European Microfinance Network’s annual conference -25 June 2009, Milano
Plenary “How to reach the thousands of people at the bottom of the pyramid
and be sustainable, within the context of the financial and economic crisis?”
Microfinance, a tool
for the active inclusion
of people excluded
from the labour market
A new microfinance facility
to tackle the crisis
Antoine SAINT-DENIS,
DG Employment, Social Affairs, Equal Opportunities
European Commission
http://ec.europa.eu/social/
MICROFINANCE
IN THE EU POLICIES
Political, legal and financial support
Employment
&
Social/financial
inclusion policy
Microfinance
Cohesion policy
SMEs policy
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MICROFINANCE IS A TOOL FOR
ACTIVE INCLUSION
•
Many Europeans suffer from poverty and exclusion and are thus deprived
from participation to economic and social life: 16% of the EU population at
risk of poverty, nearly 80 million people. Some groups suffer from multiple
disadvantages (eg. Roma).
•
The EU emphasises that disadvantaged people have rights and potential.
Social cohesion is a condition of success for the Lisbon strategy for growth
and jobs.
•
Based on a Recommendation adopted on 3 October 2008, the EU is
implementing a strategy for the "active inclusion of people excluded
from the labour market". The aim is: "a job for those who can, social
participation for all." The strategy consists in an integrated approach between
3 pillars: adequate minimum income, measures to facilitate access to the
labour market, quality social services.
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THE MICROFINANCE WE PROMOTE
IN A SOCIAL PERSPECTIVE
• There is a need for professional but also personal microfinance.
• The market structure is different in Western an Central and Eastern
Europe, but financial and social approaches should be better
combined everywhere.
• The value added consists not only in loans, but also in advice and
mentoring.
• Microfinance institutions are invited to feed in the National
Strategies for Social Protection and Social Inclusion 2008-2010,
in which social inclusion is the objective but tools should be multiple
(not only social benefits!).
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THE CRISIS REQUIRES
FURTHER ACTION
•
The positive employment growth of 6 million during 2007/8 has been totally
reversed by the economic crisis and Europe is now being confronted with very
high levels of unemployment. The fall in outstanding loans in the last quarter
2008 (€1.98bn) is the most severe reduction ever recorded in the history in a
single quarter.
•
Many people who would either become self-employed or start a micro enterprise
cannot do so. Further, the target group of ‘ESF type of beneficiaries has
insufficient access to micro-credit as mainstream banks in particular consider
this group as too risky and cost intensive (the latter due to the relative small
amounts of loans).
•
The economic crisis requires immediate action to assist those who lost their
jobs or are facing social exclusion and want to start or further develop their own
business.
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THE COMMISSION'S RESPONSE:
A "SHARED COMMITMENT FOR EMPLOYMENT"
•
•
•
•
•
On 3 June 2009, the European Commission proposed to initiate a new
strategy to tackle the employment impact of the crisis.
The priorities: maintaining employment, creating jobs and promoting
mobility; upgrading skills, matching labour market needs ; increasing access
to employment
Among the measures: acceleration of 19 billion € of funding from the
European Social Fund planned in 2009-2010 ; no need for national cofunding in 2009-2010 ; 5 million apprenticeship ; immediate support by the
public employment services for the unemployed ; a new EU microfinance
facility.
The "Shared Commitment for Employment" is a strong, forward looking
and coordinated agenda to fight unemployment, boost job creation and
pave the way for a sustainable recovery.
The proposals will be presented to the EU leaders for their agreement at the
European Council on 18-19 June.
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"PROGRESS",
A NEW EU MICROCREDIT FACILITY
• A joint initiative with the EIB Group to create an EU recovery
facility for employment.
• This facility aims to deepen the outreach of microfinance to
particular at-risk groups which face barriers in access to credit
in a context of reduced credit supply and increased risk aversion
in order to support the development of enrepreneurship, the social
economy and micro-entreprises and thus offer a new chance to
some of Europe's most disadvantaged entrepreneurs.
• The facility will be implemented by the European Investment Fund
between January 2010 and December 2013.
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"PROGRESS", A NEW
EU MICROCREDIT FACILITY (cont.)
• The Commission will reallocate 100 million € within the existing
EU budget. The facility will be a risk-sharing mechanism.
• Thanks to a contribution from the EIB Group, possibly along with
other IFIs or specialised financial institutions, this amount could
leverage up to 500 million € in loans for micro-credits.
• Impact on the market : these amounts are to be compared with
the value of the 42,750 loans disbursed in 2007: 394 million€.
• These funds will be used for: equity financing, debt financing,
guarantees, support measures.
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HOW IT WILL WORK
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THE COMPLEMENTARITY BETWEEN
THE DIFFERENT EU FACILITIES
PROGRESS
facility
ESF European Social Fund
100M€
19 billion€ in 2009-2010 (no predefined envelope for microfinance
at EU level)
To back the upcoming
recovery people-based
To support access to employment
in the long run
For all microfinance
providers (banks and
microfinance
institutions)
A risk-sharing
mechanism
Jasmine
20M€ loans (from the EIB)
8 M€ technical assistance (from the
ERDF - European Regional
Development Fund)
CIP Competitiveness
and Innovation
Programme
(no pre-defined envelope
for microfinance)
To support SMEs
For non banking institutions
Can offer interest rate rebates
Not a risk-sharing mechanism
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THE COMPLEMENTARITY BETWEEN THE
DIFFERENT EU FACILITIES (cont.)
• The PROGRESS
facility will have the
capacity to fund
diverse (both big and
small) microfinance
providers. It will be
able to bear risk.
• The European
Investment Fund will
also be in charge of
the distribution of this
new facility to
microfinance providers
that will apply.
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FOR MORE INFORMATION
 Commission communication “A Shared Commitment for
Employment”:
http://ec.europa.eu/social/main.jsp?langId=en&catId=89&newsId=514&f
urtherNews=yes
 DG Employment, Social Affairs and Equal Opportunities on the web:
http://ec.europa.eu/social/
 Antoine SAINT-DENIS, European Commission, DG EMPL:
[email protected]
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