Microfinance covers all the financial services provided to unbanked or underbanked persons with an ultimate goal of giving impoverished people an opportunity to become self-sufficient and improve their quality of life. Microfinance is, by and large, a growing sector in many European countries, where it contributes to financial, economic and social inclusion. Various financial and non-financial services, ranging from microcredit to business advice, can enable previously underserved individuals to create jobs, improve their living conditions and finance other social needs, with significant benefits for communities and for society as a whole.
Microfinance Institutions (MFIs) in Europe are very heterogeneous in terms of their legal form, business model, objectives and country of operation. However, all of them are faced with challenges related to meeting the double bottom line of social and financial sustainability. Limited access to finance often constrains MFIs' outreach to targeted groups and curbs their growth.
Building upon the CEB's microfinance operations to date, exchanges with other European IFIs and the European Microfinance Network (EMN), this Technical Brief highlights three areas where action by International Financial Institutions (IFIs) can be highly relevant in supporting MFIs, thus enabling them to reach thier socail and financial objectives.