Microfinance, EU Structural Funds and Capacity Building for Managing Authorities

The European Commission’s proposals for the 2014–2020 legislative framework aim to increase the flexibility of the regulation, taking into account national and sectorial peculiarities; they further seek to improve the coherence and consistency between instruments, raise visibility and transparency and reduce the number of instruments in order to ensure a sufficient critical mass in a context where the amount of funding available is scattered across a large number of regions and recipients.1

The aim of ensuring a balanced development of the territory of the European Union as well as equal social and economic opportunities to all individuals in the EU member states led European Union institutions to activate a number of financial instruments that may allow reducing the current structural economic gaps between different regions in Europe and establishing a regional development policy based on the concepts of economic, social solidarity and cohesion.1

Small and medium-sized enterprises (SMEs) represent 99.8 per cent of the total number of enterprises in Europe and play a key role in terms of economic development and creation of jobs, by accounting for 57.6 per cent of added value in EU-27 and more than two thirds of jobs created in the private sector (Table 3.1). Over 90 per cent of European businesses are microenterprises with less than ten employees, whose importance is particularly significant in South European countries such as Italy, Spain and Portugal.1

Microfinance instruments, in particular microcredit, play a key role in the implementation of the European strategies to support entrepreneurship, employment, social and financial inclusion.1,2 These instruments, in fact, can support start-ups through the provision of microloans characterised by simplified administrative procedures and absence of collateral requirements, offering to socially excluded and disadvantaged subjects an opportunity to ensure dignified living conditions for themselves and their households. The economic crisis that has hit the European economy in recent years resulted in high social costs that call for the adoption of specific measures to support the weakest segments of the population as well as effectively contribute to the economic recovery through the creation of new development opportunities. Today, individuals at risk are not just those outside the labour market due to disadvantaged conditions, but also other numerous subjects — young people, women, immigrants, off-workers, those ejected from the labour market — who, although in possession of professional skills, are unable to enter (or re-enter) the labour market due to a scarce demand for jobs by enterprises and the impossibility to access credit. In this context, the European Commission regards microcredit as a key instrument to fight unemployment and combat the new forms of poverty, to promote access to credit and, more generally, to financial services, a necessary condition to fully participate in the social and economic life of the community.

As underlined in the first chapter, the methodological approach of this research is based on two questionnaires on the managing authorities’ capacity building in the microcredit sector and capacity building related to financial instruments within the new EU regulatory framework.1 The previous chapter clarified the main guidelines of the EU cohesion policy, the key features and objectives of the EU structural funds and the possibility of using such funds to activate financial engineering instruments dedicated to the microfinance sector in general and specifically to microcredit.

One of the most significant achievements of the Capacity Building project, which was finalised by the National Agency for Micro-credit, was to have identified new characteristics and issues of a sector, such as microfinance, which until the recent past was often associated with the simple offer of modest credit paid by not-for-profit institutions in favour of people or social groups who are particularly vulnerable.

Surveys conducted by the National Agency for Micro-credit for the fulfilment of this research, which represents the conclusive action of the project Capacity Building on Micro-credit Financial Instruments, allow us to focus on some issues that, starting from the Italian experience in ex-convergence regions, can form the basis for a future debate aimed at the development of the microfinance sector at both the national and European level.