AlpSib

Innovative ways to involve private investments to finance services of social interest

SIB in France

France has traditionally been public oriented in dealing with the social issues. Those have been managed at a public-central level. It is believed that that is the reason that the SIB developed relatively late in France, accompanied with the hesitation from some public stakeholders and the public opinion. However, the SIB is gaining its popularity also because the Government has been facing enormous public expenses in social area and SIB can be an instrument for their compensation.

The French Government launched a call for proposal for financing SIB on 16th March 2016 and was opened till 31th March 2017. 13 projects were selected and other 47 will be re-evaluated in the second phase.  

Three examples of SIBs selected within the French government’s call for proposal:

  • ADIE (Association pour le Droit à l’Initiative Economique): ADIE signed up the first SIB in France on 24th November 2016 with the objective to face the problem of abandoning the countryside due to the unemployment. The project involves the private bank BNP Paribas and the independent evaluation society KPMG as partners. The latter is going to evaluate the results of the project after six years from its approbation.

Cost for the French Government: 1 500 000 €.

  • Solidarité nouvelle face au chômage:  It finances and supports the creation of jobs in the social economy sector, moreover, the contracts signed should be for at least one or two years. It is an opportunity for unemployed people to find long lasting occupation, as this working experience is certified with a certificate of competences. The project results will be evaluated as “achieved” if the participants enter the labour market.

Cost for the French Government: 1 700 000 €

  • Cravate solidaire:  The idea is to support unemployed people that live in remote areas to prepare for the job interviews by providing them professional outfits. The action is facilitated with the help of the association’s bus which is riding in two disadvantage neighbourhoods in the Paris area. The project will be evaluated successful is a certain number of people involved obtain an occupation.

Cost for the French Government: 1 700 000 €

Impact Partenaire’s case

Impact Partenaire is an investment company with a social mandate established in 2007 which has been selected by the French Government SIB call for proposal. Their project is dedicated to the economic development of priority districts[1] in France, particularly in relation to businesses’ creation.

The objective of the project is to create in the next five years at least 200 stores in the priority districts, train 350 people, thus generating at least 2000 employments.

The investors’ money facilitates the access to finances of the potential store-owners /franchisee. In fact, with the funds, Impact Partenaire covers 40% of the budget, 50% is covered by the banks and the franchisee has only to invest 10% of the total budget required.

The 60M€ raised for this SIB is coming from the Franchise French Federation (FFF), national franchisors such as Burger King, Carrefour Proximité, Mail Boxes Etc., OCP-Pharmactiv, O’Tacos, Pizza Hut, Speedy, the European Investment Fund, the Française des jeux (the French institution for lotto) and bpi France.

How can the added value for the French Government be measured?

  • There are a series of avoided costs:
    1. The Government is not fully equipped to create a business, negotiate with private partners or train people, so it should forecast a team and pay it to do that.
    2. In case of failure of the project, the risk for the Government is set at zero; meanwhile it’s the private in charge of it. On the other hand if the project is successful the public administration would finance a negligible expense in comparison of the expenses it would have faced with classical funding.
    3. If the project results are favourable, there should be less unemployment and consequently less public finances should be required to support unemployed people.
  • There are two direct Return on Investments:
    1. 300 enterprises will be created leading to employment creation, which is one of the Governments main objectives ;
    2. The Government and the local authorities will have a return on investment of 11 Million Euros in the form of professional taxes thanks to the new businesses.

In order to be successful, Impact Partenaire proposes to create mostly franchised stores, and therefore developed partnerships with large retailers such as Carrefour or Burger King®, the latter is treated hereinafter.

Testimony of partner: Burger King®

Burger King® is an American fast food franchisor with a unique shareholder, the French group BERTRAND.

Burger King® has recently decided to develop its business in France with the acquisition of the Belgian fast food brand “Quick”, therefore new restaurants will be created and the Quick restaurants need to be converted into Burger King®. The franchisor is willing to support the transition of franchisees as well as new creators and therefore decided to integrate the Impact Partenaire’s project. In this way the franchisee will invest only 10% of the expenses needed for the transition to Burger King® or for entering in the franchising. This is going to foster the chances of success of the project, because people do not need a huge capital to start or convert their activity.

 

 

[1] Priority Districts or “quartiers Politique de la Ville”: this instrument intends to reduce the difference  of development in the disadvantaged districts in relation to other districts in the cities. This measure involved about 1 500 districts and 5,5 million citizens. The provision is regulated by the Ministry of the city, of the youth and of the sport (Ministère de la Ville, de la Jeunesse et du sport) and the Ministry of the economy (Ministère de l’économie) which identified problematic districts which needs specific policies already in 2014.