REPORT on the proposal for a decision of the European Parliament and of the Council establishing a European Microfinance Facility for Employment and Social Inclusion (Progress Microfinance Facility)

10.11.2009 - (COM(2009)0333 – C7‑0053/2009 – 2009/0096(COD)) - ***I

Committee on Employment and Social Affairs
Rapporteur: Kinga Göncz


Procedure : 2005/0237B(COD)
Document stages in plenary
Document selected :  
A7-0050/2009

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

on the proposal for a decision of the European Parliament and of the Council on establishing a European Microfinance Facility for Employment and Social Inclusion (Progress Microfinance Facility)

(COM(2009)0333 – C7‑0053/2009 – 2009/0096(COD))

(Codecision procedure: first reading)

The European Parliament,

–   having regard to the Commission proposal to the European Parliament and the Council (COM(2009)0333) and the amended proposal (COM(2009)0340),

–   having regard to Article 251(2) and the third paragraph of Article 159 of the EC Treaty, pursuant to which the Commission submitted the proposal to Parliament (C7-0053/2009),

–   having regard to Rule 55 of its Rules of Procedure,

–   having regard to the report of the Committee on Employment and Social Affairs and the opinions of the Committee on Budgets and the Committee on Economic and Monetary Affairs (A7-0050/2009),

1.  Approves the Commission proposal as amended;

2.  Calls on the Commission to refer the matter to Parliament again if it intends to amend the proposal substantially or replace it with another text;

3.  Instructs its President to forward its position to the Council and the Commission.

Amendment  1

Proposal for a decision

Title

Text proposed by the Commission

Amendment

Proposal for a decision of the European Parliament and of the Council establishing a European Microfinance Facility for Employment and Social Inclusion (Progress Microfinance Facility)

Proposal for a decision of the European Parliament and of the Council establishing a European Microfinance Facility for Employment and Social Inclusion

Amendment 2

Proposal for a decision

Recital 1 a (new)

Text proposed by the Commission

Amendment

(1a) The Commission communication of 24 May 2006 entitled 'Promoting decent work for all - The EU contribution to the implementation of the decent work agenda in the world' (COM(2006)0249) set out the importance of decent work for all as did the European Parliament's resolution of 23 May 20071 on promoting decent work for all.

 

1. OJ C 102 E, 24.4.2008, p. 321.

Amendement  3

Proposal for a decision

Recital 1 b (new)

Text proposed by the Commission

Amendment

(1b) The Leaders' statement following the G-20 Summit in Pittsburgh on 24 and 25 September 2009 made a commitment to improving access to financial services for the poor, for example through microfinance. An international financial inclusion expert group will identify lessons learned on innovative approaches to providing financial services to the poor, promote successful regulatory and policy approaches and elaborate standards on access to financing, financial literacy, and consumer protection.

Amendment  4

Proposal for a decision

Recital 3

Text proposed by the Commission

Amendment

(3) The ongoing Community and national efforts need to be strengthened to increase the supply of micro-credits to a sufficient scale and within a reasonable time-frame so as to address the high demand of those who need it most in this period of crisis i.e. unemployed or vulnerable people, including the young who want to start or develop a micro enterprise including self-employment but do not have access to credit.

(3) The ongoing Community and national efforts need to be strengthened to increase the supply and accessibility of micro-credits to a sufficient scale and within a reasonable time-frame so as to address the high demand of those who need it most in this period of crisis and who have difficulties in accessing the conventional credit market, i.e. unemployed or disadvantaged people who want to start or develop a micro enterprise including self-employment but do not have access to credit. Equality between women and men should be actively pursued as regards access to micro-credit facility.

Amendement  5

Proposal for a decision

Recital 3 a (new)

Text proposed by the Commission

Amendment

(3a) An increasing amount of micro-credit to disadvantaged people in the European Union is provided by non-commercial microfinance institutions and socially committed banks. Such providers require further support in order to meet the current levels of demand and can be supplementary to the commercial banking market (including democratically controlled cooperative financial institutions). Increasing the supply of micro-credit to disadvantaged people who have no access to credit should not be considered to mitigate the failings of the financial market, for which a solution should be found. The establishment of start-ups by the final beneficiaries of the micro-credits should be assisted by the provision of temporary financial and social-economic measures by central, regional and local governments.

Amendment  6

Proposal for a decision

Recital 3 b (new)

Text proposed by the Commission

Amendment

(3b) In many cases the providers of micro-credit in the European Union are commercial banks, which should become important partners in the projects financed, with a view to re-establishing trust on the credit market and with a focus mainly on customers with no credit standing.

Justification

In many Member States the loans for micro-enterprises and for start-ups are granted by commercial banks. The high risk that the microcredit represents in conjunction with the current liquidity crisis made the banks even more prudential in their action, which echoed in the limitation of the crediting and a blockage of the crediting sector. By engaging them into the project the outcome will be also a clearing of the crediting and establishment of trust.

Amendment  7

Proposal for a decision

Recital 4

Text proposed by the Commission

Amendment

(4) The Commission Communication "A Shared Commitment for Employment" underlined the need to offer a new chance to the unemployed and open the road to entrepreneurship for some of Europe’s most disadvantaged groups, including the young. In addition to existing instruments, specific action is needed to further strengthen economic and social cohesion by reinforcing activities undertaken by the European Investment Bank and the European Investment Fund and other international financial institutions without prejudice to the activities of the Member States. The Commission therefore announced a proposal for a new EU microfinance facility to deepen the outreach of microfinance to particular at-risk groups and to further support the development of entrepreneurship, the social economy and micro-enterprises.

(4) The Commission Communication "A Shared Commitment for Employment" underlined the need to offer a new chance to the unemployed and open the road to entrepreneurship for some of Europe’s most disadvantaged groups who have difficulties in accessing the conventional credit market. In addition to existing instruments, specific action is needed to further strengthen economic and social cohesion by reinforcing activities undertaken by the European Investment Bank and the European Investment Fund and other international financial institutions without prejudice to the activities of the Member States. The Commission therefore announced a proposal for a new EU microfinance facility to deepen the outreach of microfinance to particular at-risk groups and to further support the development of entrepreneurship, the social economy and micro-enterprises. To ensure that this Decision is effective, Member States should be able to establish a mechanism to coordinate, assess and monitor all the micro-finance actions taken at a national level.

Amendment  8

Proposal for a decision

Recital 4 b (new)

Text proposed by the Commission

Amendment

(4b) In addition to the difficulties of gaining access to credit, social exclusion and insecurity are among the main obstacles to setting up and developing micro-enterprises. European microfinancing instruments should help to support the structures of the social economy which assist people who are excluded with their social reintegration and which help them to develop the minimum skills required in order to undertake a lasting business project.

Amendement  9

Proposal for a decision

Recital 5 a (new)

Text proposed by the Commission

Amendment

(5a) To help final beneficiaries of micro-credit, public and private bodies established in the Member States, including civil society organisations working with target groups as referred to in Article 2 and democratically controlled cooperative financial institutions, should be consulted as regards the eligibility of beneficiaries.

Amendment  10

Proposal for a decision

Recital 6

Text proposed by the Commission

Amendment

(6) The actions financed by the Facility should be coherent and compatible with the other Community policies and comply with the provisions of the Treaty and of acts adopted under it. The activities of the Facility should be complementary to other Community interventions, in particular the CIP financial instruments, JASMINE and the European Social Fund.

(6) The actions financed by the Facility should be coherent and compatible with the other Community policies and comply with the provisions of the Treaty and of acts adopted under it. The activities of the Facility should be complementary to other Community interventions, in particular the CIP financial instruments, JASMINE, EAFRD, ERDF and the European Social Fund.

Amendement  11

Proposal for a decision

Recital 6 a (new)

Text proposed by the Commission

Amendment

(6a) The actions financed by the Facility should comply with the recommendation of the ILO regarding micro-credit and should be complemented by mentoring and training programmes in order to maximise the chances of creating viable and competitive micro-enterprises. It is appropriate to support microfinance by providing banking products and services which are adapted to the circumstances.

Amendment  12

Proposal for a decision

Recital 6 b (new)

Text proposed by the Commission

Amendment

(6b) For the maximisation of the final outcome provided by the Facility there should be joint actions between the Member States and the European Community in terms of impact assessment, implementation and monitoring, by engaging national financial instruments and national employment strategies.

Justification

Regarding recent studies of the impact of microfinancing one of the main drawbacks was related to the lack of relevant data and unequal engagements of national governments. By formally stating the engagement the risk of asymmetry of information and lose of data can be diminished and the impact can be assessed better for future actions in this field.

Amendement  13

Proposal for a decision

Recital 7 a (new)

Text proposed by the Commission

Amendment

(7a) In order to increase its effectiveness, the Facility should be coordinated and implemented consistently with European and national financial instruments and national financial institutions, appropriate social assistance, and existing regional and local programmes. Legal and regulatory obstacles to the development of micro-credit should be eliminated.

Amendment  14

Proposal for a decision

Recital 7 b (new)

Text proposed by the Commission

Amendment

 

(7b) The funding of new activities should not jeopardise existing programmes.

Amendment  15

Proposal for a decision

Article 1 – paragraph 1

Text proposed by the Commission

Amendment

1. A European Microfinance Facility for Employment and Social Inclusion, called the Progress Microfinance Facility (hereinafter “the Facility”), is hereby established.

A European Microfinance Facility for Employment and Social Inclusion, called the European Microfinance Facility (hereinafter “the Facility”), is hereby established.

Amendment  16

Proposal for a decision

Article 2 – introductory part

Text proposed by the Commission

Amendment

1. The Facility shall provide Community resources to increase access to micro-credits for:

The Facility shall provide Community resources to increase access and availability to micro-credits for:

Justification

The facility should be accessible and in the same time has to provide availability to the users of the programme.

Amendement  17

Proposal for a decision

Article 2 –points a and b

Text proposed by the Commission

Amendment

(a) persons who have lost or are at risk of losing their job and want to start their own micro-enterprise, including self-employment;

(b) disadvantaged persons, including the young, who want to start or further develop their own micro-enterprise, including self-employment;

(a) persons who are at risk of losing their job or who have difficulties entering or re-entering the labour market and disadvantaged persons or persons who are at risk of social exclusion or who are finding it difficult to enter the conventional credit market and who want to start or further develop their own micro-enterprise, including self-employment;

Amendement  18

Proposal for a decision

Article 2 –point c

Text proposed by the Commission

Amendment

(c) micro-enterprises in the social economy which employ persons who have lost their job or which employ disadvantaged persons, including the young.

(b) micro-enterprises in the social economy and micro-enterprises which employ disadvantaged persons or persons who have lost their job, persons who are at risk of social exclusion or persons who are excluded from conventional credit markets.

Amendment  19

Proposal for a decision

Article 2 – paragraph 1 a (new)

Text proposed by the Commission

Amendment

1a. The Facility shall provide the Community resources for access to micro-credit, actively promoting equal opportunities for women and men.

Justification

It is important that women too should be able to benefit properly from micro-credit, as they are more discriminated against and particularly exposed in view of the twofold difficulty of entering and remaining in the labour market and gaining access to the conventional credit market.

Amendment  20

Proposal for a decision

Article 3 – paragraph 1

Text proposed by the Commission

Amendment

1. The financial contribution from the Community budget for the Facility for the period from 1 January 2010 to 31 December 2013 shall be EUR 100 million.

1. The financial contribution from the Community budget for the Facility for the period from 1 January 2010 to 31 December 2013 shall be EUR 150 million.

Amendment  21

Proposal for a decision

Article 3 – paragraph 1 a (new)

Text proposed by the Commission

Amendment

 

1a. A separate budget line shall be created for the Facility.

Amendment  22

Proposal for a decision

Article 3 – paragraph 2

Text proposed by the Commission

Amendment

2. The annual appropriations shall be authorised by the budgetary authority within the limits of the financial framework.

2. The annual appropriations will be decided during the annual budgetary procedure, including if necessary through application of point 37 of the Interinstitutional Agreement of 17 May 2006 between the European Parliament, the Council and the European Commission on budgetary discipline and sound financial management1 (the IIA), or by other means provided for in the IIA.

 

OJ C 139, 14.6.2006, p. 1.

Amendment  23

Proposal for a decision

Article 3 – paragraph 3

Text proposed by the Commission

Amendment

3. The total budget for support measures referred to in Article 4(1)(d) shall not exceed 1 % of the budget of the Facility as set out in paragraph 1.

3. The total budget for support measures referred to in Article 4(1)(d) shall not exceed EUR 1 million.

Amendment  24

Proposal for a decision

Article 4 – paragraph 2

Text proposed by the Commission

Amendment

2. The Facility shall be open to public and private bodies established in the Member States which provide microfinance to persons and micro-enterprises in the Member States.

2. The Facility shall be open to national and local public and private bodies established in the Member States which provide microfinance to persons and micro-enterprises in the Member States.

Justification

It is necessary to involve local bodies properly in the measures and with the beneficiaries of micro-credit.

Amendement  25

Proposal for a decision

Article 4 – paragraph 2 a (new)

Text proposed by the Commission

Amendment

2a. Those public and private bodies shall closely cooperate with organisations engaged in representing the interests of the final beneficiaries of micro-credit and those who provide mentoring and training programmes to those final beneficiaries in order to create competitive and viable micro-enterprises.

Amendment  26

Proposal for a decision

Article 4 – paragraph 2 b (new)

Text proposed by the Commission

Amendment

2b. Mentoring and training programmes shall accompany the measures financed by the Facility.

Justification

It is vital to accompany financing by means of micro-credit with an appropriate mentoring and training system so that the Facility yields the results hoped for in terms of effectiveness and social inclusion.

Amendment  27

Proposal for a decision

Article 4 – paragraph 2 c (new)

Text proposed by the Commission

Amendment

 

2c. Public and private bodies providing micro-credit under this Decision shall comply with responsible lending principles and thereby avoid, in particular, over-indebtedness of persons and undertakings.

Amendment  28

Proposal for a decision

Article 5 – paragraph 2

Text proposed by the Commission

Amendment

2. To implement the actions referred to in Article 4(1), except for the support measures referred to in point (d) of Article 4(1), the Commission shall conclude agreements with international financial institutions, in particular with the European Investment Bank (EIB) and the European Investment Fund (EIF), in accordance with Article 53d of Council Regulation (EC, Euratom) No 1605/2002 and Article 43 of Commission Regulation (EC, Euratom) No 2342/2002. These agreements shall contain detailed provisions for the implementation of the tasks entrusted to them, including the necessity to ensure additionality with national schemes.

2. To implement the actions referred to in Article 4(1), except for the support measures referred to in point (d) of Article 4(1), the Commission shall conclude agreements with international financial institutions, in particular with the European Investment Bank (EIB) and the European Investment Fund (EIF), in accordance with Article 53d of Council Regulation (EC, Euratom) No 1605/2002 and Article 43 of Commission Regulation (EC, Euratom) No 2342/2002. These agreements shall contain detailed provisions for the implementation of the tasks entrusted to them, including the necessity to ensure additionality and coordination with existing European and national financial instruments, relevant social support measures and regional and local programmes. Those agreements shall, furthermore, set out the obligation of such institutions to pass on the resources in order to meet the objective set out in Article 2 and implement the actions set out in Article 4.

Justification

It is very important to ensure that the financial institutions mandated with the management of the Facility are clearly obliged to the objectives set out in Art. 2 and 4.

Amendment  29

Proposal for a decision

Article 5 – paragraph 3

Text proposed by the Commission

Amendment

3. Proceeds, including dividends and reimbursements, received by the international financial institutions referred to in paragraph 2 may be re-invested by them into actions referred to under Article 4(1) (a), (b) and (c) for a period of 6 years after the starting date of the Facility. Upon closure of the Facility, the remaining balance due to the European Communities shall be repaid to the general budget of the European Communities.

3. Proceeds, including dividends and reimbursements, received by the international financial institutions referred to in paragraph 2 shall be re-invested by them into actions referred to under Article 4(1) (a), (b) and (c). The Commission shall present an evaluation report to the European Parliament and to the Council in 2015, on the basis of which the Council shall decide whether to maintain or close the Facility. Upon closure of the Facility, the remaining balance due to the European Communities shall be repaid to the general budget of the European Communities

(Ex AM 85( Or. EN) of FdR F:\docep\AM\792370EN.doc){AM\EN\792370}

Amendment  30

Proposal for a decision

Article 5 – paragraph 3

Text proposed by the Commission

Amendment

3. Proceeds, including dividends and reimbursements, received by the international financial institutions referred to in paragraph 2 may be re-invested by them into actions referred to under Article 4(1) (a), (b) and (c) for a period of 6 years after the starting date of the Facility. Upon closure of the Facility, the remaining balance due to the European Communities shall be repaid to the general budget of the European Communities.

3. Proceeds, including dividends and reimbursements, received by the international financial institutions referred to in paragraph 2 shall be re-invested by them into actions referred to under Article 4(1) (a), (b) and (c) for a period of 6 years after the starting date of the Facility. Upon closure of the Facility, the remaining balance due to the European Communities shall be repaid to the general budget of the European Communities.

Amendment  30

Proposal for a decision

Article 8 – paragraph 1

Text proposed by the Commission

Amendment

1. The Commission shall receive annual implementation reports from the international financial institutions referred to in Article 5(2) setting out the supported activities in terms of financial implementation, distribution of funding with regard to sectors and type of beneficiaries, applications submitted, contracts concluded, actions funded, results and, where possible, impact.

1. The Commission shall present to the European Parliament and to the Council annual implementation reports based on reports from the international financial institutions referred to in Article 5(2) setting out the supported activities in terms of financial implementation, distribution and accessibility of funding with regard to sectors and type of beneficiaries, applications accepted or rejected, contracts concluded, actions funded, results and impact.

Amendment  31

Proposal for a decision

Article 8 – paragraph 2

Text proposed by the Commission

Amendment

2. For the first time in 2011 and before 31 December of each year, the Commission shall present to the European Parliament and to the Council a quantitative and qualitative annual report on the activities under this Decision in the previous year. The annual report shall be based on the implementation reports referred to in paragraph 1 and focus mainly on the results achieved and shall in particular contain information relating to applications submitted, contracts concluded, actions funded including their complementarity with other Community interventions, notably the ESF.

2. No later than 12 months after the entry into force of this Decision and before 31 May of each year, the Commission shall present to the European Parliament and to the Council a quantitative and qualitative annual report on the activities under this Decision in the previous year. The annual report shall be based on the implementation reports referred to in paragraph 1 and focus mainly on the extent of the use of the instrument by Member States and the sustainability of the results achieved and shall in particular contain information relating to applications adopted and rejected, contracts concluded, actions funded including their complementarity with other Community interventions, notably the ESF. It shall also contain information, activity by activity, on the evolution and development of micro-enterprises that are supported by the Facility.

Amendement  32

Proposal for a decision

Article 8 – paragraph 3 a (new)

Text proposed by the Commission

Amendment

3a. Based on the annual report referred to in paragraph 2, the Commission shall make efforts to ensure that the Facility meets the objective set out in Article 2 and is accessible across the European Union to those who are at risk of social exclusion or who are are finding it difficult to enter the conventional credit market.

Amendment  33

Proposal for a decision

Article 9 – paragraph 1

Text proposed by the Commission

Amendment

1. The Commission shall carry out interim and final evaluations at its own initiative and in close cooperation with the international financial institutions referred to in Article 5(2). The interim evaluation shall be completed four years after the start of the Facility and the final evaluation at the latest one year after the end of the mandate(s) given to the international financial institutions referred to in Article 5(2). The final evaluation shall, in particular, examine the extent to which the Facility as a whole has achieved its objectives.

1. The Commission shall carry out interim and final evaluations at its own initiative and in close cooperation with the international financial institutions referred to in Article 5(2). The interim evaluation shall be completed every second year after the start of the Facility as an addition to the annual reports referred to in Article 8(2) and the final evaluation at the latest one year after the end of the mandate(s) given to the international financial institutions referred to in Article 5(2). The final evaluation shall, in particular, examine the extent to which the Facility as a whole has achieved its objectives.

Amendment  34

Proposal for a decision

Article 9 – paragraph 2 a (new)

Text proposed by the Commission

Amendment

2a. On the basis of the second interim evaluation, the European Parliament and the Council shall decide whether to extend the duration of the functioning of the Facility.

EXPLANATORY STATEMENT

Background

The Progress programme covers the period 2007 to 2013 and serves as a legal basis for different community spending. The programme incorporates four specific Community Action Programmes supporting the implementation of the social policy agenda (Antidiscrimination, Social Inclusion, Employment and Gender) as well as a number of budget lines in relation to working conditions.

Under the terms of the 2006 Inter-institutional agreement, an additional amount of EUR 114 million (current prices) was allocated to the Progress programme. The increase was asked for by the European Parliament.

The Commission published on 4 March 2009 a communication (´Driving European recovery´) which outlined a number of points to help member States design and implement effective employment policies (COM(2009) 0114). The Spring Council set three key priorities: marinating employment, creating jobs and promoting mobility; upgrading skills and matching labour market needs; and increasing access to employment. The employment Summit of 7 May 2009 featured an exchange of views on these priorities.

On 3 June 2009 the Commission adopted a Communication on a shared commitment for employment (COM(2009) 0257) with the aim to step up cooperation between the European Union and the Member States as well as between EU social partners on the three key priorities set by the Spring Council. In this Communication the Commission announced to come up with a proposal for a new microfinance facility for employment, which would be financed (EUR 100 million) out of the existing budget (not mentioning Progress) and could leverage more than EUR 500 million in a joint initiative with international financial institutions particularly the EIB group.

Commission proposal

The EU microfinance facility for employment aims to give the unemployed the chance of a new start and to open the way to entrepreneurship for some of Europe’s most disadvantaged groups, including the young. It will extend the range of targeted financial support to new entrepreneurs in the current context of a reduced credit supply. Individual entrepreneurs and founders of microenterprises will also be assisted by way of mentoring, training, coaching and capacity building, in addition to interest-rate support from the ESF.

The Facility will add to other Community programmes by providing risk sharing instruments, debt and equity financing. It will capitalise on the experience of international financial institutions for example the EIB Group (European Investment Bank and European Investment Fund). Based on a joint management arrangement, the international financial institutions will provide further leverage by supporting banking and non banking providers of microfinance throughout the European Union.

Given the currently reduced level of lending and the dramatic fall in outstanding loans (as demonstrated in the ex-ante evaluation accompanying the present proposal), ongoing Community and national efforts need to be strengthened to increase the supply of micro-credits to a sufficient scale and within a reasonable time-frame so as to address the high demand of those who need it most in this period of crisis i.e. unemployed or vulnerable people who want to start or develop micro-enterprises, including self-employment but do not have access to 'commercial' bank credits.

Using Community resources is appropriate and responds to the Resolution of the European Parliament of 24 March 2009[1] regarding a European initiative for the development of micro-credit in support of growth and employment. Further, a single facility will concentrate leverage from international financial institutions. Finally, a pan-EU facility will avoid a dispersed approach thus increasing micro-finance supply in all Member States.

The Commission proposal is to establish the Progress Microfinance Facility by a Decision which defines the roles and responsibility of the Commission only and does not create rights or obligations for Member States or individuals. A Decision is therefore the instrument best adapted to achieve the desired objective.

The proposal is to reallocate EUR 100 million for the facility out of the Progress budget.

Parliaments´ position

During the meeting of the EMPL Committee on 3 September 2009 it voted on its opinion regarding the budget 2010. The Committee adopted an amendment which opens a separate budget line for the European Microfinance Facility. The financial and economic crisis is now turning into an employment and social crisis, therefore the rapporteur is of the opinion that reallocating money from Progress is giving the wrong signal since Progress is targeting the most vulnerable groups. It is the common responsibility of Member States and the EU to implement the Progress Programme effectively under the present circumstances.

The rapporteur therefore rejects the proposal by the Commission to reallocate the money needed for the European Microfinance Facility from Progress. This means that the reference to Progress in the proposal should be deleted in several places.

Under Article 3 amendments have been introduced to ensure that the Facility is put under a separate budget line. Furthermore, the rapporteur is convinced that EUR 100 million is not enough to have an effective Facility; the budget for the four years is increased with EUR 50 million. The budget for support measures had a fix ceiling of 1% of the budget. To be sure that this does not increase in accordance with the rise of the total budget, the rapporteur propose to limit the amount to the original proposal (EUR 1 million).

In order for the Facility to be more effective the rapporteur is convinced that it should be coordinated and implemented having regard to other existing financial instruments on a European, national, regional and local level.

To make clear in the legislative proposal that the target group is all vulnerable groups finding difficulties in entering and re-entering the labour market and who are facing the threat of social exclusion, a reference to specific groups (like for example the young) is deleted. An amendment is added to make sure that the person who receives financial support also gets mentoring and training courses in order to assist the person involved.

The rapporteur proposes that the Facility will start on 1 January 2010. If the agreement between Council and European Parliament is later, the Facility should start retrospectively.

OPINION of the Committee on Budgets (5.11.2009)

for the Committee on Employment and Social Affairs

on the proposal for a decision of the European Parliament and of the Council establishing a European Microfinance Facility for Employment and Social Inclusion (Progress Microfinance Facility)
(COM(2009)0333 – C7‑0053/2009 – 2009/0096(COD))

Rapporteur: Alain Lamassoure

SHORT JUSTIFICATION

Commission proposal

The Commission has proposed the creation of a new financial instrument: European Microfinance Facility for Employment and Social Inclusion, in order to give the unemployed the chance of a new start and to open the way to entrepreneurship for some of Europe’s most disadvantaged groups.

This new instrument intends to provide Community resources in order to increase access to micro-credits and risk-sharing coverage. The establishment of a single pan-EU facility would, first, concentrate leverage for international financial institutions; and, second, avoid a dispersed approach thus increasing microfinance supply in all Member States. Open to public and private bodies established in the members States, which provide microfinance; it would serve to help to assist people who lost their jobs or are facing social exclusion and want to start or further develop their own business, but do not have access to 'commercial' bank credits.

Your Draftsman welcomes the Commission proposal establishing the Microfinance Facility for employment and social inclusion. Moreover, he supports the idea that the EU budget can and shall be used as a tool to help overcome the current crises, by giving impetus to economic growth, competitiveness and job protection.

Budgetary aspects

Commission's proposal foresees a total amount of EUR 100 million, over a period of four years (from 01.01.2010 to 31.12.2013). The funding would come from a reallocation of the same amount from the Progress programme under heading 1a of the MFF.

Your Draftsman notes that the Progress programme has been proposed by the Commission as a source for funding the new instrument. He recalls that Progress programme was established to support the implementation of the objectives of the European Union in employment, social affaires and equal opportunities, as set out in the Social Agenda, as well as to contribute to the achievements of the EU 'Lisbon' Growth and jobs Strategy. Moreover, he recalls that the European Parliament increased the overall amount of the Progress programme by EUR 100 million under the terms of the 2006 Interinstitutional Agreement.

In this respect, your Draftsman stresses that the Progress programme should be fully implemented in order to achieve its specific objectives and to effectively contribute to the tackling of the consequences of financial and economic crisis.

2010 Budget procedure

In the context of the budget procedure 2010, the committee on budgets has clearly expressed its opinion on the funding of the European Microfinance Facility.

Two new budget lines have been created: 04 04 15 for the operational expenditure and 04 01 04 11 for the administrative expenditure. EUR 37,5 million has been adopted for the European Microfinance Facility and EUR 0,25 million for the administrative expenditure budget line, both in reserve. These reserves could be released once the legal basis will be adopted.

The European Parliament first reading of the budget 2010 gave a clear support to the demand expressed by its competent committee.

The Draftsman underlines the urgency to adopt this proposal as soon as possible in order for it to have an effect during the current crisis.

AMENDMENTS

The Committee on Budgets calls on the Committee on Employment and Social Affairs, as the committee responsible, to incorporate the following amendments in its report:

Amendment  1

Draft legislative resolution

Paragraph 1 a (new)

Draft legislative resolution

Amendment

 

1a. Considers that the annual amount will be decided during the annual budgetary procedure, including if necessary through application of point 37 of the Interinstitutional Agreement of 17 May 2006 between the European Parliament, the Council and the European Commission on budgetary discipline and sound financial management[1] (IIA), or by other means foreseen in the IIA;

Amendment  2

Draft legislative resolution

Paragraph 1 b (new)

Draft legislative resolution

Amendment

 

1b. Considers that the funding of new activities should not jeopardise existing programmes;

Amendment  3

Proposal for a decision

Title

Text proposed by the Commission

Amendment

Decision of the European Parliament and of the Council establishing a European Microfinance Facility for Employment and Social Inclusion (Progress Microfinance Facility)

Decision of the European Parliament and of the Council establishing a European Microfinance Facility for Employment and Social Inclusion

Amendment  4

Proposal for a decision

Article 1 – paragraph 1

Text proposed by the Commission

Amendment

1. A European Microfinance Facility for Employment and Social Inclusion, called the Progress Microfinance Facility (hereinafter "the Facility"), is hereby established.

1. A European Microfinance Facility for Employment and Social Inclusion, called the European Microfinance Facility (hereinafter "the Facility"), is hereby established.

Amendment  5

Proposal for a decision

Article 3 – paragraph 2

Text proposed by the Commission

Amendment

2. The annual appropriations shall be authorised by the budgetary authority within the limits of the financial framework.

2. The annual appropriations will be decided during the annual budgetary procedure, including if necessary through application of point 37 of the Interinstitutional Agreement of 17 May 2006 between the European Parliament, the Council and the European Commission on budgetary discipline and sound financial management1 (the IIA), or by other means foreseen in the IIA.

 

OJ C 139, 14.6.2006, p. 1

PROCEDURE

Title

European Microfinance Facility for Employment and Social Inclusion (Progress)

References

COM(2009)0333 – C7-0053/2009 – 2009/0096(COD)

Committee responsible

EMPL

Opinion by

       Date announced in plenary

BUDG

14.7.2009

 

 

 

Rapporteur

       Date appointed

Alain Lamassoure

21.10.2009

 

 

Discussed in committee

5.11.2009

 

 

 

Date adopted

5.11.2009

 

 

 

Result of final vote

+:

–:

0:

28

0

0

Members present for the final vote

Marta Andreasen, Francesca Balzani, Reimer Böge, Lajos Bokros, Andrea Cozzolino, José Manuel Fernandes, Salvador Garriga Polledo, Ivars Godmanis, Ingeborg Gräßle, Estelle Grelier, Carl Haglund, Jutta Haug, Jiří Havel, Monika Hohlmeier, Sidonia Elżbieta Jędrzejewska, Anne E. Jensen, Ivailo Kalfin, Sergej Kozlík, Alain Lamassoure, Janusz Lewandowski, Vladimír Maňka, Barbara Matera, Claudio Morganti, Sergio Paolo Francesco Silvestris, Helga Trüpel, Angelika Werthmann

Substitute(s) present for the final vote

Maria Da Graça Carvalho, Giovanni La Via

  • [1]  OJ C 139, 14.6.2006, p. 1.

OPINION of the Committee on Economic and Monetary Affairs (21.10.2009)

for the Committee on Employment and Social Affairs

on the proposal for a decision of the European Parliament and of the Council establishing a European Microfinance Facility for Employment and Social Inclusion (Progress Microfinance Facility)
(COM(2009)0333 – C7‑0053/2009 – 2009/0096(COD))

Rapporteur: Olle Schmidt

SHORT JUSTIFICATION

The Commission proposes a new EU microfinance facility for employment (Progress Microfinance Facility) in order to give the unemployed the chance of a new start and to open the way to entrepreneurship for some of Europe’s most disadvantaged groups, including the young. This new Facility will extend the range of targeted financial support to new entrepreneurs in the current context of a reduced credit supply.

The Progress Microfinance Facility will add to other Community programmes by providing risk sharing instruments, debt and equity financing. It will capitalise on the experience of international financial institutions; for example the EIB Group (European Investment Bank and European Investment Fund). Based on a joint management arrangement, the international financial institutions will provide further leverage by supporting banking and non-banking providers of microfinance throughout the European Union.

The rapporteur agrees with the approach of the Commission proposal. The proposal would increase the possibility for those wishing to start up businesses around the EU. There is a potential market gap in terms of supply and demand for microcredit in the EU. Supporting the funding of microcredit providers would help this activity to become sustainable and would enable them to respond to the growing demand from micro-borrowers. The proposal could facilitate small-scale investments and give micro-enterprises the chance to grow. It is also positive that the proposal is targeted at those groups having difficulties finding lending opportunities for their business ideas.

The rapporteur underlines the urgency to adopt this proposal as soon as possible in order for it to have an effect during the current crisis. He stresses the importance of using the funding set up for the facility in an efficient and cost-effective way and of there being no additional administrative burdens for those applying for the loans.

The proposed budget line is sufficient for the facility at this stage. There is no need for more EU budget funding.

There are some concerns over the scope of the initiative. The rapporteur proposes therefore to at least include the definitions of micro-credit and micro-enterprises (as proposed by the Commission) into the legal text. In addition he takes the view that restricting the scope only to those micro-enterprises employing persons who have just lost their job etc. might be burdensome for the financial intermediaries in terms of reporting and, more importantly, might limit their potential customer base; with the downside risk of having local micro-finance providers not willing to partner with EIB and other financial institutions and a low uptake of the initiative as a result. Therefore, we want to add 'including those', in Article 2 of the Decision, which still gives the initiative a social dimension.

It is important that any of the programme's money allocated for loans is used for investments based on solid business ideas. The credit should not be used for social welfare benefits or for consumption. The rapporteur underlines that the companies in the target group for the programme must have a solid business plan. He therefore suggests including a requirement for the borrowers to establish a business plan.

The opinion underlines the importance of evaluating the financial institutions and their procedures for risk assessment and risk control. It also stresses the need for responsible lending by the credit providers.

The rapporteur wants to underline the importance of avoiding fraud and corruption by setting up a risk control mechanism.

The rapporteur underlines the importance of marketing the programme for its success.

AMENDMENTS

The Committee on Economic and Monetary Affairs calls on the Committee on Employment and Social Affairs, as the committee responsible, to incorporate the following amendments in its report:

Amendment  1

Proposal for a decision

Title

Text proposed by the Commission

Amendment

Proposal for a decision of the European Parliament and of the Council establishing a European Microfinance Facility for Employment and Social Inclusion (progress microfinance facility)

Proposal for a decision of the European Parliament and of the Council establishing a European Microfinance Facility for Employment and Social Inclusion

Justification

Resources for the Progress programme must not be cut back at this time of crisis. The European Microfinance Facility must be financed under a separate credit line, because this facility is intended for a different public from the public targeted by the Progress programme.

Amendment  2

Proposal for a decision

Recital 3 a (new)

Text proposed by the Commission

Amendment

 

(3a) Increasing the supply of micro-credit for the benefit of persons experiencing difficulties and who cannot obtain credit should not be considered to mitigate the failings of the financial market, for which a solution should be found.

Justification

Microcredits must be developed as an additional facility, not as an alternative to the traditional banking market. The failings of the latter cannot be passed over in silence with the development of microcredits.

Amendment  3

Proposal for a decision

Recital 6 a (new)

Text proposed by the Commission

Amendment

 

(6a) The actions financed by the Facility should be given support and technical assistance to ensure their durability.

Justification

Support is very important in general when starting up a business and particularly so for people experiencing difficulties.

Amendment  4

Proposal for a decision

Article 1 – paragraph 1

Text proposed by the Commission

Amendment

1. A European Microfinance Facility for Employment and Social Inclusion, called the Progress Microfinance Facility (hereinafter “the Facility”), is hereby established.

A European Microfinance Facility for Employment and Social Inclusion, called the European Microfinance Facility (hereinafter “the Facility”), is hereby established.

Justification

Resources for the Progress programme must not be cut back at this time of crisis. The European Microfinance Facility must be financed under a separate credit line, because this facility is intended for a different public from the public targeted by the Progress programme.

Amendment  5

Proposal for a decision

Article 1 a (new)

Text proposed by the Commission

Amendment

 

Article 1a

 

Definitions

 

1. For the purpose of this Decision, the following definitions shall apply:

 

(a) "micro-credit" means a loan of less than EUR 25 000;

 

(b) "micro-enterprise" means an enterprise which employs fewer than 10 persons, including self-employed persons, and the annual turnover of which and/or the annual balance sheet total of which does not exceed EUR 2 million;

 

(c) "person" means a natural person.

Amendment  6

Proposal for a decision

Article 2 – paragraph 1 – point a

Text proposed by the Commission

Amendment

(a) persons who have lost or are at risk of losing their job and want to start their own micro-enterprise, including self-employment;

(a) persons who are unemployed or at risk of losing their job and want to start their own micro-enterprise, including self-employment;

Justification

The Facility must exist for all unemployed people, regardless of whether they were employed previously or not. People who are entering the job market for the first time also need assistance.

Amendment  7

Proposal for a decision

Article 2 – paragraph 1 – point b

Text proposed by the Commission

Amendment

(b) disadvantaged persons, including the young, who want to start or further develop their own micro-enterprise, including self-employment;

(b) disadvantaged persons or persons who are at risk of social exclusion and who want to start or further develop their own micro-enterprise, including self-employment;

Justification

It is not advisable to define, in this proposal, specific groups that can be considered disadvantaged. The economic and social situation differs in every Member State and Member States must, therefore, be able to be flexible and take particular factors into account when defining the groups of people they consider to be disadvantaged. Furthermore, special attention must be paid to people who are at risk of social exclusion.

Amendment  8

Proposal for a decision

Article 2 – paragraph 1 – point c

Text proposed by the Commission

Amendment

(c) micro-enterprises in the social economy which employ persons who have lost their job or which employ disadvantaged persons, including the young.

(c) micro-enterprises, including those in the social economy sector, which provide jobs for the unemployed, the disadvantaged, persons suffering from extreme poverty, or persons at risk of social exclusion.

Justification

The aim of this decision is to promote employment and social inclusion. Restricting its aim to just one type of micro‑enterprise restricts its chances of success.

Amendment  9

Proposal for a decision

Article 3 – paragraph 1

Text proposed by the Commission

Amendment

1. The financial contribution from the Community budget for the Facility for the period from 1 January 2010 to 31 December 2013 shall be EUR 100 million.

1. The financial contribution from the Community budget for the Facility for the period from 1 January 2010 to 31 December 2013 shall be EUR 150 000 000.

Justification

The European Microfinance Facility should have a higher budget if it is to be really effective in achieving its employment and social inclusion objectives, particularly at this time of crisis.

Amendment  10

Proposal for a decision

Article 3 – paragraph 1 a (new)

Text proposed by the Commission

Amendment

 

1a. A specific budget line shall be established for the Facility.

Justification

Resources for the Progress programme must not be cut back at this time of crisis. The European Microfinance Facility must be financed under a separate credit line, because this facility is intended for a different public from the public targeted by the Progress programme.

Amendment  11

Proposal for a decision

Article 3 – paragraph 4

Text proposed by the Commission

Amendment

4. The financial contribution shall cover the full cost of the Facility, including management fees for international financial institutions referred to in Article 5(2) managing the Community contribution as well as any other eligible costs.

4. The financial contribution shall cover the full cost of the Facility, including management fees for international financial institutions referred to in Article 5(2) managing the Community contribution, the cost of the technical assistance of the public and private bodies providing microfinance referred to in Article 4(2) and any other eligible costs.

Justification

Technical assistance is not taken into account in the Commission’s proposal, although improving the capacities of microcredit intermediaries is essential for their development.

Amendment  12

Proposal for a decision

Article 4 – paragraph 2 a (new)

Text proposed by the Commission

Amendment

 

2a. Public and private bodies providing micro-credit under this Decision shall comply with responsible lending principles and thereby avoid, in particular, over-indebtedness of persons and undertakings.

Amendment  13

Proposal for a decision

Article 8 – paragraph 1

Text proposed by the Commission

Amendment

1. The Commission shall receive annual implementation reports from the international financial institutions referred to in Article 5(2) setting out the supported activities in terms of financial implementation, distribution of funding with regard to sectors and type of beneficiaries, applications submitted, contracts concluded, actions funded, results and, where possible, impact.

1. The Commission shall receive annual implementation reports from the international financial institutions referred to in Article 5(2) setting out the supported activities in terms of financial implementation, distribution of funding with regard to sectors and type of beneficiaries, applications submitted, contracts concluded, actions funded, results and impact.

Amendment  14

Proposal for a decision

Article 8 – paragraph 2

Text proposed by the Commission

Amendment

2. For the first time in 2011 and before 31 December of each year, the Commission shall present to the European Parliament and to the Council a quantitative and qualitative annual report on the activities under this Decision in the previous year. The annual report shall be based on the implementation reports referred to in paragraph 1 and focus mainly on the results achieved and shall in particular contain information relating to applications submitted, contracts concluded, actions funded including their complementarity with other Community interventions, notably the ESF.

2. For the first time in 2011, but no later than 12 months after the entry into force of this Decision, and before 31 December of each year, the Commission shall present to the European Parliament and to the Council a quantitative and qualitative annual report on the activities under this Decision in the previous year. The annual report shall be based on the implementation reports referred to in paragraph 1 and focus mainly on the results achieved and shall in particular contain information relating to applications submitted, contracts concluded, actions funded including their complementarity with other Community interventions, notably the ESF.

Amendment  15

Proposal for a decision

Article 9 – paragraph 1

Text proposed by the Commission

Amendment

1. The Commission shall carry out interim and final evaluations at its own initiative and in close cooperation with the international financial institutions referred to in Article 5(2). The interim evaluation shall be completed four years after the start of the Facility and the final evaluation at the latest one year after the end of the mandate(s) given to the international financial institutions referred to in Article 5(2). The final evaluation shall, in particular, examine the extent to which the Facility as a whole has achieved its objectives.

1. The Commission shall carry out interim and final evaluations at its own initiative and in close cooperation with the international financial institutions referred to in Article 5(2). The interim evaluation shall be completed two years after the start of the Facility and the final evaluation at the latest one year after the end of the mandate(s) given to the international financial institutions referred to in Article 5(2). The final evaluation shall, in particular, examine the extent to which the Facility as a whole has achieved its objectives and, if appropriate, make a proposal to increase the efficiency of the implementation of actions by the Facility, also drawing on the experience of related programmes such as JEREMIE.

Justification

The design of the distribution of funds should be continuously assessed and adapted, if appropriate, in order to further accelerate the release of the funds for beneficiaries. In doing so, the experience of the previous Community-level programmes should be used, in light of the fact that the implementation of the JEREMIE programme has raised serious concerns.

PROCEDURE

Title

European Microfinance Facility for Employment and Social Inclusion (Progress)

References

COM(2009)0333 – C7-0053/2009 – 2009/0096(COD)

Committee responsible

EMPL

Opinion by

       Date announced in plenary

ECON

14.7.2009

 

 

 

Rapporteur

       Date appointed

Olle Schmidt

21.7.2009

 

 

Discussed in committee

28.9.2009

19.10.2009

 

 

Date adopted

19.10.2009

 

 

 

Result of final vote

+:

–:

0:

37

2

2

Members present for the final vote

Sharon Bowles, Udo Bullmann, Nikolaos Chountis, George Sabin Cutaş, Leonardo Domenici, Diogo Feio, Elisa Ferreira, Vicky Ford, José Manuel García-Margallo y Marfil, Jean-Paul Gauzès, Sven Giegold, Sylvie Goulard, Enikő Győri, Liem Hoang Ngoc, Gunnar Hökmark, Othmar Karas, Wolf Klinz, Jürgen Klute, Astrid Lulling, Hans-Peter Martin, Íñigo Méndez de Vigo, Ivari Padar, Antolín Sánchez Presedo, Olle Schmidt, Edward Scicluna, Peter Simon, Peter Skinner, Theodor Dumitru Stolojan, Kay Swinburne, Marianne Thyssen, Ramon Tremosa I Balcells, Corien Wortmann-Kool

Substitute(s) present for the final vote

Jean-Pierre Audy, Pervenche Berès, Sophie Briard Auconie, Sari Essayah, Danuta Maria Hübner, Philippe Lamberts, Klaus-Heiner Lehne, Thomas Mann, Pablo Zalba Bidegain

PROCEDURE

Title

European Microfinance Facility for Employment and Social Inclusion (Progress)

References

COM(2009)0333 – C7-0053/2009 – 2009/0096(COD)

Date submitted to Parliament

2.7.2009

Committee responsible

       Date announced in plenary

EMPL

14.7.2009

Committee(s) asked for opinion(s)

       Date announced in plenary

BUDG

14.7.2009

ECON

14.7.2009

ITRE

14.7.2009

CULT

14.7.2009

 

JURI

14.7.2009

FEMM

14.7.2009

 

 

Not delivering opinions

       Date of decision

ITRE

16.9.2009

CULT

2.9.2009

JURI

1.10.2009

FEMM

1.9.2009

Rapporteur(s)

       Date appointed

Kinga Göncz

2.9.2009

 

 

Discussed in committee

29.9.2009

4.11.2009

 

 

Date adopted

5.11.2009

 

 

 

Result of final vote

+:

–:

0:

42

4

1

Members present for the final vote

Edit Bauer, Mara Bizzotto, David Casa, Alejandro Cercas, Ole Christensen, Derek Roland Clark, Sergio Gaetano Cofferati, Tadeusz Cymański, Frédéric Daerden, Karima Delli, Frank Engel, Sari Essayah, Richard Falbr, Ilda Figueiredo, Pascale Gruny, Thomas Händel, Marian Harkin, Roger Helmer, Nadja Hirsch, Vincenzo Iovine, Liisa Jaakonsaari, Danuta Jazłowiecka, Martin Kastler, Veronica Lope Fontagné, Olle Ludvigsson, Elizabeth Lynne, Thomas Mann, Elisabeth Morin-Chartier, Rovana Plumb, Konstantinos Poupakis, Sylvana Rapti, Elisabeth Schroedter, Joanna Katarzyna Skrzydlewska, Jutta Steinruck, Traian Ungureanu

Substitute(s) present for the final vote

Georges Bach, Udo Bullmann, Jürgen Creutzmann, Kinga Göncz, Gesine Meissner, Ria Oomen-Ruijten, Evelyn Regner, Csaba Sógor, Emilie Turunen, Tatjana Ždanoka, Gabriele Zimmer

Substitute(s) under Rule 187(2) present for the final vote

Peter van Dalen

Date tabled

10.11.2009