From Exclusion to Inclusion through Microfinance (Policy Brief)

This policy brief comprises key findings from a project that combined the experiences of three microfinance networks to overcome social and financial exclusion in Europe. The networks were:

• The Microfinance Center for (MFC) for Central and Eastern Europe and the New Independent States;
• The European Microfinance Network (EMN);
• The Community Development Finance Association (CDFA)

The project:

• Identified key constraints and opportunities for financial inclusion in Europe;
• Formulated policy and made recommendations to enable building more inclusive welfare and financial systems.

The brief states that:

• Microfinance is a critical tool in addressing issues of financial and social exclusion;
• Providers of microfinance services can be classified into banks and non-banks;
• All categories of financial institutions use the market approach to solve problems of financial exclusion. Some also complement it with additional business coaching and financial education services.

The brief suggest ways for governments to address the problems of financial exclusion. These include:

• Creating a helpful policy environment that broadens access to finance, while protecting consumers;
• Creating a system that allows the provision of large-scale financial education to low-income people;
• Non-interference in the issue of interest rate ceilings;
• Encouraging cooperation among different actors to combat financial exclusion.