Overview of the Microcredit Sector in the European Union

This edition of the EMN microfinance sector survey analyzes impact of the economic and financial crisis on the European microfinance sector.

The survey includes 2008 and 2009 data from 170 microfinance actors operating in 21 countries from the European Union (EU), current EU candidate country Croatia and countries belonging to the European Free Trade Area (EFTA). Findings include:

• Sector is diverse, with lenders using microcredit as a tool for microenterprise promotion, job creation, and social and financial inclusion;
• Number of microloans disbursed suffered a negative growth rate;
• Institutions seem to be more concerned with portfolio quality than growth;
• Microlenders focus on start-up businesses and on the consolidation of existing small microenterprises; 
• Microlenders target financially excluded individuals, women, ethnic minorities and/or immigrants, unemployed people, youth and disabled people;
• Financial performance reporting is weak across the sector.

The most important challenge for the sector continues to be reaching sustainability, followed by outreach to the most excluded. Institutions listed lack of institutional capacity, legal and regulatory environment regarding usury, and borrowing for lending and funding of operational costs as important constraints.