Magazine article UNESCO Courier

Three Microcredit Schemes in Europe

Magazine article UNESCO Courier

Three Microcredit Schemes in Europe

Article excerpt

In the North as well as the South, microfinance can help to strengthen the community

Wage-earning is the most widespread form of employment in the industrialized countries. However, in a context of economic crisis and high unemployment, the proportion of self-employed workers has risen steadily since the early 1980s. Microcredit is one tool of development for this sector.

The Association for the Right to Economic Initiative (ADIE) was set up in France in 1990, and was supported from its inception by a number of private foundations, the French state and the European Union. To date

ADIE has funded more than 2,500 micro-enterprises started by the unemployed and people receiving the minimum social wage (RMI(1)). It has branches in fourteen French regions and works in tandem with authorized savings and loan banks such as Credit Mutuel and Credit Municipal.

Nearly 40 per cent of ADIE's customers have not completed a vocational training course, and about 10 per cent can barely read or write. But in life's hard school they have acquired entrepreneurial capacities and energy that no formal schooling could have taught them. Some of them pursue occupations traditionally associated with poverty such as street vending and scrap-metal dealing; others are astutely exploiting the possibilities of modern technology, e.g. by teleworking - providing secretarial services from home.

What most differentiates them from their counterparts in the countries of the South, however, are the administrative complexities and the social charges they have to cope with. Social security coverage for the most vulnerable groups tends to discourage potential entrepreneurs from starting new businesses.

But helping unemployed people create their own jobs on a permanent basis costs the state three times less than supporting them for a year while they are out of work. In France microcredit is used as a tool to help people on the fringe of society to help themselves.

The dismantling of Albania's co-operatives and state farms that began in 1992 has put farmers in charge of individual holdings averaging 1.4 hectares but with no farm implements or input.

As part of the Rural Poverty Alleviation Project financed by the World Bank and Aide International, village credit funds have been set up to inject resources into rural areas and rebuild village community life destroyed under communist rule. …

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