About ACP-EU Microfinance
Improving Access to Finance
People living in poverty - like everyone else - need access to a diverse range of financial services to run their businesses, build assets, stabilize consumption, and shield themselves against risk. Microfinance services required for this include not only microcredit, but also savings, insurance and payment services. The real challenge facing microfinance in ACP countries - as in many other places - is scaling-up services to reach the people who still lack access to formal financial services.
Many of the necessary elements needed to scale up microfinance are already in place. A great deal of the knowledge about the requirements of sustainable microfinance already exists. Several high performing microfinance institutions (eg NGOs, cooperatives, credit unions, finance companies, banks) have developed innovative methodologies to extend credit, savings and other services to poor clients. A number of domestic and international private commercial banks and other institutions with nationwide distribution systems are beginning to take active interest in reaching poorer clients. Advances in information technology have the opportunity to lower the cost and risk of providing microfinance to the poor.
The challenge before us is to mobilize this knowledge and apply it on a much vaster scale in ACP countries, creating financial systems that work for the poor and boost their contribution to economic growth.
Supporting Sound Microfinance
In January 2005, the European Union and the African, Caribbean and Pacific States (ACP Group) launched the EU/ACP Microfinance Framework Programme (the Programme). With a budget of 15 million Euro for 6 years from the 9th European Development Fund, the EU/ACP Microfinance Programme intends to support the development of innovative solutions and dissemination of good practices in microfinance. The Programme builds on successful microfinance experiences in ACP countries and promotes South-South learning. With this pilot programme, the EU seeks to advance the overall effectiveness of its microfinance operations in ACP countries, including those not directly funded by this Programme. Read more about the EC's approach to supporting microfinance 
[414 KB] .
The EU/ACP Microfinance Programme offers a professional model for the European Commission's (EC) support to microfinance because of its:
- Focus on building the retail level capacity of microfinance actors. This is one of the biggest constraints in microfinance, and the EC is well-positioned to it with its grant instrument.
- Thorough screening process leading to the selection of professional implementing partners.
- Expert advice in design, implementation and monitoring stages of the Programme. This professionalism was welcomed and appreciated by the implementing partners.
- Application of internationally accepted good practices, such as using performance-based contracts with implementing partners and standard reporting requirements.
- Frank and open cooperation with implementing partners, EC delegations and other funders.
Financial Systems Development Approach
The Programme takes a financial systems development approach which emphasises institutional sustainability as a crucial element in the provision of microfinance services. To ensure permanent access to financial services by low income people, capacity needs to be built at different levels of the financial systems. The EU/ACP Microfinance Programme targets microfinance actors at every level: microfinance retail institutions, the financial industry infrastructure up to the policy-making level. The Programme has three areas of intervention in ACP countries:
Build Capacities and strengthen microfinance actors
Support Ratings and Information Systems of microfinance and stimulate improvement
Enhance Transparency and Efficiency in the microfinance market
Results of the EU/ACP Microfinance Programme
Q1 2007 Quarterly Report [117 KB]
Q2 2007 Quarterly Report [137 KB]
Q3 2007 Quarterly Report [139 KB]
Q4 2007 Quarterly Report [99 KB]
January - April 2008 Report [123 KB]
May - August 2008 Report [303 KB]
September - December 2008 Report [225 KB]
Q2 and Q3 2008 Progress Report [225 KB]
Mid-term review of EU/ACP Microfinance Programme [738 KB]
A mid-term evaluation of the EU/ACP Microfinance Programme completed in May 2008 concludes that the Programme has successfully achieved its objective of improving the overall effectiveness of microfinance operations in ACP countries through institutional strengthening, microfinance rating and increased efficiency and transparency. Just after three years, it has already achieved many of its five-year targets. This success is attributed to different factors such as high level commitment from EC and ACP, strong project design and implementing partners, the use of performance based contract, and solid supervision mechanism with the support of CGAP.
The review recommends that in the remaining two years, the Programme should focus on ensuring the sustainability of supported partners, incorporating tools to measure impact and extracting lessons learned. The evaluation also recommends that the EC and the ACP launch a successor programme, even larger than the current one, and with increased linkages with the EIB and other microfinance funders to respond to the high demand for capacity building among ACP microfinance actors. In its conclusion, the report advises the EC and ACP to further institutionalize their support for microfinance and to build up the necessary capacity and expertise to manage new activities and ensure the effective quality control.
Read the executive summary [81 KB] 
or the full report [738 KB] of the Mid-term review.
