Microfinance in Europe

This paper presents the status of microfinance based on data collected from 32 microfinance institutions (MFIs) across nine European Union (EU) member countries. The paper highlights:

• Women are not the top priority as contrasted with less developed countries (LDC);
• MFI services are equally distributed over trade and services to individuals and enterprises, while the agricultural sector forms only 9% of the portfolio;
• 35.5% MFIs operate using only private funds, 58% use mixed funds (private and public) and a mere 6.5% are supported by public funding alone;
• Average repayment rate is 89.7%;
• Average interest rate is 5.5% per annum;
• Average number of products offered is 2;
• The average number of clients served by an MFI is 437.

The paper concludes:

• Microfinance is not a panacea to address all different issues related to poverty;
• Contractual innovations such as group lending, and the introduction of dynamic incentives, allow service quality to improve;
• For an MFI to have desired impact, a relatively stable political environment and macroeconomic framework, together with an infrastructural base, are fundamental conditions.