The role of micro-credit in promoting entrepreneurship and its effects on social inclusion Maria Nowak, Co-founder and President of Adie (France) and of the European Microfinance Network Co-founder and Member of the Board of the Microfinance Centre for Central and Eastern Europe Open days Brussels October 9, 2007

Historical perspective The development of capitalism created a separation between the economic and the social sector run by the Welfare State This separation is one of the major causes of social exclusion One of the solutions is to bring back together labour and capital at the bottom level of entrepreneurship Microcredit provides an opportunity to socially excluded people to re enter the productive sector by creating their own job

Access to credit Capitall Labour Creation of wealth Welfare Excluded The Welfare State takes care of excluded from the market economy

Access to credit Capital Labour Creation of wealth Welfare Excluded Access to capital allows the excluded to participate in the creation of wealth

The Case of Adie : NGO created in 1988 Mission: provide financial and non financial services to unemployed and social aid beneficiaries creating microenterprises Coverage: all national territory ( 119 branches and 380 contact points) Services provided: Financial services : loans, quasi-equity loans Non financial services : business and marketing advice, administrative support, etc. Financing: loans funds  banks non financial services  government, local governments, ESF

Results : microcredit Number of micro-loans disbursed since 1989 : 46 000 Number of micro loans in 2006 : 7 500 (average : 3000 €) in 2007 : 9 000 Number of active clients : 15 000 Default rate 2006 : 6,7% Loss rate 2006 : 3,2%

Results : business development services Number of new enterprises created since 1989 : 40 000 Number of enterprises to be created in 2007 : 7 500 Survival rate after 2 years : 64% Inclusion rate : 75%

Loans granted by Adie

22 regional offices 119 branches 380 contact points 350 staff members 1100 volunteers

Social performance indicators Target population Adaptation of the financial services to the needs of the clients Provision of business development services Improvement of social and political capital of the clients Social responsibility of the Microfinance Institution Financial sustainability consolidates social performance by providing permanent access to credit to deprived groups

Impact of microcredit on social inclusion Contributes to growth by creating jobs, developping demand and reducing the burden of unemployment on economy Improves social cohesion and integration of ethnic minorities (Roma, immigrants) by economic inclusion Develops human capital by promoting self-confidence and entrepreneurship and creates a future for all segments of population

The support of the European Social Fund The role of ESF is most important for : Financing business training and support for the sel-employed Financing together with the Regional Development Fund, the EIB group and the banking sector the Microfinance Institutions Promoting the Action Plan for Development of Microcredit

Thank you ! www.adie.org