Finance for local development: New solutions for public-private action

This handbook, one of the outcomes of a project “Getting the Framework Right: Public Support Strategies and Measures for Local and Micro-finance” shows good practice internationally in public support for local and micro-finance; and how to develop and implement policy instruments to give effective support to local and micro-finance in one’s own territory.

2001

Summary :

Local and micro-finance organisations provide capital and

other support for entrepreneurs making it easier for them

to start or run their business. Moreover, local and microfinance

organisations support enterprises that are not the

target of mainstream financial institutions. This means

that they form part of a strategy to develop risk capital

markets for micro-, social and marginalised enterprises in

particular. Local and micro-finance organisations therefore

deliberately aim to fill a market gap for enterprises that

cannot access bank finance.

Most micro-finance organisations provide support for

people to set up in self-employment. Some, like the Full

Circle Fund in the UK, help establish networks of the selfemployed

by organising them into lending circles or other

groups, which provide mutual support and advice. Social

finance organisations, such as Crédal in Belgium,

Mag2Finance in Italy and Coop57 in Spain, on the other

hand, are explicitly targeted at supporting social and

cooperative businesses. Many of these businesses meet

critical social and economic needs, such as environmental

services, that are not currently met by the market.

Both micro- and social enterprises are critical for

employment. In addition, most of these organisations are

strongly rooted in their local areas, supporting enterprises

that provide not only local employment but a wide range of

local services, such as neighbourhood and social services.

This handbook accompanies:

• 10 memos setting out (a) the current state of local and micro-finance in ten Member States of the European Union, and (b) the framework of public

support for local and micro-finance in those Member States;

• 15 casestudies of good (and some bad) practice in public support for local

and micro-finance, showing what public officials within the European Union,

as well as elsewhere, have already done in practice in implementing

effective policy instruments to support local and micro-finance;

• a database of 600 officials, practitioners, experts and others from across ten Member States of the European Union, which you can use to find useful

contacts whom you might consult or work with in developing local and

micro-finance in your territory.

All the memos, casestudies and the database are available on the website