On the European level, the issue of financial exclusion gains more and more importance. As such, in its "Recommendation on the active inclusion of people excluded from the labour market" (November 2008), the European Commission makes explicit reference to financial inclusion and microloans as means to insure inclusive labour markets.
In the National Action Plans for Social Inclusion (NAPs) there are only scattered references to microfinance. In general, social and financial types of exclusion are hardly ever considered together. Microfinance, and particularly microcredit, is mainly considered in the context of self-employment and in certain cases as a complementary tool for inclusion activities. As a consequence, microfinance has been loosing visibility in the NAPs.
Still, microfinance is mentioned for specific objectives according to the European National Actions Plans for Social Inclusion 2008-2010 published by the European Microfinance network in 2009. The following parts of this section are extracted from the report.
Microfinance for inclusion through self-employment:
”Microfinance to support self-employment through business development has lost overall presence in the NAPs. While it stays visible in a few Western European Countries –France, Spain, Portugal and the Netherlands- it almost totally loses presence in Eastern European countries. In the previous NAPs, microfinance for professional purpose was highly quoted for on Romania, Bulgaria and Poland. This reflected the great presence and development of the microfinance sector, through MFIs or banks. The sector still thrives in those countries, with programmes and institutions aimed at general and specific targets (the Roma), but has almost disappeared from the NAPs. The explanation for this may be that in Eastern Europe, professional microfinance is now considered as a mainstream financial activity, thus not needing a place in a Social Policy report.
On the contrary, this strand of microfinance is well represented in France, Spain, Portugal and the Netherlands, even though it remains a marginal activity often limited to specific geographical areas (the Azores in Portugal) or social groups (migrants in Spain).”
Microfinance for improving personal financial capacity and fighting over-indebtedness:
“Microfinance as an individual “educational” tool is the fastest growing and has become the most visible strand of microfinance in the NAPs. It has become central in most countries with a longestablished highly-developed financial sector to deal with the issue of over-indebtedness and to improve the financial capacity of consumers in an increasingly complex environment.
Unsurprisingly, it ranks at the top in the Netherlands, where a whole chapter of the NAPs is dedicated to personal financial capacity building and over-indebtedness prevention. Ireland has an effective network of dedicated debt counselling outlets all over the country. Remarkably, France and Portugal have started their own actions in this field in the 2008 NAP, realising the growth of overindebtedness and the lack of financial literacy of a general public faced to increasingly risky financial products.”
Microfinance for inclusion through personal microcredit, housing or consumer loans
“Microfinance for non-business purposes, meaning consumer or housing microloans, is an area of fast expansion in the EU. It is a still small but growing expression of microfinance. The existing mainstream consumer or housing lending is not yet available to all, and when it is available it is often at a high cost in terms of interest rate and overexposure, often leading to over-indebtedness and more exclusion. This observation has led to the development of socially-oriented supported credit, combining access to consumer goods or housing and budget management training.”
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) and the European National Actions Plans for Social Inclusion 2008-2010 published by the European Microfinance Network.