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Sustaining micro-enterprises by innovative services

See also: ADIE & ADIE (EQUAL 1)

People with empty pockets often have heads full of good business ideas. Entrepreneurial spirit does not depend on social status, wealth or level of education. But, motivation is not enough to start up your own business, you need money too. Unfortunately, access to credit does depend on social status and wealth.

And access to credit is just the beginning. Unemployed people, Roma and immigrants also have difficulty getting access to markets and technology. This is why many new businesses fail. To tackle all these problems in France ADIE (the Association for the Right to Economic Initiative), has formed an EQUAL project, PROXY, to try out a package of new services to help micro-entrepreneurs get set up and most importantly stay in business.

Maria Nowak, President of ADIE, says "The culture of poor people is to live the present. They can not make projects for future because they do not have the tools for investment". ADIE has been working in this field since 1988. It is the largest and probably the most successful specialised microfinance provider in the "old" Member States and has made 44,000 micro-credits to people excluded from the banking system. This has created employment for 40,000 people and 33,000 enterprises have been set up. EU policy encourages this approach and the European Social Fund will be used to support micro-credit schemes from 2007-2013 in its new regulations.

Ms Nowak is reminded the very first meaning of the word "credit" - to trust people. "But how many banks will trust somebody with a good idea but who is an unemployed, a gypsy or an ex-convict?" she asks. "Credit can change their future, provide social recognition, and distribute power more equally in society."

However, ADIE is aware that access to credit is not the end of the story. People that face discrimination are not only excluded from bank loans but also from markets, technologies, training and insurance. ADIE and its EQUAL partners have used PROXY to join forces with some big name companies such as Microsoft, Linklaters, Leroy-Merlin, Max Havelaar and PRIMAGAZ to test innovative services to increase the survival chances of micro-enterprises created by the beneficiaries of micro-credits .The project is developing high quality services which can be applied across France, and extended to the rest of Europe.


What's new about proxy?

PROXY is testing 10 new services to support the long term success of new small businesses, working with the same people that ADIE has been working for during 17 years. In 2005, 56% of the people financed by ADIE were social welfare recipients (RMI in France) and 35% were unemployed. "The people the banks would not trust", says Mareba Bayon, from ADIE´s partnership department. ADIE already has support services provided by 850 enthusiastic volunteers and their own employees, but discovered that this was not enough. PROXY was created to develop new services at national level, with more money, coordination, and a higher level of expertise.

The most successful new service so far is a training course called "Information technology in 3 clicks". Microsoft invested € 70,000 in the development of the course. The 3 day course has been run in Toulouse, Marseille, Lyon, Côte d´Azur, Provence, Midi Pyrenées and many others. "It is very basic and practical. They learn Word, Excel, internet, how to make their business cards" says Alexandra, responsible for the project.

CIEL (providers of simple software) help entrepreneurs learn how to use software to do their budgets and invoices. Restos du Coeur, an association that provides food to homeless people, also takes part in the training by providing a computer for only 90 €. The second hand computers are repaired by long-term unemployed people. Around 240 people were trained in 2005, and 75% of them have bought a computer.

"For many of us it has been our first contact with computers", says Maurice Leflon, a street seller who has just opened a street cleaning company. Salama Driss, a silver jewellery seller, says "I have learnt how to sell my products on e-Bay". The experiment is a great success. Yves Jarland, from ADIE in Midi-Pyrénees, says "It is great. The classes are full, the entrepreneurs are satisfied, they don't miss a single class and leave happy with a computer under their arm".

Another successful experiment is a hotline for legal advice. On this project ADIE works with another big name - the lawyers Linklaters in Paris. Linklaters have provided free legal advice to almost 100 enquirers since the service was launched in June 2005. Magaly Mary, ADIE´s advisor in Toulon, explains "I sent them an email concerning a publicity swindle that one of our entrepreneurs had suffered. They gave good advice and are easily available."

Retravailler, a partner of PROXY, will play the main role in a new service that is starting in Ile de France and Normandie. Retravailler is expert in helping people who are unemployed and people with failing businesses and have designed two modules for supporting entrepreneurs in case of crisis:

  • The RESPOND module helps micro-entrepreneurs to overcome the problems in their enterprise.
  • The BOUNCE module supports entrepreneurs when they decide to wind up their business. One 3-hour module helps to find the solutions to a company's problems, and the module continues for a month. It can be for individuals or groups, but it is normally better with a group. "Things do not always go the way you thought. If you feel disoriented, let the professionals help you", is the slogan of the course.

Retravailler also works particularly with women micro-entrepreneurs. It is setting up a women's group in Marseille that will meet regularly to discuss business affairs and the particular obstacles women face.

People come to ADIE with a clear idea of what they want. If the credit is granted, in less than three days the entrepreneurs have the money at their disposal. The credits are a maximum of €5,000 and the average is €2,800. ADIE believes in people´s competences and finances all kinds of projects. "They are mainly little projects", says Mareba Bayon from ADIE. "They may be little, but help people to create their own employment." Afterwards around 90% of the people repay the money. "The micro-entrepreneurs are happy to be trusted. The poorest people are the best at paying back the loans" says Mareba Bayon.

A professional partnership gives access to the market

ADIE is also working with PRIMAGAZ, one of the main suppliers of gas in France to provide free training to obtain the PGP (Propane Gaz Professional) certificate. The project is not only about training: it provides access to the PRIMAGAZ network where there are more than 6,000 professionals and access to professional tools. Sixty plumbers from French rural areas had already completed the training in 2005. Jean Philippe Thomas, a plumber in Maine, affirmed "It is important for us to know the legal framework and the new materials. PRIMAGAZ is very dynamic and they are generous with materials and publicity for us".

Leroy-Merlin is another big name to add to the list of professionals working within PROXY. The organisation helps craftspeople gain access to markets by referring their clients to the micro-entrepreneurs. This service was launched in Valenciennes and has improved the market access of 10 craftspeople during 2005.

These are just some examples of successful innovation by the PROXY project working with professionals in different sectors. PROXY plans to develop savings schemes for Roma and African women and to offer an insurance scheme to micro-entrepreneurs. These other services will be developed in later phases of the EQUAL project.

Campaigning for change and spreading best practice

ADIE currently makes up to 7,000 loans a year. However, the number of demand for micro-credit in France is estimated to be 30,000 loans a year. ADIE is campaigning to get excluded micro-entrepreneurs out of a ghetto. Thanks to this lobbying the environment for micro-entrepreneurs is becoming more favourable.

Firstly, ADIE's campaign helped to change French banking law in 2004 to allow agencies such as ADIE to make loans even though they are not financial institutions. Secondly, French law now recognises the creation of somebody's own company is a means of employment. Finally, ADIE has successfully lobbied for a reduction in the steep social security charges that micro entrepreneurs had to pay in the past.

ADIE is spreading the experience gained in the PROXY projects across its 22 regional organisations in France, using 300 employees and 850 volunteers. From the head office in Paris, ADIE proposes a service, and the regions where that need has been identified decide to test it. "In 2005, five regions provided computer training. In 2006, 12 regions are already developing this service. We test the services in one region, improve them, and then make then available in the rest of France", says Alexandra Videloup of ADIE.

The PROXY partners are passing on their expertise to other organisations. Secours Catholique (Caritas in France), the Micro Insurance Foundation and Retravailler have all joined ADIE in the partnership for PROXY.

Finally, as has been mentioned, PROXY works with major private sector operators that can help spread the message. Craftspeople receiving micro credits are getting work experience with Leroy-Merlin. The big law firm Linklaters are helping micro-entrepreneurs with free legal advice. Microsoft is providing tailor-made computer training and low cost computers. These are all services that make a big difference to micro-entrepreneurs.

These successes will be spread across France and to the rest of Europe. Maria Novak, the President of ADIE is also the chair of the European Microfinance Network which brings together the main specialist microfinance operators in Europe. Through this and other channels the ideas tested by EQUAL will travel across Europe.


DP name: PROXY
DP ID: FR-NAT-2004-42471
Transnational Partners: Integra (Slovaquia), Aspire Micrro Loans (Ireland)
TCA id code: 4479
Contact DP: Amélie Benais
Tel.: +33 156 03 59 42