Devfinance: Re: When in Rome?: An invitation to IDLO's dialogue on law and microfinance

[Karl Dayson]

Dear Peter and Jamie,

You're both nearly right.

1, DG Enterprise and Industry is also interested in European microfinance (as are DG Regions) and they'll be publishing work on the relationship between microfinance and banks shortly. The EU project will be run through JASMINE (Joint Action to Support Microfinance Institutions in Europe)  and involves EIB and EIF.
2, Generally the EC would like to see more sustainable microfinance institutions but understands there's a balance to be struck. In addition a number of member states have caps on interest rates that rule out true financial viability. Thus the questions are around finding ways to maximise efficiency even though it may not be possible to make it totally self-sustaining
3, There isn't a single European way for microfinance but crudely put those in Eastern Europe tend to be focused on sustainability ( partly post-Cold War capitalist institution building) and those in the west on social inclusion. In addition, at least one nation has tried, with some success, to engage the mainstream banks in the delivery of services.
4, The UK is different again (a depressing reoccurrence) as it looked to the USA. So it uses the language and arguments of CDFIs and rarely uses microfinance. The UK govt has to date believed in sustainability  first and is relaxed about much larger average loan sizes (the sector also has a venture capital CDFI)
5, I'm not sure the banks opposed microfinance but the EU has strict rules on unfair competition and organisations in receipt of EU and state support have a minimum rate they must charge.
6, There is a recognition that there are many lessons to be learnt from the developing world (there's something rather pleasing about a social policy initiative coming to the developed world) though not everything is transferable
7, EMN is the main vehicle for microfinance in Europe. IMHO its an incredibly well-run operation and has worked tirelessly to ensure the sector's voice is heard in Brussels. I've also been impressed with the engagement of the  Commission and their willingness to listen and reflect.  

So I'd agree that in Europe there's a strong social policy impulse to much of the microfinance activity, though with a recognition that efficiency and efficacy matter.

I hope this is useful

All the best
Karl

P.S. With colleagues from Foro Natik Lum in Madrid we've a book on European microcredit due out early next year.

Dr Karl Dayson
Director of Sociology
Community Finance Solutions
University of Salford
M5 4WT
tel: [phone]



-----Original Message-----
From: Development Finance on behalf of Jami Hubbard
Sent: Mon 11/2/2009 16:15
To: Development Finance
Subject: Devfinance: Re: When in Rome?:  An invitation to IDLO's dialogue on law and microfinance
 
Hi Peter, I will look for the exact language, but I think the EU internal goals are to combat unemployment and increase social inclusion of marginalized groups (youth, migrants, women) ... will revert tomorrow.
Best,
Jami

-----Original Message-----
From: Development Finance [mailto:devfinance@...] On Behalf Of Peter van Dijk
Sent: Monday, November 02, 2009 5:06 PM
To: Development Finance
Subject: Devfinance: Re: When in Rome?: An invitation to IDLO's dialogue on law and microfinance

Dear all,

It is wonderful and surprising at the same time that the EU has an interest in Microfinance as it is undertaken outside of the European Union.

The EU makes a clear distinction in Microfinance:-

1. MF as a tool to fight social inclusion within the EU with subsidised loans to specifically targeted people (women, youth, unemployed, etc.). These activities are a part of the Social Development DG of the European Commission and

2. MF as a tool to build inclusive financial sectors outside of Western Europe.

The two different sectors have two separate fora, The European MF Platform (www.e-mfp.eu) is an association of donor agencies that define MF as a tool for building inclusive financial sectors in 'developing countries' (including the central European 'transition economies'). The European MF Network (www.european-microfinance.org) promotes microlending to marginalised citizens in Europe.

If I am not mistaken this clear distinction is also the result of opposition from commercial banks in the EU and maybe their regulators who want to avoid inappropriate use of financial terms that are legally protected and want to avoid unfair competition (by social microcredit organisations that offer 'zero interest rates' on loans such as ADIE promotes its activities in France).

I hope that IDLO and the participants understand the implications of the above distinction and I look very much forward to a report on the discussions and the recommendations / next steps.

Kind regards, Peter


--- On Mon, 11/2/09, Miller, Calvin (AGSF) <Calvin.Miller@...> wrote:

> From: Miller, Calvin (AGSF) <Calvin.Miller@...>
> Subject: Devfinance: When in Rome?:  An invitation to IDLO's dialogue on law and microfinance
> To: "Development Finance" <devfinance@...>
> Date: Monday, November 2, 2009, 8:05 AM
> ?
> Message
>  
>  
>  
> Posted on behalf of Jami Hubbard,
> IDLO.
>  
> Calvin
>
> Miller,
> FAO
>
>  
>    
> Hello DevFinance
>     Members,
>
> Please find attached in invitation to an upcoming law &
>
>     microfinance event in Rome.
>
> The topic of this dialogue on Thursday
>     afternoon, Nov. 12th will be microfinance:  
> legal and regulatory
>     lessons learned in developing countries to be shared
> with the EU
>     microfinance sector.  The EU has created a 100
> m  euro fund to
>     support MF as a tool of social inclusion and to combat
> unemployment (which
>     is rising rapidly in the Euro zone).  Last night
> on the EU news
>     channel, they interviewed a banker from the EIF and
> announced that there was
>     an ongoing discussion of increasing the fund to $150 m
> to meet an estimated
>     demand of roughly that in the EU.  Because many
> developing countries
>     have more mature microfinance sectors than most of
> Europe, we believe that
>     there are experiences worth sharing (though
> cooperatives have been here for
>     hundreds of years, and some good examples continue to
> thrive, microfinance
>     is a  new concept for most of the EU which it has
> expressed a
>     particular desire to support).
>
> IDLO has been involved in the
>     microfinance sector for a fairly short time:
> noting the dearth of
>     informed legal professionals working in the industry in
> 2005, we launched
>     seminars, video conferences and research activities
> designed to enlarge the
>     community of legal professionals who understand the
> objectives of
>     microfinance institutions; and who can advise the
> industry on the impact of
>     existing domestic commercial law and regulations on the
> provision of
>     financial services to the poor.
>
> Lawyers are also natural advocates,
>     both for the MF sector at large, as well as for the
> rights of the
>     consumer.
>
> We invite you to attend this dialogue followed by social
>     networking (and snacks) to meet legal professionals
> from Argentina, Ecuador,
>     Colombia, Venezuela, Kosovo, Tanzania, Uganda, Kenya,
> Sri Lanka, India,
>     Cameroun, the DRC, Rwanda, Nigeria, Nepal and the US
> (me) and
>     more.
>
> Bring your legal problems (related to microfinance), and we
>
>     will try to connect you with someone who can help.
>
> Event details and
>     venue are attached to this message, and feel free to
> contact me with any
>     questions you may have, or if you would like to
> participate as a
>     speaker.
>
> Kind regards,
>
> Jami Hubbard
> Manager Microfinance
>     & Legal Counsel
> International Development Law
>     Organization
>
> Viale Vaticano, 107
> Rome, Italy
>     00165
> www.idlo.int/microfinance
>
> --------------------------------?
>     Responsible Regulation: Lessons
> and Innovations in
>     Microfinance from the Developing World
>
>     Rome
>     Thursday 12 November, 2.30 - 6.00 pm
>
>     Residence Ripetta , Via di Ripetta 231
>
>     A cocktail reception will follow
>
>     The Conference will be in English. Simultaneous
> translation
>     English/French will be available
>     La conférence aura lieu en anglais, avec traduction
> simultanée en
>     français
>     Welcome Address: Thomas
>     McInerney, IDLO Director of
> Research and Policy
>    
>     Jami Hubbard, IDLO Manager of
> Microfinance Program
>    
>     Guest Speakers:
>     Deborah Burand, Professor, Faculty of
> Law, University of
>     Michigan
>     Simone Di Castri, Policy Analyst, CGAP
>    
>     April Rinne, Director, Water Credit,
> water.org
>    
>     Claudio Gonzales Vega, Director
> Rural Finance Program,
>     Ohio State University (tbc)
>     Eduardo Jimenez, Microfinance Consultant,
> Bangko Sentral, the
>     Philippines
>  
>

     

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