Microfinance and BDS in Europe: A Guide to Good Practices, 2007
| Implementing agency(ies) | European Microfinance Network | |
|---|---|---|
| Funding agency(ies) | European Commission | |
| Date completed | April 2007 | |
| Issues/challenges | Since their emergence, European Micro-finance Institutions have provided Business Development Services (BDS) to their clients along with the provision of micro-loans. The allocation of BDS has shown to be an essential support for people who are setting up or have already set up their own business. Support services are especially important for micro-entreprises (enterprises with less than ten employees). Micro-entrepreneurs often lack technical and managerial skills, information and market access - factors that are needed in order to transform a micro-loan into a competitive micro-enterprise. BDS address these constraints and comprise a wide variety of different non-financial pre- and post-loan services. In the European business environment formal business support is very common. Additional support is indispensable, not least due to the complex administrative and financial regulations in European countries. The European Union has acknowledged the importance of high quality BDS for small enterprises by implementing the 'Best Procedure project on Business Support Services' under its 'Multi-annual program for Enterprise and Entrepreneurship, in particular for Small and Medium-sized Enterprises from 2001-2005'. However, according to a study by the European Commission in 2002, small entrepreneurs often lack information on the availability of business support services and participation rates are generally low. The BDS field in Europe thus still has room for improvement. | |
| Country(ies) | France, Germany, Slovakia , Spain, Sweden, United Kingdom |
- Description
- To inform the target group proves to be a fundamental action in each one of the good practices analysed. Such actions would ease the business start-up process, and promote project development.
- A simple, accessible and fast orientation would help to unlock the business start-up sector for all target groups and prevent that the latter feel discouraged by the complexity of the process and formalities.
- Providing space, infrastructure and interaction: bringing together different people who are starting a business, facilitates the exchange of ideas, solution-finding and gives self-confidence.
- To offer useful, effective and quality training allows the acquisition of the basic knowledge necessary to start-up business projects brings an added value, and up-grades the chances of success. To adapt training to target group needs proves to be a key tool that increases the likelihood of success.
- Moreover individual advice has shown to be effective: a specific tool that facilitates administrative procedures may help business entrepreneurs overcome technical difficulties while reducing MFIs costs.
- Medium- or long-term monitoring makes it possible to keep up entrepreneurial motivation and guarantees a better level of project result and success. Innovating actions particularly profit those who find themselves in the most underprivileged and remote areas.
- The need for regular assessment and setting benchmarks through the dissemination of good practices: 1) The dissemination of good practices allows to access on-going information related to successful actions. 2) Helps target key issues to be developed in a specific context.
- Up-hold market access: it is of primary importance that the organizations committed to offering support to future micro-entrepreneurs develop innovating actions which up-hold their access to the market.
While the Executive Summary is reproduced below, note that the report itself contains extensive data on the experiences gained by individual MFIs in the various European countries referred to.
The present guide describing twelve good BDS practices in Europe aims at contributing to the provision of more sustainable Business Development Services that are more specifically adapted to the needs of micro-enterprises in European countries. The twelve good practices presented in the guide are all innovative in their field and show their effectiveness in their sphere of activity. The study includes a description of methodology employed, a contextual and technical description of each good practice, as well as a series of recommendations for their duplication. In addition, a bibliography as well as a list of the sources used has been provided.
In addition, EMN has identified three main challenges for European Micro-finance Institutions and business support providers in the field of micro-finance in Europe. Each of the twelve good practices presented in the guide addresses at least one of these challenges:
1) The need for more effective services
2) The separation of cost
3) The sustainability of services
Methods for info gathering
The criteria taken into account to choose the twelve good practices were selected according to work methodologies and the results observed by the European Microfinance Network (EMN) within the framework of its network activities in the European microfinance field. Consequently, according to the definition used here, its delimitation comprises a minimum of essential criteria: documented,accessible, based on procedures and methodology that are tested, put into practice, capable of reaching a defined goal, transferable, profitable, effective, adaptable and able to face unforeseen issues.
Summary of results
The main recommendations that follow from the study take up the major aspects observed in all the best practices analysed and relevant to the challenges in European business support services. The specific context should always be kept in mind with regard to a possible transfer of a good practice to a different country or target group.
All these aspects contribute to the effectiveness of the business support services provided. Nevertheless generally speaking, the good practices provided in the guide depend on subsidies. More research in terms of feasibility studies needs to be done concerning the separation of cost and the self-sustainability of services. This will contribute to deepen the knowledge and incite further discussion on these issues that are becoming more and more important within the BDS framework regarding micro-enterprise providers.
| Associated Activities and Documents | |
| Synthesis Documents | |
| » | Synergies through Linkages: Who profits from linking micro-finance and BDS? Sievers and Vandenberg, 2007 |
Microfinance and BDS in Europe: A Guide on Good Practices (2 Mb)