EU Parliament adopted a legislative report on a proposal to support the growth of microcredit institutions in the EU. The report drafted by Zsolt Laszlo Becsey (EPP-ED, HU) was approved by 574 votes in favour, 23 against and 12 abstentions. (24 March 2009)

Microcredit to help people out of the crisis

The current financial crisis shows the need to provide financing to firms when access to capital is reduced due to liquidity crunch. 

According to the approved resolution, microcredit is often granted not only for profit-making, but also for cohesion purposes, to reintegrate disadvantaged people into society. Therefore, it can represent an alternative source of credit, particularly in economically and socially disadvantages regions say MEPs.

Parliament calls on the Commission to put forward a legislative proposal to support the establishment of microcredit institutions throughout the EU. The approved resolution also provides detailed guidelines for the future legislation. In doing so, MEPs ask the Commission to analyse, in the light of the last sub-prime crisis, the advantages and disadvantages of microcredit against securitised credit facilities.  

EU funding for microcredit for disadvantaged people

The financing of microcredit projects through the EU budget should favour persons and businesses without direct access to credit, say MEPs. Particularly, they should target disadvantaged people such as the Roma society, immigrants, people living in deprived rural areas, people with precarious work situations, and women.

Promoting microcredit

Among the proposed measures to support microcredit growth in the EU, MEPs ask the Commission to elaborate a communication strategy to promote self-employment as an alternative to wage earning and a way to escape unemployment for disadvantaged target groups.

As far as national authorities are concerned, MEPs call on Member States to adopt tax incentives for private involvement in the microcredit business.  Moreover, the Commission should ask Member States to analyse and report on their efforts to support microcredit growth in their annual reports on national reform programmes, says the Parliament. 

Need to update definition of microcredit

MEPs criticise current definition of microcredit put forward by the Commission since it does not allow a clear distinction between microcredits and microloans to microenterprises, microcredit for non-bankable borrowers and microcredit for bankable microenterprises.

Commission's current definition of micro-credit is a loan of EUR 25 000 or less and a microenterprise is one that employs fewer than 10 persons and whose annual turnover or annual balance sheet total does not exceed EUR 2 000 000