Mainstreaming microfinance in Germany

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The mainstreaming of microfinance in Germany

The history of German microfinance shows that there’s often no short cut to a mainstreaming success. The lessons are that it’s a long slow haul – it depends on sustained lobbying by many organisations which can spread the message far and wide. In this case, EQUAL played a decisive role.

Brigitte Maas 110128.jpg
Brigitte Maas has worked in inclusive entrepreneurship since 1994. After running a NOW project on women’s business, in 1999 she made a study visit to the USA to look at microfinance, with the support of the German Marshall Fund. Once back in Germany, she translated what she had learnt into German, and distributed a report. This evoked interest and she was invited to speak at a number of regional workshops.

Unemployed women were finding it very difficult to raise finance from banks to start their own businesses, and the women’s movement took the issue up. In 1982 Goldrausch was founded, and since then has lent out €850,000 to 450 women’s businesses. The publicly-owned Investitionsbank Berlin (IBB) ran a pilot project, but by and large the banking establishment had no grasp on how to link two separate processes: client creation and loan distribution. The women’s ministry set up a working party involving different ministries, NGOs and the GLS bank, which improved the collaboration between banks and business support agencies for unemployed people – but even so, the KfW-Startgeld programme that was launched in 1999 was based on the old untargeted thinking.

In terms of ‘silo’ thinking, government was no better: microfinance was under the wing of the economics ministry, who thought in terms of SMEs but not microenterprises. Meanwhile the employment ministry did not concern itself with self-employment. There was therefore a policy gap – stimulating self-employment was nobody’s job.

A common agenda

This situation changed after 1997, and self-employment became a hot political topic. A window of opportunity opened up when the ministries of economics and employment were brought together between 2002 and 2005 under the ‘red-green’ coalition between the Social Democrats and the Greens. EQUAL gave an extra push to the creation of a joint agenda, with the creation of a national thematic group (NTG) on business creation. This gave the nascent Deutsches Mikrofinanz Institut (DMI) a network within which to find its feet. EQUAL’s stress on mainstreaming had a decisive effect. Ministers were invited to the NTG’s conferences, and took advantage of the 200+ audiences to make announcements.

In 2008, the issue was then propelled into prominence by a most unlikely means – Ms Maas was named ‘Golden Woman of the Year’ by Bild der Frau, a popular women’s magazine published by Springer and not known for its radical opinions. The €10,000 prize was presented at a gala ceremony in the presence of Ursula von der Leyen, Minister for the Family, and Ulrike Folkerts, an actor famous for her role in the crime series Tatort.

The end of EQUAL heralded a period of tough lobbying. In 2006 GLS Bank, along with a series of partners – KfW Bank and the ministries of economics and employment – created the Mikrofinanzfonds Deutschland. In 2009, this was superseded, on the basis of a preparatory study, with the creation of the much bigger Mikrokreditfonds Deutschland with a value of €100m, 60% of which comes from the ESF. This fund aims to make microfinance across the whole of Germany. It guarantees the microloans that GLS makes, and the 3% income stream it generates pays local microfinance institutions (MFIs) a fee of €800 per loan made, to defray management costs.

Microfinance is now heading for the mainstream. At the start of 2010 there were eight accredited MFIs in Germany, and now there are 40. Take-up is rising, with 1,500 loans made in the first year – double the target of 800! The target is to make 15,000 loans by 2015.


Deutsches Mikrofinanz Institut e.V. (DMI)
Schumannstraße 10
10117 Berlin
+49 30 6904 1070