Who will pay the ferryman?

1. Who will pay the ferryman?  The way ahead – what do we expect to achieve with the funding available?A vagabond tourist’s viewAmsterdam 10th June 2011 Peter Ramsden, Director Freiss ltd.

2. The EMN Conference tag cloud 2011

3. Where are we now? • In most parts of the EU there are islands of microfinance (inclusive financial services) surrounded by a sea of exclusion all shrouded in fog • Few of us understand our own financial services, even when we can access them (pensions, loan agreements, mobile phone tariffs)

4. Enterprise stats • 20 million enterprises active in the EU-27 in the non-financial business economy • 99.8 % were SMEs, • 67.1 % of employment • 57.6 % of value added • Microenterprises account for over 90% of all businesses, 30% of employment and 20% of output

5. New thinking needed on employment • Employment and enterprise are changing • No longer binary situation either employment or unemployment • No jobs for life, • Welfare systems designed for another age • Massive social innovation challenge to reform these systems • Individuals need to be enterprising about transitions in their own lives (education to employment, unemployment, retirement)

6. Impact of crisis • Greatly increased unemployment and under employment • Growing employment insecurity • Challenge of fiscal deficits to the old model of welfare state – now in crisis • Youth especially hard hit - inter-generational disparity in wealth and assets • Need for a new paradigm to challenge poverty based on asset building, financial resilience • Greater transparency on financial services - no one understands their pension

7. Where does funding for Microfinance come from? • National sources of public funding (from taxation etc) at national, regional, local/city level • EU Structural funds (ERDF – the regional fund and ESF the social fund) delivered through share management • EU Progress micro finance facility • Private sector investors • Social investor institutions • Peers, citizens through cloud or crowd funding

8. How much resource 2007-13? • ESF Approx €70 billion of which €2.75 billion for SMES over 6 years • ERDF Approx €200 billion up to 20% on SME support and innovation (but not much on micro support) • EU progress Microfinance fund €200 million (from 2011) approx €35m per year • But break down for micro enterprise not known

9. Faisel’s conditions for microfinance growth • Capacity (of the micro finance organisations and the authorities) • Time (over which the investment will be made) • Appropriateness (of finance for not for profit third sector organisations)

10. EMN vision • The EMN envisions a society in which all those who are financially and socially excluded have access to the full range of financial services that empower them to improve their lives. 

11. What we expect to achieve? • For MFIs – ‘transformation’ capacity built, critical mass achieved, exponential growth, wider range of products/services and greater social impact • For Member States and regions – growing financial support for microfinance, more integrated employment and enterprise policies, greater focus on self -employment and enterprise as a job generator • For EU - mainstreamed support for microfinance in Structural Funds, better coordination of ESF, ERDF, EIF, stronger support for national micro enterprise policies

12. Downside risks • Inappropriate finance fails to impact on growth • Lack of financial support and human resources for capacity building • Lack of engagement by members on capacity building activity • Over hyped expectations on growth • Not enough time to grow sector to critical mass • Failure to innovate and roll out new products (internet, mobile phone) • Lack of improvement in productivity for non financial services • Failure to coordinate policies and funds at national and regional levels

13. Specific problems • EMN called for a single microfinance window • The reality is that they are complex and multi-level • 117 ESF Managing Authorities • 300+ ERDF Managing authorities • Lack of coordination of different geographical levels and departments

14. Audit mania • The system of ‘shared management’ of EU Structural Funds has led to an audit fuelled culture • National and regional managing authorities are more concerned to avoid risk than to address challenges • Innovation has been squeezed out • Resources are captured by old policies

15. MF Sector issues • Modest growth, especially through the crisis • Lack of capacity building – new instruments may be more effective • A need for product and process innovation • Dependent on drip-fed funding – stable long term investment needed • Better relationships needed with Managing authorities – COPIE potential

16. Mr Toyota would ask • How to make the money go further? • Be more efficient – do more with less, do things faster, use smarter systems • Be more effective, do the right things, avoid losing time on the wrong things • Work with the right people - get the funnel to work for you

17. Filtering clients

18. Tag cloud for EMN for 2016

19. Fostering Gender Equality: Meeting the Entrepreneurship and Microfinance Challenge • Thank You! • Peter Ramsden • peterramsden2@gmail.com