Microfinance, its Concepts and Development, Lessons to Draw for Europe

Drawing lessons from the success of microfinance initiatives in developing countries
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This paper analyzes the state of microfinance in Europe and compares its development to that in developing countries. It states that while microfinance has acquired an industry status with legislation and regulatory frameworks in developing countries, Europe has lagged behind. The paper seeks to identify ways to develop the sector in Europe, particularly in the Netherlands.While comparisons between different countries are difficult to make, they demonstrate that matching of client groups and services or channels deserves more attention. Europe differs from developing countries in the following areas:
  • NGOs play a limited role in European microfinance;
  • Number of MFIs in Europe is only 200;
  • Average loan sizes in Europe are higher than those in developing countries;
  • Role of microfinance is unclear, with no consensus on whether it should focus on enterprise development or social inclusion;
  • European MFIs' client groups differ significantly from those of MFIs in developing countries.
The paper states that Netherlands has been late in discovering microfinance. A study of microfinance in developing countries would help identify channels and services most appropriate for different target groups.

About this Publication

By Molenaar, K.