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The new European initiative in the field of Micro Credit: JASMINE

Philippe DELVAUX - Principal Administrator, Directorate General for Regional Policy, Unit D3 - Financial Engineering

Could you present JASMINE?

You should remind November 13th 2007, when the European Commission adopted a communication intended to promote development of micro-credit as a growth and job creator instrument in Europe. The European Commission conducted an examination of the situation and concluded that it was necessary to launch an action in partnership with the European Investment Bank - EIB - in order to reinforce the role played by micro-credit institutions in allocating micro-loans to project leaders who for many reasons have no access to banking instruments. Lire_La_Suite

Could you present JASMINE?

You should remind November 13th 2007, when the European Commission adopted a communication intended to promote development of micro-credit as a growth and job creator instrument in Europe. The European Commission conducted an examination of the situation and concluded that it was necessary to launch an action in partnership with the European Investment Bank - EIB - in order to reinforce the role played by micro-credit institutions in allocating micro-loans to project leaders who for many reasons have no access to banking instruments.

JASMINE (Joint Action to Support Micro-finance institutions in Europe) is an instrument which was developed to answer these concerns.
This initiative foresees a pilot phase of 3 years and will associate a restricted number of non banking microfinance institutions, which should be sufficient to implement this new instrument. The concept is to provide a technical assistance to the most promising Microfinance Institutions (MFI) in order to help them to establish their credibility on the market. Moreover, it would allow them to obtain a better access to capital and to improve their capacity to finance loan operations so that they can increase the number of loans.



How will JASMINE work concretely?



For all practical purposes, JASMINE will examine the viability of the expressed requests, and will do appropriate proposals in order to ensure co-financing of these operations by the EIB and the public or private banking partners which will accept to participate in this initiative. JASMINE will be implemented within the European Investment Funds (EIF) and will have to assess enterprise plans of MFI candidate to a funding and to help them to reach a quality level at the governance, financial management and commercial policies scales. The aim is to allow these institutions to adopt "good practices" enabling them to deliver a quality label.
This initiative is launched jointly by the European Commission and the European Investment Bank. What were the motivations of these institutions?

The European Commission and the EIB Group (European Investment Bank and Investment European Funds ) have developed JASMINE in order to answer to a market need. Micro Credit for people considered as non bankable is very badly implemented.

The European Commission's estimations rest upon Eurostat data, which have emphasised that the potential Micro Credit demand in EU might correspond to more than 700 000 new loans, which represent an amount of nearly 6,3 billion euros on the short run. These are mostly people excluded from classical financial services who are beneficiaries of micro-loans because, in the absence of sufficient guarantees, traditional banks don't accept their loan requests. So it seems appropriate to develop other intermediaries who take their guarantees differently, and to support their approach. The objective is not to create useless competition with banking institutions doing micro credit, but to implement synergies and intervene where they can not do it, in regards to the costs represented by project leaders' support.

The EIB has for long been involved in micro credit through the EIF (European Investment Fund). It is an excellent opportunity for them to become major actors in the field of Micro Credit which, let's not forget it, is part of the JEREMIE initiative, promoted and managed by the EIF within the Structural Funds.



When will the initiative begin?



The pilot phase of our project will start at the beginning of 2009 and will run for 3 years. The initial envelope of the whole project amounts for the moment to about 50 million euros.



JASMINE intervenes in complement of JEREMIE. Could you explain the originality and assets of such an initiative?



Actions aiming at strengthening Micro credit role in Europe are not new but JASMINE's originality is to associate in this project many European Institutions (European Commission, EIB, EIF, European Parliament) as well as public and private banks (or their representatives) and other interested stakeholders. Concerning the link between JASMINE and JEREMIE, microfinance institutions having received the JASMINE quality label will be well placed to be selected by the JEREMIE participation funds constituted in regions or, depending on the case, in Member States. What is noticeable, is that our initiative has received and still receives a substantial support from political institutions and sparks off a lot of interest from the Banking sector.

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