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Hanse-Passage Project “SUSTAIN”:
„Microcredit –A Tool to support SME”
Thomas König
Agrarsoziale Gesellschaft e. V.
Göttingen
Germanywww.asg-goe.de
Outline:1. Origin of microcredits
2. Experiences from various Hanse-Passage regions
3. Characteristics of the examples selected
4. Applicability of the microcredit approach
5. Conclusions
1. Origin of microcredits
• founded in Bangladesh in the 70s, now spread globally
• dedicated to people with no or limited access to the financial market
• Basic assumption: poor people are able to use loans economically and use borrowed money in a responsible manner
• The loan security system emphasis on social system
Microcredits support poor people to borrow money and use it efficiently; not by donating grants!
2 a. Experiences
• Founded in 1989
• Largest provider in the EU
• Nationally organized
• Target groups: unemployed and recipients of welfare benefits
• Limited loans
• Founded in 2004
• National umbrella organisation supporting microlenders
• Interface between microlenders, banks, borrowers
2 b. Experiences
• Founded in 1976• Charity organisation,
offering loans and grants• working nationally• Target group ‘those who
need it most’, young people, long-term unemployed
• Pay-back rate for loans is relatively low but becomes more important
• Central and Eastern Europe
• Totally different market approach
• Began soon after the fall of the Berlin Wall
• MFI focus more on existing enterprises than on start-ups
• MFI offers loan to bridge a financial gap of the running business
• Both, NGO and banks are involved
2. Overview EU-15
– 75 microfinance providers EU-15. Almost half of the programs were founded in 2000 or later (68 %)
– Biggest microloan schemes: France (ADIE) and Finland (Finnvera); both provide nearly 80% of all microloans in 2003
– Total number of loans made in 2005 15,436 loans (n=75 MFIs).
– 69 % of microlenders made 100 loans or fewer in 2005
Source: Evers & Jung
Switzerland1%
Italy9%
Spanien42%
UK28%
Finland1% France
3%Germany
11 %
Sweden3%
Norwegen3%
Ireland1%
3. Characteristics
• The MFI’s performance strongly depends on the national legal frame
• All MFIs support their financial offers with non-financial services
• Most MFIs work target group oriented• The loan security system differs from
the ‘normal’ bank’s security requirements
4. Applicability
• Numerous examples of good practices do exist!
• Necessity of involving banks, gov., experienced organisations, other local stakeholders
• Assessment of the existing situation (e.g. regulations, target groups, demands and offers) is essential
• Keep in mind the social aspects and the loan security system’s design in this respect
5. Conclusions• Microcredits are a market niche and reach a
relatively small group of clients.• Microlending is more than only a financial
instrument, but is mainly a social oriented approach.• (Local) governments play an important role.• The decreasing availability of public funds urges
new forms to use the public money effectively.
• Learning from the South is a new quality of international know-how transfer.