AG Insurance invests €1 million in the microcredit provider
In 2014, microStart, Belgium’s number one business microcredit provider, interviewed some 3,000 would-be entrepreneurs and granted 582 business micro-loans to borrowers – such as the unemployed, those whose current jobs are under threat and persons in receipt of aid from public centres for social welfare – who would like to set up or expand their own independent business but are unable to go through traditional banking channels.
To help build on this successful performance and support the further growth of microStart in Belgium, AG Insurance, the number one insurance company in this country, has now agreed to invest €1 million in the form of additional equity capital. AG Insurance thus becomes the second-biggest shareholder in the micro-lending cooperative, behind BNP Paribas Fortis.
Belgian microcredit provider microStart was set up in 2010 as a cooperative company with limited liability for social purposes) on the initiative of ADIE, a France-based NGO, and BNP Paribas Fortis, the leading Belgian bank, which is part of the international BNP Paribas Group, with support from the European Union. In 2014 the six local microStart agencies – at Saint-Gilles and Schaerbeek in Brussels, in Antwerp, Charleroi, Ghent and Liège – granted 582 small business loans, up from 400 the previous year.
microStart Board Chairman Philippe Maystadt underlined: “These results clearly demonstrate that there is a strong demand for micro-loans in Belgium and that among the less well-off in our society there exists a remarkable ability to put their own ideas into action. We’re convinced that some changes to the rules governing the setting up of companies could help to generate even more encouragement for people to set up their own businesses, which would in turn have a great impact on the employment situation.”
Strong demand – The average loan amount granted to microStart borrowers during 2014 was € 6,200. 45% of all microStart clients are unemployed or in receipt of a social security allowance, 36% are self-employed people who are unable to obtain a standard bank loan and 19% are low-wage workers. 36% of them are women. They tend to establish small-scale niche businesses (46% in trades and 20% in services) that require very little initial investment and every day brings new examples of people who demonstrate their ability to take a new approach in order to pull themselves out of unemployment and create their own jobs. While these new businessmen and -women are usually not at all well-off, and sometimes lacking formal education, the fact that the repayment rate on the micro-loans they take out currently stands at 93% shows that the trust microStart places in them is fully justified.
Positive impact on society as a whole – By establishing their own jobs or placing them on a more secure footing, borrowers created 300 new jobs in 2014, which makes a total of 800 since microStart was founded. Over and above the actual loans granted, the success enjoyed by these small businesses also owes a great deal to the advice and support provided on an individual or group basis to the fledgling entrepreneurs by around 100 volunteers. The success of these small businesses is having a considerable overall social impact – both in its direct socio-economic outcomes and in terms of the positive effects on public finances – as indicated by a survey carried out recently by the Vlerick Business School at the request of microStart and BNP Paribas Fortis.
Regulatory obstacles to individual business initiatives persist – In spite of these noteworthy successes, people wishing to set up their own little business nevertheless all too often still come up against excessive rigidities in the current legislation, which can make their initial steps into self-employment extremely difficult. For example they face the immediate loss of social security benefits, social security contributions are rather high at the outset in relation to the small size of the business starting up, and those who lack educational qualifications or proven experience are required to pass a test on business management in order to obtain authorisation to register their company. In fact microStart has made a number of concrete proposals for adjusting these rules so as to help create a friendlier environment for new entrepreneurs. These suggested adjustments would help to increase employment and so benefit the whole of society.
AG Insurance a new strategic partner in the microStart cooperative – Meanwhile AG Insurance, Belgium’s leading insurer, has just taken a €1 million stake in the microStart cooperative. This new capital injection will help the microcredit provider to pursue its growth plans. As part of this strategic partnership, microStart will also be examining ways and means of meeting the borrowers’ insurance needs and thus shielding their fledgling businesses from unexpected risks.
AG Insurance CEO Antonio Cano explained: “As an insurer we’re fulfilling an important role for society, and solidarity with our policyholders is a central element. We intend to play that role not only by running our day-to-day insurance activities as efficiently as possible but also by supporting socially-oriented projects such as microStart. The Belgian economy needs this sort of initiative, which encourages people to set up their own business and provides opportunities for those who have great difficulty in going through the traditional channels in order to do so.”
Press contacts
Hilde Junius – 02 565 47 37 – hilde.junius@bnpparibasfortis.com
Valéry Halloy – 02 565 46 50 – valery.halloy@bnpparibasfortis.com
Kim Cauberghs – 02 228 37 94 – kim.cauberghs@bnpparibasfortis.com
About microStart
microStart is a group of innovative socially-oriented enterprises, consisting of: microStart scrl-fs, a limited-liability cooperative company for social purposes, which distributes micro-loans; and microStart Support asbl, a non-profit-making entity which provides support to the cooperative's customers. These two companies were founded by two partners: ADIE, a French organisation whose mission is to help integrate people into the world of work and which has helped to pioneer microcredit in Europe; and BNP Paribas Fortis, the leading Belgian bank. During 2014, Belgium’s leading insurer, AG Insurance, became the second strategic investor in the cooperative. In addition, microStart enjoys a guarantee in the name of the European Union microfinance instrument, ‘Progress’, pursuant to which an official EU entity – the European Investment Fund – has a seat with observer status on the microStart Board of Directors.
Since it was established in 2010, microStart has provided finance and support to some 1,200 individuals for the setting up or development of a new business in Belgium, just under half of these being unemployed persons or citizens in receipt of social security benefits.