Promoting Microfinance: Policy Measures Needed

This study focuses on the identification and analysis of policy measures that promote use of microfinance and make the environment more conducive to self employment.

Recent high unemployment rates in Europe have resulted in the emergence of a new class of welfare recipients who are at risk of poverty and social exclusion. Self-employment and microentrepreneurship are a way of enabling such people to participate in the economic and political processes of society. Using a transnational approach, the study analyzed policy measures in seven member states of the European Union with regard to:

• Entrepreneurial context;
• Microenterprise policy environment;
• Welfare bridges;
• Legal framework;
• Financial bridges;
• Microfinance funding and support.

The study found a number of effective policy measures that, combined with microfinance, support social inclusion through self-employment. These include:

• Awareness programs promoting self-employment as a viable income generating activity;
• Reduction of legal, fiscal and administrative barriers related to self-employment;
• Provision of business advice through flexible internet and telephone support desks;
• Collaboration between social welfare and the employment system;
• Active labor policy market;
• Risk sharing loan instruments and tax incentives for investors.