Foreword
 The deep economic crisis affecting our economies is the result of the bursting of the financial bubble. Doesn’t this remind you of something? In March 2000 another "bubble" burst, the Internet bubble. The current crisis was caused by the diffusion through the financial system of financial products backed by dubious loans. The March 2000 crisis had its origin in a race for investment in sectors considered as promising, especially the Internet and telecommunications sectors. The current crisis materialized through the collapse of the banking system and a global recession; that of March 2000 resulted from a significant fall in prices on the technology stock market Nasdaq, which caused a serious slowdown in the world economy.
The trigger for this crisis is the search for an always higher yield, leading players looking for investments to lose sight of the reality on the ground. This development was facilitated, particularly in the current crisis, by measures of market deregulation.
Following the shock of the current crisis, the worst since World War II, the situation appears to be heading towards a recovery in the hands of the authorities. The dominant discourse has changed in nature: economic liberalism must be tempered by a greater regulation of markets, mainly financial, and in future States should play a more important role in stabilising the economy.
And this is where the microfinance sector gets involved as it can contribute to reconfiguring the way our economies work. What indeed is the primary objective of microfinance? To give people excluded from the "system" an opportunity to develop an economic income generating activity or to satisfy basic needs. And what can we expect as a short-term trend? That the ranks of people excluded from the system will grow significantly, while the banks, which lack liquidity, will implement a more restrictive lending policy.
These are the opportunities produced by the crisis. Unfortunately, the microfinance sector is also weakened by the crisis: liquidity problems, reluctance of funds providers, increased delinquency rates, ... and the objectives set by microfinance actors could not be achieved without the support of States and especially the European authorities.
At European level, since 2002 the EIF (European Investment Fund) has guaranteed microcredit programmes; the JEREMIE initiative has already allowed some disadvantaged regions to mobilise resources at their disposal in the microfinance sector and JASMINE aims at strengthening and sustaining MFIs in the future.
But the efforts displayed at the European level must be accompanied by a reflection of the microfinance sector, as it is true that to qualify for aid at the European level it is necessary to show true professionalism and reach a certain level of development or volume of production.
Jean Pierre WATTHY
EMN Treasurer
 EMN survey on financial crisis
 End of November 2008, 24 EMN member organisations from eleven countries took part in an EMN survey on the impact of the financial crisis on European MFIs. Even if the date chosen for the survey was relatively early, some important trends were already discernible. These survey results now provide a basis for reflecting on the crisis as an opportunity and for mitigating its negative impact. In the future, EMN will continue to carry out similar surveys on a regular basis.
Seventy seven percent of respondents consider that their organization is or will be affected by the crisis in 2009. Most think that there will be an increase in default payments owing to business closures and that it will become more difficult to gain access to funds for their loan capital. Proposed measures to soften such negative impacts include seeking additional funding and guarantees, ensuring stronger client-follow up and developing new products.
 The great majority of survey participants (96%) also see the crisis as an opportunity for their organization – an opportunity to raise the profile of microcredit, influence government, seek additional resources, develop new tools and methods, improve efficiency and strengthen their outreach. Seventy one percent state that their organisation has not yet taken advantage of the crisis to communicate on the role microfinance could play. However, of these, 75% plan to do so in the near future through the use of media, participation in conferences and stronger networking.
The Albanian microfinance sector Since its beginnings in the early 1990s, microfinance has [1]been an essential part of the development and economic environment of Albania. With donor support and with a firm commitment from the government throughout the period, microfinance has developed and consolidated into a recognized and established part of the financial market. Microfinance institutions (MFIs) entered Albania in the early and mid 1990s with ease, [2]some as NGOs and some as quasi-governmental agencies all free of state supervision. By the time state supervision came under discussion in the late 1990s there was a solid core of MFIs operating in Albania.
MFIs have retained high levels of loan repayment during the period, despite a number of social and economic crises, most infamously the “pyramid savings schemes” collapse of 1997, when up to 50% of the population lost their savings. MFIs maintained their small but sound base even when crises in loan repayments led to the collapse of one major state owned bank and, in 1998, a moratorium on lending in another.
This healthy state of operations has, from the MFI point of view, been the cornerstone of discussions with the state authority for regulation and supervision of banking activity, the Bank of Albania (BoA). With strong repayment levels MFIs have been able to negotiate from a position of strength in order to obtain a regulatory and supervisory system suitable to their needs.
The Bank of Albania, while it is reassured by consistently high levels of loan repayment, points out however that MFIs have been slow to achieve an optimal scale of operations and full sustainability. They are still donor dependent, either through direct subsidies or through access to funds at below market rates.
Over a period of 15 years, microfinance activity in Albania has reached over 2% of the population, or an estimated 6% of households, in over 80% of the regions of the country. Average loan size per borrower has also surpassed the expectations of all MFIs. Since 1998 it has risen from $300 (€240) to $1,400 (€1.110) in rural areas and from $1,800 (€1.425) to over $3,000 (€2.380) in urban areas.
The microfinance sector in Albania is considered “pioneering” in the financial sector in Albania. The beginning of 1994 marks the establishment of two micro-lending programmes under ADF (Albanian Development Fund): Rural Credit Project (Rural Finance Fund) and Urban Credit Project (today fondiBESA).
The microlending market developed in a similar cycle to development and changes in the banking system. The main features of microlending in Albania are:
- An increasing number of operators.
- An improving quality of services provided to small clients, and diversification of products offered (mainly in applying the scaled interest rate) and kind of operators in rural and urban areas.
- A significant increase in competition which leads to the improvement of the quality of services.
- A significant presence of the Microfinance Institutions in the crediting of businesses.
- More attention paid by entrepreneurs to the Microfinance Institutions.
Three years before, the AMA (Albania Microfinance Association) was established. The establishment of AMA comes as result of consolidation of the microfinance sector in Albania and the good condition and readiness of all Microfinance Institutions. All [3]six Microfinance Institutions are AMA members.
The years 2007 and 2008 were a period of consolidation of all Microfinance Institutions, improvement of all financial indicators and more complete extension of activity in all areas (rural; urban; semi-urban). The microfinance sector in Albania is an integral and significant part of the financial sector that year after year is showing growth, consolidation and structural improvement. Microfinance Institutions are helping the country with economic growth and poverty reduction in urban and rural areas by promoting the micro and small enterprise sector in Albania.
In this way, all Microfinance Institutions have been part of the Albania Government Strategy in the Reduction of Poverty, by creating thousands of new jobs. Albanian MFIs all together have outstanding more than US$150 million (around € 120 million) at the end of 2008 and have increased their activities year after year.
One challenge for AMA is the establishment of a Credit Bureau for all Microfinance Institutions to exchange information on clients. The year 2008 and beyond will be a time of further consolidation of our Microfinance Institutions, and of necessary legal changes to better adapt to the evolving microfinance sector in Albania.
The concern of BoA is the security of the deposits of Albanian citizens, the soundness of the MFIs under its supervision and the stability of the financial market. In this regard it can be pleased with its progress: the bulk of microfinance activity is being reported to BoA: approximately 50% of the activity is directly supervised by BoA and there are ongoing discussions with the MFIs not fully incorporated into the system. The main issue of concern is the slowness of the MFIs to request licenses under the 2003 NBFI regulation, a situation due in part to BoA's acceptance of their current status. The BoA Supervisory Dept. has integrated microfinance supervision into its overall Bank Supervision programme with relative ease, although licensing of all MFIs under the regulation would put a strain on its resources.
[1]Microfinance has had its own role in the financial sector and the economic development of the country.
[2] It needs to be underlined that the pioneer actors in microfinance sectors in Albania are two projects financed by the World Bank, respectively the Urban Microcredit Program in 1994 (transferred in 1998 to fondiBESA) and the Rural Microcredit Program (transferred to Rural Finance Fund-now ASCU - Albanian Savings and Credit Union).The microlending Market in Albania in this period can be categorized as very weak and undeveloped.
[3]AMA's six members are: fondiBESA; ASC-UNION; MAFF; PSHM-Opportunity Albania; Union of Savings & Credit Associations Jehona; Building Future – World Vision
EMN welcomes 3 new members 
The EMN Board welcomed three new members at its February meeting, bringing the number of members to 72 from 22 European countries.
 HandsOn Microcredit (The Netherlands) was founded with the idea of supporting people in the Netherlands who want to start a small business and need financial support and coaching. It also helps those who can’t receive a loan elsewhere, simply because they had debts in the past, do not speak the language very well, haven’t got a diploma or are afraid to approach a financial institution.
 Banca Etica (Italy) aims at creating a place where savers, driven by the common desire for a more transparent and responsible management of financial resources, may meet socio-economic initiatives, inspired by the values of a sustainable social and human development. Banca Etica started its microcredit activity in 2003. It delivers both microcredits to microenterprises and consumer microcredit for social emergencies. Banca Etica develops its microcredit projects in partnership with other organisations (government organisations, non-profit organisations, Caritas).
 Qredits is a specialized credit provider who aims at the financing of small entrepreneurs in the Netherlands. What distinguishes Qredits from the regular banks is its individual and custom recommendations to small entrepreneurs. In this way, Qredits looks at the future rather than the past. Thanks to Qredits, microentrepreneurs can easily and rapidly obtain a credit with a good plan.
Opening of Triodos Facet office in Spain
 In 2008, Triodos Facet initiated talks with Triodos Bank España which culminated in January 2009 in the establishment of a new Triodos Facet office in Spain. The office is located in the building of Triodos Bank España, located in Madrid. Management responsibility remains fully with Triodos Facet in Bunnik (the Netherlands), including all reporting lines. Regular meetings of directors are scheduled and (already) taking place.
In practical terms, many activities are scheduled for the next few months to make the new office fully operational. And to get the project pipeline filled, a network of contacts and linkages between universities, large organisations, and other potential clients is being established. A Spanish national is to be contracted to facilitate this. Triodos Facet Spain is also scheduling a series of seminars on current issues and contemporary themes within its field of work. The Triodos Facet Spain representative is Tom Baur.
For more information, please visit Triodos Facet's website by clicking here. ANDC celebrates its 10th anniversary and has elected a new Board
 To celebrate its 10th anniversary, ANDC in Portugal is going to organise ten events during 2009. These events aim at reinforcing public awareness of microcredit, increasing the visibility of microcredit institutions and promoting the work of ANDC. ANDC’s event programme includes a photo exhibition of 30 microentrepreneurs as well as a book/album of their stories, a public opinion poll concerning microcredit in Portugal, an educational kit on entrepreneurship and microcredit aimed at young people aged 17 to 19, a ceremony celebrating the assignment of the 1000th microloan and the creation of an exchange network among microentrepreneurs.
In addition, ANDC is going to start its 10th year with a new board and a newly elected president, Mohamed Ahmed.
Partner opens a new organisational unit
On 21 January 2009, Partner Microcredit Foundation opened its new Organizational Unit in Zivinice (Eastern Bosnia and Herzegovina). In the new office, clients will be able to perform all activities related to collection and disbursement of loans in cash, meaning that they will be offered full service in one place. Until now, clients from this area were paying loan instalments through commercial banks. From now on, with the new service provided, clients will save both time and money, since all payments at the new office are collected without charges; this is also the case for all Partner loan products.
Since its early beginnings until today, Partner has created more than 60,000 jobs, and over 200,000 jobs have been kept thanks to Partner's commitment to achievement of its mission. Today, Partner employs around 300 people in the whole of B&H, who provide services to 65,000 microentrepreneurs, with over KM 180 million for financing their business activities.
The Italian Microfinance Gateway Giordano Dell’Amore Foundation (formerly Finafrica Foundation) is an endowed foundation based in Milan constituted under Italian law in July 1977 (but operating since 1967) by Cassa di Risparmio delle Provincie Lombarde.
 With its website www.fgda.org the Foundation aims to deepen and disseminate information about microfinance activities in Italy and at the international level to the broadest audience. The Foundation also manages the first I talian Microfinance Gateway, www.microfinanza-italia.org, created within the project: “Oltre l’Assistenza…” (“Beyond the assistance...”) financed by the Italian Ministry of Foreign Affairs and Fondazione CARIPLO, and realized by CIPSI and ACRA in collaboration with other Italian institutions. Its goal is to spread the key concepts of microfinance and to unify the different experiences of Italian operators. At the moment it is available only in Italian.
The aim of the website is to represent and unify the community of those who study, implement, or want to deepen their knowledge of microfinance, both in its applications in developing countries (DCs) and on the Italian territory. It is intended as a tool for disseminating and sharing information on key topics of microfinance and also aims to support the construction of networks and collaborative programmes between the actors involved in different ways in the field.
More information on the Italian Microfinance Gateway here.
Adie launches its own endowment fund for social enterprise The fund's creation corresponds to Adie's objective of becoming financially sustainable in the coming years. The fund was created to finance the services and loans provided to Adie's 23,000 clients, so far financed through public subsidies from the state, cities and European funds. Its initial capital of one million euros is expected to grow with the number of private donors increasing in time.
14 organisations apply for the first Microfinance Good Practices "Europe Award"
The “Europe Award” is a competition organized by Giordano Dell’Amore Foundation and the European Microfinance Network within the framework of the “Giordano Dell’Amore Award”, an initiative that offers two specific prizes open to institutions involved in the supply of microfinance services in Italy and worldwide.
 On the occasion of the first competition for the “Europe Award”, launched last September, 14 institutions based in nine different European countries have applied for the contest on microfinance good practices.
The microfinance experiences presented cover different fields: from specific programmes tailored for young people, farmers, small entrepreneurs, and households to programs offered by cooperative banks, social venture capital funds, microinsurance and internet-based electronic microfinance projects.
A short-list of five applications will be selected by the Award Committee, composed of leading experts in the field, and the names of the candidates short-listed will be announced on the Giordano Dell’Amore and EMN websites by 31 March 2009.
The Award winner will receive 50,000 euros, destined to be reinvested for the realization of new projects or to cover core costs of the existing services, and will be announced on the occasion of the EMN Annual International Conference scheduled for 4-5 June 2009.
The five initiatives short-listed will also receive a contribution to cover travel and lodging expenses for the participation of two staff members at the Conference and Award ceremony.
This Award aims to increase the understanding of the importance of microfinance by the public, to encourage European microfinance practitioners to share good and transferable practices in the field of microfinance, innovation and sustainability and to promote and spread those good practices to other microfinance agencies in Europe.
More information soon available on our website.
Bulgarian MFIs visit French institutions
EMN organised a week-long exchange visit (19-23 January 2009) on behalf of the ILO (International Labour Office) SRO Budapest, welcoming a delegation of 21 Bulgarian representatives of microfinance institutions, NGOs and institutional agencies, accompanied by one ILO representative. This visit took place within the wider framework of an ILO project, related to the promotion of solidarity finance and integration of persons in difficulty in Bulgaria.
The participants had the opportunity to meet representatives from a wide range of key players in the microfinance sector in France: Adie, the Chamber of Commerce and Industry of Paris, Pôle Emploi, and the Ministerial delegation for innovation, social experiments and the social economy. They also visited the local platforms of Afile 77 with its business incubator in Melun and France Initiative in La Courneuve. This practical side of the exchange visit helped them to clearly envision and discuss among themselves the possible implementation of certain projects, tools and mechanisms in their respective regions.
This is the second exchange visit organised by EMN on behalf of the ILO SRO Budapest within the framework of the pilot projects it implements in several Eastern European countries, the objective of which is to promote, with local institutions, integrated and adequate support to unemployed candidates for self-employment, especially taking into account financial support for enterprise creation.
For more information on ILO SRO Budapest's activities, please click here.
EMN Exchange Visit in Bulgaria
EMN is organising an exchange visit to Bulgaria to visit microfinance institutions and other stakeholders, in partnership with Nachala Cooperative and Mikrofond EAD. This unique opportunity to discover what is happening in Bulgaria will take place on 22-24 April 2009.
 Aside from Nachala Cooperative and Mikrofond EAD, we plan to visit other organizations such as JOBS Project and USTOI. ProCredit Bank, which is very active in the region, has also been approached.
Microfinance in Bulgaria emerged in the early 1990s primarily as a donor-driven tool to address some urgent aspects of transition. It offered vital assistance to support the reestablishment of entrepreneurship and the private sector, whose traditions and potential were largely interrupted during the previous centrally planned system. Most microfinance operations started as pilot projects or programs initiated and funded by international donors.
This and other information will be presented during the visit which will start from Sofia and allow participants to travel to Plovdiv and Pazardjik where, aside from practitioners, they will also meet clients.
EMN 6th Annual Conference 
"Microfinance and its Growth in Europe: consequences, challenges, opportunities"
On 4 and 5 June 2009, EMN is organising its 6th Annual Conference which will be held in Milan (Italy).
During this major event EMN will welcome around 350 participants, among whom will be practitioners, bankers, researchers, investors, local government and European Commission representatives, policy makers, the private sector and the media.
This 6th Annual Conference will offer the opportunity to discuss the exchange of good practices for growth in the sector with a special focus on the inclusion dimension of microfinance.
Furthermore, during the conference the “Award Europe” on Microfinance Good Practices will be presented for the first time . In addition, the “European Microcredit Research Award”, which is endowed with €1,000, will be distributed for the second time.
For more information on the conference and the accompanying events, please click here. You can already register on-line.
Launch of the EMN Working Groups
Under its new strategic plan 2009-2011, EMN launched four working groups at the end of 2008 in order to further involve its members in the implementation of the strategic plan and the examination of their main preferred topics. All together, there are 18 EMN members who showed an interest in being involved in this work: the group on legal and regulatory environment will be managed by Réseau Financement Alternatif (Belgium); the group on social performance measurement will be managed by Triodos Facet (The Netherlands); the group on growth, sustainability and funding will be overseen by Fair Finance (UK) and the group on research will be lead by Foro Nantik Lum (Spain).
The first meetings will be held in the coming weeks to define the business plans for 2009. These groups will be supported by members of the EMN Board and by secretariat delegates to ensure good cohesion with the EMN strategy and to enable effective dissemination of their work.
Microfinance in the National Action Plans 2008-2010.
The European Council of Lisbon (March 2000) agreed on the need to take steps to make a decisive impact on the eradication of poverty by 2010. To reach maximum efficiency, it recommended that Member States mainstream the objective of fighting poverty and social exclusion into relevant strands of policy, at both national and community level. 
The Council designed a framework for national strategy development as well as for policy coordination between the Member States on those issues: The Open Method of Coordination involves agreeing to common objectives and common indicators, preparing standardized strategic reports and evaluating these reports jointly with the European Commission.
Every two years, the Member States prepare a National Strategic Report on Social Protection and Social Inclusion, which is divided into three reports: a National Action Plan on Social Inclusion (NAP), a Strategy for Pensions and a Strategy for Healthcare and Long Term Care. Every year, the European Commission and the Council, together with each Member State, assess the progress made in a Joint Report.
Microfinance is an important tool for social inclusion: microenterprise development is key for employment and economic growth, and personal (inclusion) microfinance is a tool for fighting social exclusion, over-indebtedness and poverty. However, as shown by the December 2007 Transformando study (June-August 2008 EMN Newsletter), microfinance is almost never quoted in the National Strategies. To change this, EMN published a toolkit and set up a community of practice on NAP inclusion, to guide members in influencing the NAP in their own countries, and to give microfinance visibility and recognition as a worthwhile tool for social inclusion.
EMN is presently updating the report, looking at the 2008-2010 National Strategic Report on Social Protection and Social Inclusion and the 2008 Joint Reports. Is microfinance more visible now? The answer in March…
Cross Country Microfinance Market Studies Western and Eastern Europe
EMN is currently conducting comprehensive microfinance market studies in eight Eastern and Western European countries on behalf of the European Investment Fund (EIF). The studies, results and conclusions will help shape EIF policy in mounting its new microfinance initiative, JAMSINE. Eastern countries being examined are Bulgaria, the Czech Republic, Romania and Slovakia; and in the West: Germany, Italy, Spain and the UK. In addition to producing two regional reports that will detail supply and demand trends and current market realities, the studies are focused on the institutional capacity that exists in these markets and consequently in what areas the EIF could contribute most.
JASMINE stands for “Joint Action to Support Microfinance in Europe”. It is the operational outcome of the official communication released by the European Commission in November 2007 on the “European Initiative for the Development of Microcredit in Support of Growth and Employment.” JASMINE will primarily target EU-based non-bank microfinance institutions that are in the development phase, sustainable or close to sustainability, but real targeting will be assessed based on the studies’ findings and could be extended for instance to greenfield MFIs willing to act in underserved areas or to expanding MFIs. In addition, it could be widened to MFIs that are in the process of transforming into banks and which need equity participation or to well-established MFIs willing to open new branches to develop innovative products.
Coordination of the regional efforts is being handled by EMN members EUROM Consultancy & Studies (Romania) and Fundación Nantik Lum (Spain). EVERS & JUNG (Germany) is coordinating the institutional “Capacity Building” portion of the studies and will be responsible for the final Capacity Building report, synthesizing the findings from all eight countries.
Lobbying for an enabling Microcredit legal framework never ends The sector grows and changes, new challenges appear, new issues have to be addressed.
The improvement of the regulatory framework for microfinance organisations to achieve social and financial inclusion in an enlarged European Union is one of the priorities of the European Initiative for the development of microcredit in support of growth and employment.
In January, after almost two years of intensive lobbying by EMN, hearings of experts within the commissions of the EU Parliament, studies and presentations at conferences and events organized by the Commission, the Motion on Microcredit, promoted by the Hungarian parliamentarian Zsolt Laszlo Becsey, was voted by the EU Parliament’s Committee on Economic and Monetary Affairs.
With this vote, followed by the vote of the EU Parliament in plenary session, a first stage of this process is concluded. Microcredit and its contribution to growth, employment and social inclusion are recognized as part of the EU financial system.
There is still much to be done at the local level. Governments and regional institutions, banks and microcredit organisations have to launch a reform movement of the countries’ existing legislation aimed at enabling growth and sustainability of the microfinance sector and improving access to financial services for the underserved entrepreneurs.
The EMN working group on legal framework is the forum for the exchange of experiences in lobbying for building enabling legal frameworks for microfinance activities and a valuable source of information related to the existing microcredit laws in EU countries. Please join us at the first working group meeting organized during the EMN Conference in Milan and contribute to its goals by sharing your specific knowledge and experiences.
First agreements under negotiation for JASMINE Officially launched at the 5th EMN Annual Conference on 9 September 2008 in Nice by Danuta Hübner, European Commissioner for DG Regio, JASMINE, the new programme for supporting the microfinance sector in Europe, will soon see its first agreements come about. Initial contacts have been made by officials from the European Investment Fund (EIF) with various EMN members. DG Regio is currently working on a code of conduct for organizations which benefit from the funding, and the first study conducted by EMN and its members should help to highlight the main needs in terms of capacity building and microfinance programmes in Europe. So far, the total budget allocated to this project amounts to approximately €50 million, part of which will be devoted to institutional strengthening of practitioners. EMN member organizations wishing to benefit from such support can contact the EIF directly.
For more information about JASMINE, please click here.
First Meeting of the EU Stakeholders Expert Group for EY 2010 As one of the Key European Networks under the PROGRESS programme, EMN is part of the EU Stakeholders Group for the preparation, implementation and evaluation of European Year 2010 for combating poverty and social exclusion. The year’s overall objective is to increase public mobilisation on these issues . EMN considers EY 2010 as a unique opportunity to raise awareness on microfinance as a tool to reduce poverty and social exclusion. So far, EMN has created a section on its website that provides valuable information on EY2010.
On 3 March, the first preparatory meeting of the Stakeholders Group took place in Brussels giving the EMN secretariat the possibility of knowing more about the activities planned for EY 2010 by the European Commission and on the national level. On the EU level, five big events are planned so far. These are: a preparatory event for the media in October 2009, the Opening Conference to take place under the Spanish Presidency, two “focus weeks” in Spring and Autumn 2010, cumulating in a number of specific events, and finally the Closing event under the Belgian Presidency.
On the level of the Member States, so called National Implementing Bodies (in general Ministries) will be appointed that shall draw up national programmes for EY 2010 in the coming months (March/April).
Microfinance organizations should take advantage of this opportunity and take part in the preparation of these national programmes.
Visit the EMN website or contact the EMN secretariat to obtain update information on how to get involved!
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This newsletter is supported by the European Community Programme for Employment and Social Solidarity (2007-2013). The information contained in this publication does not necessarily reflect the position or opinion of the European Commission.
