Reclamaciones y Demandas

Microfinance in Europe consists mainly of microloans tailored to microenterprises (92% of all European businesses). It also includes people who would like to become self-employed but are facing difficulties in accessing the traditional banking services. Standardised, regularly available indicators to explain market developments for microfinance in Europe do not yet exist, or refer to Eastern Europe. Thus, we will focus in this section on the framework conditions for microfinance which are covered by the regularly updated Eurostat indicators for poverty and social inclusion, and by data on microenterprises.

6.2.1 The situation of micro-enterprises

The EU Craft and SME barometer shows that, on balance, microenterprises estimated their overall situation less favourably than other SMEs in the second half of 2013 (see Figure 40). However, microenterprises, on balance, expected some improvement in their business situation in the first half of 2014 ((-10.5%) compared to (-13.3%) in the second half of 2013). Similar results were reported for the survey questions on turnover, employment, and orders in the second half of 2013. According to the overall picture, microenterprises will continue facing more difficulties than other SMEs.

According to the data from the latest ECB survey on the access to finance of SMEs in the euro area (ECB, 2014c), the share of enterprises which see access to finance as their most pressing problem is larger among microenterprises than among other SMEs. Microenterprises reported “access to finance” as the second of their most pressing problems (while it is in the fourth place of the “most pressing problems” for small enterprises, and sixth for the medium and large ones). Compared to the previous survey wave, the percentage of companies listing access to finance as their most pressing problem has decreased (see Figure 41) for all enterprise size classes, except for microenterprises, while “finding customers” stayed the most frequently mentioned concern. The ECB (2014c) has also reported a drop in bank loan rejection rates for micro and medium-sized enterprises, and a rise for small-sized ones. However, the rejection rate is still the highest for micro firms (17%), compared to 12% for small firms and 6% for medium-sized firms.

Figure 40: Overall situation of European micro-firms compared to other enterprise size classes

Source: EIF, based on data from UEAPME Study Unit (2014)

Figure 41: Share of enterprises reporting access to finance as their most pressing problem

Source: EIF, based on data from ECB (2014c), Statistical Data Warehouse

Difficult access to finance, in particular to bank loans, might be one key reason why microenterprises in Europe use bank loans and other external financing sources considerably less than other SME size classes, however micro enterprises, on balance, reported increased needs for bank loans. Figure 42 shows that, with the exception of “bank overdraft, credit line or credit cards overdraft”, the usage of different financing sources on average typically increases with the size of the SME.

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Figure 42: Enterprises having used different financing sources (by enterprise size class) over the preceding 6 months (October 2013 to March 2014); percentage of respondents

Source: EIF, based on ECB (2014c) data 6.2.2 Potential business creators

In order to assess the likelihood of achieving the Europe 2020 poverty/social inclusion target, Eurostat has provided the indicator called “people at risk of poverty or social exclusion”.73 _Figure 43 depicts the headline indicator, corresponding to the sum of persons who are at risk of poverty or severely materially deprived or living in households with very low work intensity (i.e. a combination of the three sub-indicators).74 _{Central-Eastern Europe shows the largest incidence of} poverty or social exclusion. When comparing 2012 to 2011 and 2010, the situation became worse in most of the countries. Within the EU, the highest risks of poverty or social exclusion are recorded for Bulgaria, Latvia and Romania. The countries on the right-hand side of the diagram include some of the relatively new entrants to EU and those countries that have suffered the most from the impact of the current sovereign-debt crisis, i.e. Greece, Italy, Spain, Portugal, and Cyprus.

73 _{The indicator is a union of the three sub-indicators “People living in households with very low work}

intensity”, “People at-risk-of-poverty after social transfers”, “Severely materially deprived people” See the Eurostat internet site on the Europe 2020 indicators at:

http://epp.eurostat.ec.europa.eu/portal/page/portal/europe_2020_indicators/headline_indicators

74 _{Persons are only counted once, even if they are present in several sub-indicators. At risk-of-poverty are}

persons with an equivalised disposable income below the risk-of-poverty threshold, which is set at 60 % of the national median equivalised disposable income (after social transfers). Material deprivation covers indicators relating to economic strain and durables. Severely materially-deprived persons have living conditions severely constrained by a lack of resources. People living in households with very low work intensity are those aged 0-59, living in households where the adults (aged 18-59) worked less than 20% of their total work potential during the past year. For more information please see:

http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=1&language=en&pcode=t20 20_50

Figure 43: People at risk of poverty or social exclusion (percentage of total population)

Source: EIF, based on data from Eurostat

People at risk of poverty are considered to be potential business creators. A decision to start a business often arises out of necessity (for example because of a lack of paid employment). The majority of entrepreneurs (especially young people) start businesses to improve their situation (OECD/European Commission, 2013). According to Figure 44, in most countries of the EU, the majority of self-employed people found dissatisfaction with their previous work very important in their decision to start a business. Another important element that triggered their decision to start a business was getting the necessary financial resources. Moreover, in most of the EU countries, the proportion of respondents indicating importance of necessary financial resources has risen since December 2009.

As regards some Central-Eastern EU Member States, their relatively poor performance in social welfare indicators is one reason for the existence of a significant market for microfinance (i.e. commercial microfinance) in their respective economies. It also has to be borne in mind that in the European Union more than six million jobs were lost during the crisis and poverty has increased (Darvas and Wolff, 2014).

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Figure 44: Drivers to start a new business or take one over (% of self-employed respondents)

Source: European Commission, 2012a