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Tuesday, 24 March 2009 - Strasbourg
A European initiative for the development of micro-credit in support of growth and employment

European Parliament resolution of 24 March 2009 with recommendations to the Commission on a European initiative for the development of micro-credits in support of growth and employment (2008/2122(INI))

The European Parliament,

–   having regard to the Commission Communication of 20 December 2007 on A European initiative for the development of micro-credit in support of growth and employment (COM(2007)0708),

–   having regard to its resolution of 11 July 2007 on financial services policy (2005-2010) - White Paper(1), in particular paragraph 35 thereof,

–   having regard to Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises(2),

–   having regard to the Commission Communication of 20 July 2005 on Common Actions for Growth and Employment: The Community Lisbon Programme (COM(2005)0330),

–   having regard to the Commission Communication of 5 July 2005 on Cohesion Policy in Support of Growth and Jobs: Community Strategic Guidelines, 2007-2013 (COM(2005)0299),

–   having regard to the Commission Communication of 11 December 2007 on Member States and Regions delivering the Lisbon strategy for growth and jobs through EU cohesion policy, 2007-2013 (COM(2007)0798),

–   having regard to the Commission Communication of 11 December 2007 entitled Proposal for a Community Lisbon Programme 2008-2010 (COM(2007)0804),

–   having regard to Decision No 1639/2006/EC of the European Parliament and of the Council of 24 October 2006 establishing a Competitiveness and Innovation Framework Programme (2007 to 2013)(3),

–   having regard to the Commission Communication of 25 June 2008 entitled "Think Small First" - A "Small Business Act" for Europe (COM(2008)0394),

–   having regard to Directive 2006/48/EC of the European Parliament and of the Council of 14 June 2006 relating to the taking up and pursuit of the business of credit institutions (recast)(4) and the Commission proposal of 1 October 2008 for a directive of the European Parliament and of the Council amending Directives 2006/48/EC and 2006/49/EC as regards banks affiliated to central institutions, certain own funds items, large exposures, supervisory arrangements, and crisis management (COM(2008)0602),

–   having regard to Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing(5),

–   having regard to Commission Regulation (EC) No 1998/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid(6),

–   having regard to Commission Regulation (EC) No 1535/2007 of 20 December 2007 on the application of Articles 87 and 88 of the EC Treaty to de minimis aid in the sector of agricultural production(7),

–   having regard to Directive 2004/17/EC of the European Parliament and of the Council of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors(8),

–   having regard to Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts(9),

–   having regard to its declaration of 8 May 2008 on microcredit(10),

–   having regard to Article 192, second paragraph, of the EC Treaty,

–   having regard to Rules 39 and 45 of its Rules of Procedure,

–   having regard to the report of the Committee on Economic and Monetary Affairs and the opinions of the Committee on Budgets, the Committee on Industry, Research and Energy, the Committee on Legal Affairs and the Committee on Women's Rights and Gender Equality (A6-0041/2009),

A.   whereas the Commission's current definition of micro-credit is a loan of EUR 25 000 or less and Recommendation 2003/361/EC provides that a microenterprise is one that employs fewer than 10 persons and whose annual turnover or annual balance sheet total does not exceed EUR 2 000 000; whereas those definitions do not seem to be pertinent for all national markets, and do not allow a clear distinction to be drawn between micro-credits and micro-loans to microenterprises, micro-credit for non-bankable borrowers and micro-credit for bankable microenterprises,

B.   whereas difficult access to appropriate forms of finance is frequently referred to as a very important barrier to entrepreneurship, and there is a significant potential demand for micro-credit in the European Union that is currently not met,

C.   whereas the Commission has not taken up the requests made in Parliament's resolution of 11 July 2007 to draw up an action plan for micro-financing, to coordinate different policy measures, and to make optimal use of best practices in the European Union and in third countries,

D.   whereas in 2008, for the second successive year, Parliament approved appropriations to fund a pilot project entitled "Promoting a more favourable environment for micro-credit in Europe", and whereas, although that the above-mentioned Commission Communication of 20 December 2007 fails to refer to those appropriations, they might usefully be earmarked for the formation of own capital which can serve as start-up capital,

E.   whereas several features distinguish micro-credit from ordinary credit, including credit for small and medium-sized enterprises, whereas businesses seeking ordinary credit are generally served by different types of financial institutions, and whereas the importance of the ultimate aim - to include all citizens in the formal financial system - should be borne in mind,

F.   whereas micro-credit entails higher operational costs, due to the small size of the loan, the lack of (sufficient) collateral, and high handling costs,

G.   whereas the business of micro-credit has innovative and subjective elements, such as alternative or no collateral requirements and non-traditional credit worthiness evaluation, and is often granted not only for profit-making, but serves also a cohesion purpose, by trying to (re-)integrate disadvantaged people into society,

H.   whereas micro-credits are, by definition, small but the possibility of 'recycling' them (granting a further such loan after repayment) due to their generally short maturity multiplies their impact; whereas regard should be had to the objective of reintegrating the recipients into the traditional banking system,

I.   whereas a range of providers can offer micro-credit or facilitate access to finance, such as informal financial services providers (authorised P2P lending), member-owned organisations (for example credit unions), non-governmental organisations, mutual and provident societies, community development financial institutions, guarantee banks and funds and savings, cooperative and commercial banks, and whereas cooperation between those various providers could be beneficial,

J.   whereas there is a need to recognise the unique structure of financial services providers existing across the European Union such as credit unions which are non-bank financial institutions mobilising members' deposits for micro-lending and those unique structures should not exclude them a priori from relevant micro-credit funding programmes,

K.   whereas the current financial crisis and its possible repercussions in the economy as a whole demonstrate the disadvantages of complex financial products and the need to consider ways of enhancing efficiency and having in place all possible channels for providing financing when businesses have reduced access to capital due to liquidity crunch, in particular in economically and socially disadvantages regions, and, at the same time, stress the importance of institutions that focus their business on local development and that have a strong local connection and offer inclusive banking services to all economic actors,

L.   whereas entrepreneurship should be fostered,

M.   whereas the utmost efforts should be made to reduce the regulatory burden on microenterprises to the strict minimum and the Commission is asked to act accordingly,

N.   whereas interest rate caps can deter lenders from providing micro-credit if such restrictions prevent them from covering their lending costs,

O.   whereas supporting micro-credit should play a prominent role in the revised Lisbon Strategy,

P.   whereas in a not-insignificant number of cases those willing to access funds under the EU cohesion policy in order to set up small family businesses, might face difficulties in providing the required co-financing,

Q.   whereas disadvantaged people, such as the (long-term) unemployed, welfare dependants, immigrants, ethnic minorities such as the Roma, people active in the informal economy or living in deprived rural areas, and women, who want to establish a microenterprise should be the focus of an EU initiative on micro-credit,

R.   whereas although private involvement should be assured to the extent possible, public intervention in the micro-credit business is necessary,

S.   whereas several EU initiatives that entail elements of support for micro-credit exist, and a streamlined and more focused approach, combining such initiatives to form a single system, would be beneficial,

T.   whereas access to business support (such as training, coaching and capacity building) for founders of microenterprises is essential, and training should be mandatory for micro-credit borrowers, and whereas consumer financial education and responsible lending should be an important part of the policies of all micro-finance institutions (MFIs),

U.   whereas the potential beneficiaries of micro-credits should have the benefit of proper legal advice with regard, inter alia, to the conclusion of the credit agreement, setting up a business, debt collection, the acquisition and exploitation of intellectual and industrial property rights, particularly when the micro-business concerned intends or has the potential to do business in other Member States of the European Union,

V.   whereas access to credit data of potential borrowers would facilitate the provision of micro-credit,

W.   whereas research and the exchange of best practices regarding micro-credits should be promoted, e.g. as regards innovative techniques for the granting, safeguarding and risk mitigation of micro-credits, the extent to which and with which target groups such approaches work in an EU context,

X.   whereas the role of intermediaries should be looked into with a view to preventing abuses, as well as considering alternative ways to establish credibility with borrowers (for example, through peer-support groups),

Y.   whereas an EU framework for non-bank MFIs should be established, and the Commission should develop the mechanism for the support of micro-credit which remains neutral among those micro-credit providers,

Z.   whereas people who have no permanent address or personal identification documents should not be excluded from obtaining micro-credit by legislation on the prevention of money laundering and terrorist financing,

AA.   whereas the EC competition rules should be adapted with a view to reducing barriers for the granting of micro-credit,

AB.   whereas EC rules on public procurement should assist micro-credit borrowers,

1.  Requests the Commission to submit to Parliament on the basis of Article 44, Article 47(2) or Article 95 of the EC Treaty, a legislative proposal or proposals covering the matters dealt with in the detailed recommendations below;

2.  Confirms that the recommendations respect the principle of subsidiarity and the fundamental rights of citizens;

3.  Considers that, where appropriate, the financial implications of the requested proposal or proposals should be covered by EU budgetary allocations;

4.  Instructs its President to forward this resolution and the accompanying detailed recommendations to the Commission, the Council and the governments and parliaments of the Member States.

(1) OJ C 175 E, 10.7.2008, p. 392.
(2) OJ L 124, 20.5.2003, p. 36.
(3) OJ L 310, 9.11.2006, p. 15.
(4) OJ L 177, 30.6.2006, p. 1.
(5) OJ L 309, 25.11.2005, p. 15.
(6) OJ L 379, 28.12.2006, p. 5.
(7) OJ L 337, 21.12.2007, p. 35.
(8) OJ L 134, 30.4.2004, p. 1.
(9) OJ L 134, 30.4.2004, p. 114.
(10) Texts adopted, P6_TA(2008)0199.



1.  Recommendation 1: on awareness-raising as regards micro-credit

The European Parliament considers that the legislative act(s) to be adopted should aim to regulate the following:

(a)  The Commission should provide for the introduction of the concept of micro-credit in relevant statistics and legislation on financial institutions. Statistics on micro-credit should take into account the per capita GDP figures in the Member States and distinguish between the self-employed or family-based enterprises and those with employees from outside the family in order to enable positive discrimination in favour of the former.

(b)  The Commission should invite the Member States to standardise the statistical presentation of micro-credits, including the collection and analysis of data broken down according to gender, age and ethnic origin;

(c)  The Commission should elaborate a communication strategy with a view to promoting self-employment as an alternative to wage earning and, in particular, as a way of escaping unemployment for disadvantaged target groups.

(d)  The Commission should invite Member States to implement tax incentives for private involvement in the micro-credit business.

(e)  The Commission should invite Member States to restrict the application of interest-rate caps to consumer loans; however Member States should be able to apply a mechanism by which extraordinary high interest rates can be excluded.

(f)  The Commission should analyse - in the light of the last sub-prime crisis - the advantages and disadvantages of direct micro-credit formats as against securitised credit facilities.

(g)  The Commission should require Member States specifically to analyse and report on their efforts and results as regards micro-credit in their annual reports on their national reform programmes in connection with the integrated guidelines for growth and jobs of the revised Lisbon Strategy. The Commission should expressly address micro-credit in its Annual Progress Report.

2.  Recommendation 2: on EU funding

The European Parliament considers that the legislative act(s) to be adopted should aim to regulate the following:

(a)  The Commission should provide for the (co-)financing of projects relating to the following, provided that such financing is specifically targeted at promoting the availability of micro-credit for all persons and enterprises without direct access to credit, which are usually defined by Member States, within their jurisdiction, as disadvantaged target groups (such as the Roma people, immigrants, people living in deprived rural areas, people with precarious work situations, and women):

   (i) the provision by national or EU funds of guarantees for providers of micro-credit;
   (ii) the provision of business support services as additional services for micro-credit borrowers, either by the providers of micro-credit or by third parties, which is to include mandatory targeted training with regular assessments for micro-credit borrowers, with the possibility that such training could be financed under the Structural Funds;
   (iii) research and the exchange of best practices in the operational field, e.g. as regards alternative collateral requirements, non-traditional credit worthiness evaluation methods, scoring systems and the role of intermediaries;
   (iv) the creation of a website on which potential recipients of micro-credits can present their projects to those willing to lend money to support them; and
   (v) the creation of an EU-wide database comprising positive and negative credit data on micro-credit borrowers.

(b)  To avoid duplication, the Commission should:

   (i) appoint a single coordination entity where all EU financing activities concerning micro-credit are pooled; and
   (ii) (co-)finance projects only where they can be combined with the retention of social security entitlements, such as unemployment benefit and income support, on the basis of the analysis of the business services provider, who should take into account the achievements of the business and the national minimum living standard.

3.  Recommendation 3: on a harmonised EU framework for bank and non-bank MFIs

The European Parliament considers that the legislative act(s) to be adopted should aim to regulate the following:

The Commission should propose legislation to provide an EU-wide framework for bank and non-bank MFIs. The non-bank MFI framework should include:

   (a) a clear definition of micro-credit providers, providing that they do not take deposits, and therefore do not constitute financial institutions under Directive 2006/48/EC;
   (b) the ability to conduct credit-only activities;
   (c) the ability to conduct on-lending; and
   (d) harmonised, risk-based rules as regards authorisation, registration, reporting and prudential supervision.

4.  Recommendation 4: on Directive 2005/60/EC

The European Parliament considers that the legislative act(s) to be adopted should aim to regulate the following:

The Commission should, while reviewing Directive 2005/60/EC, ensure that the provisions laid down in that directive do not constitute obstacles preventing people who have no permanent address or personal identification documents from accessing micro-credit, by allowing for a special exemption in the provisions regarding customer due diligence.

5.  Recommendation 5: on the EC competition rules

The European Parliament considers that the legislative act(s) to be adopted should aim to regulate the following:

(a)  The Commission should, while reviewing the de minimis rules, provide for:

   (i) the differentiation of the de minimis limits between Member States when it comes to financial support for micro-credit providers;
   (ii) the abolition of the discrimination of de minimis aid granted to an undertaking in the agricultural sector if the aid is granted in connection with micro-credit; and
   (iii) a reduction of the administrative burden if the aid is granted in connection with micro-credit.

(b)  The Commission should specify that the role of micro-credit providers and, if applicable, the public support that such institutions receive are in line with the EC competition rules.

(c)  The Commission should implement rules that allow for the preferential treatment of goods and services provided by micro-credit borrowers in public procurement procedures.

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