Microfinance for entrepreneurship in Europe. Milan, 07/11/2014

Transcription

1 Microfinance for entrepreneurship in Europe Milan, 07/11/2014

2 About EMN The European Microfinance Network (EMN) was launched by ADIE (FR), nef (UK) and evers&jung (GE) in April 2003, with the support of the European Commission and the French Caisse des Dépôts et Consignations (CDC) EMN has currently 81 members in 22 European countries. Amongst them are Practitioners (MFIs), Consulting & Research Organisms and Banks EMN supports its members through: Capacity building activities; Networking and information exchange; Advocacy at EU and national level

3 There is a need of Microfinance in Europe Population at risk of poverty: 78 million Working population under the poverty line: 28 million Rate of people at risk of poverty in the EU: 17% (2007) Especially at risk: women, youth & single parent households with children Long-term unemployment is the main factor of exclusion Financial exclusion (population without a bank account, neither savings nor credit or insurance): 7% in EU15, 34% in EU10. In the 10 new EU countries 47 % don t have a bank account, compared to 10% in the EU15. In the EU15, 18 % of adults don t have access to bank transactions, 30% don t have savings and 40% don t have any credit facilities

4 Main features of MF in Europe Definition UE: loan below EUR for selfemployment and entrepreneurship purposes Microfinance comprises financing and non financial services (microfinance vs. microcredit) Young and heterogeneous sector. Main figures*: - 380k microloans disbursed per year - 79% & 21% business/personal loans - Average loan EUR 8,500 - Approx. EUR 1,5 bill. in loans per year * Overview of the Microcredit sector in the EU :

5 Microfinance Models in Europe NGOs, focus microfinance ADIE (FR), PerMicro (IT), ANDC (PT) - Inspired by international practice - Integrated non financial services NGOs, focus on specific groups YBI (UK), WWB (ES), Autonomia Foundation (HU) - Small scale / Finance seen as added value for enterprise support Non Bank Finance Institutions (NBFIs) Credal (BE), Fair Finance (UK), Patria Credit (RO), Mikrofond (BU), Qredits (NL) - MFIs in Western Europe and Credit Cooperatives in Eastern Europe

6 Microfinance Models in Europe (II) Institutional support programs DMI (GE), Finnvera (FI), Fonds de Participation (BE), ICO (ES) - Part of existing programs of development banks - Public admin. as shareholders Special entities of banks Microbank & Savings Banks Foundations (ES), Millennium bcp (PT), Microstart (BE) - Recent development - Strong growth - Synergy effects on costs due to existing infrastructure

7 MF for Entrepreneurship - Best Practices (I) - Available on: NEEM (Sweden): "Big fish and small fish" Create and support win-win business ventures between micro and big companies to facilitate new kinds of employment and new business opportunities Savings House Mosnosti (FYROM): Delightful loan for non-documented micro business Lokum 2 loan especially targeted towards micro-businessmen and women who do not posses any documentation for their business. Loan officers visit the place where the client does his or her activities, which is usually a small shop, and make photographs to document the business activity, based on which the credit committee approves the loan later on

8 MF for Entrepreneurship - Best Practices (II) - Seniors Entrepreneurs (France): Business creation for/by seniors & youth Seniors (unemployed, retired or soon retiring) possess the competences, interest and financial resources (savings) necessary to establish new businesses or acquire existing businesses. Younger people of less than 40 years could be hired in order to complement the team and make sure that the business will be sustainable Prizma (B&H): Microcredits for Micro-entrepreneurs Campaign Enterprise loans (250 Euro - 12 months or 500 Euro - 22 months) to new clients under the following conditions: interest rate on average 7% lower than other loan products; small instalments of 25 Euro; disbursement in cash within 2 days; no guarantor required

9 MF for Entrepreneurship - Best Practices (III) - MI-BOSPO (B&H): Women s Business Network Provision of non-financial service activities including financial education/business skills training seminars, market connections within B&H for marketing, purchasing and/or selling services/products, advocacy activities - delivery of information about incentives or subsidies The Prince's Iniciative (UK): Senior Entrepreneurship Afford over 50s the means to explore and develop their business ideas: providing quality training and services for over 50s, and at informing and developing public policy FEBA (UK): Ethnic Minority Business Awards Create and sustain economic advantage through self-employment, by providing pre- and post-start up support in many forms

10 Common trends: MF for Entrepreneurship - Best Practices (IV) - - Provision of tailor made training, coaching & mentoring before and after - Microcredit is just one part of the total package of services - The client is based in a broader environment - Innovative approaches to adapt the services to the clients needs - Think on specific approaches to every segment of the most vulnerable population groups: youth, women, senior & migrants

11 ADIE (Creajeunes): Youth Help young people to create their own businesses & support their social & prof. inclusion via support services: 1. Collective training 4. Financing 2. Coaching 5. Post start-up services 3. Networking activities Training to be well adapted to the young target group (need to have a good knowledge of the local context) Governments must acknowledge the problem of youth unemployment and have a clear commitment

12 PARTNER (Youth program) Youth Provide market-oriented business training and mentorship services for youth in addition to loans Financial literacy training in addition to the business training Launched in cooperation with the world Bank and the SEEP network Difficulty in motivating youth (clients) to regularly attend and complete business and financial literacy training

13 Senior Princes Initiative for Mature Enterprise (PRIME) English charity organization supporting people aged 50+ who are unemployed or facing redundancy establish their own business Provides free training, counseling, networking and online resources (how to keep records, register a business, write a business plan, access alternative finance, acquire knowledge in financial basics, etc. Also acts as a lobby, informing and advising policymakers on those aged 50+.

14 Senior CREDAL Started a program in 2013 specifically targeting the 65+ age group with low revenues. Possibility to get a loan (max. 10K) to update their house ( housing loan ). Implemented together with public authorities Since 2004, 151 personal loans have been distributed to 60+ (less than 8% of total portfolio) Since 2000,15 professional loans provided to 60+ (less than 3%) Older segments are not well-reached. MFIs are just beginning to specifically address programs for seniors

15 NANTIK LUM (Programa IMPULSA) microstart Migrants Hybrid organization: asbl responsible for planning and provision of BDS through volunteers in parallel to a cooperative company for the commercial credit offer Provide microcredit tailored on clients needs for meeting national labour market requirements and overcoming the barriers in the business creation Migrants are not targeted specifically, but represent 90% of clients

16 Migrants PERMICRO Constant follow-up activities for the development of business plan during the entire loan repayment Intense financial education and coaching as key factor for attaining financial and social mission from the first contact Involve local active immigrant associations or social networks as moral collateral for clients and key players in the monitoring of clients business activities Promote loan products that meet financial needs as emergencies and investment purposes of migrants families resident in the origin country by fostering a global perspective of the management of financial resources between origin and host countries

17 Business Development Services (BDS) In the broader definition of MF, two kind of services are provided: financial & non-financial (BDS) Both services are been increasingly provided attached one to the other in order to increase project success BDS is often rejected by the clients Monitoring the quality of the BDS and managing the relationship with volunteers is always cumbersome Necessary to exchange Good Practices across Europe

18 Business Development Services (BDS) Standard classroom-based financial education is not enough. More participative and combined approaches are needed. Important to to increase the role of Social Media and set up well-designed/targeted interventions On micro-enterprises, business training programs increase knowledge but have a minor impact New technologies are considered the main tool in term of effectiveness & outreach for BDS Potential financial support for BDS activities that can be carried out by ESF

19 microstart Group of social entreprises serving social cohesion: BNP Paribas, EIF & ADIE Microloans (from 500 to ; max. 36 months) business-related (existing or start-ups). Only unbankable. Free TA to customers to help them launch & develop their activities, and to make sure the business survives. Adapt regulatory framework for micro-entrepreneurship Requirements: cosigner for at least 50% of lent amount Interest rates from 8,25% to 9,75%, commitment fee 5%

20 microsave project : microstart Sometimes trustworthy entrepreneurs can t find a cosigner in their circle of friends/family or don t want to for cultural reasons The majority of the target audience needs financial education microstart is not allowed to collect any savings Deposit on a savings account. Money tied up for the duration of the loan. The loan is partially guaranteed Default rate: 8%

21 microsave project: Credit underwriting and decision from the credit committee Savings account set-up (collateral) Technical support, financial education and reimbursement follow-up Difficulties to find a cosigner History of savings in the past Or Observation period (min. 3 months) Microsavings = min ¼ of the loan amount Microcredit reimbursement and incentive to keep on saving small amounts each month When the initial deposit is on the Bpost savings account (tied-up money), the loan can be disbursed Matched savings program (20% of the deposit, max. 300 ), Micro-savings = collateral for the loan

22 Qredits Combines traditional lending facility in combination with sophisticated IT support 5 staff on the coaching programme, with more than 500 coaches (volunteers) For non-performing loans Qredits uses social media, phone calls, internet communication, etc. which have proved to be very effective. Default rate is 2,5% Microcredit loans: Businessloans up to 50,000 Interest rates: 9.75% % Average loan term: 4.5 years SME loans: Businessloans 50, ,000 Interest rates: 8.75% % Average loan term: TBD

23 Qredits - Online tools for entrepreneurs Entrepreneurial competency test Business Plan template (150 downloads a day) e-learning modules (30 sold per week) - Coaching available in following areas of interest: Writing a business plan Finances and administration Marketing and sales Human resources Crisis management and reorganization Personal effectiveness

24 Qredits - Company-oriented organization of their BDS activities (clients have to pay for most of the BDS services - For the non-clients, Qredits promote the BDS through Chambers of Commerce, website, social media, entrepreneurs associations and collaborations with other formal financial institutions - They find hard to measure the real impact in the portfolio quality, but they estimate that coaching doesn t have a massive impact. - 70% of start-ups clients use their BDS services. 50% of the general customers follow BDS activities (some of them have to be forced to it as they deny any help). Also 80% of customers use the e-learnings platforms

25 Thanks! Jorge Ramirez EMN General Manager European Microfinance Network aisbl 10 Rue de l Industrie 1000 Brussels Belgium