This new report provides updated and additional information about the European microfinance
market and current developments in the microfinance area. Moreover, it gives insights into the
intervention logic, rationale for EU support, and mandate development considerations of the EIF
in this field.
More precisely, following a short introduction, we provide in the second section (general market
overview) updated information for selected aspects of microfinance in Europe.
Investor base: about 70 percent of private bonds were purchased by banks in 2011. Their
participation has increased further recently partly because they have faced constraints in
expanding consumer loans given increased risk and higher cost in the sector, and therefore
have sought alternative higher-yield investment instruments.
Liquidity in the secondary
market is very limited as many banks tend to hold private bonds until maturity. Retail
investors’ participation remains low (see Figure 11). ...
The challenge of alleviating poverty and improving living conditions for
the poorest populations is a formidable one. It is increasingly apparent
that such a betterment of the lot of poor people requires an effort that
spans all sectors of the economy and may not be easy to achieve through
economic growth alone. Improved access to financial services helps poor
people by enabling payment transactions that then bring them into the
The Communication highlighted the role played by microfinance institutions/micro-credit providers
in developing the provision of micro-credit in Europe and stressed that adequate technical support
is necessary to help these operators release their potential.
Despite their significant role in availing financial services to underprivileged groups and communities,
the involvement of savings banks in the microfinance’s arena is often overlooked as many are still
restricted from lending and offering microcredit schemes. However, these restrictions are progressively
lifted, fully or partially, allowing a few to expand the scope of their operations.
CARE will do this by expanding our village savings and loan associations to 39 countries across Africa and by
building the capacity of microfinance institutions to develop and deliver the products and services these
Overall, the microfinance sector is continuing to expand despite tremendous operating obstacles
in serving the market in a sustainable way. The lack of access to financial services for households
and micro and small enterprises is quite striking in Africa and microfinance institutions are crucial in
responding to the unbanked segments. However, the microfinance sector is still relatively small and
weak compared to other global regions and despite the huge potential market. In this context, the
role of savings banks in microfinance should be recognised and boosted.