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Microfinance and the EC ‘Agenda for Change’
March 22, 2012

Newsletter N°3 Microfinance ACPEU | March 2012 - The European Commission recently presented the “Agenda for Change”, which sets out its strategic framework to reducing poverty. Among the key focal areas is the generation of inclusive and sustainable growth for human development. It raises the importance of a competitive private sector and a conducive business environment, and calls for a more active engagement with private sector actors in order to better leverage expertise and funding for development. Yet, the Agenda for Change is not only about growth rates; growth patterns need to be
inclusive, i.e. people need to be able to participate in job and wealth creation. Furthermore, development is not sustainable if it damages the environment and increases the vulnerability to natural disasters.

The EU support to microfinance has to be seen in this perspective. Microfinance is one of the instruments which can help delivering inclusive and sustainable growth, e.g. by supporting livelihoods for the poor, helping them manage their financial resources or facilitating small scale energy-saving investments. Yet, in order to be an effective tool, microfinance actions need to keep a clear focus on the expected development outcomes. Keeping in mind this overall direction is vital for the success of any microfinance support action, whether at policy, meso, MFI or client level. This can be achieved through a strong focus on clients’ needs and monitoring systems to trace development outcomes.

ACP/EU MICROFINANCE fits this approach particularly well. First, the programme has a strong client-orientation: it supports the introduction of social performance management, the development of new products and services at MFI level and contains specific actions geared at consumer empowerment. Furthermore, through its support to innovative financing mechanisms such as Regmifa, which blends grants with additional public and private funding, it effectively leverages private capacities and funding sources for development, while ensuring a proper balance between the social and financial missions of financial institutions.

ACP/EU MICROFINANCE is an exciting programme in this respect. The lessons we will be learning from it are likely to shape future EU assistance in this field.

Stefaan Pauwels
EU Microfinance Focal Point, DG Devco, European Commission

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