Microfinance in Europe

What is the status of microfinance in Europe?
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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.

About this Publication

By Vigano, L., Bonomo, L. & Vitali, P.