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JASMINE

European Code of Conduct for Microcredit Provision

JASMINE JASMINE

European Code of Conduct European Code of Conduct for Microcredit Provisionfor Microcredit Provision

Dorota Zaliwska - Philippe Delvaux

Directorate General for Regional PolicyEuropean Commission

WarsawWarsaw -- 28 28 OctoberOctober 20112011

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• JASMINE – Joint Action to Support Microfinance Institutions in Europe.

• Focusing on technical assistance to microcredit providers.

• Microcredit providers may benefit from an assessment or a rating by a specialised rating agency followed by tailor-made trainings.

• Complemented with support services and tools.

JASMINEJASMINE

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• MFI Assessment and/or rating (2010)

• MFI On the ground training (2010)

• Business Development services (2011)

• European Code of Good Conductfor Microcredit Provision (5 chapters) (2011)

• Pilot phase CoGC (2011-2012)• ECoGC - Chapter on Social Responsibility (2012)• JASMINE Online (2012)• A Quality Label for MFIs (2013)

• A Prize (RegioStar Awards)? (2013)

• JASMINE Final evaluation (2013)

The JASMINE toolsThe JASMINE tools

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• The European Code of good Conduct for Microcredit Provision is now released.

• This Code is drafted in the framework of JASMINE.

• It builds on a recommendation originating from the Communication on the development of microcredit adopted by the Commission in November 2007.

• Important point : its endorsement is voluntary.

European Code of Good Conduct European Code of Good Conduct for Microcredit provisionfor Microcredit provision

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Why a European Code of Good Conduct for Why a European Code of Good Conduct for Microcredit Provision?Microcredit Provision?

• Microcredit market in the EU quite heterogeneous.

• Lending practices depend very much on the type of institution providing microcredit, on its legal setup and the legal/institutional environment in which it operates.

• The need to promote best practice in this field.

• Provide guidance material to microcredit providers.

• Make JASMINE more consistent.

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Objectives and principles of the CodeObjectives and principles of the Code

• Provide to the sector widely accepted operating standards.

• Enable the sector to face the challenges of accessing long term finance.

• Incorporate specific and measurable content to help the managers and the board take action to enhance their organisations.

• Draft a Code adjusted to the diversity of microcredit operators.

• Raising standards in the field.

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Practical organisationPractical organisation

• Five indexed sections comprising several clauses (159)

1. Customer and investor relations

2. Governance

3. Common reporting standards

4. Management Information Systems

5. Risk Management

• A sixth section addressing Social Performance is currently being finalised

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A didactic guide aimed at a large audienceA didactic guide aimed at a large audience

• Primarily addressed to non-bank microcredit providers but also intended for other stakeholders:

• Customers• Investors and funders• Regulators• Policy makers• Commission

• A sixth section addressing Social Performance is currently being finalised

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Voluntary EndorsementVoluntary Endorsement

• In the absence of regulatory frameworks, endorsement of the Code is not a mandatory, but a voluntary process.

• Other stakeholders (e.g. investors, funders, regulators MAs) may also endorse the Code.

• Those organisations who have endorsed the Code will be made public in JASMINE Online currently under development.

• JASMINE Online is a web-based application complementing the Code that will be accessible through InfoRegio.

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JASMINE OnlineJASMINE Online

• Intended to facilitate the implementation of the Code for those who have endorsed it.

• Will make reporting tasks for microcredit providers (Section 4 of the Code) quite easy.

• Will also help EU citizens get in touch with those local/regional organisations who have endorsed the Code (monitored process).

• Will allow potential investors access financial data of microcredit providers stored in JASMINE Online, provided they have endorsed the Code.

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Criteria (e.g.):• Good institutional governance• Quality of information systems• Risk management• Relation with clients • Results compliant with business plan• Financial performance• Social performance• Distance to sustainability• Rating, if any•• ……

Designing a quality label Designing a quality label for for MFIsMFIs

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• Finalise the tools in the pipeline• Run a pilot on the Code of Good Conduct and pursue

its development• Review strands 1 and 2 of the Communication on

microcredit of 2007• Consider awarding a prize aimed at MFIs in the

framework of Regio Star Awards• Implicate local and regional actors to secure efforts

made by MFIs to create local activity

Next stepsNext steps

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The Code should contribute to the development of a sound and sustainable micro-credit industry.It may help increasing the provision of micro-credit throughout the EU.Involving stakeholders as much as possible in the work and facilitate networking of actor is key for its success.

ConclusionsConclusions

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Thank you for your attention

DG REGIO – Unit D3 ‘Financial Engineering, major projects‘

regio-financial-engineering@ec.europa.eu

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Main elements to be assessed :Main elements to be assessed :

•• InstitutionalInstitutional GovernanceGovernance•• Information System and Data QualityInformation System and Data Quality•• Risk managementRisk management•• Strategic planning and portfolio managementStrategic planning and portfolio management•• Social impactSocial impact•• Assets and liability managementAssets and liability management

Assesment/rating Assesment/rating

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•• Provided by MFCProvided by MFC

•• Adaptable tTailorAdaptable tTailor--made trainingsmade trainings

•• Based on results of the assessmentBased on results of the assessment

•• Includes also consulting if neededIncludes also consulting if needed

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On the ground training On the ground training

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Accessible to all microAccessible to all micro--credit providerscredit providers

•• JASMINE HelpdeskJASMINE Helpdesk

http://ec.europa.eu/regional_policy/thefunds/instruments/jasmine_helpdesk_en.cfm

http://ec.europa.eu/yourvoice/ipm/forms/dispatch?form=jasminhelp&lang=en

•• Organisation of specialised workshops Organisation of specialised workshops

•• DocumentationDocumentation

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Business Support Services Business Support Services

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JASMINE onlineJASMINE online

Restricted area for MFIs

Public website

Information on EU MFIsInformation on EU MFIsInformation on sectorInformation on sectorJASMINE HelpdeskJASMINE Helpdesk

Complements the Code of Complements the Code of Good Conducts Good Conducts (administrative (administrative and financial data)and financial data)Practical tool for MFIs Practical tool for MFIs (calculations & reporting)(calculations & reporting)

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JASMINE onlineJASMINE onlineRestricted area

for MFIsPublic website