Focus on Enterprise: Demystifying the Role of Microfinance in Job Creation

Employment creation is a common objective of microfinance institutions in Europe well in line with the employment policies of the EU and national governments. According to the latest survey of microcredit providers - European Microfinance Network (EMN) and/or the Microfinance Centre (MFC) members - 70% of the institutions from 22 European countries indicated job creation as their mission. Additionally, 60% of MFIs stated that they aimed at microenterprise promotion.

Despite high expectations, in general microenterprises have a limited, however socially important, contribution to job creation. This paper discusses the role of microfinance in creating jobs through self-employment and microenterprise. The paper further presents a summary of the key findings and their implications for the role of microfinance in job creation.