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Business year 2011
25
General overview
During 2011, EIF’s microfinance activity transitioned from
a low-scale pilot activity to a fully dedicated EIF business
segment. As part of its active role in developing Europe’s
microfinance market, EIF provides both financial instru-
ments and non- financial support measures to build up
the capacity of Europe’s microfinance institutions (MFIs),
which range from very small non-bank MFIs, smaller
banks, and commercial lenders to guarantee institutions.
Through its support for MFIs, EIF aims to improve on-lend-
ing to micro-entrepreneurs and the self-employed, includ-
ing to vulnerable social groups who often lack access to
the commercial credit market.
EIF’s positioning in the microfinance market is closely
linked to its wider commitment to the EU 2020 strategy to
promote inclusive growth. As part of its microfinance strat-
egy, EIF actively seeks to target institutions that success-
fully reach out to underserved client groups in order to
promote self-entrepreneurship and job creation as drivers
of social inclusion. Through its due diligence process, EIF
aims to identify and partner with MFIs that apply respon-
sible lending practices vis-à-vis their micro-borrowers. In
this regard, EIF follows closely the initial testing phase of
the European Code of Good Conduct for Microfinance
that was launched with the participation of a number of
non-bank MFIs in 2011.
EIF’s product offering in the microfinance field is tailored
to the specific European context, which is characterised
by a heterogeneous market and a wide range of different
types of MFIs applying different sets of lending models.
The variety of products available under the European
Progress Microfinance Facility (Progress Microfinance)
in particular, aims at addressing these particular market
needs. Over time, EIF has the ambition to become the key
player in the European microfinance market.
2011 marked a giant leap for EIF in the scaling up of
its microfinance activities. EIF began the deployment of
newly developed debt, equity, and guarantee instruments
tailored to the needs of Europe’s MFIs and designed to
maximise the catalytic effect at the micro-borrower level.
During 2011, the first full operational year of Progress
Microfinance, EIF concluded 14 agreements with 12 micro-
lenders in nine countries across the EU and committed over
EUR 64.4m to support the microfinance sector under the
new facility alone. This support generated a total volume of
over EUR 130m in new micro-loans.
At the end of 2011, EIF estimated that EUR 24m in micro-
loans had already been disbursed to final beneficiaries.
This figure corresponds to approximately 2,400 new
micro- loans already originated through support under
Progress Microfinance.
Portfolio
At end 2011, the total portfolio amounted to over EUR 67.1m,
catalysing EUR 140m and enabling close to 8,800 loans.
The transactions closed in 2011 clearly indicate a strong
demand among non-bank MFIs for long- term funding.
Banks in Western and Eastern Europe are also keen to
embark into microfinance, building on their small business
lending track-record. Such downscaling is often limited to
pilot testing or social responsibility activities. Microfinance
guarantee transactions closed in 2011 demonstrate the
catalytic effect that can be achieved with capped guar-
antee instruments.
Early successes under the newly launched Progress Micro-
finance initiative have been complemented by continued
microfinance achievements initiated under the CIP, the
European Parliament Preparatory Action (EPPA), and RCM
microfinance programmes, which served as a basis for EIF’s
early microfinance pilot activities. Technical assistance
made available under JASMINE Technical Assistance (TA),
in particular, has demonstrated important non-financial com-
plementarity with the funding and guarantee instruments
Microfinance
“Condit ions have been par t icularly difficult for
microfinance institutions recently. We found in EIF
a reliable long- term partner that is able to help us
provide tailor made solutions for the specific financing
needs of local micro-entrepreneurs.”
Ioan Vlasa, CEO, FAER IFN S.A