ABCDE The role of micro-credit in promoting entrepreneurship and its effects on social inclusion Rainer Irmen Member of the Board Sächsische Aufbaubank – Förderbank – Open Days Brussels, 9 October 2007

ABCDE 2 SAB – Sächsische Aufbaubank: SAB is primary vehicle for regional, national and EU promotional programmes in Saxony Bank has no competitors, no commercial bank activities Close cooperation with state government, private banks, saving banks as well as KfW SAB implements State Economic and Regional Policy in Saxony, Germany balance sheet total 11,064.4 m capital resources m business in ,747.4 m (loans & guarantees: m / grants: 1,353.1 m) employees696 Saxony: one of 16 German Länder 4.3 m inhabitants GNP ~ 70 % of West German Länder GNP-growth ~ 4,2 % in 2006

ABCDE 3 ESF-promotion by SAB in 2006 Grants for start-ups and employment Advanced training programmes Apprentice- ship training programmes ESF–Micro- finance Programme Total Number of approvals 1,308 1,7833, ,442 Approval amount in T 8,047 98,94648, ,166 Number of promoted individuals 1,30843,42845, ,069

ABCDE 4 ESF - microfinance programme of SAB Results /2007: consultations8935 applications798 approvals495 approval sum 7.1 m (= T 14) investment sum 8.3 m job effects926 (331 created and 595 safeguarded) Advantages for the Entrepreneur: promotion during the first three years after the set-up of the business credit up to 20,000 for investment or working capital purposes low interest rate: EU-reference rate + 1 % only personal liability no commission/fees to be payed grace period of 6 months

ABCDE 5 Findings approval ratio 60 %; current default rate 5 % (after 18 months) 58 % of approved projects to overcome unemployment extensive consulting and support efforts necessary, since the target group of the programme has deficits in commercial and financial knowledge good and efficient co-operation with chambers and other experts is key significant output in relation to the limited subsidies granted combination of ESF grants and microloans proves to be successful