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The development of microfinance in Europe has encountered many legal and political obstacles. It is therefore important that the European Microfinance Network be strongly involved in advocacy on a wide range of issues related to microfinance, micro-enterprises, social and financial exclusion, self-employment and employment creation.

EMN, in close collaboration with the Microfinance Centre (MFC) actively participates in advocacy activities through the organisation of conferences that facilitate meetings between policy makers and practitioners, the provision of strategic information to its members on EU policy, meetings with political leaders, and public responses regarding various issues.

EMN will continue its advocacy efforts at EU and national level during the coming years. Do not hesitate to send to us your suggestions for the development of new advocacy actions for the development of the microfinance sector in Europe. Please send to us your comments/inputs via

During 2016-17, EMN has been carrying out the following advocacy actions at European level

1. EU Definition of microfinance and microcredit.

The existing EU definition of microfinance i.e. the maximum amount of 25.000 € is not satisfactory as it does not recognise the specificities of the sector. A new definition at EU level is necessary to identify the potential beneficiaries of EU funding and support and to justify the advocacy work towards policy makers in general.

2. Regulatory framework for Microfinance and Capital Markets Union (CMU).

One of the main issues of the capital markets union is to unlock financing of innovation, enterprises, and especially SMEs and start-ups. In a situation where, 92% of European enterprises are microenterprises of less than 10 employees1 (many of them having no employees) and where start-ups include a growing part of unemployed, it seems important to include these “missing entrepreneurs” in the total demand of the capital market, knowing that many of them are excluded from access to banks. This is the context for development of microcredit in support of growth and employment, which is in itself a social innovation on behalf of an inclusive entrepreneurship.

3. Regulatory framework for the creation of microenterprises and self-employment.

The Commission could establish a basic set of common objectives, and invite Member States to undertake a programme of reforms, aimed at improving the conditions for inclusive entrepreneurship, taking account of national circumstances and priorities. In view of the inclusive growth goal in the Europe 2020 strategy and this set of common objectives, Member States should be encouraged within the context of their National Reform Programmes to take on board those actions necessary to promote a more favourable environment for inclusive entrepreneurship which falls within the national institutional, legal and commercial frameworks. The Commission could also help the Member States by indicating quantitative targets for inclusive entrepreneurship and by compiling an inventory of good regulatory practices.

4. Pricing of microcredit.

There is a widely spread and important misgiving about the pricing of microcredit in the EU, which often leads to inappropriate references to usury interest rates. With this note, EMN threw some light on the fundamentals about the cost and pricing for microfinance. Cost and pricing of Microfinance.

5. Pricing of EU financial instruments.

In the framework of the evaluation of the new Helenos fund for microfinance, the issue of risk assessment and pricing of EU financial instruments popped up. In the case of social purpose investment, we would argue that the risk of loss and the consequent return requirement on an equity investment should be balanced with the social impact. Indeed, of the only two equity investments in MFIs made to date, the case of microStart is an example where the social objective of the project is considered by all parties as fully achieved while, at the same time, the equity investment of the EU budget managed by EIF is financially at loss at the time of exit. The question is thus: how to assess the value of social impact versus financial return and how to factor these into the pricing and performance indicators of the project.

6. MoU between EMN-MFC and the EIB Group.

The microfinance sector is in rapid development within the EU at a time when micro-entrepreneurship is becoming a growing option next to salary employment or unemployment benefits. The growing migration flows also bring to the EU a new population of often qualified refugees capable to develop their own enterprise but without the necessary initial access to finance. In this framework, all efforts should be developed at EU level to support the microfinance sector in terms of policies, regulation, finance and technical assistance. This MoU is to develop a privileged, non-exclusive, partnership between the EIB Group and EMN & MFC to help support the microfinance sector.

7. Use of European Social Fund (ESF) for Microfinance.

Supporting entrepreneurs setting up their own business is one of the objectives of the European Social Fund (ESF). ESF offers a range of funding opportunities for financial and non-financial services. It has been used to co-finance entrepreneurship training and guarantee funds in different countries such as Lithuania, France and Germany to name a few. Nevertheless, even when ESF have specific lining with the MF sector in Europe, MFIs are having extraordinary difficulties in order to be instrumental in channelling these funds towards the underserved. The purpose of the study ESF Market Failures for Microfinance in Europe Findings “short mapping” is to identify some of these difficulties in order to promote alternative solutions to the EU institutions.

What is ESF?

The European Social Fund (ESF) is one of the tools the EU relies on to meet its targets for increasing employment, reducing poverty and improving educational achievement across the Union.

ESF projects support people who may otherwise not get the opportunity to attend training, obtain qualifications and get good jobs. Due to its size (10 billion a year during the period 2014-2020) and scope, the ESF has a big influence on the labour market and society at large. In some countries, around 90 % of the actual expenditure for labour market measures comes from the ESF.

ESF is funding tens of thousands of local, regional and national employment-related projectsthroughout Europe: from small projects run by neighbourhood charities to help local disabled people find suitable work, to nationwide projects that promote vocational training among the whole population.

There is a great variety in the nature, size and aims of ESF projects, and they address a wide variety of target groups. There are projects aimed at education systems, teachers and schoolchildren; at young and older job-seekers; and at potential entrepreneurs from all backgrounds.

Visit the ESF website or consult the ESF Brochure to find out more about it.

What is the link between ESF and the microfinance sector?

The ESF addresses the following four major challenges: EmploymentSocial InclusionEducation and Public Services.

With regard to employment, the ESF funds projects across Europe that assist people of all ages and backgrounds so they have a better chance of finding work. ESF-funded initiatives in this area are making it easier for people to go self-employed; supporting them with non-financial services, helping entrepreneurs create viable business plans, and increasing their skills. In addition, some ESF projects provide funding for start-up businesses.

How the ESF works?

The ESF is designed and implemented in a partnership between the European Commission, the Member States and the many thousands of NGOs, social partners, local authorities and civil society organisations, and even companies that help to run projects across the EU.

For the programming period 2014-2020, a Partnership Agreement was agreed between the Member States and the Commission in order to set a clear strategy of investments for the five European Structural and Investments Funds (ESF is among them) during the seven-year period. In addition, each Member State, in partnership with the Commission, agreed on one or more Operational Programmes (OPs) for ESF funding for the duration of the financing period. The OPs outline how EU funds are spent concretely in each Member State and set clear, measurable aims and targets to ensure results and improved monitoring and evaluation.

Every Member State has one or more Managing Authorities which take responsibility for the implementation of the OPs. 

The partnership principle implies close coop­eration between the Commission and public authorities at national, regional and local levels in the Member States, as well as with the social partners and civil society organisa­tions that play a part in delivering ESF pro­jects. This principle has now been translated into a legal act which covers all the ESIF funds: the European Code of Conduct on Partnership (ECCP). The Code will help the Member States organise robust and useful partnerships with all relevant stakeholders, including those from the private sector. The ECCP demands the following:

  • The procedures for selecting the part­ners should be transparent and take account of the Member States’ differing institutional and legal frameworks.
  • All the partners should be meaningfully consulted in the preparation and imple­mentation of Partnership Agreements and OPs.
  • The partners should be represented in committees that monitor programmes throughout the whole cycle, covering prep­aration, implementation and evaluation.

To know more about how the ESF works consult the ESF website or download the Social Europe guide

How can an MFI participate?

In relation to the above information, we have prepared a practical toolbox for you to discover more about ESF in your country and to start approaching your Managing Authority:

  • Learn more about what is happening in your country/region with regard to ESF planning and concrete implementation:

  • Plan ahead for your involvement in future ESF activities:

    • Get in contact with your Managing Authority to get relevant information on the preparation of Partnership Agreements in your country (e.g. how to participate in official public consultations ahead of drafting the Partnership Agreements, which body is in charge of the consultation, or what is the timing? etc.) and to create awareness of the potential of microfinance in meeting ESF goals on employment.
    • Establish a first contact with the ESF Managing Authority in your country/region.
    • Prove your impact to policy makers: download examples available in our publications section of studies done by MFIs in Europe to present their social and economic impact.
    • Consult examples of communications addressed to national government and regional managing authorities during the preparation of Partnership Agreements and OPs 2014-2020 that can be updated in view of the next ESF programming period.

To keep this toolkit up-to-date and relevant, feel free to share with us any additional information or documents that could be pertinent:

8. Preparation of the post 2020 framework (proposals in preparation).

  • Market size and financial gap study for Microfinance in Europe
  • Cost of BDS provision and pilot action for migrants
  • Future role of the microfinance networks in Europe
  • New guarantee instrument for the investors in MFIs
  • Human capital funding post 2020 (first paper sent to DGEMPL)
  • ESF off-the-shelf instrument
  • EU Advocacy toolkit for Microfinance
  • National legislative mapping reports for Microfinance in Europe

Advocacy at national level: good practices

Here is selection of good practices in advocacy at national level from EMN members. To access the Good Practices, please click on the titles below.