REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Implementation of the European Progress Microfinance Facility — 2011 /* COM/2012/0391 final */
REPORT FROM THE COMMISSION TO THE
EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE
AND THE COMMITTEE OF THE REGIONS Implementation of the European Progress
Microfinance Facility — 2011 CONTENTS 1........... Introduction.................................................................................................................... 4 2........... Implementation at the level of
microcredit providers......................................................... 4 2.1........ Contracts concluded....................................................................................................... 4 2.2........ Actions funded............................................................................................................... 6 2.3........ Applications accepted and
rejected................................................................................. 8 3........... Impact at micro-borrower level....................................................................................... 9 3.1........ Microloan volumes and the number
of beneficiaries.......................................................... 9 3.2........ Types of final beneficiaries............................................................................................ 10 3.3........ Social and employment impact of
Progress Microfinance............................................... 11 4........... Complementarity and coordination
with other European Union instruments..................... 13 5........... Conclusions and outlook............................................................................................... 14 1. Introduction The European Progress Microfinance Facility
(Progress Microfinance) for employment and social inclusion was established in
March 2010 by Decision No 283/2010/EU (hereinafter referred to as the ‘Decision’). Microcredit providers in EU Member States can
apply to the European Investment Fund (EIF) for guarantees or funded
instruments (debt, equity and risk-sharing instruments), so they can become
intermediaries under Progress Microfinance[1].
They provide microloans (loans of less than EUR 25 000) to
micro-enterprises or individuals, particularly to people who are unemployed, at
risk of losing their jobs, at risk of being socially excluded or otherwise at a
disadvantage when it comes to securing a traditional loan. The aim of the
microloans must be to establish and/or develop micro-enterprises. For the
period 2010–13, the European Union makes available EUR 103 m for Progress
Microfinance[2],
and the European Investment Bank (EIB) has committed itself to adding another
EUR 100 m for funded instruments. The total of EUR 203 m is divided between
the two windows as follows: EUR 25 m for guarantees and EUR 178 m for
funded instruments. Progress Microfinance is implemented by the EIF on behalf
of the Commission and the EIB. 2011 was the Progress Microfinance Facility’s
first full year of operation. In line with Article 8 of the Decision, this report
covers implementation at the level of microcredit providers, including
contracts concluded with the EIF, geographical distribution, actions funded and
applications accepted and rejected. The second part of the report analyses the
impact at micro-borrower level, including the types of beneficiaries and
distribution per sector, based on the data available at this stage. The last
sections look at complementarity between Progress Microfinance and other
instruments and the outlook with regard to future developments. The report
covers the year 2011, but it includes more recent data where possible. 2. Implementation
at the level of microcredit providers 2.1. Contracts
concluded Types of intermediaries Progress Microfinance is open to a wide range
of intermediaries at national, regional or local level, including banks and
non-bank institutions as well as private and public institutions. The sector
has shown considerable interest in the instruments the Facility offers. By March
2012, the EIF had signed 18 contracts with 16 microcredit providers: ·
eight non-bank institutions: microStart (BE),
Mikrofond and JOBS MFI (BG), Créasol (FR), Qredits
(NL), Inicjatywa Mikro (PL), FAER and Patria Credit (RO); ·
seven banks: Central Cooperative Bank (CY),
Pancretan Cooperative Bank (EL), Siauliu Bankas (LT), FM Bank
(PL), Millennium Bank (PT), Banca Transilvania (RO) and Volksbank
Slovenia (SI); ·
one public institution: ICREF (ES). The variety of intermediaries enables the
Facility to give a broad range of micro-entrepreneurs access to credit (see
also point 3.2). Microcredit providers at all territorial levels
are represented. Some of them cover a whole country, e.g. FM Bank in
Poland, while others operate on a regional or local scale. For example, the
Spanish ICREF focuses on the region of Murcia, whereas the Portuguese Millennium
Bank has agencies in Lisbon, Porto, on the Azores and Madeira. The Belgian microStart
is active in some areas of Brussels. Geographical distribution Although it is demand-driven, Progress
Microfinance aims to achieve a balanced geographical distribution. The EIF is therefore
required to issue guarantees for intermediaries in at least 12 Member States
and to respect a concentration limit on guarantees per country. By the end of March 2012, guarantees had been issued
in six countries (BE, EL, NL, PL, PT, RO — see Table 1 for further details). Contracts for funded instruments were signed in
nine Member States: BG, CY, EL, ES, FR, LT, PL, RO and SI. According to the Management
Regulation governing funded instruments under Progress Microfinance, exposure
to intermediaries in any single Member State may not exceed 10 % of the
aggregate target commitments of investors, i.e. at present EUR 17.5 m. With
its three contracts together amounting to EUR 16.5 m, Romania is the only
country that is close to the limit. Geographical distribution of
Progress Microfinance (March 2012) Signed
Approved 2.2. Actions
funded Guarantees Under the Progress Microfinance guarantee window,
which is funded by the Commission only, the EIF can issue portfolio guarantees
to microcredit providers, or it can issue counter-guarantees to guarantee
institutions which in turn issue guarantees to cover the microloan portfolios
of microcredit providers. Having a guarantee makes it easier for a microcredit
provider to serve target groups that are considered risky, such as business
starters who do not yet have any business history, young people or people who
belong to a minority group. This is because part of any defaults that might
occur are covered by the guarantee and therefore reimbursed under Progress
Microfinance[3].
Applicants for guarantees are usually microfinance institutions that already
focus on risky groups, like the Belgian microStart that especially
targets people with a migrant background, or microcredit providers who want to extend
their lending activities to risky groups. Thanks to the Progress Microfinance
guarantee, the Polish FM Bank serves newly created enterprises that have
been operating for less than 12 months. In other cases, a guarantee is used to improve
the conditions of the loan for the micro-borrower, i.e. a lower interest rate
or collateral requirements that are less strict. For example, in exchange for a
guarantee, the Romanian Patria Credit has been required to lower its interest
rate by 2.9 percentage points and accept a personal guarantee from its clients instead
of requiring them to put up real collateral. As initial demand for Progress Microfinance
guarantees fell behind expectations, the term of the guarantees was extended
from three to six years. This generated increased interest in the guarantees,
and by March 2012, six guarantee operations had been launched. Funded instruments Under the funded instruments window, which is co-financed
by the European Commission and the EIB, four types of products are available: –
Senior loans[4], –
Subordinated loans[5], –
Risk-sharing loans[6], –
Equity participations (direct or indirect
equity). Senior loans help provide intermediaries with liquidity
that they can use to on-lend as microcredit. With 13 microcredit providers
opting for senior loans, this product has, in line with expectations at the
outset, been the most popular so far. One reason for the prevalence of senior
loans is that they are relatively simple products and quicker to use than the
more sophisticated subordinated or risk-sharing loans or equity participations. Subordinated loans provide capital relief,
particularly for small banks seeking to boost their capital adequacy to satisfy
legal requirements. These instruments make it easier to obtain more funding
from other investors, hence they create a leverage effect. For subordinated
loans, intermediaries are required to generate a microloan portfolio of at
least twice the amount of the loan received. By March 2012, one microcredit provider
(Volksbank Slovenia) had signed an agreement for a subordinated loan. Risk-sharing loans combine elements of a senior
loan with portfolio risk-sharing. For risk-sharing loans, intermediaries are
required to match the amount of the loan received. This means that the leverage
effect is also at least double the initial amount. Risk-sharing loans are most
likely to be chosen by banks, particularly in the context of down-scaling
projects.[7] Equity can take the form of direct investments
in a microcredit provider or indirect investments in a fund which invests in
microcredit providers. Since equity helps microcredit providers obtain more
funding, intermediaries are required to generate a microloan portfolio of at
least three times the amount of the equity investment received[8]. Complementarity between guarantees and
funded instruments With its wide range of
products, Progress Microfinance serves a broad range of intermediaries in
different parts of Europe. In addition, the two windows under Progress
Microfinance are complementary. Firstly, the availability of both guarantees
and funded instruments has a positive effect on outreach in geographical terms
as they tend to be used in different countries (see section 2.1). Secondly, in
cases where a microcredit provider has received support under both windows, the
products are used in a complementary way. For example, the Pancretan
Cooperative Bank (EL) will (i) use risk protection under the guarantee to
cover a riskier portfolio of start-ups with a business history of less than three
years or new borrowers who cannot provide sufficient collateral and (ii) draw
on financing under a senior loan to generate a separate portfolio targeting
existing enterprises that would have difficulty accessing microloans in the
current economic climate. Table 1: Overview of Progress Microfinance
operations as of 31 March 2012 Member State || Intermediary || Instrument || Support to intermediary (EUR) BE || microStart || Guarantee || 111 375 BG || Mikrofond || Senior Loan || 3 000 000 BG || JOBS MFI || Senior Loan || 6 000 000 CY || Cooperative Central Bank || Senior Loan || 8 000 000 FR || Créasol || Senior Loan || 1 000 000 EL || Pancretan Cooperative Bank || Guarantee Senior Loan || 803 250 8 750 000 LT || Siauliu Bankas || Senior Loan || 5 000 000 NL || Qredits || Guarantee || 750 000 PL || FM Bank || Guarantee || 1 940 000 PL || Inicjatywa Mikro || Senior Loan || 4 000 000 PT || Millenium Bank || Guarantee || 309 488 RO || Patria Credit || Guarantee Senior Loan || 960 000 8 000 000 RO || FAER || Senior Loan || 1 000 000 RO || Banca Transilvania || Senior Loan || 7 500 000 SI || Volksbank Slovenia || Subordinated Loan || 8 750 000 ES || ICREF || Senior Loan || 8 000 000 12 Member States || 16 microcredit providers || 18 contracts || 73 874 068 Financial volumes As of 31 March 2012, the EIF has made
commitments to microcredit providers of EUR 73.87 m in total. Under the guarantee window, commitments amount
to EUR 4.87 m (out of the total EUR 25 m available for the
guarantees). This is considerably below the EUR 8 m expected for the end
of 2011. However, the EIF has confirmed that there is a rising demand for
guarantees. This should materialise in a number of additional contracts in 2012
including for larger volumes. The rise in demand is also due to the extension
of the term of the guarantees from three to six years. Under the funded instruments window, the EUR 69 m
of commitments to microcredit providers exceeds the expected EUR 44 m.
This is due to strong demand from the sector and the EIF’s sustained deal
origination efforts. Disbursements under the senior loan agreements
are made in instalments over a 18 to 24 month period. The operations signed in
2011 are therefore expected to be disbursed fully in 2013. The first instalment
is paid once the microcredit provider fulfils certain conditions, such as those
in relation to operational preparedness or enhancement of client lending practices.
Each disbursement typically does not exceed 50 % of total commitments. Subsequent
disbursements are made only once the previously negotiated microloan generation
targets have been met. By March 2012, EUR 19.1 m had been
disbursed: EUR four million to Cooperative Central Bank (CY), EUR four million
to ICREF (ES), EUR four million to Patria Credit (RO),
EUR 2.5 m to Siauliu Bankas (LT), EUR two million to JOBS
MFI (BG), EUR 1.5 m to Mikrofond (BG), EUR 0.89 m to Inicjatywa
Mikro (PL) and EUR 0.24 m to FAER (RO). 2.3. Applications
accepted and rejected To become an intermediary under Progress
Microfinance, microcredit providers have to reply to the call for expressions
of interest for the guarantees or submit applications directly to the EIF for
the funded instruments[9].
The EIF assesses the proposals and carries out a due diligence on applicant
microcredit providers. For the guarantees, the Commission’s approval is also needed.
After the approval of the EIF Board has been obtained, a contract is negotiated
and signed between the EIF and the intermediary. So far, no applications for financing under
Progress Microfinance have been formally rejected. However, after first making contact
with the EIF, a number of microcredit providers chose not to apply. For guarantees,
this happened partly because microcredit providers found that, in the end, the
funded instruments were better suited to their needs. For the funded instruments, operations that are
no longer part of the formal pipeline include senior loan agreements with two
microcredit providers who no longer needed support from Progress Microfinance. Direct
equity participation in a peer-to-peer lending platform was abandoned because
of uncertainties about compliance with the Decision. In more general terms,
some early-stage contacts did not result in concrete operations because the amounts
requested were too high, the size and risk quality of the microcredit provider insufficient
or their lending practices questionable. Furthermore, a number of agreements approved by
the EIF Board have not yet been signed and their future remains uncertain. This
is the case for an indirect equity investment in a UK-based fund, already approved
in December 2010. Due to developments with regard to the structural set-up of
the intermediary, there does not seem to be any further interest in concluding
the agreement with the EIF. The negotiation of an agreement with an Italian
provider approved by the EIF board has been put on hold pending confirmation of
a new capital injection at intermediary level. Finally, the future of a
counter-guarantee agreement with an Italian guarantee institution is uncertain
due to a recent change in national legislation. The change hinders the ability
of the guarantee institution to fulfil the additionality requirements under Progress
Microfinance. 3. Impact
at micro-borrower level 3.1. Microloan
volumes and the number of beneficiaries Targets In terms of microcredit for final
beneficiaries, the total budget of EUR 203 m is estimated to leverage to a
volume of EUR 500 m in microcredit, i.e. around 46 000 microloans. Based on the contractual terms of the current 18
agreements with microcredit providers, it is expected that the EUR 73.87 m
committed as of March 2012, i.e. over one third of the total budget available, will
result in more than EUR 170 m in microloans over the coming years. A
number of incentives for intermediaries ensure that this will be the case: failure
to reach the agreed microloan generation targets, e.g. under a senior loan,
would mean the microcredit provider must repay the loan early. This creates a
clear incentive to on-lend to micro-borrowers effectively and efficiently. A
similar incentive is used for guarantees: while they are, in principle,
provided free of charge, microcredit providers have to pay a commitment fee if
they disburse less than 90 % of the agreed volume of microloans. Microloan volumes generated and the number
of beneficiaries As of March 2012, a microcredit volume of EUR
26.8 m in total (EUR 17.8 m under the guarantees and EUR 9.1 m
under the funded instruments) had been generated by microcredit providers in BE,
BG, ES, LT, NL, PL and RO[10].
This corresponds to 15.72 % of the volume expected to be reached under the
18 agreements signed by March 2012. In terms of numbers, by March 2012, these
microcredit providers had disbursed 2 933 microloans (1 834 under the
guarantees, 1 099 under the funded instruments). This amounts to 17.8 %
of the expected total for the 18 agreements. According to the EIF’s estimations, the current
figures are broadly in line with the typical pattern for the build-up of
microcredit portfolios over a 2 to 3 year inclusion period following each
contract signature. Implementation patterns typically indicate a non-linear
portfolio build-up with a slower start followed by a stronger rise in volumes. After
an agreement is signed, a microcredit provider must prepare to begin micro-lending
activities, especially when a new micro-lending product is launched. For
example, before the first microloan can be disbursed, a public institution
might have to go through a tendering process to find a bank to cooperate with.
This can take several months. Guarantees usually have an availability period
of two years, senior loans an inclusion period of two to three years. This means
that between 2013 and 2015, the microcredit providers who have signed
agreements so far should reach their target microloan volumes and numbers. 3.2. Types
of final beneficiaries Microcredit providers supported by Progress
Microfinance target a wide range of final beneficiaries. Some focus on self-employed people and/or
micro-enterprises in general, e.g. Banca Transilvania (RO), which presents itself
as the ‘Bank for Entrepreneurial People’, the Cooperative Central Bank (CY)
with its sole trader facility, or the Pancretan Cooperative Bank (EL), which
targets existing micro-enterprises that are having difficulty accessing
finance. A number of microcredit providers target
entrepreneurs in rural areas, focusing on the agricultural sector. This is particularly
significant in countries where banks tend to be concentrated in big cities.
FAER and Patria Credit thus fill an important gap in Romania, as Mikrofond does
in Bulgaria. Inicjatywa Mikro (PL) also targets the self-employed, especially
agro-producers. Several microcredit providers aim to give access
to finance to start-ups, which are generally considered comparatively risky. FM
Bank (PL) concentrates on enterprises that are less than 12 months old. Qredits
(NL) has a portfolio guaranteed by Progress Microfinance that finances
start-ups. Volksbank Slovenia and the Pancretan Cooperative Bank (EL) target
micro-enterprises that are less than three years old. The Pancretan Cooperative
Bank also targets new borrowers with a viable business plan who cannot provide
sufficient collateral. Finally, some Progress Microfinance
intermediaries target particularly vulnerable groups, such as young people and
women (ICREF (ES)). JOBS MFI (BG) provides microloans and microleases to
unemployed people or job seekers who want to start their own business. microStart
(BE) has above all clients with a migrant background, while Siauliu Bankas (LT)
has set itself the target of financing at least 50 % of female entrepreneurs
and micro-enterprises that either employ a majority of women or are owned only
by women. Millennium Bank (PT) has, as part of its portfolio, established cooperation
with an association that supports people who are socially excluded, such as
homeless people or former drug addicts and Roma. Créasol (FR) targets unemployed
people, often with a migrant background, who want to create a business or
develop their business and who have
been rejected by a bank in the region. 3.3. Social
and employment impact of Progress Microfinance The EIF reports to the Commission on the social
and employment impact of Progress Microfinance based on information provided by
the microcredit providers the Facility supports. This kind of social impact
reporting is not a common market practice and therefore required some
adjustments of internal procedures and systems so microcredit providers could
report to the EIF. Social reporting is currently only required once a year,
with September 30 as the deadline. By that date in 2011, only five microcredit
providers had started lending under Progress Microfinance, but data on some
aspects is only available from two microcredit providers. The fact that this was
the first time this kind of reporting was done explains some of the problems. Data
on the employment and social impact cannot therefore be considered representative.
It is also too early for data on the sustainability of businesses that have
been supported. Job and business creation The job creation effects of Progress
Microfinance can be measured by the number of unemployed and inactive people who
started a business with the help of a microloan. Based on the information given
by microStart (BE) and Mikrofond (BG), this was the case for
27.46 % of clients. In addition, anecdotal evidence suggests that some of
those who had previously been employed had only been working part-time. For some of the micro-enterprises already operational
at the time the microloan was provided, the information given shows that almost
60 % of the enterprises supported are less than one year old. They
therefore belong to the group of micro-borrowers considered ‘risky’. More than
a third of enterprises supported are less than six months old. Table 2: History of enterprises supported by
Progress Microfinance intermediaries (data as of
September 2011) || Up to two years || Up to one year || Up to six months FM Bank || 100 % || 94.39 % || 58.88 % Mikrofond || 40.93 % || 30.38 % || 13.50 % microStart || 90.74 % || 85.19 % || 79.63 % Patria Credit || 90.21 % || 79.02 % || 73.43 % Qredits || 75.42 % || 55.87 % || 24.39 % Total || 73.01 % || 58.63 % || 34.69 % Outreach to disadvantaged target groups Individuals with a higher level of education
are more likely to be involved in an entrepreneurial activity than those with a
lower level of education[11].
Data provided by microStart and Mikrofond on the educational
background of their clients shows, however, that more than three quarters of
the micro-borrowers financed had either completed secondary education (71 %)
or primary education (5 %) only. This shows that these intermediaries also
serve people who are in a more fragile position in the labour market. In terms of age disadvantage, around 5 %
of the micro-borrowers were under 25 and 13 % were older (over 54). However,
the group aged between 25 and 54 is certainly not homogeneous. Gauging the
representation among end-beneficiaries of the group aged 25 to 30 might give
more insight into the potential of Progress Microfinance to help young people find
a job. Almost 10 % of employees of the micro-enterprises financed were
young people under 25 and 12 % were seniors over 55. The figures vary a lot in terms of gender. While
Mikrofond, active above all in the rural areas of Bulgaria, has only 28 %
of female clients (which is below the national average of 31 % of female entrepreneurs[12]), most of Brussels-based microStart’s
clients are women (54 %). This figure is far above the national average of
29 % of female entrepreneurs. Regarding outreach to other disadvantaged
groups, as of September 2011, the two microcredit providers that reported on
this indicator have not financed any disabled entrepreneurs. However, Mikrofond
reports that 18.8 % of its clients belong to a minority likely to belong
to the Roma communities in the rural areas in which it is active. Many of microStart’s
clients come from a migrant background, with 93 % of them born abroad.
The templates would need to be adapted to reflect this in official reporting. Based on the information given by four
microcredit providers, around 1 % of the employees of micro-enterprises
financed are disabled, while 8 % belong to a minority group. Given the small sample size, it is too early to
draw conclusions about the social and employment impact of Progress
Microfinance. However, the target groups indicated by the microcredit providers
and first indications regarding the real impact suggest that Progress
Microfinance helps create jobs and serves disadvantaged groups, in line with
the policy objective of promoting financial inclusion. Sector and geographical distribution of
enterprises The 1079 micro-borrowers financed by the five reporting
microcredit providers as of September 2011 are active in a variety of sectors.
The predominant sector is trade, accounting for 28.5 % of the
micro-enterprises financed, followed by agriculture, which accounts for 20 %. The high percentage of micro-enterprises in the
agricultural sector can be explained by the presence of Patria Credit
and Mikrofond in the sample, which focus on rural areas in Romania and
Bulgaria. 4. Complementarity
and coordination with other European Union instruments A microcredit provider typically needs funding
to build up its microloan portfolio and risk-sharing instruments in order to
reduce the portfolio risk. It also needs seed funding and non-financial
technical assistance to build or improve its institutional capacity. Over the past few years, different elements of
microfinance support have been provided under a range of complementary EU
instruments: ·
Progress Microfinance fills an important gap in
portfolio funding. ·
Guarantees on microcredit portfolios are already
available under the Competitiveness and Innovation Programme (CIP). Today, the
CIP and Progress Microfinance guarantee headings are complementary. In
principle, microcredit guarantees are only issued under the CIP when a contract
is not possible under Progress Microfinance because of the target geography (non-EU
countries), the size of the cap amount, or the portfolio’s purely commercial focus.
The EIF has published guidelines on deal allocation on its website to help
microcredit providers with the application process. ·
A limited amount of seed funding to help microfinance
intermediaries build capacity was allocated by the European Parliament
Preparatory Action (EPPA) to promote the development of EU microcredit
providers. MicroStart and Qredits benefited from complementary
support under both Progress Microfinance and EPPA. As EPPA was a pilot, no more
seed funding is available for the current financial period. However, the
success of the initiative led the Commission to include a capacity-building
element in its microfinance support instrument proposed under the Programme for
Social Change and Innovation (see also section 5). ·
Under the JASMINE initiative, which aims to improve
the capacity of microcredit providers in various fields, such as institutional
governance, information systems, reporting standards and risk management,
microcredit providers can receive an evaluation and/or a rating of their
organisation followed by counselling and training tailored to remedy identified
weaknesses. JASMINE helps prepare microcredit providers to be eligible for
further support. Several JASMINE beneficiaries have successfully applied for
Progress Microfinance, e.g. JOBS MFI (BG), Mikrofond (BG), Créasol
(FR), Qredits (NL), Patria Credit (RO) and FAER (RO). Vice
versa, several Progress Microfinance intermediaries (e.g. Qredits and microStart)
have at a later stage applied for JASMINE. This demonstrates the complementary
nature of the two initiatives.[13] ·
Progress Microfinance also complements the structural
funds. A number of Member States use the European Social Fund to finance
business development services, like mentoring or training for starters. These
services are known to increase the survival rates of new businesses, even
though they are costly for microcredit providers. This is why the microcredit providers
supported under Progress Microfinance are required to cooperate with
organisations that provide these services, in particular with those financed by
the ESF. ·
The Commission has facilitated mutual learning
in this area by funding the Community of Practice on Inclusive Entrepreneurship
(COPIE). This network of ESF managing authorities has developed several tools
covering action planning, quality management, entrepreneurship education,
access to finance and integrated business support. These tools are designed to
help policy makers improve support systems in order to make entrepreneurship a
viable option for all members of society, including disadvantaged groups. The
tools are available on the internet[14]. ·
Some Member States and regions use part of their
structural funds appropriations to improve access to finance for
micro-entrepreneurs directly or through holding funds, including through the
JEREMIE initiative. 5. Conclusions
and outlook Although Progress Microfinance has been fully
operational for somewhat more than one year, several positive conclusions can already
be drawn. The 18 agreements signed demonstrate that Progress Microfinance serves
the needs of a great variety of microcredit providers across the EU. It is
expected that until the end of 2012, further agreements will be signed with
microcredit providers in Austria, Belgium, Germany, Ireland, Italy, Sweden and
the UK. The reports of microcredit providers show that it has had a positive
impact in terms of employment and social inclusion. The Commission will explore
with EIF how the social impact reporting framework can be improved. For the next financial period 2014–20, the
Commission has proposed to continue supporting microfinance development
throughout the EU under the Programme for Social Change and Innovation (PSCI)[15]. This would build on the
successful intermediary model by offering a similarly wide range of products,
disseminating best practice and pioneering financial inclusion by strengthening
underserved market segments. One of the criticisms made about the current
financial period is that EU microfinance support is scattered among several
separate, though complementary, programmes. The proposed PSCI attempts to
create a one-stop-shop for microfinance support. It will also make funding available
for the capacity building of microcredit providers based on experience gained from
the EPPA initiative and allow the financing of technical assistance for
microcredit providers. The financing
of microfinance schemes, capacity-building actions and entrepreneurship support
services will still be possible across the EU under the structural funds (the ERDF
and the ESF), operated through shared management between the Commission and
Member State authorities. [1] For more details see the 2010 Implementation Report,
COM(2011) 195. [2] In addition to the EUR 100m initially foreseen,
another EUR 3m have been added from a European Parliament Preparatory Action
(For more details see the 2010 Implementation Report). [3] For a detailed description of the guarantees, please
refer to the 2010 Implementation Report, COM(2011) 195. [4] If the borrower goes bankrupt, senior loans must be
repaid before other credits receive any payment. [5] Financing subordinated to senior creditors. [6] Senior loans combined with risk participation in the
microcredit portfolio. [7] A first risk-sharing loan agreement is likely to be
signed in 2012. [8] An indirect equity agreement is likely to materialise
with a fund in the UK in 2012. [9] http://www.eif.org/what_we_do/microfinance/progress/index.htm. [10] These figures refer to the microloan portfolios built
up by microcredit providers thanks to Progress Microfinance. [11] European Commission, Flash Eurobarometer 283, Entrepreneurship
in the EU and beyond. A survey in the EU, EFTA countries, Croatia, Turkey, the
US, Japan, South Korea and China, May 2010. [12] European Commission, Equality between women and men —
2010, COM(2009) 694 final. [13] The proposed successor instrument for microfinance
support under PSCI (see section 5) will require microcredit providers to apply
high quality standards in line with the principles of the "European Code
of Good Conduct for Microcredit Provision". [14] www.cop-ie.eu. [15] COM(2011) 609 final.