What importance is attached in EU policies to microfinance as a social inclusion tool?

In the National Action Plans for Social Inclusion (NAPs) there are scattered references to microfinance; they do not collate all the inclusion actions that are actually conducted in each country. 

In general, social and financial types of exclusion are hardly ever considered together. Microfinance, and particularly micro credits, is mainly considered in the context of self employment and in certain cases as a complementary tool for inclusion activities.

Few NAPs make specific mention of financial exclusion as having a causal effect on social exclusion. Only Finland, Ireland, Italy, France and UK use the term at all; in a few countries one can deduce from the context that it has been considered.

As regards the use of microfinance for domestic expenses or people in situations of exclusion, we can point to Finland, France, Germany, Netherlands, UK and Italy. These countries suggest support measures for those without access to consumer loans in the financial system, but who do have the capacity to pay.

Microfinance could also be used to pay for insurance but there were no specific references to this in the NAPs consulted.

Another field where microfinance appears in the NAPS is in activity related to the Social Economy. Microfinance is put forward as an instrument for reducing exclusion, creating cooperatives, local neighbourhood services, protected employment, occupational activities, etc. Belgium, Croatia, Poland and Sweden all expressly mention MF in this context.

Self employment is the aim most often mentioned in the context of micro financial tools. The vast majority include some type of financial support mechanism for setting up small companies, some of them specifically labelled as microcredits. For example, in the case of Portugal, “microcredits are considered a transversal measure to “promote technical and financial support to create self-employment for people who have difficulty in joining the labour force”.

Over-indebtedness is another very widespread worry. It is mentioned by Germany, Netherlands, Hungary, Ireland, Belgium, Croatia and Finland, with measures proposed to fight it, although rarely specifically linked to microfinance. These same countries also propose advisory actions so that people understand financial ideas and mechanisms.

As regards its use to get into the property market, Italy, France and Bulgaria have incorporated some actions where micro credits are given to certain collectives which are excluded in this sense, such as in the case of young people in the Italian plan.

And as concerns the use of Microfinance to support ethnic minorities and immigrants, only Bulgaria and France make an explicit reference to it. In other countries the immigrant collective is addressed as a beneficiary of social actions, but not from the perspective of help via microfinance. 

For details on actions planned or already carried out in each country, we recommend reading the relevant NAP. You can also read the report of Transformando on the National Action Plans (download here).