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Tuesday, 15 December 2015 - Strasbourg
Implementation of the European Progress Microfinance Facility

European Parliament resolution of 15 December 2015 on implementation of the European Progress Microfinance Facility (2015/2042(INI))

The European Parliament,

–  having regard to the Report from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on ‘implementation of the European Progress Microfinance Facility – 2013’ (COM(2014)0639),

–  having regard to the Interim Evaluation of the European Progress Microfinance Facility of 5 May 2015(1),

–  having regard to the ‘Study on imperfections in the area of microfinance and options how to address them through an EU financial instrument’(2),

–  having regard to Regulation (EU) No 1296/2013 of the European Parliament and of the Council of 11 December 2013 on a European Union Programme for Employment and Social Innovation (EaSI) and amending Decision No 283/2010/EU establishing a European Progress Microfinance Facility for employment and social inclusion(3) (the ‘EaSI Regulation’),

–  having regard to Decision No 283/2010/EU of the European Parliament and of the Council of 25 March 2010 establishing a European Progress Microfinance Facility for employment and social inclusion(4) (‘the Facility’) (the ‘Decision’),

–  having regard to its resolution of 24 March 2009 with recommendations to the Commission on a European initiative for the development of microcredits in support of growth and employment(5),

–  having regard to the European Parliamentary Research Service’s in-depth analysis of May 2015 entitled ‘European Progress Microfinance Facility – Interim evaluation’(6),

–  having regard to Special Report No 8/2015 of the European Court of Auditors, entitled ‘Is EU financial support adequately addressing the needs of micro-entrepreneurs?’,

–  having regard to Rule 52 of its Rules of Procedure,

–  having regard to the report of the Committee on Employment and Social Affairs and the opinion of the Committee on Budgetary Control (A8-0331/2015),

A.  whereas microfinance contributes to meeting the objectives of the Europe 2020 Strategy; whereas microfinance can lift people out of poverty and unemployment, give them dignity and enhance cohesion in communities by improving social inclusion and minimising social divergences;

B.  whereas the objective of the Facility is to increase access to, and availability of, microfinance for persons who have lost or are at risk of losing their job, or have difficulties entering or re-entering the labour market, as well as persons who are facing the threat of social exclusion or vulnerable persons who are in a disadvantaged position with regard to access to the conventional credit market and who want to start or further develop their own micro-enterprises, including self-employment; whereas the objective of the Facility is also to increase access to, and availability of, microfinance for micro-enterprises and the social economy;

C.  whereas the objective of the Facility is to improve the capacity of intermediaries to increase the number of potential operations, in order to generate employment through quality job creation, growth and social inclusiveness in local communities;

D.  whereas the financial situation of women borrowers appears to be worse than that of men, with a higher share of women being unemployed or at risk of poverty(7); whereas the ratio between female and male entrepreneurs benefitting from the Facility is only 36:64 and is still insufficient in terms of equal gender balance;

E.  whereas the marginalisation and multiple discrimination suffered by certain groups of women further exacerbate their economic disadvantage and difficulty in accessing financing; whereas the insertion of women suffering from exclusion should be a priority;

F.  whereas an increasing number of women participating in the labour market are also primary breadwinners for their families; whereas the rate of single parents is higher for women than for men; whereas microfinance should benefit an increasing number of women;

G.  whereas the social economy includes cooperatives, mutual societies, non-profit associations, foundations and social enterprises, which contribute to the Union’s employment, social cohesion, regional and rural development, environmental protection, consumer protection, agricultural, third-country development and social security policies;

H.  whereas, as a consequence of the economic and financial crisis, levels of poverty and social exclusion have increased, as have long-term unemployment, youth unemployment and social inequalities;

I.  whereas the Facility improves the conditions under which borrowers can obtain loans and makes financing available for otherwise non-eligible individuals; whereas microfinance intermediaries (MFIs) have benefited from the Facility in 22 Member States; whereas the overall objective of the Facility is to disburse 46 000 microloans by 2020, representing an estimated amount of EUR 500 million;

J.  whereas the repayment rate by borrowers is estimated at 95 %; whereas the Facility has helped individuals to enter or re-enter the labour market, or start their own businesses, and helped self-employed people to preserve or expand their microenterprises in terms of jobs preserved, new hires and turnover generated; whereas the Facility has reached remote European areas and triggered economic activity;

K.  whereas outreach to minorities remains difficult to assess as most MFIs are not specifically engaged in an activity to increase outreach to minorities; whereas recipients of microloans do not necessarily see themselves as a marginalised group or fear discrimination if their ethnic background is disclosed;

L.  whereas 60 % of the individuals for whom data are available were either unemployed or inactive at the time of their microloan application; 84 % of recipients were in the age group of 25-54, and 36 % of recorded entrepreneurs supported by the loans were female;

M.  whereas the Facility should be assessed qualitatively and not just quantitatively; whereas although it is simpler to assess this Facility in terms of economic efficiency, its efficacy as a means of ensuring social inclusion should also be assessed, as should the quality and knock-on effect of the jobs created;

N.  whereas the targeted ratio of 40:60 between female and male entrepreneurs has almost been reached, and whereas it is significantly higher than the Union average;

O.  whereas business development services such as training and mentoring are key to the success and viability of a microenterprise;

P.  whereas the absence of financing of enterprises in the social economy has been identified as a shortcoming of the Facility;

Q.  whereas there are indications that microfinance might be one element in supporting businesses to transition from the shadow economy to the status of declared economic activity;

R.  whereas a greater degree of public disclosure of data related to the provision of microloans by MFIs is the best way of promoting better use of public funding; whereas a greater degree of public disclosure of data facilitates comparisons of the performance of MFIs;

S.  whereas there is potential for synergies between the Facility and the European Social Fund (ESF), the European Fund for Strategic Investments (EFSI) and other EU funds, thus avoiding undesirable overlaps;

T.  whereas Article 6 of the Financial Regulation stipulates that ‘the budget shall be established and implemented in accordance with the principles of unity, budgetary accuracy, annuality, equilibrium, unit of account, universality, specification, sound financial management which requires effective and efficient internal control, and transparency’;

U.  whereas the Facility benefits from EU funding and from the European Investment Bank’s financial contribution, both of which are managed by the European Investment Fund (EIF); it also foresees additional funding from private investors;

V.  whereas this instrument is still not well known to potential beneficiaries;

Increasing access to microfinance

1.  Stresses the importance of a financial instrument such as the Facility in times of financial crisis in creating new undertakings, promoting new employment and ensuring that unemployed, disadvantaged people and microenterprises have access to financing, while mitigating the risk for MFIs;

2.  Notes that the impact on employment creation was less than initially expected, in spite of the fact that many recipients would have been completely excluded from the credit market were it not for microcredit; believes that this less-than-expected impact on employment creation can partly be explained by the fact that the Facility was implemented at the same time as the economy was experiencing a major economic crisis which impacted both on the credit market and on employment figures; notes, however, that the Facility substantially contributed to job preservation; takes into account that this will be addressed by the new, more flexible EaSI instrument;

3.  Regrets the high number of rejected applications for microfinance (almost 2 000 applications were rejected, partly on grounds of over-indebtedness of persons and undertakings) and the still significant microfinance market gap, despite the increase in the number of micro-borrowers; calls on the Commission to conduct a more detailed study of the reasons for these rejections, including finding ways to resolve them;

4.  Underlines the importance of the Facility, especially in times of crisis, in its role of enabling unemployed and disadvantaged people to have access to financing; emphasises that given the current migration and asylum crisis in particular, micro-financing can act as a fundamental support for refugees and migrants entering the EU labour market;

5.  Calls on the Member States to establish contact points to promote knowledge among potential beneficiaries and citizens in general about the Facility;

6.  Calls on the Commission and the Member States, capitalising on the experience gathered so far, to raise awareness, particularly in remote regions and within communities, especially in those with a minority background or within organisations for persons with disabilities, about the existence of the Facility, its benefits and the ways to access it;

7.  Notes that in 2013 actions funded under the Facility included senior loans and guarantees; notes in addition that some MFIs receive both a guarantee and a loan but that these two instruments always cover different portfolios;

8.  Calls for the Facility to take account of the added value of projects in regions with severe and permanent natural or demographic handicaps, such as sparsely populated regions and regions undergoing depopulation, since this will not only stimulate job creation there but also help maintain population levels;

9.  Welcomes the fact that Commission and the EIF have made the Microfinance and Social Entrepreneurship (MF/SE) axis of EaSI operational so as to secure access to money for the beneficiaries; expects that EaSI will tackle successfully the shortcomings of the Facility;

10.  Calls on the Commission to assess the suitability of the current definition of microcredit with a view to ensuring that future financial instruments meet the needs of the market and of beneficiaries and the targets defined in Article 2 of the Decision;

11.  Encourages the Commission and the Member States to gather and assess data on the characteristics of microenterprises, their needs and their survival rates, and to propose adjustments to the EaSI Regulation, if necessary, during the mid-term review; welcomes the fact that the balance and the reflows available at the end of the Facility will be injected into the budget of the MF/SE axis of EaSI, thus increasing the number of guarantees and funded instruments that will be offered to microborrowers;

12.  Welcomes the fact that all seven of the financial instruments of the Facility hitherto examined have attracted additional private funding; expresses concern, nevertheless, that according to the report by the Court of Auditors, as far as guarantees are concerned, the target values for leverage ratios were achieved in only one case out of seven, and in two cases were not achieved;

13.  Welcomes the increased flexibility of the new programme under EaSI in responding to changing needs in respect of reallocation of the funds among axes of the programme; calls on the Commission to avoid double funding by developing clear and transparent synergies between EaSI and other Union programmes and initiatives;

14.  Calls on the Commission to provide greater publicity and information concerning the Facility and the means of access to it;

15.  Calls on the Commission to enlarge the geographical scope of the Facility, in order to reach every Member State; highlights the need to widen the sectorial scope of the Facility beyond the agriculture and trade sectors;

Reaching target groups and social impact reporting

16.  Deplores the fact that, owing to the lack of well-defined social reporting, the social impact of the Facility has not been measured more accurately in terms of job creation, business sustainability and minority group outreach; calls on the Commission, therefore, to adhere to standards for social performance measurements in an empirical way so as to ensure the highest social impact, also with regard to the Europe 2020 targets and to assess whether the definition of target groups, including people with disabilities, needs to be clarified further;

17.  Notes that the Facility has started its operations as a pilot project; notes, furthermore, that weaknesses were identified in terms of outreach to vulnerable groups such as migrants and disabled people; believes, however, that lessons learned have been taken into account and that some of the shortcomings have already been tackled in the EaSI instrument; welcomes the fact that the strategic assessment of the targets has been developed in accordance with the Europe 2020 objectives;

18.  Calls on the EIF to cooperate with MFIs, requiring them to apply the European Code of Good Conduct for Microcredit Provision and prioritising those MFIs that have demonstrated their ability and willingness to cooperate with organisations providing further support to final beneficiaries; also calls on the EIF to enforce provisions in agreements with MFIs requiring them to cooperate more closely with organisations representing vulnerable groups in order to reach target groups more effectively;

19.  Calls on the Commission to improve methods of evaluating the viability, and the impact within their community, of businesses after repayment of the microcredit;

20.  Calls on the Commission and the EIF to improve reporting about beneficiaries and MFIs, while recognising that a balance needs to be struck so as to not overburden MFIs; stresses that the information that would be required for an appropriate report is provided by both the MFIs and the microborrowers in order to obtain a loan;

21.  Finds it regrettable that information on the use of the loans and guarantees related to the Facility is fragmentary and incomplete and lacks detailed information on the employment status of the final recipients, even though the Court of Auditors found that the reporting was in keeping with the requirements of the Decision;

22.  Calls on the EIF to ensure that MFIs publicise data on the number and the amount of microloans provided and on the type of final beneficiaries;

23.  Calls on the Commission to pursue equality between men and women in terms of access to microfinance and to envisage an equal target ratio between male and female entrepreneurs in the future; calls on the Commission and the Member States to encourage MFIs to implement specific strategies to target women and support female entrepreneurship, including through cooperation with relevant associations and organisations in the field;

24.  Calls on the Commission and the Member States to further promote the visibility and information as regards the possibilities of financing under this Facility, including through awareness-raising campaigns, exchange of best practices among women entrepreneurs, and workshops and training that specifically target women, with a view to achieving better gender balance in access to microfinance;

25.  Calls on the Commission to take into account the benefits of microfinance for women, including the creation of sustainable jobs; calls on the Commission to facilitate exchanges of views and sharing of good practices between women entrepreneurs;

26.  Recognises the importance of the targeted ratio between female and male entrepreneurs; believes, however, that the success of the Facility should not be measured solely by blanket targets but on the ability of the Facility to enable micro-entrepreneurs and small and medium-sized enterprises to get their projects off the ground and contribute to economic growth and social cohesion;

27.  Urges the Commission to focus its efforts to improve access to microfinance for potentially excluded clients, such as migrants, refugees, long-term unemployed, young people, low-income persons, low-skilled workers and people with disabilities, who are currently not benefiting enough from the Facility;

28.  Calls on the Commission to view refugees and asylum seekers as a target group;

29.  Calls on the Commission to multiply the initiatives and funding available for granting microcredit to innovative start-ups run by young people, in order to support youth entrepreneurship and high technological, scientific and social innovation at a time of economic crisis and difficulty in obtaining access to credit; stresses, moreover, the need for the Member States to strive to reduce the red tape imposed on entrepreneurs in order to gain access to the funds made available to them by the Union;

Supporting the social economy

30.  Regrets that the Facility has not funded a significant number of social enterprises; welcomes the fact, therefore, that a specific percentage of the EaSI budget is dedicated to the funding of social enterprises;

31.  Encourages the Commission to closely monitor this new feature and to encourage the Member States to exchange data, knowledge and best practices in this respect, ensuring appropriate reporting from MFIs, and motivating them to support projects with high social impact among their potential clients;

32.  Invites the Commission to assess, and if necessary review, the cap stipulated for loans to social enterprises under EaSI, so as to give them the necessary, and adequate, resources for their beneficial development and so that market needs are met;

33.  Highlights the importance of a gender perspective being incorporated into funding programmes; believes that gender impact assessments and gender budgeting are useful in evaluating and improving the impact on women of funding priorities, the allocation of financial resources and specifications for funding programmes; emphasises the need for gender-disaggregated data to be systematically collected and regularly analysed;

Mentoring and training services and complementarity with other instruments

34.  Welcomes the possibility under EaSI of funding capacity-building of MFIs and technical assistance for MFIs to improve their professionalisation, service delivery, and gathering and processing of data to allow better feedback about the Facility;

35.  Encourages the Commission to link the Facility with basic entrepreneurship training so that businesses' economic viability and the aim of the lending are ensured;

36.  Deplores the fact that business development services, including mentoring and training, cannot be directly financed under EaSI, and calls on the Commission to investigate future financing avenues with appropriate new instruments in partnership with national or Union funds;

37.  Notes that the ESF should provide key financing for creating enterprises, viable microfinance and social entrepreneurship, together with mentoring and training programmes; finds it regrettable that these tools are not directly financed by the EaSI;

38.  Recommends that the Commission and Member States develop their strategic cooperation with local and regional organisations and institutions regarding EaSI, ESF and other possible national programmes, promoting their cooperation with MFIs and final recipients, in order to improve the assistance given to microborrowers in terms of training, mentoring and overall support for greater business viability;

39.  Welcomes the possibility of using funds from the ESF for the MF/SE axis of EaSI, and invites the Commission and the EIF to inform the MFIs better about this possibility under Article 38 of the Common Provisions Regulation(8);

40.  Calls on the Commission and the Member States to ensure that EFSI is available to finance microenterprises;

Microfinance intermediaries

41.  Encourages the Commission to coordinate ESF and EaSI support in order to improve complementarity between the two programmes, with regard to Microfinance Facilities, focusing among other things on cooperation between MFIs and business support centres co-financed by the ESF;

42.  Welcomes the microcredit intermediary selection process, which is in compliance with the EIF’s rules and procedures, and reiterates Parliament’s request that those intermediaries should comply with the principles of responsible lending and avoidance of over-indebtedness of persons and undertakings;

43.  Recommends that the procedure for access to the instrument be simplified and that agreements between MFIs and the EIF be more flexible and easier to understand, allowing smaller MFIs to make full use of the funding instruments and the EIFs facilities quickly;

44.  Deplores the fact that a significant number of applications for the Facility were not completed and could not be approved by the EIF; asks the Commission to assess the reasons for this failure (e.g. a lack of information or accessibility, or a bureaucratic burden requiring simplification); calls on the Commission to act quickly to resolve the problem;

45.  Calls on the Commission to ensure that greater publicity and information are provided as regards the Facility and how to gain access to it, in addition to simplifying the procedure and making the agreements between microfinance intermediaries and the EIF more flexible and easier to understand, enabling smaller intermediaries to gain faster access to the market;

46.  Calls on the Commission and the EIF to assess how to better disseminate the benefits of the Facility to a wider public, beyond the existing requirements imposed on MFIs;

47.  Encourages the Commission to strengthen cooperation between MFIs and organisations engaged in representing the interests of beneficiaries, beyond the advertising of products or the finding of new clients;

48.  Calls on the Member States to develop the microfinance sector, so as to enable it to be expanded, which is necessary in order for the Europe 2020 objectives to be reached, and to make use of the Facility, by investigating possibilities for non-bank intermediaries to enter the microcredit market without depending on a partnering bank;

49.  Encourages the Commission to strengthen its dialogue with microfinance actors (MFIs, banks and non-banks, networks such as the European Microfinance Network), as well as with stakeholders currently not included, regarding the accessibility, use and design of the products to be offered under Union-funded programmes;

50.  Encourages the Commission and the Member States to facilitate exchange of best practices among MFIs from different Member States;

51.  Calls on the Commission and the EIF to ensure that the MF/SE axis of EaSI further promotes the dissemination and integration of the European Code of Good Conduct for Microcredit Provision in contracts with MFIs;

52.  Considers that the Commission’s report on the implementation of the European Progress Microfinance Facility – 2013 is very general and is lacking detail with regard to its implementation;

53.  Encourages the Commission to ensure that the Facility and the EaSI instrument continue to contribute to the EU's added value and visibility;

o   o

54.  Instructs its President to forward this resolution to the Council and the Commission, and to the Governments and Parliaments of the Member States.

(3) OJ L 347, 20.12.2013, p. 238.
(4) OJ L 87, 7.4.2010, p. 1.
(5) OJ C 117 E, 6.5.2010, p. 85.
(7) Interim Evaluation of the European Progress Microfinance Facility.
(8) Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (OJ L 347, 20.12.2013, p. 320).

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