a different economy and society. And there is no better way to show that you believe than to finance them. Because the word credit comes from CREDERE which in latin means BELIEVE.


Developing AFIN


But to develop AFIN, we need more believers. There are banks and credit unions in Romania that are not equipped to support social economy but they can support AFIN to do it for them. Patria bank is a good exemple. There are public funds which can be used to use grants to develop new enterprises at city level, at regional level, creating new social enterprises that AFIN can finance afterwards to help them grow.


There are associations, cooperatives, collectives that have already invested in AFIN, and we need more of them as supporters and future clients of AFIN.


Because, as the africans say to raise a child, you need a whole village. To make AFIN a success we need an ecosystem of sponsors and social enterprises around it.


In essence, we need believers. In FEBEA, we believe in AFIN. I have come here to Iasi, to persuade you to beleive in AFIN.


Let’s believe, let’s make AFIN a success, let’s grow the Romanian social economy.