FEBEA, in collaboration with the European Microfinance Network (EMN) and the Microfinance Centre (MFC), has contributed to the Invest EU call for evidence. This contribution is the result of a consultation process among the members of the three organisations.
Around 30 members provided feedback on the current Invest EU programme. As providers of financial and non-financial services to vulnerable groups, MSMEs and social enterprises, the members mainly use the financial guarantee products to reduce their financing costs, credit risks and capital requirements. Ultimately, the guarantee enables them to provide access to finance for vulnerable groups and to promote (self)employment, financial and social inclusion.
Several shortcomings have been identified by members, such as the recovery rate and the exclusion of some financing projects.
There are also other issues such as the new refinancing conditions, increased reporting requirements and the need for low-cost funding/capital/new financial instruments, which are not met by the InvestEU guarantee scheme. Members also mention the lack of transparency of InvestEU, such as the amounts disbursed for the Social Window and the list of successful beneficiaries.
Improving the current programme to meet the objectives of the InvestEU Social Window will require grants to reduce interest rates for final beneficiaries, cheaper loans for financial intermediaries and new financing instruments. There is also an important need to increase the portfolio dedicated to the Social Investment and Skills Window. Members unanimously agreed that they do not use the InvestEU portal due to its complexity.
On the InvestEU Advisory Hub (SIFTA programme), opinions vary depending on the status and size of the member. Some members find the service helpful, while others find the application process too bureaucratic and need more peer-to-peer visits and specific training.
In conclusion, while InvestEU supports the activities of microfinance institutions, social finance providers and ethical and alternative banks, members have identified a number of shortcomings that need to be addressed. Improvements needed to make the programme more effective include greater transparency, increasing dedicated portfolios, providing grants and lower cost loans, and simplifying the application process.
Valentina Patetta
Policy Manager of FEBEA
