Overview of the Microfinance Sector in Western Europe

This paper presents a survey of micro-lenders in Western Europe. Commissioned by the European Microfinance Network, it is designed to increase learning about the current scale and nature of activities of microfinance programs, their performance and impact.

The paper discusses:

• Operations, based on country, scale, age and staff;
• The clients, including:
  • The target market;
  • Assessment criteria;
  • Marketing approach;
  • Impact measurement.
• Products and services, including:
  • Loan terms;
  • Interest rates;
  • Loan sizes;
  • Lending methodology;
  • Support services.
• Performance, including:
  • Performance versus objectives;
  • Numbers and amounts of loans made;
  • Portfolio outstanding and active borrowers;
  • Operational performance.
• Sources of funding;
• Plans for and constraints to growth in the future.

The survey concludes that:

• There is great diversity in microfinance activity in Western Europe;
• Micro-lenders operate in very different contexts and within contrasting legal and regulatory environments;
• Leading micro-lenders are sustainable organizations that have achieved regional or national market coverage;
• Emerging organizations are experimenting with innovations in a number of areas;
• Sustainability, lack of demand and operational performances are challenges;
• There is a need for:
  • Number and scale of operations to be increased;
  • Increased public sector support;
  • Effective marketing strategies;
  • Training in delinquency management;
  • Improved information management systems.