Originally devised to foster development in the Third World,
microcredit has now become a critical anti-poverty tool also in
the developed world. It is often used as a means of encouraging
the growth of self-employment and the formation of microenterprises.
In many cases this is linked to efforts to promote the transition
from unemployment to self-employment. Microcredit can thus contribute
to social inclusion policies. It is of particular importance for
rural areas and can play an important role in helping to integrate
ethnic and other minorities both economically and socially.
At the same time, the report cautions against the limitations
of microcredit: while the microfinance movement has improved access
to credit, it has often “romanticised” the poor as potentially creative
entrepreneurs while ignoring the structural causes of poverty in
a given country.
The report underlines that microcredit operations need to
be seen in a broader legal and support framework because financial,
employment and social welfare systems are interrelated. Moreover,
smoothing the transition between unemployment or social welfare
dependence and self-employment is essential for the success of these
operations. It suggests an array of policy measures to create a
hospitable economic environment necessary to promote the development
and smooth functioning of microfinance institutions in the member states
of the Council of Europe.