Friday 27 September 2019

The EIF is investing in microlux to support inclusive and solidarity-based microfinance in Luxembourg

Press release

Signing ceremony marking the EIF's investment in microlux - Rémy Jacob-microlux Chairman of the Board and Roger Havenith-EIF Deputy Chief Executive - Photo: WILI

Thanks to the European EaSI programme, the EIF is investing in microlux to support inclusive and solidarity-based microfinance in Luxembourg

·       On 26 September, the EIF signed an agreement to acquire a EUR 500 000 stake in microlux.

·       The operation was made possible thanks to the EU Programme for Employment and Social Innovation (EaSI) implemented by the EIF

·       The aim is to increase microlux’s ability to take action and support the institution’s growth trajectory

Access to credit for microentrepreneurs without access to the traditional banking system will be boosted considerably in Luxembourg following the acquisition by the EIF of a stake in microlux. The country’s leading microcredit institution, which in three years of activity has already helped create 80 jobs, will be able to boost its firepower and thus expand its inclusive role in the economic and social fabric of Luxembourg and the Greater Region.

On 26 September 2019, Rémy Jacob, President of microlux, and Roger Havenith, Deputy Chief Executive of the European Investment Fund, signed an agreement confirming the acquisition by the EIF of a EUR 500 000 stake in the Grand Duchy's leading microcredit institution. The official signing ceremony took place at the EIB's headquarters in Luxembourg, which provided the opportunity to hold a conference on the social impact of local action in Luxembourg aimed at the country’s economic and civil society players.

Financial and social inclusion is a major challenge for the European Union and one of the goals of its EUROPE 2020 strategy. Microfinance has shown that in Europe too it is an effective tool that helps to create jobs, improve living conditions, and reduce vulnerability and poverty, thereby helping microentrepreneurs and their beneficiaries break free from social and economic shackles.

Rémy Jacob, President of microlux said: “We live in an environment where essential goods are available. However, in order to make these goods available to everyone, basic economic and financial means are necessary. With this EIF investment, microlux and its volunteers will be able to support a larger number of microentrepreneurs, offering them more microloans and a better future.”

Roger Havenith, Deputy Chief Executive of the EIF, said at the signing ceremony: “The EIF is proud to be able to strengthen its initial partnership with microlux and provide it with additional resources. We are also pleased to be able to implement the EaSI Capacity Building Investments programme in the Grand Duchy of Luxembourg. The EU Programme for Employment and Social Innovation enhances microlux’s ability to support microentrepreneurs having difficulty accessing traditional bank loans in Luxembourg and across the Greater Region.”

Supporting small economic players is part of the European Investment Fund's DNA. It uses various types of financial instruments – debt or equity instruments – and also provides non-financial support to achieve its inclusive finance goals. When microlux was set up in 2016, the EIF provided Luxembourg’s microfinance pioneer with a guarantee under EaSI that partly covered its credit risks.

The Programme for Employment and Social Innovation, financed by the European Union, enables financial intermediaries to obtain the necessary capital to launch their microentrepreneurship and social entrepreneurship activities. Through the EaSI Capacity Building Investments Window, the EIF, which was entrusted with its implementation by the European Commission, has already deployed EUR 14m worth of capital via six partners in Europe and is currently appraising 11 applications.

Through the EaSI Guarantee Window, EUR 234.4m worth of portfolio guarantees have been allocated to around 100 financial institutions in the 28 EU Member States and some neighbouring countries that have participated in the programme since 2015. These guarantees will help mobilise EUR 2.7bn in financing for European micro-enterprises and social enterprises. To date, nearly 60 000 enterprises have benefited from the EaSI Guarantee and have thus been able to access finance through professional channels more easily.

 

About microlux

Microlux is Luxembourg's leading microcredit institution. It promotes the creation and development of enterprises in Luxembourg that do not have access to the traditional banking system by providing assistance and microloans of up to EUR 25 000. The institution was established in March 2016 as a not-for-profit social enterprise. The initial shareholders, joined today by the European Investment Fund, are BGL BNP Paribas, the NGO ADA (Appui au Développement Autonome), ADIE (Association pour le droit à l’initiative économique) and Foyer, which in 2018 stepped up its original partnership with microlux by acquiring a stake in the institution.

In three years of activity, microlux has found its niche market in Luxembourg: 400 meetings have taken place with prospective microcredit customers, around 150 microentrepreneurs have been supported by its network of volunteer coaches and 80 microloans have been disbursed with an average value of EUR 14 000. These microloans have led to the creation of 58 companies and some 80 jobs.

About the EIF

The European Investment Fund is part of the European Investment Bank Group. Its central mission is to support Europe's micro, small and medium-sized businesses by helping them to access finance. The EIF designs and develops venture and growth capital, guarantees and microfinance instruments, which specifically target this market segment. In this role, the EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment.

About the EU Programme for Employment and Social Innovation (EaSI)

Under the European Programme for Employment and Social Innovation (EaSI), the European Commission supports microfinance and social entrepreneurship finance with an overall envelope of EUR 193m for the 2014-2020 period. The aim is to increase access to microfinance, i.e. loans of up to EUR 25 000, in particular for vulnerable persons and micro-enterprises. In addition, for the first time, the European Commission is also supporting social enterprises through investments of up to EUR 500 000.

The EaSI Capacity Building Investments Window reinforces the capacity of selected financial intermediaries in the areas of microfinance and social enterprise finance. Through equity or quasi equity (such as seed financing, risk capital), the European Investment Fund (EIF) will support the development of these finance providers. Ultimately, these investments will benefit and help increase the opportunities for micro-borrowers and social enterprises. The European Commission has selected the EIF to implement the EaSI Capacity Building.

 

Press contacts

For the EIB Group (EIB and EIF)

Sabine Parisse, s.parisse(at)eib.org, tel. +352 4379 83340, mobile: +352 621 459 159

Website: https://www.eif.org/news_centre/press_releases/index.htm

Press Desk: +352 4379 21000 – press(at)eib.org

For microlux

Anh-Quyen NGO-LI aq.ngoli(at)microlux.lu, tel.: +352 45 68 68 76, mobile: +352 671 022 450

Website: www.microlux.lu  

Founders

With the support of