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.
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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.