Microfinance for Self-Employment Activities in the European Urban Areas: Contrasting Crédal in Belgium and Adie in France

Poverty is multidimensional. In its starkest form, the United Nations Development Annual Reports proxy poverty as combined low levels of income, health, and education. Microfinance, on the other hand, addresses directly the income dimension of poverty, and indirectly health and education. Specifically, microfinance is generally perceived as a tool for poverty reduction via self-employment for income-generating activities. Because the vast majority of poor households live in developing countries, poverty in industrialized countries is often neglected. This report focuses on microfinance as a tool for pulling disadvantaged individuals out of poverty in industrialized countries. In particular, this report contrasts the experience of two microfinance institutions, namely, that of Crédit Alternatif (Crédal) in Belgium with that of the Association pour le droit à l’initiative économique (Adie) in France. While both institutions started over twenty years ago, microfinance is far more active and outreach in per capita terms is much higher in the latter than in the former. First, we find similarities between the two institutions: Both target the socially excluded and unbanked, their presence in the capitals of Belgium and France is strong, both offer “guided” microloans, benefit from government support, and socially responsible investors. Second, we encounter very important differences: The distinct historical roots of Crédal and Adie, their different trajectories in terms of scale and scope, governance, loan size and maturity structures, average interest rates, geographic coverage, and their very different strategies for outreach growth. Third, we draw some lessons from Adie, which can potentially be replicated for microfinance outreach growth by Crédal, and by other microfinance institutions operating in Brussels and Belgium. Finally, this report concludes by extending the analysis to other urban areas of Europe, where strategic alliances with other financial institutions and the government, and marketing for guided loans and other financial products might prove key to microfinance expansion in industrialized countries.