Microfinance in Europe
What is the status of 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.
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