The EU bank

Some of the first EIB microfinance operations took place in the African, Caribbean and Pacific countries. They have gradually been extended to the Mediterranean Countries and Europe (including the European Union but also Eastern Europe and the Candidate Countries). Each region is characterised by the type of intervention (instruments) and the origin of the financial resources used (own resources, EC, etc.). Some 75% of the amounts committed to microfinance is for operations in Europe while 75% of the number of microfinance operations relates to counterparties outside the European Union.

• In Africa, the Caribbean and the Pacific (ACP)

The ACP region accounts for the lion's share of the EIB's microfinance portfolio with a total of approximately EUR 129 million committed in debt and equity in both microfinance investment vehicles (MIVs) and microfinance institutions. Since 2005, the geographical focus of ACP microfinance operations has shifted from the Caribbean to Africa, where EIB's portfolio stands at about EUR 102 million in twelve microfinance operations. Almost 75% of the ACP portfolio (EUR 96 million) consists of investments in ten MIVs, with either a regional or global scope, and only a small proportion is earmarked for MFIs in ACP countries.

• In the Mediterranean Region (FEMIP)

With the Facility for Euro-Mediterranean Investment and Partnership (FEMIP) Trust Fund, the EIB is the third largest microfinance lender in the Mediterranean region and has provided EUR 29 million in direct local currency funding to microfinance institutions in Egypt, Lebanon, Morocco, Syria and Tunisia since 2003. Technical assistance affords further support for the establishment of new well-governed microfinance institutions or for helping existing ones to fully integrate into their local financial sector by obtaining financing from local banks. FEMIP’s microfinance resources have one very important advantage: the fact that loans can be provided in the local currency. The EIB bears, in exchange for a premium, the foreign exchange risk against the euro.

• Inside Europe

In the European Union, the European Investment Fund (EIF) conducts most of the microfinance operations, as it is the main source of risk capital and guarantee products for small and medium businesses. EIF’s operations range from investing in microfinance funds/vehicles to participating in risk sharing arrangements, and guarantee and securitisation operations. The European Commission has commissioned the EIF to implement a series of initiatives promoting the development of microfinance activities: the Joint Action to Support Microfinance Institutions in Europe (JASMINE, which is designed to develop microcredit in the European Union) and the Joint European Resources for Micro to Medium Enterprises initiative (JEREMIE), which is intended to enhance access to finance for small and medium-sized enterprises.

More recently, the European Commission and the EIB Group launched the European Progress Microfinance Facility, a EUR 100 million facility aimed at refinancing and guaranteeing financial intermediaries that target individuals who want to start or further develop their own micro-enterprise, including for self-employment. Intermediaries may include commercial banks, microfinance institutions, guarantee institutions and community development finance institutions. Financing isntruments will take the form of guarantee products and funded instruments.

At a wider level, the EIB Group funds microfinance activities under EC-financed mandates or from its own resources, in EU Member States, as well as in EU Candidate and Potential Candidate Countries (the Western Balkans and Turkey). The EIB is one of the early investors in the European Fund for South East-Europe (EFSE), which is intended to foster economic development mainly in the Western Balkans as well as in Bulgaria, Romania and Moldova through the provision of loans to micro and small enterprises and low-income households.