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ADIE microcredits for social inclusion

A recently published case study from fi-compass highlights how financial instruments were used to support local entrepreneurship in the former Champagne‑Ardenne region of France.

The financial instruments were implemented by ADIE (Association pour le Droit à l’Initiative Economique) from late 2009 to the end of 2010. This case study tells how it worked, highlighting the advantages of combining support from the European Social Fund (ESF), the European Regional Development Fund (ERDF), and national co‑financing to support local entrepreneurship. Further, the  fi-compass case study is designed to show managing authorities and other stakeholders the value of combining financial and non-financial support to advance social goals, including an increased business mentality and the creation of jobs.

There is a special focus on the non‑financial coaching and mentoring provided by ADIE through ESF which worked alongside the ERDF financial support. This makes the case specifically interesting for a managing authority designing microfinance instruments using the ESF.

Talking about the support, Marie Degrand-Guillaud said: “In a lot of EU Member States, ESF is not yet used to support the development of microfinance. Showing concrete examples and business cases is a very powerful way to convince managing authorities to seize this tool and enable the development of microfinance at a larger scale.”

This overview of the financial instrument covers the support from ADIE and is illustrated by a final recipient. Using such a concrete example also helps illustrate the practicality of a financial instrument to promote social inclusion. For instance, Mau, a 29-year‑old, was unemployed when she made her application for microcredit support to open her own clothing store, providing employment for herself. As the business expands there can be opportunities to take on another person.

Revolving funds are also highlighted in this ADIE example. With microfinance, regular repayments normally start immediately. These repaid funds can be used to support similar final recipients. By the end of 2015, this financial instrument had revolved nearly three times to support 286 local entrepreneurs.

Advantages of financial instruments go beyond financial support, where they can increase the funds available for final recipients through leverage and their revolving nature. They can also help advance social goals through a greater understanding of business by entrepreneurs, which helps create opportunities and jobs. Marie Degrand-Guillaud was asked how this publication would be useful. She replied: “I would say at two levels: By Member States to convince managing authorities and by managing authorities to implement ESF mechanisms, promoting microfinance at a regional level.”

The case study (titled: 'Microcredits for social inclusion – France') can be downloaded from the fi-compass website here.

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