1. Role of microfinance and technical support for self-employment/start ups Maria Nowak, founding president of Adie, president of Adie International Athens, May 2016 International

2. Introduction We are in a period of structural change combined with a crisis of confidence and purpose One of its worst signs is youth unemployment : an average of 23% in Europe, but more than 50% in Greece and Spain. Its consequences are : => A lost generation as regards integration in the labour market => violence or passivity => dependence on family or society => welfare policies more and more unsustainable 1

3. Self-employment and enterprise creation have become in France a major road towards employment Tevaite, horticultrice Robert, éleveur canin Yao, boutique de prêt-à-porter Yao, boutique de prêt-à-porter Tinivarii et Mohea, restaurant snack Guillaume, apiculteur Fouzia, artisan peintre Tithouan, artisan cuir Thérèse, vente de gâteaux sur les marchés Thérèse, vente de gâteaux sur les marchés Cécilia, accessoires pour enfants 2

4. 93% of micro-enterprises have fewer than 10 employees Informal Sector 7 (0,3%) 25 (0,8%) 163 (5,6%) 984 (33,6%) 1 746 (59,7%) 200 employees Between 50 and 199 employees Between 0 and 9 employees Between 10 and 49 employees 0 employees FRANCE 8,5 M million people live below the poverty line 2,4 M million homes recipients of RSA 3 760 100 unemployed ( DOM included) Informal sector = 11% du GDP Number of enterprises in France 3

5. Major structural changes Number of workers in industry and services in France 4

6. Allowing the unemployed to create enterprises : Two starting points : Everyone can become an entrepreneur Low-income people repay their loans Three pillars of enterpreneurship : Access to credit Business Development Services A more favourable legal framework 5

7. Example of the Association pour le Droit à l’Initiative Economique (Adie) Association created in France in 1989 by three volunteers with no capital more than 200 new jobs per week, created in 2015 (this number continues to grow) 6

8. Number of loans disbursed 7 Production Outstanding

9. Plateforme de Roubaix 119 antennes 360 permanences 470 employees 600 volunteers Adie branches cover all of the French territory 8

10. 166 000 loans disbursed since 1989 Outstanding (01/01/2016) : 104 186 289 € Default rate : 6,81% Loss rate : 3,23% au 31/12/2015 Crédit 9

11. 121 321 microenterprises created since 1989 Survival rate : 70% after 2 years Inclusion rate of the unemployed : 84% Business Development Services 10

12. Three main amendments obtained by Adie : An amendment to the Banking law allows nonbank microfinance institutions to borrow and on-lend (2001) Self-employment and enterprise creation are recognized as a vehicle of economic and social inclusion (2005) Self-employed people are allowed to postpone paying fringe benefits until their business has generated a profit (2007) And many others… Modification of the legal framework 11

13. Clients 12

14. Clients 13

15. Financing of vulnerable people, with a low education level : unemployed, people on welfare, youth, women, migrants etc… Financing of start ups Low interest rate : 7,38% difficult to increase in a welfare state and many other…factors make difficult to reach full sustainability but the cost of creating an enterprise (1500€ for individual business, training and advice as well as administrative assistance) is much less than subidized jobs (10 000€ per year) or the cost of unemployment (14 000€) Economic model of Adie 14

16. Credit ressources are provided by banks and public institutions such as EIF The risk is shared between the banks, a public gurantee fund, EIF and Adie Business development services are financed by subsidies from Government, local governments, ESF, ERDF and a few foundations or enterprises Financing of Adie 15

17. More than ever, need for a permanent link between doing and thinking. Governments fail to recognize the experimental knowledge gained by NGOs as a valuable input in economic and social policy, which often remains more passive than active. Absence of the vital relationship between the micro and macro economies Microcredit can play an increasing role in Europe by becoming a financial instrument of the new economy by creating social links and developing confidence in economic growth and social cohesion by creating hope and empowering people to build their own future Lessons learned 16

18. In Europe,the distribution of enterprises according to size is very similar to the French one Informal Sector 4 200 1 400 19 200 > 250 employees Between 50 and 249 employees Between 0 and 9 employees Between 10 and 49 employees  22 M enterprises in EU  93 % of enterprises in Europe are micro-enterprises (0 – 9 Sector)  Population under the poverty level: 80 millions  Informal sector represents 10 to 15 % of the GDP 17

19. The trends in EU are similar, even if deindustrialisation is, on average, slower than in France 18 Number of workers in industry and services in EU (source : Eurostat)

20. Inspite of a rapid growth on the supply side, there is still a market gap as regards microcredit in Europe : The number of microloans has increased by more than 400% since 2009 and the amount has more than doubled.(EMN survey 2013) The number of microloans provided in 2013 was on the order of 388 000 for a total amount of €1.52 MM The potential demand in 2012 was estimated at 1.2 M microloans for EU-28 in 2012, for a total amount of €8.6 MM. 19

21. 2003 : Creation of the European Microfinance Network 2006 : Publication of the EC regulations regarding financial engineering of structural funds, including microfinance 2007 : Publication of the European Initiative in favor of growth and employment 2010 : The PROGRESS Microfinance Facility for Employment and Social Inclusion provides support via guarantees and funding for microcredit to small and micro-enterprises, and to unemployed who wish to start up their own small businesses 2014 : EU Programme for Employment and Social Innovation (EaSI) continues guarantees and funding program for microcredit 2014 : Publication of the OECD/CE report on « Missing entrepreneurs : Policies for inclusive entrepreneurship 2016 : Advocacy for inclusion of microfinance in the EU capital markets union Growing recognition of the importance of self-employment, enterprise creation and microcredit at EC level 20

22. the high level of unemployment, especially as regards youth (more than 50%) the experience of small business is most developped in Greece, as compared to other member countries the only way to restore trust and reduce the high credit risk in the banking sector is to start a pilot project from the bottom up Development of self employment, and microenterprises should be a priority in Greece for three main reasons: Microcredit could be an important factor of reversing the trend of social despair, because it is not only the financial instrument of economic initiative, but also a tool of solidarity creating social links. It restores hope and trust, without which it is impossible to you cannot get out of the present difficulties. 21