European progress microfinance facility : interim evaluation : European implementation assessment : in-depth analysis.
Date: 2015-10-28
Institutions: Directorate-General for Parliamentary Research Services
Subjects: EU employment policy, EU financial instrument, European Employment Strategy, microfinance, microloan, social integration

European Progress 
Microfinance Facility 
- Interim evaluation 

European Implementation 
Assessment

IN-DEPTH ANALYSIS 

EPRS | European Parliamentary Research Service 
Author: Jan Tymowski 
Ex-Post Impact Assessment Unit 
PE 547..555 - May 2015 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
European Progress Microfinance Facility 
- Interim evaluation 

In-Depth Analysis 

On 17 December 2014, the Committee on Employment and Social Affairs (EMPL) requested an 
implementation  report  on  the  European  Progress  Microfinance  Facility  for  employment  and 
social  inclusion,  initiated  in  2010,  which  triggered  an  automatic  implementation  assessment 
from  DG  EPRS.  The  original  request  referred  to  the  European  Commission's  report  on  that 
instrument's  functioning  in  2013,  but  in  view  of  the  larger  (interim)  external  evaluation,  the 
report was later adapted and given a wider scope. The purpose of the EMPL report is to focus 
on  job  creation  by  facilitating  access  to  finance  for  the  unemployed  and  for  economically 
inactive people, and analysing to what extent help was provided to disadvantaged groups. 

This analysis has been drawn up by the Ex-Post Impact Assessment Unit of the Directorate for 
Impact Assessment and European Added Value, within the European Parliament's Directorate-
General  for  Parliamentary  Research  Services,  in  advance  of  the  first  EMPL  discussion  on  the 
matter  on  7  May  2015.  It  looks  at  the  implementation  of  the  relevant  legal  act  (Decision 
283/2010) on the basis of the existing data and documents, with special attention given to the 
Parliament's  input,  the  European  Commission  implementation  reports  and  the  interim 
evaluation prepared for the Commission by an external consultancy. 

Abstract 

The  European  Progress  Microfinance  Facility  for  employment  and  social  inclusion  was 
established  by  Decision  283/2010  and  will  be  in  operation  until  April  2016.  Although  only  a 
limited number of conclusions can be made on the basis of data available so far, some criticism 
towards  this  instrument  has  already  been  reflected  in  the  set-up  of  the  next  EU  multi-annual 
framework to cover microcredit, namely the Programme for Employment and Social Innovation 
(EaSI).  The  specific  effects  of  the  Microfinance  Facility,  especially  those  related  to  social  and 
employment  matters,  seem  to  correspond  to  the  objectives  that  were  set  in  response  to  the 
financial  crisis  in  Europe.  The  commitment  of  100  million  euro  from  the  EU  budget 
(supplemented  by  an  equal  amount  from  the  European  Investment  Bank),  allowed  a  growing 
number of financial intermediaries to offer small loans (below and above 5,000 euro - but in any 
case below 25,000 euro which is the maximum limit of the micro-credit's definition) to persons 
starting-up or developing their own micro-enterprises (and often previously unemployed). 

 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
AUTHOR 
Jan Tymowski Ex-Post Impact Assessment Unit 

ABOUT THE PUBLISHER 
This  paper  has  been  drawn  up  by  the  Ex-Post  Impact  Assessment  Unit  of  the 
Directorate  for  Impact  Assessment  and  European  Added  Value,  within  the 
Directorate–General  for  Parliamentary  Research  Services  of  the  Secretariat  of  the 
European Parliament.  
To contact the Unit, please email EPRS-ExPostImpactAssessment@ep.europa.eu  

LANGUAGE VERSIONS 
Original: EN 

This document is available on the internet at: http://www.europarl.europa.eu/thinktank 

DISCLAIMER 
The content of this document is the sole responsibility of the author and any opinions 
expressed  therein  do  not  necessarily  represent  the  official  position  of  the  European 
Parliament. It is addressed to the Members and staff of the EP for their parliamentary 
work.  Reproduction  and  translation  for  non-commercial  purposes  are  authorised, 
provided  the  source  is  acknowledged  and  the  European  Parliament  is  given  prior 
notice and sent a copy. 

Manuscript completed in May 2015. Brussels © European Union, 2015. 

PE 547.555 
ISBN: 978-92-823-7081-0 
DOI: 10.2861/00840 
CAT: QA-02-15-335-EN-N 

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European Progress Microfinance Facility - Interim evaluation 

Contents 

Contents ............................................................................................................................. 3 

Executive summary .......................................................................................................... 4 

1. 

Background information ................................................................................. 6 
1.1.  The meaning of 'micro' ..................................................................................... 6 
1.2.  The road to Microfinance Facility ................................................................... 7 
1.3.  The Decision - main features ........................................................................... 8 
1.4.  The Parliament's input ..................................................................................... 9 
1.5.  The financing process ..................................................................................... 10 
1.6.  The future of Microcredit Facility ................................................................. 11 

2. 

Implementation of EPMF .............................................................................. 12 
2.1.  Geographical and sectoral scope .................................................................. 12 
2.2.  Financial support ............................................................................................ 13 
2.3.  Guarantees ....................................................................................................... 14 
2.4.  Social and employment impact ..................................................................... 15 
2.5.  Synergies with other EU instruments .......................................................... 16 

3. 

The Facility's objectives and effects ............................................................. 17 

3.1.  Micro-credits covered by the Microfinance Facility –  

Are they different from what the market offers? ....................................... 17 

3.2.  Micro-credits covered by the Microfinance Facility –  

What is measured? .......................................................................................... 18 

3.3.  Micro-credit covered by the Microfinance Facility –  

Is the objective being reached? ...................................................................... 18 
3.4.  Additional institutional arrangements ........................................................ 19 
3.4.1.  Representative organisations ........................................................... 19 

3.4.2.  National contact points ..................................................................... 20 

3.5.  External evaluation's assessment .................................................................. 20 

4. 

Conclusions ..................................................................................................... 23 

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European Implementation Assessment 

Executive summary 

In  response  to  the  worsening  credit  market  in  the  European  Union,  and  in  order  to 
contribute to the goals of the Europe 2020 Strategy on Growth and Jobs, the European 
Progress Microfinance Facility for employment and social inclusion was established by 
a  Decision  of  the  European  Parliament  and  the  Council  in  March  2010.  The 
Microfinance  Facility  offers  guarantees  and  funded  instruments  to  microcredit 
providers  (banks  or  non-bank  institutions)  who  in  turn  are  able  to  extend  credit  to 
individual persons and/or enterprises. 

The  management  of  the  specific  financial  instruments  of  the  European  Progress 
Microfinance Facility (EPMF) is carried out by the European Investment Fund, on the 
basis of special agreements with the European Commission, which remains responsible 
for  the  overall  implementation.  In  addition  to  the  annual  reports,  and  in  accordance 
with the establishing Decision itself, an interim evaluation analysing multiple aspects 
of  the  microcredit  provision  facilitated  with  the  EU  action  was  prepared  for  the 
Commission  by  an  external  consultancy.  It  was  made  available  to  the  Parliament's 
services in advance of the official publication, for the preparation of this Analysis. 

The  number  of  credit  intermediaries  involved  in  EPMF  grew  to  60  providers  in  May 
2015,  covering  22  of  the  28  current  EU  Member  States,  and  -  by  September  2013  - 
disbursed 13,252 microloans with an overall value of 124,6 million euro (with the most 
recent estimates of the European Commission further increasing these figures to 31,000 
final recipients and 270 million euro). 

The  socio-economic  effects  of  the  Microfinance  Facility  are  compared  with  the 
objectives set by Decision 283/2010, that is the provision of microfinance to persons in 
difficulties  with  regard  to  the  labour  market,  facing  social  exclusion  and/or  in  a 
disadvantaged position for the conventional credit market, who want to start or further 
develop  their  own  micro-enterprise.  The  available  data  indicate  that  the  funds  and 
guarantees available under EPMF indeed contributed to the job-preservation and job-
creation  in  Europe,  but  there  was  relatively  little  focus  on  such  vulnerable  groups  as 
migrants  or  disabled  persons.  In  line  with  a  separate  objective  of  gender  equality,  a 
rather balanced outreach was observed. 

As  in  the  case  of  other  EU  programmes,  special  attention  was  given  to  the 
complementarity  of  EPMF  with  other  instruments,  especially  the  European  Social 
Fund.  However,  only  part  of  the  microcredit  providers  was  actually  involved  in  the 
suggested  cooperation  with  entities  (for  example  organisations  representing  the  final 
recipients)  providing  training  and  mentoring  services,  while  some  offered  such 
themselves. There was also little confirmed reaction to a suggestion made on the basis 
of  Parliament's  amendment,  which  was  for  the  Member  States  to  establish  national 
contact  points  to  promote  and  coordinate  actions  in  their  respective  territories.  In  a 
separate institutional observation, the voluntary European Code of Good Conduct for 
Microcredit Provision still seems to be too little known in the sector. 

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European Progress Microfinance Facility - Interim evaluation 

The Microfinance Facility will continue to operate actively (offering its products) until 
April  2016,  but  it  is  already  in  the  process  of  being  replaced  (alongside  some  other 
programmes)  by  the  new  Programme  for  Employment  and  Social  Innovation  (EaSI), 
established for the period 2014-2020. Improved monitoring and social reporting in the 
remaining period of EPMF as well as EaSI could lead to more informative evaluation of 
the effectiveness and sustainability of the microcredit-oriented action taken at the EU 
level. 

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European Implementation Assessment 

1.  Background information 

Microfinance,  which  is  nowadays  present  in  many  parts  of  the  world,  offers  people 
that  are  for  some  reason  excluded  from  standard  financial  services  (for  example  by 
being  considered  –  if  unemployed  –  as  too  risky  by  the  banks)  the  opportunity  to 
obtain small loans in order to start or develop productive activities. Those activities are 
mostly small or even micro businesses, which in turn generate regular income for their 
owners  and  -  if  there  are  any  -  other  employees.  In  an  Overview  of  the  microcredit 
sector  in  the  European  Union,  published  by  the  European  Microfinance  Network,  a 
steadily growing trend was identified over recent years in the microfinance provision 
in the EU, characterised by a wide and diverse set of institutions active in the market.1 
Although  the  availability  of  data  for  employment  impact,  client  outreach  and  social 
performance (which  makes  the  foundation  of  micro-credits) was  found  to  be  limited, 
the general impact of that sector in Europe in 2013 alone was considered - on the basis 
of enterprises supported - to be above 250,000 jobs.2 

In  the  first  part  of  this  Analysis,  the  basic  information  is  presented  on  the  European 
Progress  Microfinance  Facility  (hereafter  -  the  Microfinance  Facility  or  EPMF),  a 
specific  instrument  established  by  the  European  Union  in  2010.  This  part  covers  the 
explanation of 'microcredit' and 'micro-enterprise', the process that led to the adoption 
of  a  Decision  establishing  EPMF  and  that  legal  act's  basic  features,  as  well  as  the 
influence of the European Parliament on the construction of Microfinance Facility and 
the latter's future perspectives. 

1.1. The meaning of 'micro' 

By 2014, there were 45 different microcredit providers in 19 Member States, providing - 
within  the  framework  of  EPMF  -  microcredits  to  self-employed  and  micro-
entrepreneurs.  It  is  thus  necessary  to  have  a  clear  understanding  of  what  'micro' 
means. 

Microfinance  -  which  covers  more  than  just  credit,  but  originated  from  it  -  is  the 
provision of basic financial services to poor (low-income) people who traditionally lack 
access to banking and related services (definition of the Consultative Group to Assist 
the Poor - CGAP). 

Micro-credit  is  defined  as  a  loan  or  lease  under  25,000  euro  to  support  the 
development  of  self-employment  and  micro-enterprises.  It  has  a  double  impact, 
sometimes  also  referred  to  as  ‘the  two  sides  of  the  microfinance  coin’:  an  economic 
impact - as it allows the creation of income generating activities, and a social impact - 
as  it  contributes  to  financial  inclusion  and  therefore  to  the  social  inclusion  of 
individuals.3 

1 EMN Overview, p. 10; its Executive summary was also published separately, as an EMN policy note. 
2 EMN Overview, p. 11. 
3 Bruhn-Leon, B., Eriksson, P., Kraemer-Eis, H., (2012), Progress for Microfinance in Europe, EIF Working 
Paper 2012/13, p. 6. 

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European Progress Microfinance Facility - Interim evaluation 

Consequently,  a  separate  recital  (14)  in  Decision  283/2010  which  established  the 
Microfinance Facility, states that for the purposes of this decision, 'microfinance' shall 
include  guarantees,  micro-credit,  equity  and  quasi-equity  extended  to  persons  and 
micro-enterprises  covered,  micro-credit  being  defined  as  loans  under  25,000  euro.  It 
also defines the term 'micro-enterprise' as an enterprise employing less than 10 people, 
including self-employment,  and whose  annual  turnover  and/or  annual balance  sheet 
total does not exceed 2 million euro4. In addition, in the following recital (15), 'micro-
enterprise  in  the  social  economy'  is  defined  as  a  micro-enterprise  which  produces 
goods and services with a clear social mission or which provides services to members 
of the community with a non-profit purpose. 

1.2. The road to Microfinance Facility 

Support  for  micro-enterprises  and  micro-finance  institutions  in  Europe  has  been  the 
subject  of  a  number  of  actions  and  acts  in  the  past,  such  as  those  providing  risk 
protection  to  financial  institutions  for  new  micro-credit  portfolios  under  the  Growth 
and  Employment  initiative  (1998-2000),  the  Multi-Annual  Programme  for  the 
promotion  of  enterprise  and  entrepreneurship  (2001-2005),  and  -  more  recently  -  the 
Competitiveness  and  Innovation  Framework  Programme  (2007-2013),  as  well  as  the 
JASMINE5 and JEREMIE6 programmes. The main reason for such support was and is 
the relative problem of many potential entrepreneurs to access the conventional credit 
market. Quite tellingly, some credit intermediaries surveyed by the external evaluation 
published by the European Commission, considered that ‘in the situation of a lasting 
economic downturn, microenterprises can be considered as vulnerable by default, both 
due to the higher risks they are faced with and their reduced access to finance.’7 

Due to national specificities and differences in the history of microcredit development, 
especially  between  Eastern  and  Western  Europe,  but  also  between  North  and  South, 
almost each EU Member State has a different situation with regard to its existence and 
functioning.  In  a  Working  Paper  of  the  European  Investment  Fund,  published  in 
November 20098, its authors showed that there was a wide spectra of final beneficiaries 
and  intermediaries,  and  concluded  that  there  was  no  common  microfinance  business 
model  in  Europe.  While  the  microfinance  market  was  considered  immature  and 
fragmented, the study pointed to its growing importance as a market segment with a 
potential  to  counter  poverty  and  unemployment  while  fostering  financial  and  social 
inclusion. 

4 As in Article 2(3) of the Commission Recommendation 2003/361/EC concerning the definition of micro, 
small and medium-sized enterprises. 
5 Joint Action to Support Microfinance Institutions. 
6 Joint European Resources for Micro to Medium Enterprises. 
7 Ramboll evaluation, p. 65. 
8 EIF working paper on the European microfinance market, Kraemer-Eis and Conforti, 2009. 

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European Implementation Assessment 

legislative-initiative  resolution9,  and 

Following  a  number  of  communications  and  other  documents,  the  European 
Parliament's 
legislative 
proposal10,  which  highlighted  the  crisis-related  context  and  the  importance  to  'retain 
and bring more people into the labour market'11,  the European Progress Microfinance 
Facility  for  employment  and  social  inclusion  was  established  by  Decision  283/2010 
(hereafter - the Decision) adopted on 25 March 2010 by the European Parliament and 
the Council12. 

the  Commission's 

1.3. The Decision - main features 

The  Microfinance  Facility  offers  its  products  -  guarantees  and  funded  instruments, 
such as loans and equity - not to individual persons or enterprises, but to microcredit 
providers,  that  is  banks  or  non-bank  institutions,  which  are  also  referred  to  as 
microfinance intermediaries (MFIs). This is of course done with the aim of improving 
accessibility and availability of microfinance to the final recipients, also known as the 
micro-borrowers. 

In  order  to  ensure  'concentrate  leverage'  from  international  financial  institutions,  this 
'single  EU-wide  facility'13  was  made  subject  to  the  management  of  the  European 
Investment  Fund  (EIF),  on  behalf  of  the  European  Commission  (being  responsible  in 
accordance  with  the  Decision's  Article  5(1)).  With  the  exception  of  support  measures 
(set  out  in  Article  4(1)(d)14),  the  Commission  was  in  fact  authorised  to  conclude 
appropriate agreements with the international financial institutions (especially EIF and 
European  Investment  Bank  -  EIB),  with  special  attention  given  to  'additionality  and 
coordination  with  existing  European  and  national  financial  instruments'  and  a 
'comprehensive  and  balanced  coverage  between  the  Member  States'.15  These 
agreements are only available on demand, and will be mentioned below. 

In  accordance  with  Article  3  of  the  Decision,  the  financial  contribution  from  the  EU 
budget  was  set  at  the  level  of  100  million  euro16,  indicated  for  the  period  from  1 
January 2010 to 31 December 2013 but once committed - available also in the following 
years.  The  Microfinance  Facility  also  benefits  from  an  additional  100  million  euro 
provided  by  the  EIB, assured  on  the  basis  of  a specific  agreement with the  European 
Commission.  

9 Adopted on 24 March 2009 (2008/2122(INL)). 
10  COM(2009)  333  final;  it  was  accompanied  by  an  ex-ante  evaluation  (SEC(2009)907)  which  contained 
information about  the  needs  to  be  met,  the  objectives  to  be  achieved,  the  risks  linked  with  the  proposal 
and the alternative scenarios. 
11 Idem, Explanatory Memorandum, p. 2. 
12 OJ L 087/1, 07.04.2010. 
13 See the Decision's recital 12. 
14 Such as communication activities, monitoring, control, audit and evaluation which are directly necessary for the 
effective and efficient implementation of this Decision and for the achievement of its objectives. 
15 Article 5(2). 
16  60  million  euro  were  reallocated  from  the  Progress  programme,  by  Decision  284/2010.  Additional  3 
million  euro  have  been  added  in  2010  from  the  earlier  EP  preparatory  action  (see  below),  and  2  million 
euro from a global transfer procedure 2012/2013. 

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EIF is obliged to transmit annual implementation reports to the European Commission, 
setting  out  the  supported  activities  in  terms  of  financial  implementation,  distribution 
and  accessibility  of  funding  with  regard  to  sectors  and  type  of  beneficiaries, 
applications  accepted  or  rejected,  contracts  concluded,  actions  funded  and  results17. 
The Commission in turn presents its own report, which should specifically contain the 
total number  of beneficiaries  and  the  distribution  of  amounts  geographically and  per 
sector18. 

1.4. The Parliament's input 

An  early-stage  mandate  in  support  of  the  European  microfinance  sector  was  the 
European Parliament Preparatory Action, a 4 million euro project under which the EIF 
has, since April 2010, made four risk capital investments and loans to non-bank MFIs. 

During  the  legislative  procedure  leading  to  the  adoption  of  the  EPMF  Decision,  the 
Parliament proposed that19: 

-  The rationale for EPMF is clearly stated, namely that an increasing amount of 
micro-finance  to  vulnerable  people  who  are  in  a  disadvantaged  position  with 
regard  to  access  to  the  conventional  credit  market  in  the  European  Union  is 
provided by non-commercial microfinance institutions, credit unions and banks 
implementing corporate social responsibility (CSR). In this context, Parliament 
stressed  that  the  Microfinance  Facility  could  help  these  providers,  which 
supplement  the  commercial  banking  market,  with  an  increased  availability  of 
micro-finance to meet the current levels of demand – this is reflected in recital 8; 
-  Since  in  many  cases  the  providers  of  micro-finance  in  Europe  are  commercial 
banks, they should become important partners in the Facility, with a view to re-
establishing  trust  on  the  credit  market  and  with  a  focus  mainly  on  customers 
with no credit standing – added as recital 9; 
It  is  underlined  that  public  and  private  bodies providing  micro-finance  under 
the Decision should comply with principles of responsible lending and thereby 
avoid, in particular, over-indebtedness of persons and undertakings – this was 
introduced as recital 1020;  

- 

-  Equality  between  women  and  men  should  be  actively  pursued  as  regards 
access to micro-credit facility – promotion of equal opportunities was specified 
among the Decision’s objectives in Article 2; 

-  National  contact  points  to  facilitate  the  implementation  of  the  instrument  are 

established – this was added to the final recital 7. 

17 See the Decision’s article 8(1). 
18 See the Decision’s article 8(2). 
19 As set out in Göncz Report, adopted by EMPL on 10 November 2009. 
20 This and the previous two recitals provide thus an indication for the practical implementation of Article 
4(2),  which  set  the  material  scope  of  the  Decision:  The  Facility  shall  be  open  to  public  and  private  bodies 
established  on national,  regional and  local  levels  in  the  Member States  which provide  microfinance  to  persons  and 
micro-enterprises in the Member States. 

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Following relatively short negotiations with the Council, the legislative resolution was 
adopted  by  Parliament  on  15  December  2009  with  a  big  majority  of  516  votes  to  82, 
with 4 abstentions. 

1.5. The financing process 

The  overall  objective  of  the  Microfinance  Facility  was  and  is  to  generate  46 000 
microloans  by  2020,  with  an  estimate  amount  of  joint  leverage  reaching  500 million 
euro. This aimed leverage was already indicated in the EC response to the Parliament's 
resolution  of  24  March  200921,  and  later  -  in  the  Explanatory  Memorandum  of  its 
legislative proposal. It was also stated as EPMF's specific 'operational' objective in the 
ex-ante  evaluation  accompanying  the  legislative  proposal.22  As  explained  earlier,  the 
provision of those loans is facilitated by support or guarantees for the credit providers 
that sign an appropriate contract with the European Investment Fund (EIF). 

According to the management agreement between the European Commission and the 
EIF,  microcredit  intermediaries  are  ‘selected  in  compliance  with  EIF's  policies,  rules 
and  procedures  and  in  conformity  with  best  business  and  market  practices  in  a  fair 
manner,  avoiding  any  conflict  of  interest.’23  In  response  to  a  call  for  expression  of 
interest in guarantees, the intermediaries submit proposals to the EIF which examines 
the applications, puts them for approval by its Board and the European Commission, 
and then negotiates and signs the contracts. The procedures are broadly the same for 
the funded instruments, apart from the fact that are no calls for expression of interest 
and applications are approved only by the EIF Board. 

Following a modest beginning, the number of credit intermediaries involved in EPMF 
grew  from  26  providers  in  2012  to  40  providers  in  2013,  and  60  in  May  2015.  The 
detailed  overview  presented  by  the  external  evaluation24  covers  44  contracts  (for 
guarantees and funded instruments) concluded between the EIF and 28 intermediaries 
by the end of June 2013.  

In  effect,  by  September  2013,  microcredit  providers  had  disbursed  a  total  of  13,252 
microloans with an overall value of 124.6 million euro. The last European Commission 
implementation report, published in October 2014, raised this to an estimation of more 
than 20,000 final recipients and 182 million euro, and the most recent figures provided 
in its presentations - 31,000 and 270 million25. 

21 See above – footnote 9. 
22 SEC(2009)907, p. 10; the Microfinance Facility was then planned to last for up to 8 years. 
23  Annex  1  to  the  Fiduciary  and  Management  agreement  between  the  EU  and  the  EIF  for  the  European  Progress 
Microfinance Facility for Employment and Social Inclusion. For the selection criteria for intermediaries seeking 
to  secure  a  guarantee,  and  information  from  interviews  with  non-participating  MFIs,  see  Ramboll 
evaluation, pp. 20-21. 
24 Ramboll evaluation, p. 13-14. A separate table on pages 16-19 provides details of the MFIs. 
25 They will likely be published in the up-coming European Commission implementation report 2014. 

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1.6. The future of Microcredit Facility 

The  successor-instrument  for  the  Microfinance  Facility  (as  well  as  some  other 
programmes) is the Programme for Employment and Social Innovation (EaSI), which 
was already agreed by the European Parliament and the Council26. Activity in the third 
‘axis’  of  EaSI,  covering  microfinance  (for  which  –  as  well  as  for  supporting  social 
entrepreneurship – 21% of the total 919,469 million euro for the 2014-2020 period was 
allocated) was supposed to begin already in 2014, but – as confirmed by the European 
Commission – is still in the process of preparation. 

It  is  important  to  realise  that  lessons  learned  from  the  implementation  of  the 
Microfinance Facility have already fed into the design of EaSI, specifically on the basis 
of  a  ‘Study  on  imperfections  in  the  area  of  microfinance  and  options  how  to  address 
them  through  an  EU  financial  instrument’,  prepared  on  the  European  Commission’s 
request by Evers & Jung27. The new programme was intended to react to the criticism 
that  during  the  2007-2013  financial  period  the  European  Union’s  support  for 
microfinance  was  scattered  among  several  separate,  although  complementary, 
programmes28.  In  addition,  increased  attention  is  supposed  be  given  to  capacity-
building for microcredit providers, and more technical assistance will be offered under 
one of EaSI axis. 

The  formal  end  of  EPMF,  as  set  out  in  the  agreement  between  the  European 
Commission  and  the  European  Investment  Fund,  will  be  on  7  April  2016  when  the 
remaining funds should in principle be paid back to the EC. The Commission estimates 
that approximately 70 million euro will be available from the Microfinance Facility and 
the  reflow  of  these  funds  to  the  EIB  will  probably  start  in  2016.29  The  European 
Commission’s report on EPMF in 2013 simply stated that it (the Microfinance Facility) 
will continue to offer its products until 2016 to keep addressing the financing gap on 
the EU microfinance market. 

In  order  to  ensure  legal  clarity,  the  EaSI  Regulation  deleted  the  provision  of  the 
Decision’s Article 8(3), which stated that following the presentation of the third annual 
report and on the basis of a proposal by the Commission, the European Parliament and 
the Council may review it (the Decision establishing EPMF). 

26 Regulation 1296/2013 
27 Available at http://ec.europa.eu/social/BlobServlet?docId=12485&langId=en. 
28 This has already been noted in the European Commission implementation report 2011, published in July 
2012 (COM(2012) 391 final, p. 16). 
29 Evers & Jung, Study on imperfections…, p. 36. 

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2.  Implementation of EPMF 

In accordance with Article 8(5) of the Decision, the European Commission shall make 
efforts  to  ensure  that  the  Microfinance  Facility  meets  its  objective  and  is  accessible 
across  the  European  Union  to  those  who  are  at  risk  of  social  exclusion  or  who  are 
finding it difficult to enter the conventional credit market. 

In procedural terms, as specified by Article 8(1) of the Decision, the European Commission is 
obliged  to  present  each  year  a  quantitative  and  qualitative  annual  report  on  the  undertaken 
activities.  This  implementation  report  should  in  particular  contain  information  relating  to 
applications adopted or rejected, contracts concluded, actions funded, the total number and type 
of  beneficiaries  and  the  distribution  of  amounts  geographically  and  per  sector.  The  annual 
reports  should  also  contain  information  on  the  impact  and  sustainability  of  the  Microfinance 
Facility, expressed by the total number of persons and microenterprises which are still employed 
or  in  business  at  the  end  of  the  period  of  EPMF  support.  Finally,  the  reports  should  include 
information  on  the  Facility's  complementarity  with  other  EU  interventions,  notably  the 
European Social Fund. 

The  most  recent  European  Commission  report  on  activities  and  developments  in  the 
Microfinance  Facility  (in  2013)30  was  published  on  20  October  2014.  This  part  of  the 
analysis provides basic information on the scope of EPMF application, its two financial 
elements  (support  and  guarantees),  social  and  employment  impacts,  as  well  as 
synergies with other EU instruments. 

2.1. Geographical and sectoral scope 

With the ultimate aim to support microcredit throughout the whole European Union, 
the  Microfinance  Facility  also  tries  to  have  a  balanced  geographical  distribution.  The 
European Investment Fund was thus required to issue guarantees for intermediaries in 
at  least  12  EU  Member  States  (which  was  achieved  in  the  first  full  year  of 
implementation – 2011) and to respect a concentration limit per country. Until March 
of  2013  only  one  country  reached  such  a  limit  (Romania),  resulting  in  the  denial  of 
funding for further intermediaries from that country.31 

By  the  end  of  March  2012,  contracts  for  funded  instruments  were  signed  in  nine 
Member States (BG, CY, EL, ES, FR, LT, PL, RO and SI), and 1 year later – in ten (with 
the  addition  of  IT  and  PT,  but  without  EL).  The  guarantees  had  been  issued  in  six 
countries  by  March  2012  (BE,  EL,  NL,  PL,  PT,  RO)  and  nine  by  March  2013  (the  list 
above plus IE, FR and AT). The geographical coverage later increased, and the EPMF 
was extended into three more Member States (DK, SK and UK) during the rest of 2013, 
two  more  (SE  and  CR)  in  2014,  and  another  two  (EE  and  HU)  in  early  2015.  The 
Microfinance Facility thus covers 22 of the 28 current EU Member States. 

30 COM(2014) 639 final. 
31 Evers & Jung, Study on imperfections..., p. 48/49. 

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The  Commission’s  implementation  report  for  2011  underlined  that  the  1079  micro-
enterprises  financed  by  the  then  five  reporting  microcredit  providers  are  active  in  a 
variety  of  sectors32.  The  predominant  sectors  were  already  then  trade  (28.5%)  and 
agriculture  (20%).  In  2013,  the  sector  distribution  remained  broadly  similar  to  the 
previous ones, with more than half of final recipients coming from trade (3% increase 
since 2012) and agriculture (7% decrease). 

2.2. Financial support 

The  financial  support  in  form  of  funded instruments  (senior  and  subordinated loans, 
equity participation and risk-sharing loans33) is provided to microcredit intermediaries 
'Fond  Commun  de  Placement'  (FCP),  established  in 
via  a  Luxembourg-based 
November 2010 and comprising 178 million euro). 

32 COM(2012) 391, p. 13. 
33 Bruhn-Leon, B., Eriksson, P., Kraemer-Eis, H., (2012), Progress for Microfinance in Europe, EIF Working 
Paper 2012/13, p. 23/24. 

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By  the  end  of  March  2014,  the  EIF  signed  27  agreements  with  microfinance 
intermediaries  to  provide  them  with  funded  instruments.  According  to  the  external 
evaluation, around half of the MFIs reported to develop the intended portfolio at the 
time.34 The intermediaries provided somewhat conflicting opinions with regard to the 
difficulties of the market, indicating the economic downturn to either be the reason for 
less  interest  in  starting  new  companies  (especially  taking  into  account  the  relatively 
higher costs of getting a micro-credit), or the rationale for more unemployed persons 
interested in getting one (credit). 

The share of defaulted loans for the funded instruments is currently 1.59%. 

2.3. Guarantees 

The guarantees (funded only from the European Commission's resources, to the joint 
amount  of  23,8  million  euro)  are  issued  under  a  Fiduciary  and  Management 
Agreement  (FMA)  between  the  European  Commission  and  the  European  Investment 
Fund, launched in July 2010. It is important to note that the maximum guarantee rate 
covered by this instrument is 75%. 

The number of intermediaries supported by a guarantee increased from 12 in 2012 to 
27  at  the  end  of  2013.  By  the  end  of  March  2014,  the  EIF  signed  30  agreements  and 
according to the external evaluation, around 2/3 of the MFIs reported to develop the 
intended portfolio.35 
It  was  expected  that  the  overall  guarantee  budget  provided  by  the  EU  will  be  fully 
used  by  the  end  of  2014,  and  that  is  indeed  the  case  at  the  moment  of  writing  this 
analysis.  The  total  commitment  to  microcredit  providers  amounted  to  134.7  million 
euro (including guarantees, where the total cap amount is 20.7 million euro), and the 
total  disbursement  of  funded  instruments  is  60.17  million  euro.  The  net  amount  of 
called guarantees was relatively low, at 1.34 million euro, with two institutions having 
called almost 90% of this amount. The net amount of called guarantees was expected to 
increase significantly over time and at the end of March 2014, it had increased to 2.11 
million  euro.  When  issuing  new  financial  instruments  under  EaSI,  the  provision  of 
guarantees to microfinance intermediaries is supposed to be prioritised. 

The share of defaulted loans for the guarantees is currently 1.96%. 

34 Ramboll evaluation, Executive summary - Efficiency. 
35 Idem. 

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2.4. Social and employment impact 

The  ex-ante  evaluation,  which  accompanied  the  Commission's  proposal  for  the 
Decision,  explained  that  the  'combination  of  the  general  credit  squeeze  with  the 
increasing levels of unemployment means that people who would like to either become 
self-employed  or  start  a  micro  enterprise  cannot  do  so.'36  The  overview  of  existing 
efforts  at  European  and  national  levels  led  to  a  conclusion  that  they  need  to  be 
strengthened in  order  to  increase  the supply  of micro-credits  especially to  those who 
need it most - that is the unemployed or vulnerable people who want to go into self-
employment but do not have access to bank credits.37 

According  to  the  ex-post  evaluation,  almost  60%  of  the  EPMF  final  recipients  in  the 
period from 2011 to 2013 were unemployed at the time of applying for the loan which 
allowed them to start a business38. This figure is somewhat divergent from the results 
of the micro-borrowers’ survey, where ‘only’ 33% confirmed this situation, but this is 
explained by the fact that enterprises (which were also questioned) could not possibly 
claim  the  ‘unemployment’  status  as  such.  Of  course,  there  are  differences  in  these 
percentages between specific Member States and credit providers. 

Another finding, although certainly not unexpected, was that the final recipients of the 
Microfinance Facility have on average lower income, which matches the objective that 
it should support those who would otherwise have big difficulty in launching any kind 
of new economic activity.  

With  regard  to  the  age  of  final  recipients,  the  Commission  reported  a  huge  majority 
(84.4%) which were in the middle group of 25-54 year-olds, with those aged under 25 
constituting only 5.9% of loan-takers (compared to 5.2% in 2012). What turned out to 
be  more  difficult  in  measurement  is  the  amount  or  proportion  of  applications  from 
migrants, minorities and or disabled persons, since the applicants did not necessarily 
provide such information when asking for the credit. 
According to the external evaluation, numerous MFIs make purposeful efforts to reach 
potential  clients  of  migrant  origin  (for  example  by  having  branch  offices  is  relevant 
population  areas)  and  young  people  (targeting  employment  fairs  and  other 
educational-based events), but much less so with regard to persons with disabilities. 

As  the  education-criteria  (where  lower  education  would  for  example  qualify  the 
person to have less chances for obtaining a standard credit, but also increase the risk of 
being  unemployed),  the  evaluation  –  based  on  a  small  research  sample  –  could  not 
provide clear conclusions in either direction.39 

Based  on  the  responses  from  the  MFIs  themselves,  and  with  a  disclaimer  concerning 
low  availability  of  data  on  various  group  outreach  at  the  interim  phase  of  the 
Microfinance  Facility,  the  external  evaluation  stated  that  ‘overall,  intermediaries  do 

36 SEC(2009)907, p. 5. 
37 SEC(2009)907, p. 9. 
38 Ramboll evaluation, p. 56. 
39 Idem, p. 61. 

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target  those  who  are  looking  to  start  or  grow  a  micro-enterprise  who  are  financially 
excluded,  but  without  specifically  addressing  particular  vulnerable  groups  or  social 
enterprises.’40 With social enterprises making only a limited part of the final recipients 
of EPMF, exemplary opinions indicated that such entities are less likely to ask and/or 
get a microcredit, due to their usual limitations and capabilities41. 
The European Commission report on 2013 claimed that social and employment impact 
of  the  Microfinance  Facility  was  confirmed,  in  the  sense  that  entrepreneurship  can 
flourish with sufficient funding, and that it can help disadvantaged groups find a way 
out  of  unemployment.  An  interesting  case  could  additionally  be  made  by  those 
enterprises  that -  thanks  to  the  support from  EPMF  -  move  from informal  (‘shadow’) 
economy to the regular business sphere. As for the development of entrepreneurship in 
general,  the  external  evaluation  considered  that  ‘it  is  too  early  to  assess  whether 
Progress  Microfinance  supported  credits  have  contributed  to  access  to  mainstream 
banking in the long term.’42 

2.5. Synergies with other EU instruments 

As already stated above, when presenting the future of the Microfinance Facility, the 
criticism of separate instruments existing at EU level with support for microfinance led 
to the establishment of a new, broader programme (EaSI) for the period 2014-2020. In 
the  2013  report,  the  European  Commission  provides  only  general  conclusions  that 
synergies  between  EPMF  and  other  EU  instruments  were  sought  ‘in  order  to  ensure 
efficient coordination and smart complementarity’. A reference is made to the fact that 
all  microcredit  providers  are  required  to  work  with  entities  providing  training  and 
mentoring  services,  particularly  those  supported  by  the  European  Social  Fund  (ESF), 
but only around 50% are said to have done this43. 

training,  and 

technical  assistance  and 

The  external  evaluation  rightly  pointed  to  JASMINE44,  which  provided  many 
intermediaries  with 
identified  cases 
demonstrating  the  potential  for  creating  synergies  between  the  Microfinance  Facility 
and  programmes  funded  by  ESF,  for  example  the  latter’s  interventions  to  promote 
access to employment. However, only 20% of intermediaries reported cooperation with 
entities supported by the ESF, such as business support centres (which means that the 
remaining  30%  of  the  half  mentioned  above  cooperated  with  other  entities).  The 
consultants concluded that 'there is a need for a stronger strategic approach in order to 
better  coordinate  ESF  and  EPMF  support  and  realise  the  inherent  potential  for 
complementarity between the two programmes'.45  

40 Idem, p. 11. 
41 Idem, p. 54. 
42 Ramboll evaluation, Executive summary - Sustainability. 
43 The European Commission indicated that this figure has later risen to 80%. 
44 Joint Action to Support Microfinance Institutions. 
45 Ramboll evaluation, Executive summary - Complementarity. 

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3.  The Facility's objectives and effects 

The external evaluation first presents the two objectives of the Microfinance Facility as 
being the increase of lending activities by the microcredit providers, and improving the 
access to microfinance by high-risk groups. This distinction might properly reflect the 
two-fold  characteristic  of  instruments  provided  by  EPMF  (actual  lending  vs 
guarantees) but not the objectives as set in Article 2 of the Decision – which are better 
reflected  later  (in  part  4)  of  the  evaluation  report.  It  rightly  refers  to  the  general 
objectives of the Progress Programme, as well as the Microfinance Facility's coherence 
with  the  employment  and  social  goals  of  the  Europe  2020  Strategy  on  Growth  and 
Jobs.46 

Full text of Article 2 of the Decision establishing EPMF:  

1.  The  Facility  shall  provide  Union  resources  to  increase  access  to,  and  availability  of, 
microfinance for: (a) persons who have lost or are at risk of losing their job, or who have 
difficulties entering or re-entering the labour market, as well as persons who are facing the 
threat of social exclusion or vulnerable persons who are in a disadvantaged position with 
regard to access to the conventional credit market and who want to start or further develop 
their own micro-enterprise, including self-employment; (b) micro-enterprises, especially in 
the social economy, as well as micro-enterprises which employ persons referred to in point 
(a). 

2.  The Facility shall provide Union resources for access to microfinance, and actively promote 

equal opportunities for women and men. 

This part of the analysis looks at the already visible effects of Microfinance Facility, in 
view  of  its  objective(s)  set  by  the  Decision,  and  some  additional  –  institutional  – 
aspects. 

3.1. Micro-credits  covered  by  the  Microfinance  Facility  –  Are  they 

different from what the market offers? 

The  detailed  conditions  of  specific  micro-credits  (incl.  interest  rates,  fees,  collateral, 
repayment,  and  duration)  vary  significantly  between  countries  and  intermediaries47, 
but  it  is  these  conditions  that  ultimately  make  a  difference  for  the  individual  or 
business  decision  to  take  a  credit.  The  external  evaluation  was  not  able  to  identify 
‘clear  trends  when  it  comes  to  comparing  the  pricing  of  the  Facility-backed  products 
and  other  comparable  products  or  larger  loans’.48  On  the  other  hand,  it  made  an 
interesting  analysis  of  the  non-bank  intermediaries’  compliance  with  the  voluntary 
European  Code  of  Good  Conduct  for  Microcredit  Provision,  with  a  surprising 
discovery that although one-third of the MFIs interviewed confirmed the signature of 
that code, half of them didn’t, and – which is somewhat stranger – 19% didn’t know if 

46 Ramboll evaluation, p. 8. 
47 See table on pages 31-34 of Ramboll evaluation. 
48 Ramboll evaluation, p. 35/36. 

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they did or not. The importance of the Code should not be underestimated, as among 
its  provisions  there  is  for  example  a  specific  one  on  avoiding  over-indebtedness49, 
which was an issue raised by the European Parliament before the Decision’s adoption. 

3.2. Micro-credits  covered  by  the  Microfinance  Facility  –  What  is 

measured? 

In the legislative financial statement, which accompanied the legislative proposal, the 
European  Commission  proposed  two  indicators  to  measure  the  output  of  the 
Microfinance Facility: volume of credit and number of beneficiaries of the loan50. This 
was in line with the overall aim of the Microfinance Facility: 'to allow for achieving the 
objectives  set  in  terms  of  disbursing  loans  to  the  unemployed  and  disadvantaged 
groups and thus creating employment and social inclusion.51' 

With  regard  to  the  most  important  objective  –  the  employment-creation  impact,  the 
Microfinance Facility certainly helped a number of unemployed people start their own 
business: while a quarter of the borrowers surveyed by the external consultants were 
unemployed  when  applying  for  a  credit,  the  majority  of  them  reported  being  self-
employed  at  the  time  of  the  evaluation.  But  while  the  overall  unemployment  rate  of 
micro-borrowers  participating  in  the  survey  was  less  than  5%  (after  the  credit),52  the 
evaluation  admitted  that  evidence  for  the  job-creation  and  business-creation  effect  of 
the  EPMF  is  still  'anecdotal'.  Also,  only  13%  of  the  surveyed  borrowers  hired  an 
employee  as  a  result  of  the  loan,  and  the  evaluation  pointed  rather  to  the  job-
preservation effects on the already existing businesses.53 

3.3. Micro-credit  covered  by  the  Microfinance  Facility  –  Is  the 

objective being reached? 

In  terms  of  monetary  figures,  microcredit  providers  disbursed  a  total  of  13,252 
microloans  with  an  overall  aggregate  value  of  124,6 million  euro  by  September  2013. 
This was somewhat below the EIF projection of 142,4 million euro, in accordance with 
the  objective  set  (see  point  1.5.  above).54  In  addition,  the  leverage  effect  of  5,5  as  of 
March 2013 was above the set target of 5,0 (meaning that the funds committed from the 
EU budget of EUR 100 million should generate EUR 500 million in microcredits). 
A  positive  conclusion  of  the  external  evaluation  is  based  mostly  on  extrapolating 
survey  results  to  the  whole  Microfinance  Facility.  The  17%  of  final  recipients  stating 
that  their  application  for  a  credit  was  earlier  rejected  by  another  financial  institution 
led the external consultants to indicate that around 2,400 individuals and businesses in 
Europe would have been otherwise completely excluded from the credit market. The 

49 Clause 1.10. For some examples of procedures used by micro-credit providers to assess the eligibility of 
applicants – see Ramboll evaluation, p. 40. 
50 See COM(2009)0333, p. 16. 
51 SEC(2009)907, p. 15. 
52 Ramboll evaluation, Executive summary - Impact. 
53 Ramboll evaluation, Executive summary - Sustainability. 
54 Ramboll evaluation, Executive summary - Efficiency. 

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fact  that  for  68%  of  final  beneficiaries,  their  application  for  a  microcredit  provided 
within  the  framework  of  EPMF  was  their  first  ever  of  that  kind,  equally  led  to  the 
figure  of  8,560  persons  and  enterprises  taking  advantage  of  credit  thanks  to  this  EU 
instrument.55 

While  the  final  recipients  mostly  indicated  missing  collateral  as  the  reason  for  not 
obtaining  the  credit  elsewhere  (in  those  cases  where  they  actually  asked  for  it,  of 
course)56, it was on the basis of intermediaries’ responses that the external evaluators 
considered that belonging to ‘unprofitable target groups’ (young, unemployed or self-
employed, immigrants and minorities) was blocking access to other forms of credit. It 
should be noted that this information thus does not have a strong evidence base, but 
the evaluation report provides convincing case-studies in support of an argument that 
micro-finance indeed fills a certain gap in the financial system. It also admits that it is 
difficult  to  prove  that  the  Microfinance  Facility  increased  access  to finance  of specific 
groups,  as  they  were  mostly  already  target-customers  of  the  relevant  micro-finance 
providers. 

With  regard  to  Article  2(2)  of  the  Decision  (on  the  gender  aspect)  the  60/40 
male/female ratio (set by the European Commission in its evaluation criteria) is found 
close  to  being  reached  as  the  approximate  ratio in  micro-credits  supported  under  the 
Microfinance Facility was reported in 2013 to be 63/37, ‘in spite of an apparent lack of 
targeted efforts by the intermediaries'.57 In the more detailed part of the evaluation, a 
number of intermediaries is referred to as targeting women specifically.58 

3.4. Additional institutional arrangements 

In  addition  to  the  standard  formulation  of  ensuring  proper  complementarity  with 
other EU instruments, as described above (under point 2.5.), the Decision establishing 
the  Microfinance  Facility  also  introduced  one  institutional  obligation  and  made  one 
suggestion, both aimed at improving the future use of EPMF. 

3.4.1.   Representative organisations 

The  obligation  concerns  cooperation  of  microcredit  providers  with  organisations 
‘engaged in representing the interests of the final beneficiaries of micro-credit and with 
organisations,  in  particular  those  supported  by  the  ESF,  who  provide  mentoring  and 
training programmes to those final beneficiaries.59 The first part of this requirement is 
normally transposed into contract agreements between the European Investment Fund 
and  the  MFIs,  but  intermediaries  openly  admit  that  they  cooperate  with  the 
beneficiaries’  representative  organisations  (including  migrant,  ethnic,  and  producers’ 

55 Ramboll evaluation, p. 51. 
56 High debt level and non-acceptance for the business plan being also listed; gender, ethnic and disability 
issues almost non-existent; see Ramboll evaluation, p. 52. 
57 Ramboll evaluation, Executive summary - Effectiveness. 
58 Ramboll evaluation, p. 64. 
59 See Article 4 of the Decision. 

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associations),  in  order  to  reach  potential  clients  and  advertise  their  products.60  One 
intermediary,  on  the  other  hand,  claimed  that  its  non-cooperation  with  such 
associations is due to its policy of avoiding political influence. 

The  second  part  of  the  requirement  (on  training)  seems  to  have  been  somewhat 
misunderstood  by  the  external  evaluation,  which  provides  information  –  based  on 
interviews with the intermediaries – on training and mentoring provided by the credit-
providers  themselves  (sometimes  against  a  cost-covering  fee),  which  could  raise  the 
question of how the provision of financial products is separated from advice, and if the 
latter is independent or not. 

3.4.2.  National contact points 

The  suggestion  following  the  Parliament’s  amendment  that  Member  States  establish 
national contact points to promote, coordinate, assess and monitor all the actions taken 
under  the  Microfinance  Facility  in  their  respective  territories,  was  eventually  only 
reflected in a recital (7) of the Decision. The rationale for this institutional proposal was 
quite ambitious, aiming at making EPMF more effective, with a long-lasting impact in 
reaching  the  potential  beneficiaries,  and  serving  as  a  proactive  element  for  both 
economic  and  local  development  policies.  Unfortunately,  as  it  currently  stands,  this 
incentive does not seem to have been widely used in more than a few Member States 
(such as Poland61 and Italy62), as could have been expected from an optional provision 
for  institutional  support,  the  realisation  of  which  would  probably  mean  additional 
costs for national authorities. 

3.5. External evaluation's assessment 

The  results  of  the  evaluation  exercise  contracted  by  the  European  Commission  to 
Ramboll  Management  Consulting  were  eventually  published  only  on  5 May 201563. 
Admitting that it assesses the Microfinance Facility mid-way through its operation, the 
report  looks  at  the  specific  implementation  and  effectiveness  of  EPMF,  measures  its 
impact on lenders and borrowers, and examines the sustainability of the results.64 The 
contractors clearly underlined that due to the interim characteristic of the evaluation, 
their approach was mostly based on 'logically linked assumptions and hypothesis', and 
contribution analysis.65 

60 Ramboll evaluation, p. 41. 
61 http://www.instrumentyfinansoweue.gov.pl/ 
62 http://www.microcreditoitalia.org/index.php?lang=it 
63 http://ec.europa.eu/social/main.jsp?catId=738&langId=en&pubId=7760&type=2&furtherPubs=yes 
64 Ramboll evaluation, Executive summary. 
65 Ramboll evaluation, p. 1. 

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In  addition  to  the  elements  mentioned  -  where  relevant  -  above,  the  evaluation's 
conclusions were the following: 

-  Most  of 

the 

intermediaries 

interviewed,  especially  non-bank  financial 
institutions,  considered that  their  activity was  positively influenced  by EPMF. 
More  favourable  lending  conditions,  namely  lower  interest  rates  (which  are 
usually higher in micro-credits than conventional ones), were also indicated as 
an effect of the Microfinance Facility. What did not happen, was the provision 
of  micro-credit  in  new  areas.  However,  some  lenders  broadened  the  scope  of 
their  clients  (to  those  with  higher  risk)  thanks  to  the  EPMF.  The  opinions 
received  from  MFIs  led  the  evaluators  to  conclude  that  the  Facility  increased 
the  availability  of  microfinance  for  microenterprises,  since  the  EU  instrument 
permitted them (the intermediaries) to take more risks in granting credits.66 

-  The  relevance  of  the  specific  EPMF  instruments  was  subject  to  a  number  of 
interesting  observations  made  by  the  micro-credit  intermediaries67.  The  risk-
sharing loan was for example considered too complicated ('even for banks') to 
be  used  much,  the  instruments'  flexibility  too  low,  and  additional  conditions 
resulted  in  adverse  effects  (namely  administrative  costs).  Interestingly,  one 
intermediary reported that some of its clients terminated the loans after being 
asked to ensure visibility of the EU source of funding. 

-  On the borrowers' side, their survey68 indicated that 17% were formerly rejected 
by the conventional credit market, 68% individuals were applying for the first 
time,  and  56%  considered  that  it  would have  been  impossible  to  get  a  similar 
credit elsewhere.69 The Microfinance Facility could in result take credit (in the 
non-financial  meaning  of  the  word)  for  lowering  the  threshold  for  accessing 
finance. 

-  The  specific  objective  of  supporting  ‘social  economy’  did  not  seem  to  be 
reached,  and  as  one  of  the  most  illustrative  quote  stated:  ‘several  MFIs 
mentioned  that  most  of  their  clients  are  simply  trying  to  create  their  own 
private businesses rather than aiming to have a social impact’.70 

-  With regard to effect on employment, the final result (almost 60%) was clearly 
influenced by one financial institution (from France), while without it only 25% 
of  persons  receiving  credit  were  unemployed  at  the  time  of  application.  An 
important  positive  element  of  the  microcredit  provision  was  nevertheless  the 
job-preservation, in those enterprises which would possibly disappear without 
such support. Additionally, the evaluation indicated that 'half of the businesses 
younger than six months were run by borrowers who were unemployed when 
receiving the microloan'.71 

66 Ramboll evaluation, p. 54. 
67 Ramboll evaluation, p. 22-24. 
68 With significant reservations about the non-representative results explained by Ramboll evaluation, p. 
5/6. 
69 Ramboll evaluation, Executive summary - Effectiveness. 
70 Ramboll evaluation, p. 55. 
71 Ramboll evaluation, Executive summary - Effectiveness and Impact. 

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European Implementation Assessment 

-  There  was  a  small  share  of  EPMF  usage  by  persons  with  minority  and/or 
migration  background,  but  as  the  data  of  this  aspect  were  based  on  self-
reporting,  the  results  are  less  reliable  (some  loan  applicants  were  said  to 
possibly fear discrimination in case they disclosed their ethnic background72). 

-  With  regard  to  sustainability  of  EU  support,  the  survival  rate  of  businesses 
financed  through  the  Microfinance  Facility-backed  microcredit  (96%)  was 
found  higher  than  the  European  average  but  accompanied  by  a  serious 
reservation about the possibility to draw firm conclusions in this matter.73 

72 Ramboll evaluation, p. 58. 
73 Ramboll evaluation, Executive summary - Sustainability. 

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European Progress Microfinance Facility - Interim evaluation 

4.  Conclusions 

The Microfinance Facility is the first dedicated instrument available for all microcredit 
providers  that  operate  in  the  European  Union,  but  due  to  the  different  levels  of 
development and market interest it is still not used in all Member States (currently 22 
out of 28), and only by some intermediaries, each contracted separately.  

As indicated by some intermediaries themselves (including commercial banks, which 
point  to  their  CSR  policies),  it  is  mostly  a  not-for-profit  activity.74  As  the  European 
microfinance  sector  is  characterized  by  a  wide  range  and  diversity  of  institutions 
(including  NGOs,  foundations,  and  associations),  the  majority  of  MFIs  are  still  rather 
small  organisations  with  limited  outreach  (only  slightly  more  than  50%  issue  more 
than 100 microloans per year). The institutional capacities to grow and serve a higher 
number  of  clients  continue  to  differ  among  the  diverse  landscape  of  the  prevalent 
MFIs.75 At the same time, there is also a trend towards efficiency, professionalization, 
and  self-sustainability  in  that  sector,  which  requires  access  to  stable  funding  for  its 
growth.76 

Following  the  identification  of  objectives,  that  is  allowing  access  to  micro-credits  for 
those who would otherwise have problems in obtaining a loan from the conventional 
credit  market,  the  Microfinance  Facility  effectively  permitted  a  growing  number  of 
persons  and  micro-enterprises  to  invest  or  develop  their  small  businesses,  albeit  the 
reach-out  to  vulnerable  groups  (more  specific  than  ‘only’  unemployed,  such  as 
minorities,  women  or  disabled  persons)  was  not  able  to  be  ensured  as  seemingly 
wished  for  by  the  legislator.  The    finding  of  the  external  evaluation  is  that  in  the 
current  economic  environment,  financial  exclusion  is  a  problem  for  a  broad, 
heterogeneous  group  of  microenterprises  and  is  not  restricted  to  specific  vulnerable 
groups.’77 

The level of sustainability of all supported enterprises is difficult to assess at this stage, 
due  to  the  relatively  young  maturity  of  the  loans  made  on  the  basis  of  Microfinance 
Facility: 64% of recipients surveyed by external consultants took the credit less than a 
year  earlier  and  the  job-creation  effect  can  take  longer  to  materialise.78  This  was  also 
underlined  by  the  last  European  Commission  report  (2013)  which  indicated  that 
around  44%  of  all  enterprises  supported  by  EPFM  existed  less  than  1  year,  which 
makes sustainability assessments more challenging. 

74 Ramboll evaluation, p. 15. 
75 Evers & Jung, Study on imperfections..., p. 12. 
76 Bruhn-Leon, B., Eriksson, P., Kraemer-Eis, H., (2012), Progress for Microfinance in Europe, EIF Working 
Paper 2012/13, p. 31. 
77 Ramboll evaluation, p. 65. 
78 Ramboll evaluation, Executive summary - Sustainability. 

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European Implementation Assessment 

The continuation of Microfinance Facility was and is advised, and is already ensured in 
the  framework  of  EaSI  (2014-2020),  which  already  contains  some  improvements. 
It remains  to  be  seen  whether  the  European  Commission  will  still  be  able  to  use  the 
results of present interim evaluation and make any corrections either to EPMF in the 
current programming period79, or in the implementation of its successor later on. In the 
words  of  the  Study  published  before  its  implementation  report,  the  Microfinance 
Facility  ‘has  established  itself  in  the  European  microcredit  sector,  although  the 
efficiency  and  effectiveness  of  the  individual  financing  instruments  need  to  be 
improved for the new facility.’80 

79 Ramboll evaluation, p. 1. 
80 Evers & Jung, Study on imperfections..., p. 64. 

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The  European  Progress  Microfinance  Facility 
for 
employment  and  social  inclusion  was  established  by 
Decision  283/2010  and  will  be  in  operation  until  April 
2016.  

Although  only  a  limited  number  of  conclusions  can  be 
made on the basis of data available so far, some criticism 
towards this instrument has already been reflected in the 
set-up  of  the  next  EU  multi-annual  framework  to  cover 
microcredit, namely the Programme for Employment and 
Social Innovation (EaSI).  

The specific effects of the Microfinance Facility, especially 
those related to social and employment matters, seem to 
correspond to the objectives that were set in response to 
the  financial  crisis  in  Europe.  The  commitment  of  100 
million  euro  from  the  EU  budget,  allowed  a  growing 
number of financial intermediaries to offer small loans to 
persons  starting-up  or  developing  their  own  micro-
enterprises (and often previously unemployed). 

This is a publication of the Ex-Post Impact Assessment Unit 
EPRS | European Parliamentary Research Service 
European Parliament 

PE 547.555 

ISBN: 978-92-823-7081-0 

DOI: 10.2861/00840 
CAT: QA-02-15-335-EN-N 

www.europarl.europa.eu/thinktank  (Internet) − www.epthinktank.eu (blog) − www.eprs.sso.ep.parl.union.eu (Intranet)