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Survey of 2008-2009 activities:Successful Collaborative Effort • Built on the strengths of the previous surveys conducted on EMN’s behalf in 2003, 2006 and 2008. • Reduced number of questions to focus on most relevant topics • Incorporation of new questions related to EMN working groups: Social Performance, IT, Regulation • Standardized financial indicators • Continued and improved data breakdown: gender, ethnicity, immigrant status, youth, disability • Questionnaire available in Bulgarian, English, German, Hungarian, Italian and Spanish.
Work Coordinated by Nantik Lum (Spain) with the efforts of 11 collaborating agencies • RéseauFinancementAlternatif ASBL (RFA), Belgium • Centre for Entrepreneurship and Executive Development (CEED), Bulgaria • European Microfinance Network (EMN), France • DeutschesMikrofinanzInstitut (DMI), Germany • Hungarian Microfinance Network (HMN), Hungary • Giordano Dell’ Amore Foundation (FGDA), Italy • INHolland University of applied sciences, Center for Microfinance and Small Business Development , the Netherlands • EUROM Consultancy, Romania • Fundación Nantik Lum, Spain • NätverkförEntreprenörerfrånEtniskaMinoriterer (NEEM), Sweden • Independent Microfinance Consultant and Director of the Centre for Responsible Credit, United Kingdom
Large Number of Responses 170 institutions representing 21 countries from the European Union 97 new entrants More responses from institutions in Norway, Sweden, and Ireland, compared to previous survey First time responses from Croatia, Estonia, Latvia, and Lithuania No responses from Austria and Slovakia due to absence of current microcredit programmes
Diversity in Number of LoansDisbursed • Number of loans disbursed by country range from 6 to 28,863 for 2009. • Factors that influence loan numbers by country appear to be: • Age of sector • Number and types of actors and their geographic reach • Whether microlending is the primary activity or one of many activities carried out by the organisation • E.g. in France: Two lenders in the market since the 1980s, with national coverage, but with different lending methodologies: 1 not-for-profit organisation with zero-interest quasi-equity loans that allow beneficiaries to access significant complementary bank credits; 1 NGO providing standard microloans with interest • E.g. in Hungary: small foundations operate locally; a bank working on the international level disbursed 9,500 loans; • E.g. in Germany: 60% of organisations started lending after 2005, they operate locally; a government body operating internationally disbursed 7,000 loans
In 2009, a total of 84,523 microcredits for 828 million euros were granted*. In Western European countries, 51,027 loans were made for 477 million euros, while in Eastern Europe 18,293 loans were made for 307 million euros. 72% gave the figures for their active clients. End of 2009: 135,815 active clients. 74% of organisations have lent €49.9 billion for 237,495 loans since their creation. *The data didn’t include one major actor in Poland and the network of Procredit banks in Eastern Europe.
Number of active clients There are organisations that reported more numbers of loans than numbers of active borrowers:. This is the case in Germany, Hungary, Latvia, Netherlands, Sweden. In the case of Poland the difference is due to the fact that Fundusz Micro is included in number of loans disbursed but not in number of active clients.
Growth and Decline at the same time • Between 2008 and 2009 the number of loans disbursed decreased by 7%. • Highest Sector Growth Rates from 2008 to 2009 in: • Hungary (49%) • Italy (40%) • The Netherlands, Latvia, due to the incorporation of new institutions that began activities in 2009. - In terms of the highest growth in terms of number of loans disbursed: Hungary (3412 more loans than in 2008), France (2154), Italy (545) and Finland (485).
Lenders Making Small Numbers of Loans • 40% of lenders participating in the survey were active before 2000 • Nine new actors started lending in 2008 and another nine started lending in 2009 • Most lenders in the EU/EEA disburse less than 50 loans a year (57%). • On the other hand, 13% of the organisations disbursed more than 400 loans in 2009
Microlending Relatively Small Portionof Activity Portfolio • Microlenders break down into two main groups: • those for whom it is their primary occupation • those for whom lending is a relatively small proportion of their activity portfolio • For 36% of respondents, microlending makes up 75-100% of their activity portfolio, nearly all located in Bulgaria and Romania. • For 23% of respondents, microlending makes up only 5-25% of their activity portfolio
Financially Excluded and Start-Ups Are Main Targets • Client Profile: • 47% of respondents target people excluded from mainstream financial services • 44% target women • 41% ethnic-minorities and/or immigrants • 32% unemployed people • 30% no specific targeting • Business Type: • More target start-ups than existing enterprises, which fits with the focus to help the socially excluded and address unemployment • As in the previous survey, registered businesses with fewer than 5 employees are the main target (55%) • 24% lend to informal or unregistered businesses • 65.6% of clients are unbanked persons.
Gender balance 37.7% of loans disbursed to women in 2009 (82% response rate)** • Bulgaria and Finland rate best when analyzing the combination of both lending rates and total number of loans to women. • ** 37.7% when looking at the 82% of respondents, 26.7% when looking at all participants. Note: Austria and Slovakia did not disclose data on gender balance.
Immigrants and ethnic minorities ** 32% on the 54% sample and 13% on the whole sample. In 2009 32% of loans were given to immigrants/ethnic minorities (54% response rate)**.
Youth 17.5% of loans were given to young people (18-25) in 2009 (52% response rate).** ** 17.5% on the 52% sample and 11% on all participants.
Providing Support and Advice A crucial aspect of microfinance • Training, advice and support are critical elements in the success of new and existing businesses. • In 2009, 57% of clients benefited from business development support and 27% of institutions offer referrals to external providers of this service. Only 19% of respondents do not provide any kind of assistance. • None of the respondents cover the full costs of training and support through the fees charged. The majority rely on public and private sector grants and subsidies.
Not only just microcredit for enterprise development 42% provide other types of financial services
Loan Products and Pricing: Diversity in Loan Sizes and Interest rates • A variety of loan sizes offered to clients. • The maximum loan size offered to clients ranges from €37,000 to €220 (even if the EU defined a microcredit as being below €25,000). • (Non-weighted) Interest rates charged range from 2% at the lowest to 22% at the highest. The average is 9%. • Average (non-weighted) interest rates vary by country - the highest rates are charged in the United Kingdom (22% average), Poland (17% average) and the lowest in Portugal and Finland (3% and 2% respectively).
Broad Range in Average Loan Size • The weighted average amount lent is €10,012. • It’s a decrease compared to 2007 (average loan size €11,002). • Despite this, we find that in some EU countries, loan disbursements are moving toward larger loans and the higher end of the market. - E.g. Netherlands – average loan size €14,745 - E.g. United Kingdom – average loan size €9,623 - E.g. Hungary – average loan size €14,545
15,852 11,379 11,070 10,948 9,144 8,340 8,054 6,456 Credit Union/ Other Government Body CDFI Bank NGO or Savings Non-bank Bank Financial cooperative Foundation Institution The Average Loan Size varies according to the institutional type
Depth of outreach Determined using the World Bank data for 2008 GNI per capita per country and average loan size.
Limited Data on Portfolio Performance • Although more institutions responded in this current survey than in previous surveys, the number of responses continues to be low. Why? - Under-developed management information systems (MIS) • Confidentiality (banks) • For the data available in 2009*: - Average repayment rate of 83%, 6 % lower than the previous survey (around 90%) - Percent Portfolio at risk (>30) is 16.8% (14% previous survey) - Value of write offs was 5.2%, of average portfolio outstanding, similar to the previous survey - Average Operational Self-Sufficiency: 98.7% * on basis of response rate (CRR: 16.5%, PAR>30: 37%, Write-offs: 35%, OSS: 28%)
External Funding Still Plays an Important Role Operational Costs • In contrast to the previous survey, 60% of survey respondents cover their operational costs through earned income (fees, interest and income earned on assets). Loan Capital • Loan capital comes from a combination of public and private sources, with public sources most important: • Public sector 50% • Own funds, Private sector, Client deposits, commercial debt
Future Visions: Growth • Reaching financial sustainability remains the primary concern for the responding organizations. • Access to long-term funding • Regulatory flexibility • Growth and targeting of new groups of people
Réseau Européen de la Microfinance - Paris 103 Rue de Vaugirard 75 006 Paris - France Tel: +33 1 42 22 01 19 Fax: + 33 1 42 22 06 44 Réseau Européen de la Microfinance - Bruxelles dans les locaux du Fonds de participation – Participatiefonds rue de Ligne 1 1000 Bruxelles – Belgique Tel: +32 2 209 08 38 Fax: +32 2 209 08 32 www.european-microfinance.org