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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.
The EMN Newsletter
Foreword
Microfinance in the Netherlands
Study on demand and supply of microcredit in Europe
Street Cred selected for Bank of America Leadership Programme
11th Annual MFC Conference
Professor Muhammad Yunus in Moscow
EMN Annual Conference: Microfinance, a tool for growth and employment in Europe
Survey of Microfinance Institutions in Europe
Survey on the legal framework for microfinance in Europe
Training courses on Social Microcredit
Microfinance and Gender Equality - Lessons learned from pilot projects
Financial Education: Commission encourages applications for new Expert Group
Entrepreneurial Diversity in a Unified Europe
Enterprise Europe Network (EEN)
Small Business Act for Europe - Consultation and Results
Latest publications available on-line 		February/May 2008

English version
Version française
Versión española


Foreword

It is not about words….

We talk a lot about microcredit, microfinance, access to finance, social inclusion. Studies have been undertaken, reports produced, conferences held, policy notes presented. Good intentions and new plans are patiently waiting till they are translated into actions. Our understanding of the way microfinance programmes or institutions need to be designed, set up and developed has deepened and our knowledge has broadened.

Gradually the lessons learned in the South have been systematised and documented and they are being studied by scholars and researchers. We are now in a position to organise debates and argue why we need to adopt certain principles. And why we need in Europe more diversity in the approaches, why there is a need to pay attention to mentoring and coaching in addition to microcredit services.

But in spite of our growing understanding and improved access to know-how about microfinance we fail to launch large scale operations in a substantive manner in Europe.

There are only a few privately run sustainable microfinance institutions. We must ask ourselves why. Never has microfinance received such public - and sometimes even royal - attention and support; never has there been so much recognition. So what is happening? Are we missing something? I believe so. The major lesson to be drawn from the widespread recognition of the work of Raiffeissen, from the Nobel Prize for Muhammad Yunus and from the Légion d’Honneur award for Maria Nowak is obvious: enterprising people taking the lead are not stupid!
Klaas Molenaar
Board Member

Microfinance in the Netherlands

Microfinance has been present in the Netherlands for over a century. The first cooperative banks targeting poor farmers were established at the end of the 19th century. However, microfinance initiatives have above all been promoted overseas - in the former Dutch colonies - but never in the Netherlands itself. A unanimous definition of microfinance does not exist and the limit tends to be stretched to €32,000 (Seon, Microfinance Market Study in the Netherlands, 2008).

The government has an active policy for social and financial inclusion. It implements a successful social welfare support programme called BBZ that promotes business start-ups by recipients of social benefits. Moreover, when the Salvation Army found in 2001 that many people with a poor history at the national credit bureau could not open a bank account, the major Dutch banks signed a covenant on basic bank accounts. As a result of the covenant, the number of people without a bank account has decreased considerably. However, this access to basic bank services does not automatically give them access to other financial services (Ibid).

In recent years, many cuts have taken place in the welfare system due to high costs and an aging population. According to the National Statistics Office, CBS, in 2004, 9% of all households in the Netherlands were living on a low income (CBS, Social-economic trends, 1ste quarter 2007). Most of them can be found in the four large cities of the Netherlands: Amsterdam, Rotterdam, The Hague and Utrecht. The main risk groups for poverty are non-western immigrants, one parent families and elderly singles.

The government acknowledges the fact that a growing market gap exists between microloans and standard bank loans and has given microfinance some strong impulses. Since 2004, there has been an exponential growth in small projects, often funded by the European Union (ESF, Equal). In these special programmes, banks like Rabobank, Fortis Bank and Municipal Credit banks partner NGO’s such as Women@work in Action Amsterdam or HandsOn or universities. However, the number of customers reached with microfinance through those initiatives remains very low. Most initiatives have provided between six and 25 loans to date (INHOLLAND University, June 2007).

The government has taken up microfinance in its policy plan for 2007-2011 and has established an Advisory Council on Microfinance. The Council fulfils an ambassadorial function and has set the objective of reaching an additional 15.000 entrepreneurs annually with microfinance. In addition, the INHOLLAND University of Applied Science has started focussing specifically on microfinance in the Netherlands itself and established a professorship in 2007 (Seon, Microfinance Market Study in the Netherlands, 2008).

Although many initiatives exist, overall policies with respect to microfinance are still unclear in the Netherlands (FACET, 2006). Many steps still need to be taken by both the government and the private sector in order to improve the programmes and create an enabling environment. One of the main policy issues will be to decide whether to invest in building up traditional microfinance institutions or rather to focus on designing innovative credit delivery mechanisms. The current activities and the advice of the Council for Microfinance are the first signs of an exciting future for microfinance in the Netherlands (Ibid).

Study on demand and supply of microcredit in Europe

The European Investment Fund has contracted the European Microfinance Network (EMN) to carry out country-specific studies on the supply and demand of microcredit and on the evolution of the microfinance industry in particular in two countries, France and the Netherlands.

EMN selected SEON Foundation in the Netherlands (www.seon.nl) and Adie (www.adie.org) in France to carry out the respective studies. In both organisations a team of experts working for and with the organisations has participated in the studies.

There is a clear market gap in both countries between the demand and supply.The study tried to follow the segmentation of the market between “bankable” (mainly existing microentrepreneurs) and “non-bankable” clients (mainly start-ups, socially excluded clients). In France, the study shows that the bankable demand gap is around 100,000 clients per year and the non-bankable demand gap between 80,000 and 130,000 clients.

In the Netherlands, it has not been possible to estimate the demand gap, but the bankable demand has been estimated at around 17,400 clients while the non-bankable demand at 26,100 clients. This market gap requires both a stronger involvement of the banking sector in reaching microentrepreneurs, and a more sustainable and professional development of existing microfinance programmes, especially in the Netherlands, where the sector is nascent. However, without concrete improvements in the regulatory framework for both microfinance programmes and microenterprises and extra funding support, the sector will have difficulties in growing.

Coaching and mentoring potential entrepreneurs are very important and remain the keys to success of such programmes. A strong involvement of all the stakeholders, namely the European Union, the member States, the banks and the microfinance providers, is necessary to succeed in covering the potential demand and offering an “inclusive financial sector”.

Street Cred selected for Bank of America Leadership Programme

Quaker Social Action, the governing body of Street Cred, has received the Bank of America’s 2007 Neighbourhood Builder Award.

The award is part of the bank’s corporate philanthropy programme. It is the first time the bank has granted the award to a UK-based organisation. As part of the award, Street Cred is able to participate in the Bank of America Emerging Leadership Programme in the US over the next ten months.

Neighbourhood Builder recipients:
  • Are focused on local neighbourhood priorities
  • Receive $200,000 (€127,000) (or local market currency equivalent) in general operating support - $100,000 (€63,500) annually for 2 years
  • They also benefit from specially designed leadership development programs
  • Senior executives gather for two 4-day workshops. Topics include: strategic thinking, business planning, leadership development and succession planning, long-term business growth, and building a diverse funding base
  • Emerging leaders gather for three 4-day workshops. Topics include: developing organizational management skills, managing strategic opportunities, forging alliances, and building communities
For more information on Quaker Social Action, please click here.

11th Annual MFC Conference

The 11th Annual MFC Conference was held in Ulaanbaatar from 29-31 May, under the patronage of the President of Mongolia. The MFC was joined in hosting this event by XacBank, a leading microfinance bank in the region and globally.
Less than twenty years after the transformation process was initiated, Mongolia is a dynamic, growing Asian economy with one of the most diversified, innovative and competitive microfinance sectors in the world. The success this sector has achieved is even more impressive in a country whose nomadic tradition and harsh environment spreads its 2.6 million residents out over a land the size of Western Europe. What have been the key growth strategies, and what policy frameworks were designed to support this growth?
The Ulaanbaatar conference offered an unprecedented opportunity to explore these and other topics affecting microfinance throughout the MFC region, ranging from consumer protection and financial education issues, to the latest use of technology and innovative microfinance products, to social performance measurement. MFC has provided more networking opportunities than in previous years, as well as a chance to meet XacBank clients and taste Mongolian culture and traditions.

The minutes of the conference will soon be available on the MFC website.


Professor Muhammad Yunus in Moscow

Visit to Moscow by Professor Muhammad Yunus Awarded the "Nobel Peace Prize 2006" for Microfinance Development.

On 1-7 April 2008 Professor Muhammad Yunus, awarded the "Nobel Peace Prize 2006", was invited by the Moscow Government to visit Russia. The visit was organized by the Moscow Government and the National Partnership of Microfinance Market Stakeholders (NAMMS).

During his visit to Russia, Professor Yunus delivered workshops with the Deputy Chairman of the Government of the Russian Federation Aleksander Zhukov, the Moscow Mayor Yuriy Luzhkov, and the Deputy Chairman of the Council of Federation of the Federal Assembly of the Russian Federation Mikhail Nikolayev. In addition, Professor Yunus met leaders of the banking and microfinance community and gave several public lectures at the Moscow State University, the Higher School of Economics, and the Moscow State University of Management of the Moscow Government. Within the framework of the visit, on 3 April a round table «A way to the middle class: how can microfinance support start-ups?» was organized by the National Partnership of Microfinance Market Stakeholders (NAMMS), the Small Enterprise Support and Development Department of the Moscow Government and the Association of Russian Banks with the Russian Microfinance Center’s support.

Within the framework of the round table, Dr. Yunus shared his thoughts on possible ways of developing microfinance as an efficient instrument of struggle with poverty and developing private enterprise in Russia and round the world. After the Professor’s speech, the round table facilitator - NAMMS President Mikhail Mamuta (President of the Russian Microfinance Center, the EMN member in Russia) - opened the discussion with the representatives of the RF Ministry of Finance, the RF Ministry of Economic Development, the Central Bank of the Russian Federation, leading banks, microfinance institutions, and credit cooperatives participating. The issues facing the organization of the microcredit system in Russia were discussed. In the first place, the imperfection of the banking legislation was emphasized. In this respect, the issue of whether microcredit, as a product, should be represented in the bank product line or whether it is necessary to create affiliated companies which will be aimed at microfinance was discussed.

The representatives of the Moscow and Russian Governments described their plans for working on a massive project of microfinance market infrastructure development, including a pilot project in Moscow. It was mentioned that available credits for the low-income population living in outlying regions, where large banks do not operate, are very important, both for the people and for the national economy. Such microfinance would reduce the level of poverty and would serve to stimulate small and medium enterprise development.

The microfinance market is rapidly developing in Russia nowadays. However, according to the Russian Microfinance Center’s data, while demand for microcredits of an amount below 10,000 US dollars is 10 billion US dollars, the aggregate supply of microcredits by banks and non-bank microfinance institutions is about 1.5 billion US dollars, or 15% of the demand. Further small business microfinance development is one of the priorities of the state policy and business community.

One of the important results of the meeting has been the signing of a strategic Partnership Agreement between NAMMS and Grameen Bank, within the framework of which a joint project of introducing the Grameen Bank’s methodology into Russia is planned to be implemented. NAMMS also has taken upon itself a mission to translate into Russian two of the most topical books by Professor Yunus: «Banker to the Poor» and «Creating a World Without Poverty», which will be published this year in cooperation with the Moscow Government.

During this year a training session for interested bankers, microfinance institutions’ representatives, and government authorities will be organized at the Grameen Bank.

More information about microfinance can be found on the Russian Microfinance Center’s web-site www.rmcenter.ru.


EMN Annual Conference: Microfinance, a tool for growth and employment in Europe

"Microfinance: A tool for growth and employment in Europe"


From 8 to 10 September 2008, EMN is organising its 5th Annual Conference which will be held in Nice (France). 

During this major event, EMN, the leading professional network in the region, will welcome around 400 participants among which will be bankers, researchers, practitioners, investors, local government and European Commission representatives, policy makers, the private sector and the media.

With the support of the French Presidency, the Conference is co-organised by Adie and financially supported by the European Commission and by Crédit Coopératif. 

This 5th Annual Conference is also the 5th Anniversary of EMN. It is therefore particularly important for the following reasons:
  • It is organised under the auspices of the EU French Presidency, which thereby recognises the importance of this tool not only at the European level but also at the French level
  • The last afternoon is co-organised with Eurofi (the european banking network) and the whole banking sector.
  • It will be a unique opportunity to discover the work of Adie in France, pioneer and leading organisation of microcredit in Europe.

The preliminary programme of the Conference is already available here. Registrations are available on-line. For any additional information on the Conference, please contact Maria Franco.

Survey of Microfinance Institutions in Europe

Since March 2008, Foro Nantik Lum de Microfinanzas, coordinator of the EMN research working group, has been carrying out EMN’s third Survey on Microfinance Institutions in Europe in cooperation with the other EMN members. This biennial survey gives EMN the possibility to learn more about the scale and nature of the activities of microfinance programmes in Europe and their performance and impact, and to closely follow the sector’s development. It enables the network to identify and meet the needs of the sector and to efficiently promote them at the European and national levels. 

 
In 2004, the survey was coordinated by nef, with information on 32 microlenders, and provided an important baseline on operations and performance, product features and portfolio size and quality. In 2006, EMN again undertook the survey for 2004/05 data with 110 microfinance players operating in the EU 25. The results are published in “Overview of the Microfinance sector in Western Europe 2004-2005”, one of the most consulted documents on the EMN website. This year’s survey will cover 2006/2007, and more than 200 organisations in 20 EU countries have been contacted. The study is planned to be published in September 2008.

 

Survey on the legal framework for microfinance in Europe

Following the European Initiative on Microcredit and other ongoing work related to the "European Small Business Act", DG Regio asked EMN and MFC to collect information on the main institutional problems concerning microcredit and microenterprise development in the European Member States. This will serve as a basis for the European Commission to carry out various missions to the member States in order to evaluate how propositions are being or should be integrated into the new national reform plans as part of the Lisbon Strategy.

In collaboration with the international law firm "Latham & Watkins", EMN prepared a questionnaire and - through its members - collected information on the various points that need to be treated as regards microfinance. 20 jurisdiction country summaries as well as a global synthesis on the legal framework for microfinance and propositions for improvement were written and sent to the Commission in mid-April. All of them are also available on the EMN website.

In the future, EMN will actively continue to formulate legal and regulatory propositions for microfinance in the whole of Europe.

Training courses on Social Microcredit

The European Microfinance Network is currently implementing training sessions in France on “personal microcredit” (previously named “social microcredit”) for the French “Caisse des Dépôts et Consignations”. It’s part of the French government “Social Cohesion Plan”, aimed at fighting financial exclusion. The government with a fund of €73 million over 5 years will guarantee up to 50 % of microcredits for microenterprise creation or for social purposes. “Personal microcredit” refers mainly to personal loans to help socially excluded people to face specific issues (passing driving license, moving, study bursary, etc).

EMN with its members Adie (France) and Crédal (Belgium) have trained, between November 2007 and April 2008, 335 people in 32 sessions all around France. On April 23, the French government organized a specific conference on the subject, gathering around 400 people, in which the main results and the evaluation of the experiment were presented as well as further plans and strategies to develop the action on a bigger scale. In less than 2 years, around 160 experiments were started in France reaching more than 3,000 people. During the conference, Crédal presented its work in Belgium. EMN has renewed its contract with the Caisse des Dépôts to keep training staff involved in the development of “personal micro credit” for one more year.

Microfinance and Gender Equality - Lessons learned from pilot projects

Developing a better understanding of women as a main target group for microfinance activities was one of the aims of the 15-month EU co-funded project “Fostering Gender Equality - Meeting the Entrepreneurship and Microfinance Challenge”. As a result, six of the nine participating organisations implemented pilot projects in the period from November 2006 to February 2008. Based on common evaluation criteria, Réseau Financement Alternatif (Belgium) assessed each of them in order to extract lessons learned and to enable microfinance providers to further build on these experiences in the future. Schematically, the pilot projects can be classified into two main fields: client analysis/studies and new product design.

While WWB carried out a social impact study amongst female clients in urban and rural areas of Spain, WEETU (UK) carried out an impact study on peer lending. Integra (Slovakia) developed a social performance measurement tool for disadvantaged women as well as a market access programme. Fonds de Participation (Belgium) combined a study on female entrepreneurs with the implementation of a promotional campaign. HMN (Hungary) developed a special microcredit product for women and The Enterprise Fund (UK) focused on lending for Chinese women in construction.

These pilot projects have produced a wider range of new insights into microfinance and gender equality; the recommendations drawn from the assessment especially highlight the need for a cross-sectional collection of gender-disaggregated data, and the adequacy of the time period available for client analysis and methodological issues to be taken into consideration in the design of promotional campaigns and specific products targeted at women. Special recommendations are given for the work with disadvantaged communities. 

Financial Education: Commission encourages applications for new Expert Group

The European Commission is to create an Expert Group on Financial Education (EGFE). The group will be composed of financial education practitioners and will aim to promote exchange of ideas, experiences and best practices. The group will also advise the Commission on its policy-making in the area of financial education.

Internal Market and Services Commissioner Charlie McCreevy said: "Financial education has been gaining attention, especially in the context of the financial turmoil. It is an important means of enabling consumers to make informed and responsible decisions about their personal finance, which has bearing not only on their lives, but also on society and the wider economy. Education is first and foremost a national competence, but I strongly believe that there is also a role for the Commission to promote and facilitate the provision of financial literacy programmes to all consumers in the EU. Efforts at national and EU level should be complementary."

The call for applications is addressed to experts representing both private and public stakeholders: national authorities, the financial industry, consumer associations, academia, etc., who demonstrate the relevant competences and practical experience. A maximum of 25 experts will be selected.

The creation of the EGFE is one of the four Commission initiatives announced in the Communication on Financial Education published in December 2007 (IP/07/1954). The members of the group will be appointed for a 3 year renewable mandate. The group will meet twice per year in Brussels and will be chaired by the Internal Market and Services DG of the European Commission.

More detailed information about the mandate of the group and the selection criteria for the members can be found in the documentation available here.

Meanwhile, EMN, in partnership with the other members of the FEVA group and under the leadership of MFC continues its project on financial education.

A new meeting of the FEVA group is scheduled on 3-4 September, 2008, in Nice, on the sidelines of the EMN Annual Conference. During the Conference, a workshop on financial education will be held. For more information about this workshop and the EMN Conference, please click here.

 

Entrepreneurial Diversity in a Unified Europe

Migrant Entrepreneurship/Ethnic Minority Entrepreneurship

On 5 March 2008, a conference entitled "Entrepreneurial Diversity in a Unified Europe – Ethnic minority and migrant entrepreneurship” was organized in Brussels by the DG Enterprise in order to present the main findings of a study carried our by our member “Triodos Facet” (The Netherlands). This study and the conference were aimed at sharing good practices in the promotion of ethnic minority entrepreneurs.

EMN has been working on this theme for the last two years, especially through its “Inti project” with six of its members (see previous newsletter issues). The impact of immigration on entrepreneurship is increasingly important. Often migrants and ethnic minorities are more entrepreneurial than the other parts of the population. They tend to start rather small or micro enterprises. In that context microcredit can be a concrete response to their problems particularly as regards access to finance.

Among EMN members, recent studies show a high percentage of such clients in their portfolios. Even though they face the same type of problems as any other microentrepreneurs in Europe, for certain aspects related to culture, language barriers, communication, integration they might required some specific approaches. Among the 12 good case studies selected by the research, there is the “Lanzadera Empresas/ Business Launcher” by Transformando (Spain), one of the EMN members that was also presented at the conference.

The full report is available at the EMN secretariat. 

Enterprise Europe Network (EEN)

Launched in 2008 by the European Commission DG Enterprise and Industry, the Enterprise Europe Network combines and builds on the former Innovation Relay Centres and Euro Info Centres (established in 1995 and 1987 respectively). The new integrated network offers a “one-stop shop” to meet all the information needs of SMEs and companies in Europe.

Support services include business partner search within technology and business cooperation databases and fast access to information on funding opportunities, individual on-site visits to companies to assess their needs and a broad range of promotional and informational material. Representatives of the network can also help businesses understand EU law, how it applies to their businesses and how to make the most of the internal market and EU programmes.

The EEN fully exploits the synergies between all support services and helpdesks aimed at European businesses. The “one-stop shop” service is accompanied by a “no wrong door” policy: an entrepreneur or business person can enter the network through any contact point, and will then be assisted and personally directed to the relevant service or organisation.

The EEN is present in more than 40 countries, with around 4,000 experienced staff in 600 local partner organisations providing expert advice and services to EU businesses.

For more information on EEN, please click here.
 

About the network

The EEN is the largest network of contact points providing information and advice to EU companies on EU matters, in particular to small and medium enterprises (SMEs). It provides practical answers to specific questions in your language.

 
A wide range of countries and services

The network offers concrete and effective solutions to entrepreneurs and companies in more than 40 countries, including the 27 EU member states, three EU candidate countries (Croatia, the former Yugoslav Republic of Macedonia and Turkey), members of the European Economic Area (EEA) and other participating third countries.

The EEN is unique both in terms of its wide geographic reach and of the wide range of integrated services it provides to SMEs and other business people. This is made possible thanks to the coordinated action of nearly 600 local partner organisations, employing around 4,000 experienced staff working to support the competitiveness of EU businesses.

Small Business Act for Europe - Consultation and Results

Despite substantial progress both at the EU and national level concerning the legal and administrative environment for SMEs in Europe, the Commission recognizes the further need to increase the emphasis on SMEs. In its Communication to the October 2007 Meeting of Heads of State and Government, the Commission underlined the need to fully unlock the potential of SMEs to contribute to the European economy. With the aim of establishing principles and concrete measures to improve the framework conditions for European SMEs, the Commission announced the preparation of a "Small Business Act" for Europe in the package for the next cycle of the Growth and Jobs Strategy 2008-2010 adopted in December 2007.

On 31 January, the European Commission launched a public consultation on the content of this European "Small Business Act". The aim of the consultation was to stimulate an open debate with all stakeholders on developing the “Small Business Act” for Europe. The consultation addressed six areas to be examined with questions regarding SMEs’ access to finance and innovation, SMEs’ access to markets, facilitating SMEs’ access to public procurement and encouraging SMEs to tap opportunities outside the Single Market.

A public hearing with the main stakeholders took place in Brussels on 6 February. The results of this consultation will provide a major contribution to the Commission's own reflections leading up to the development of the “Small Business Act”.

You can read the full article by clicking here.

You can also download the report of the results by clicking here.

Latest publications available on-line