Microfinance

Microcredit lending schemes may have originated in the developing world, but they are no stranger to western Europe. For people wanting to set up their own small business but without the means to access loans from commercial banks, taking out a microcredit loan is one way to set up a business.

Microfinance experts in Europe, who recently attended a conference on the issue in Berlin, say the practice is especially well suited to women. In Europe, women on average usually earn 15 percent less than their male counterparts for the same work and are more often threatened by poverty and unemployment.

Banks often not interested

Tamara Underwood of the Paris-based European Microfinance Network told Deutsche Welle that though there's no evidence that women are specifically discriminated against when it comes to getting access to bank loans, their customer profile doesn’t exactly match the loan requirements of the banks.

"Because women have often been unemployed or been housewives, they don't have much of their own money," Underwood said. "That's why they often can't provide the collateral needed by the banks -- unless they own a house and can mortgage it."

Retail, hospitality and the service sector are typically dominated by female entrepreneurs. But since most of them have modest start-up capital and usually work part-time, banks often aren't interested in having them as customers, experts added.

For instance, the state-owned Finnish bank Finnvera refused for a long time to finance the service sector because it was linked with high start-up costs and risks, Underwood said. The bank, however, did change its policies over the years, with the result that it today counts many women among its customers.

Reaffirming female solidarity

Women also make for loyal and reliable customers, according to experts familiar with microfinance.

"Women who get credit often feel like they are a part of the project," Brigitte Maas, an executive at Goldrausch, a German organization that offers small loans to women wanting to set up their own business. "The women who come to us also know well that if they don't pay back, then we can't offer them any new credit. The pay-back rate is really very high."

Raina Timtscheva of a microfinance organization in Bulgaria echoed the view.

In my experience, "there's less bad credit with women than there is with men," Timtscheva told Deutsche Welle.

Experts point out that microfinance also plays an important role in creating a sense of female solidarity and bonding, for instance among African immigrants in France or communities in rural England.

"If one of them (the women) has difficulties paying back their loan, then the other women can step in to help," Underwood said. "Thus there's a kind of social pressure to pay back the loan."

Spain leads the way in Europe

An estimated 39 percent of all microcredit lending schemes in western Europe are used by women. Though that figure could be much higher, experts said, there are some countries in Europe that fare better than others.

"In Spain, almost 60 percent of all microfinance takers are women," said Underwood, who added that Spain had taken a very clear stance on the issue.

"In Spain, they want to reach women and help them out of their fringe position," she added. "The country has taken concrete steps: targeted advertising campaigns and special training programs so that women can achieve their goals."

Microfinance: just like marketing jeans?

In Germany, microfinance is still in its infancy. Brigitte Maas, who heads the German Microfinance Institute said the country still had to find out how the system worked best in the country.

Maas pointed out that one microfinance institute, KIZ from Offenbach, near the German city of Frankfurt, had found out in a study that microcredit lending schemes needed to be marketed just like washing powder or jeans.

Maas said the city was plastered with big posters with pictures of a variety of tough-looking women, even older ones and some with headscarves with the slogan "Does an entrepreneur look like this?"

"And suddenly there were so many women with immigrant backgrounds who you hadn't seen before flooding to the microfinance institute," she added.