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Microfinance with a Mission Learning Together
Bringing together private and public partners
to improve clients choices
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Bringing together private and public partners
to improve clients choices

• Françoise Radermacher
• Réseau Financement Alternatif
• Budapest 8 June 2006

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Workshop purpose

• To analyze...
• the role of the State in microfinance
• the partnership between the public and private
  sectors
• ... on the basis of
• the conclusions of a european study (eufin)
• 2 experiences ADIE (Fr) ALMI (Se)
• a debate

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European study eufin ?

• Developing common tools for public authorities
  and financial institutions so as to promote
  fundamental rights in the European Union .
• Financed by the European Commission
• Purpose to analyse the partnership mecanisms
  between the public authorities and the banks
• Creation ? Application ? Assessment ?
  Development
• 17 very different case studies (10 MF)

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eufin MF experiences

• Kvinnors Företagande
• (loans for women
• entrepreneuship )
• Credit guarantee fund for
• the creation of new firms in
• Göteborg

Enigma Siebte Saüle Microlending
Bridges Community Venture
Aspire micro loans for business
Association pour la Droit à lInitiative
Economique
Integra Foundation for women entrepreneurs
Associaçao Nacional de Direito ao Credito
Microfinance Coalition
Microcrèdits per a dones emprenedores sense avals
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Role of the public sector in MF projects

• 3 players public private third sector
  (Adie)
• the public sector supports the NGO creating the
  MF project
• 2 players public private (Almi)
• the public sector initiates the MF project
• Major public sectors contributions
• Ensuring the MF projects credibility
• Facilitating the contact, negotiations and grant
  of funds from banks
• Supporting the MF project financially

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Added value of PPP in MF projects

• No MF project without partnership
• Public sector political financial support
• Private sector financial support
• Each partner brings what he is best at
• Public sector credibility L/T support
• Private sector granting loans visibility (
  technical or HR support)
• Third sector expertise involvement

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Limits, risks of PPP in MF projects

• Beware of the public sectors
• credibility
• involvement in time
• Bugdet constraints
• Beware of the private sectors
• Commercial interest
• Real involvement in the project
• Exclusitivity (dependence to one bank)

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Building a PPP in MF projects

• Guarantee sufficient funding for a long term
  action
• Secure various financial resources
• Make sure that each partner fulfill its financial
  commitment
• Adapt the financial tools to the changing needs
  of the project (new partners)
• Find the best partners
• Determine the expected role of each partner
• Contact decision-makers
• Search for a win-win approach
• Write partnership agreements

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Building a PPP in MF projects

• Ensure each partners involvement
• Make sure the partners share the same view of the
  project
• Mobilize each partners organisation globally
• Involve partners via steering commitees
• Create a communication between partners
• Regularly inform the partners about the project
• Create feedback mechanism between the partners
• Develop interpersonal relationships with partners

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Developping PPP in MF?

• The political commitment of public authorities
  will make it possible for the action to continue
  in the future
• either public entities will include the action
  into their long
• term strategy
• or they will support the action promoting basic
  rights and later possibly move away from it after
  its bases have been laid down and funds have been
  fully provided by banking partner(s).
• PPPs develop the banks capacity for
  understanding the area of social economy
• PPPs reconcile sectors that are too often
  considered as opposed to each other

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• Thank you !
• www.eufin.org
• info_at_rfa.be