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Antoine Navarro – Planet Rating anavarro@planetrating

Supporting microfinance in the European Union: business models, impact assessment and lessons learned from EU initiatives. Planet Rating’s learnings and methodological adaptations. Antoine Navarro – Planet Rating anavarro@planetrating.com. Planet Rating

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Antoine Navarro – Planet Rating anavarro@planetrating

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  1. Supporting microfinance in the European Union: business models, impact assessment and lessons learned from EU initiatives Planet Rating’s learnings and methodological adaptations Antoine Navarro – Planet Rating anavarro@planetrating.com

  2. Planet Rating • Created in 1999, it became a private independent rating firm in June 2005 • Mission to contribute to the development of microfinance thanks to increased transparency on the financial and social performance of MFIs • Enjoys a global coverage, thanks to a network of six offices spread over four continents (Paris, Lima, Dakar, Nairobi, Beirut, Manila) • A team of 16 experienced analysts, with backgrounds in investment banking, management consulting, non-profit, microfinance

  3. JASMINE initiative • Objectives • To promote good practice in the field of microcredit. • To provide additional funding for microfinance institutions. • In the long term, to improve the environment of the European microcredit sector, by developing partnerships between the banking and non-banking actors. • How does it work? • Evaluation: providing an assessment or rating to the MFIs by specialized microfinance rating agency • Technical assistance: provide dedicated training in areas where improvement is needed. • Funding: After the technical assistance, MFIs may apply to the European Microfinance Facility Fund managed by the EIF, which offers guarantees and equity/loans funding. • Implementation • 24 MFIs selected in 2010 and 2011 already received an evaluation and TA. • After a second call for proposals, an estimate 20-30 MFIs will receive an evaluation and TA in 2012. Joint Action to Support Microfinance Institutions in Europe (JASMINE): A 5 year project (2009-2013), managed by the European Investment Fund (EIF) funded by the EC

  4. Ratings and assessmentsconducted for the JASMINE program JASMINE 2010 • Créa-Sol (France) • CP’AC (Spain) • FEA (Hungary) • Mikrohitel (Hungary) • PRIMOM (Hungary) • PSBYT (Scotland) JASMINE 2011 • Credal (Belgium) • Jobs MFI (Bulgaria) • Mikrofond (Bulgaria) • Nachala (Bulgaria) • Qredits (The Netherlands) • Patria Credit (Romania) JASMINE 2012 • 6 MFIs in Germany • And 9 others in Romania, Slovak Republic, UK, Malta, Poland, Belgium, Bulgaria and Sweden Experience in other EU countries Bosnia Herzegovina • 10 MFIs: EKI, Mikrofin, Partner, LOK micro, Mi-Bospo, Prizma, Benefit, Sunrise, Women for Women, Sinergija Plus • 26 ratings Russia • 5 MFIs: FFECCC, RWMN, VRFSBS, Doveriye, Narodnyi • 8 ratings Serbia & Montenegro • AgroInvest Moldova • MicroInvest Kosovo • KEP Turkey • TGMP Ukraine • Hope Ukraine

  5. Main differences of microfinance in Western Europe with “traditional” microfinance • Context • Higher level development of financial services  narrow potential market • Lower margins of businesses of micro-entrepreneurs in EU countries: • Low level of informality • Higher costs (taxes) • Cannot always afford higher interest rates • Consequences on the business models • Specific targeting: financially marginalized population represent a smaller share of the population than in developing countries  target unemployed, start-ups, and SMEs which have difficulties to access finance • Different business models : often includes business development services as a core service • Specific training on admin, legal processes • Entrepreneurial and business planning trainings  find a market niche • Dependent on grant funding from public or private donors and socially oriented investors for their sustainability  Different approach needed for the analysis of the sustainability of MFIs from Western or Eastern Europe

  6. GIRAFFE-S Evaluation Framework for EU MFIsA rating methodology tailored for European MFIs Ratios and scales have been adapted and benchmarks collected Governance Information Risk Activities Financing Efficiency Client Protection Factors have been added Outreach to the excluded Adaptation of services Cost of Services Financial Inclusion Factors have been added Fight vs. Unemployment Business creation Empowerment Social Change

  7. Thankyou for your attention!www.planetrating.com

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