europe_hopes
25/11/2015, 11:00

EU, Progress Microfinance



Microfinance-in-the-EU:-an-instrument-to-fight-the-economic-crisis-


 On 10th November 2015, the Employment committee of the European Parliament adopted with a large consensus a report on the implementation of the European Progress Microfinance facility. Commenting the decision, the report author Sven Schulze, a German



On 10th November 2015, the Employment committee of the European Parliament adopted with a large consensus a report on the implementation of the European Progress Microfinance facility. Commenting the decision, the report author Sven Schulze, a German member of the European People’s Party, said: "The instrument works as a whole, but unfortunately sufficient funding is not always guaranteed. The European Commission must therefore find a solution quickly in order to make Progress Microfinance even better in the future." The instrument is working effectively but it needs some improvements to reach higher results. As the Employment committee added, the grant of money should be combined with other supporting actions, such as the assistance to create effective business plans and with bookeeping.

The programme is funded by the EU and the European Investment Bank and has the objective to increase the availability of loans - below € 25.000 - to start or develop small business. The mechanism is based on giving a total guarantee of € 200 millions to banks and financial institutions so as to obtain more loans and better conditions for borrowers.

Microfinance represents an important instrument to fight poverty and unemployment across the EU. Originated in south Asia, Latin America and in general in the developing countries, the technique of microloans is successfully used since 40 years ago. The basic idea is poor people have qualities and skills that remain unutilized because of the lack of financial resources. The charity is not an effective way to fight poverty because it creates dependency and doesn’t stimulate the economic initiatives. So, the strategy of the microfinance is to offer credit, savings and other essential financial services to people living in critical situation of poverty. The group of people that can benefit from microcredit is very large, including long-term unemployed, migrants, ethnic minorities and in general whoever encountering difficulties to access traditional financial services. As benefits, the microfinance allows disadvantaged people to start their own business, sustain an income and, in general, participate to the economic activities. This resulted in microfinance becoming a proper tool to reduce inequalities and poverty.

Supporting micro-enterpreneurs represents is certainly an effective way to overcome the current financial crisis. Anyway if it seems that the European Union is going on the right road, it is true that not all  the bank institutes in the Member States put at disposal of their clients this kind of tool. And this not only due to the lack of financial resources. Maybe the European Commission and the Parliament should encourage more its use evaluating the opportunity to adopt a specific political initiative on this matter.

Read more:
http://ec.europa.eu/social/main.jsp?catId=836&langId=en
http://ec.europa.eu/social/main.jsp?catId=983&langId=en


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