Petit dejeuner Phitrust Partenaires - PERMICRO - 3/03/2011

Paris, 3rd March 2011

PERMICRO – MICROCREDIT IN ITALY

What Microcredit is

• Microcredit is the provision of a credit charaterized by: � Low amount;� Absence of guarantee, because it is based on a fiduciary relationship;� Given to persons in situations of economic hardship, excluded from the traditional financial system,With the aim of starting or developing a small business.

When it develop• The instrument of microcredit became popular in 1977 with Grameen Bank, of which Yunus won Nobel Peace

Prize 2006. It developed rapidly in the rest of Asia and Latin America.

At the beginning…• At first, in developing countries the business model is strongly related to a non-profit logic.

And now…

• Over time, however, the model evolves towards a financial one, so that today this sector is characterized by the presence of operators:

� highly professional,

� and economically sustainable.

In general, these operators not only cover their structure cost by applying high interest rates (> 20%) and contains the default, but still manage to get good margins.

WHAT MICROCREDIT IS IN EMERGENT COUNTRIES

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Characteristics of the business model used so far i n the industrialized countries • Local / limited amount of credit disbursed• Extreme fragmentation of know how and lack of credit scoring models• Poor reproducibility and uncertainty about the length

The reasons behind this model Approach that interprets the microcredit as a tool for "active labor market policies” in support of the weak social groups, believing that it should be disbursed into a welfare system:

� Loans are granted at interest rates close to zero;� The operational team is made up primarily of volunteers;� There is a strong dependence on public funds (state or the EU) and / or private donations.

Critical issues of the sector that makes the challe nge more complex than in developing countries • High cost of infrastructure, such as economic and human capital• Ceiling rate to fight usury • Generally higher rate of default

Conclusions

• Developing countries Sustainability

• Industrializing countries Non-sustainability

However, the new generation of microfinance institu tions begins to become, even if slowly, a professional structure with the ultimate goal of self-sustainability

MICROCREDIT CHALLENGE IN INDUSTRIALIZED COUNTRIES

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MICROCREDIT DEMAND IN ITALY

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In the industrialized countries the target is not only the business activities, but even “unbankable”, persons

excluded from traditional banking system:

Demand in Italy is growing up because of the follow ing factors :

• Increased number of immigrants (+13,4% in 2008 – Source: ISTAT, Ott. 2009)

• Big presence of microenterprise (94,8% of enterprises are microenterprises, occupy il 47,4% of workforce,

developing 32,5% of added value – Source: ISTAT, Ott.2009)

• Increase of financial exclusion (10,8% of workforce doesn’t have a bank account – Source: Banca d’Italia,

Household wealth in Italy – 2008)

• Increase in poverty (11,3% of families living in relative poverty condition – Source: ISTAT, Lug.2009 and 19%

Italian population at risk of poverty in 2008 – Source: EUROSTAT, Feb.2010)

• Increase of unemployment (8,6% in2009 – Source: ISTAT, Marzo 2010)

• Reduction of the support of welfare state.

RichiedentiMicrocredit to

enterprise

Microcredit to

family

SOCIAL

NETWORK

ENTEPRENEURIAL

IDEA CAPACITY

UNBANKABLE

SOCIAL

NETWORK

ENTEPRENEURIAL

IDEA CAPACITY

UNBANKABLE

Guarantee fund

to cover credit risk

Volunteers

analizing the requests

Bank

disbursing the microcredit

Clients

1

2

3

4

Triangle model

Guarantee found

Credit Risk

Management

Volunteers

Professional Team

Bank

Direct disbursment

Clients

PerMicro Model 3 in 1

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MICROCREDIT SUPPLY IN ITALY

PerMicro was born in 2007 in Turin with the ambition of distinguish itself from other operators:

• Using a team composed only by professional people, who believe in what they do, growing day by day and having fun building innovation and opportunities for others, vs team of volunteers

• Placing a clear social objective and a declared research of an systematic and operational model near to market aspects, vs welfare approach

• Developing a credit scoring and standardized procedures data base vs know how fragmentation

• Primarily taking credit risk vs use of guarantee funds

• Aims to achieve significant volume vs limited size

• Developing to the all Italian territory throughout local branches, as a financial intermediary authorized and supervised by the Bank of Italy (ex. Art 106 TUB), vs fragmentation of the proposal

• Aiming to a more economic self-sustainable in the medium term vs grants dependence

PerMicro is now the leading microcredit institution in Italy

for number of microcredits allocated and for total amount disbursed

(1055 practices for a total amount of 5.271.879 €)

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PERMICRO: A POSSIBLE RESPONSE TO THE CHALLENGE OF MICROCREDIT

FOUNDERS

Oltre Venture

It's the first Italian Venture Capital. It was created to develop new sustainable social enterprises, able

to meet the growing demand for services by citizens belonging to the social fragility area.

Oltre Venture follows closely the activities PerMicro, participating in the Executive Committee and

the Committee for Resolution of microfinance.

(www.oltreventure.com)

Fondazione Paideia

The foundation works to improve the living conditions of children living in difficult situations,

providing practical help to those who are daily engaged in this task in the health, education, welfare

and recreation. (www.fondazionepaideia.it)

The share capital now amounts to 4,316,800 € deliberate,

subscribed and paid up capital amounts to € 3,267,100.

... PerMicro can count on active and dynamic members

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PERMICRO: COMPANY STRUCTURE

... PerMicro can count on active and dynamic members

OTHER MEMBERS

UBI Banca

It 's the fifth largest banking group in Italy for number of branches, with a market share of around 6% and a

significant presence in the regions with the highest potential of the country. UBI Banca is a cooperative Group,

listed on the Milan Stock Exchange and included in the S & P / MIB.

(www.ubibanca.it)

Fondazione Sviluppo e crescita – CRT

It's a non-profit organization that contributes to the development and growth, fostering the exchange of

scientific and technological culture, development of personal talents, environmental, artistic and cultural of the

territory.

(www.fondazionecrt.it/index/eventiNews/news/Fond_svil_cresc.htl)

PhiTrust

PhiTrust Active Investors is a management company approved by the national French Financial Markets (AMF)

which develops strategies to encourage equity investment companies listed to improve their governance and

to meet the challenges of today's world.

(www.phitrust.com)

FEI Founded in 1994, the European Investment Fund is a company that deals with Venture Capital and Private

Equity. Luxembourg-based, the EIF belong to the EIB – European Investment Bank. In particular, it provides

innovative financial products for small and medium enterprises.

(www.eif.org)

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PERMICRO: COMPANY STRUCTURE

PerMicro networks are associations, ethnic communities, community centers, churches, cooperatives, etc.. and have

a strong interest in ensuring that the customer repay the credit:

• if the associated repay the loans, the network will be "rewarded" with better economic conditions;

• if members do not repay it, it will be more difficult / expensive for other members taking loans.

The PerMicro activity is based on network credit:

"The social network of reference acts as intermediary between clients and PerMicro, providing for them morally and

accompanying development activity”.

Network

PerMicro

Clients Clients Clients Clients Clients

Evaluation and Selection

Pre - selection

... PerMicro interacts closely with the landmark territory

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PERMICRO: PROXIMITY OPERATIONAL MODEL

• According to the Bank of Italy, 10.8% of families suffer from financial exclusion.

• As in the other industrialized countries even in Italy PerMicro doesn't address only to the microenterprises sector,

but also to the “unbankable”, with the aim of giving concrete opportunity at this group. (reducing at the same time

the risk)

• PerMicro address to Italian and foreign, with low access to traditional banking services, belonging to the following

two macro-categories:

- Micro-Entrepreneurs: carry a valid business idea and have adequate technical skills but with financial

difficulties.

- Families: people with jobs and income that are able to obtain, through micro-credit opportunities, socio-

economic improvement for themselves, their family and society.

• PerMicro fight against financial exclusion increasing the human capital of every individual, promoting local

economic development based on personal responsibility.

... PerMicro is an opportunity for the excluded

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PERMICRO: OUR TARGET

In order to strengthen and develop the company, it was decided to

concentrate efforts on a limited number of branches.

The reasons behind this choice are manifold:

- Intensify the knowledge of each territory so that the network credit

could work

- Substantial costs associated with management of the branch

- Standardize the procedures before of a widespread expansion

So, at national level, were confirmed the following ten territorial

branches in partnership with associations, foundations and local

institutions:

Bergamo, Brescia, Milan, Turin, Rome, Padua, Florence, Genoa,

Bologna, Pescara.

... PerMicro is close to the associations and social parteners

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PERMICRO: TERRITORIAL DEVELOPMENT

PerMicro has attracted strong interest from major players in the world of microfinance, both locally and

internationally, and more generally by all government agencies:

• The Bank of Italy, ABI and the Treasury are in constant contact to monitor the evolution of the market and

measure the social impact

• The company also collaborates with national credit bureau to create the first credit-scoring system of microcredit

• Regions and municipalities have launched joint-venture operations, participating in activities both financially and

operationally, to promote micro-credit activities in their territories

• In 2009 PerMicro won the PerMicro FGDA Microfinance Award for Best Italian Institution and was a finalist for the

European award; in 2010 received a Special Mention.

• The company is among the 15 European institutions selected by the European Investment Fund for Technical

Assistance

• PerMicro also has relationships with many professionals working in the voluntary sector, relationships with more

than 1400 networks and 370 local cooperatives and is a founding member of RITMI - Italian Network of

microfinance operators - and an active member of the European EMN (European Microfinance Network)

... PerMicro is one of the landmarks of the third sector

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PERMICRO: INSTITUTIONAL NETWORK SUPPORT

PerMicro is supported by the European Union through the programs of support for microcredit institutions launched and

managed by the EIF - European Investment Fund:i:

JASMINE Technical Assistance

JASMINE was founded in 2008 with the aim of helping microfinance institutions to increase the quality of their

operations, to grow and become sustainable: PerMicro was chosen as one of 15 microfinance institutions in receipt of

technical assistance. In late September Microfinance Rating, a specialized and independent agency, met PerMicro to

begin a process of evaluation and training on the theme "Good Governance + Management Information Systems

Strategic Planning + Risk Management”.

EPPA

EPPA Contribution Agreement is born in March 2010 with the aim of providing financial support to micro-finance

intermediaries selected to promote the development of microcredit on the basis of sustainability. EPPA resources,

amounting to € 4 million will be targeted at microfinance institutions.

PROGRESS - EPMF

European Microfinance Facility Progress is a new initiative of the European Commission and the EIB Group to increase

lending activity to micro-beneficiaries through a wide range of financial intermediaries such as microfinance institutions

and small banks.

EPMF provide up to 100 million euros over a period of 6 years in the form of guaranteed products and instruments

financed.

PerMicro requires a guarantee fund to micro-loan and expects to have a wider pool of financial support.

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PERMICRO: THE EUROPEAN SUPPORT

CONTACTS

INTERVIEW

FINANCED

2.527 3.111

1.926(61%)1.454(57%)

225 (9%) 830(26%)

MICROCREDIT TO FAMILYMICROCREDIT TO ENTERPRISE

CONTACTS, INTERVIEW, FINANCED

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PRIMO CONTATTO

Continent Nationality N° N°/Total

EUROPE

ITALY 1.029 40,7%Romania 162 6,4%

Albania 16 0,6%Other Europe 60 2,4%

AFRICA

Morocco 201 8,0%Senegal 172 6,8%Nigeria 119 4,7%

Egypt 45 1,8%Tunisia 40 1,6%

Ivory Coast 31 1,2%Congo 20 0,8%

Other Africa 68 2,7%

ASIA

Bangladesh 94 3,7%Pakistan 58 2,3%

Philippines 26 1,0%India 21 0,8%

Other Asia 36 1,4%Peru 71 2,8%

Ecuador 42 1,7%Brazil 22 0,9%

Venezuela 9 0,4%Other Latin America 42 1,7%

N.D. 143 5,7%TOTAL 2.527 100%

LATIN AMERICA

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MICROCREDIT TO ENTERPRISE: CONTACTS

Nationality

9,4%

40,7%

27,5%

9,3%7,4%5,7%

Italy

East

Europe

n.d.

Africa

Latin

America

Asia

EUROPE

ITALY 37 16,4%Romania 21 9,3%

Albania 4 1,8%Bulgaria 3 1,3%Ukraina 3 1,3%Kosovo 1 0,4%

Macedonia 1 0,4%Moldavia 3 1,3%

Poland 2 0,9%

AFRICA

Senegal 25 11,1%Nigeria 23 10,2%

Morocco 23 10,2%Ghana 4 1,8%Sudan 4 1,8%

Burkina Faso 2 0,9%Camerun 1 0,4%

Ivory Coast 1 0,4%Egypt 2 0,9%

Ethiopia 1 0,4%Kenya 2 0,9%Congo 1 0,4%

Tunisia 1 0,4%

ASIA


Philippines 4 1,8%Afghanistan 1 0,4%

Thailandia 1 0,4%Cina 1 0,4%

Japan 1 0,4%India 1 0,4%

Sri Lanka 1 0,4%Ecuador 7 3,1%

Peru 5 2,2%Argentina 2 0,9%

Rep. Dominicana 1 0,4%Brazil 2 0,9%

TOTAL 225 100%

LATIN AMERICA

Nationality

MICROCREDIT TO ENTERPRISE: FINANCED CLIENTS

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Italy16,9%

16,4%

40,0%

19,1%7,6%

East

EuropeLatin

AmericaAsia

Africa

Gender

Status

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Single

Separated

Married

Cohabitant

Widoved

Women

Men

40%

60%

51%

1%5%

6%

31%

5%Divorced

SETTORE D'ATTIVITA' N.

Agricolture 1

Food services 16

Craftmanship 19

Itinerant trade 66

Sedentary trade 29

Culture 11

Building 8

Import Export 6

Phone Center 17

Food and beverage 10

Human care service 11

Counselling 18

Transportation 13

TOTALE 225

Activities sector

Agricolture 0%Food service 7%

Craftmanship 8%

Itinerant trade 29%

Sedentary trade 13%Culture 5%

Building 4%

Import-export 3%Phone center 8%

Food and beverage 4%Human care service 5%

Counselling 8%

Transportation 6%


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Start-up37%

Formalisation5%

Take out activity5%

Development52%


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Purpose

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MICROCREDIT TO ENTERPRISE : PORTFOLIO

MICROCREDITO IMPRESA

TOTAL N. Microcredits 225 Tot. Disbursed € 1.693.775

AMOUNT Minimum € 2.000 Medium € 7.527 Maximum € 26.500 Minimum 12 Medium 38 Maximum 84

INTEREST RATE TAN Mimimum 9% TAN Maximum 12%

LENGHT(N.

Installments)

Nationality PRIMO CONTATTO

Continent NazionalitY N° N°/Total

EUROPE

ITALY 1213 39,0%Romania 267 8,6%

Ukraina 84 2,7%Other Europe 93 3,0%

AFRICA

Senegal 116 3,7%Morocco 108 3,5%

Nigeria 50 1,6%Ghana 28 0,9%

Ivory Coast 18 0,6%Egypt 14 0,5%Togo 11 0,4%

Camerun 8 0,3%Tunisia 14 0,5%Congo 10 0,3%

Other Africa 26 0,8%

ASIA

Philippines 336 10,8%Georgia 81 2,6%


India 26 0,8%Other Asia 30 1,0%

Peru 91 2,9%Ecuador 101 3,2%

Brazil 21 0,7%Colombia 22 0,7%

Other Latin America 52 1,7% N.D. 190 6,1%

TOTAL 3111 100%

LATIN AMERICA

MICROCREDIT TO FAMILY: CONTACTS

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14,3%

39,0%13,0%

18,5%

9,2%6,1%

Italia

East Europe

n.d. Latin America

Africa

Italy

Asia

Continent Nationality N° N°/Tota

EUROPE

ITALY 161 19,4%Romania 112 13,5%

Ukraina 46 5,5%Moldavia 17 2,0%

Jugoslavia 5 0,6%Albania 7 0,8%Poland 5 0,6%

Byelorussia 2 0,2%Other Europe 11 1,3%

AFRICA

Senegal 28 3,4%Morocco 21 2,5%

Nigeria 8 1,0%Ivory Coast 6 0,7%

Togo 5 0,6%Egypt 4 0,5%

Tunisia 5 0,6%Other Africa 13 1,6%

ASIA

Philippine 198 23,9%India 22 2,7%

Bangladesh 20 2,4%Pakistan 18 2,2%Sri Lanka 9 1,1%

Other Asia 19 2,3%Peru 29 3,5%

Ecuador 29 3,5%Brasile 5 0,6%

Santo Domingo 7 0,8%Bolivia 4 0,5%

Colombia 3 0,4%Other Latin America 10 1,2%

OCEANIA Australia 1 0,1%TOTAL 830 100%

LATIN AMERICA

Nationality

MICROCREDIT TO FAMILY: FINANCED CLIENTS

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24,7%

19,4%10,8%

34,5%

10,5%0,1%

Italy

East Europe

Latin America

Africa

Asia

Oceania

Gender

Status


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Women

Men

Married

Single

Separate

55%45%

5%

52%4%

7%3%

28%

Widowed

Divorced

Cohabitant

Debt consolidation5,1%

Activity expenses2,2%Car expenses11,1%

Family expenses19,2%

Training expenses3,0%

Medical care expenses8,4%

Home expenses46,0%

Personal expenses0,8%

Others2,8%

Spese viaggi1,5%

FINALITA' N. Activity expenses 18 Car expenses 92

Family expenses 159

Training expenses 25

Medical care expenses 70 Home expenses 382 Travelling expenses 12 Personal expenses 7 Debt consolidation 42 Other 23

Total 830

Purpose


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MICROCREDITO FAMIGLIA

TOTAL N. Microcredits 830 Tot. Disbursed € 3.578.104

AMOUNT Minimum € 1.035 Medium € 4.310 Maximum € 16.840 Minimum 12 Medium 26 Maximum 60

INTEREST RATE TAN Minimum 8% TAN Maximum 11%

LENGHT(N. Installments )

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MICROCREDIT TO FAMILY: PORTFOLIO

BRANCH TOTAL

Padua 7 36 43Bologna 3 6 9Brescia 15 100 115Florence 4 62 66Genoa 22 59 81Milan 5 37 42Pescara 33 111 144Rome 27 32 59Turin 101 319 420Other 8 68 76TOTAL 225 830 1055

MICROCREDIT TO

ENTERPRISE

MICROCREDIT TO FAMILY

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MICROCREDITS DISBURSED BY BRANCHES

TOTAL 2007 2008 2009 2010 2011 (31/01)Contacts 5.638 0 934 2.171 2.216 317

MC to enterprise 225 0 41 88 87 9MC enterprise disbursed € 1.693.775 € 0 € 317.620 € 643.709 € 637.404 € 95.043,00

MC to family 830 4 75 186 514 51MC fam ily disbursed € 3.578.104 € 26.378 € 400.808 € 872.809 € 2.059.558 € 218.551,00

Total Microcredits 1055 4 116 274 601 60Total Disbursed € 5.271.879 € 26.378 € 718.428 € 1.516.518 € 2.696.962 € 313.594,00

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SUMMARY

Isabel is a woman of sixty coming from Argentina, moved to Italy to follow his daughters. After more than 20 years of experience in the footwear industry in the country of origin, Isabel wants to open a small repair shop for shoes and bags. In the neighborhood where she lives there was the chance of detecting a small cobbler, but the investment is enormous. Isabel, accompanied by Jehovah's Witnesses that ensure its reliability, was addressed to PerMicro. The Isabel accuracy, timeliness, professionalism convince PerMicro, that give her the microcredit. Today Isabel works in the shop with her husband and punctually pays microcredit installments.

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MICROCREDIT'S STORIES

Activity Shoemaker

Amount disbursed 10.000 euro (for taking out the activity)

Moral guarantor Jehovah's Witnesses Congregation (Latin America

Section)

Mohammed is a political refugee from Darfur (Sudan). Upon his arrival in Italy he works as a welder for a couple of years, however, he desires starting his own business. He is very determinate and invests all his savings to detect a phonecenter, closed for several months. The idea of buying keyboards and software in Arabic with the aim of attracting a specific customer in a neighborhood with high Arab presence also like to PerMicro, who decides to finance the project after the path of business planning. Today phonecenter has become an important meeting place for the Sudanese community in Turin.


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Activity Phone Center

Amount disbursed 10.000 euro (for taking out activity)

Moral guarantor Associazione Sudanese di Torino

Radu moved to Italy 12 years ago. Since the beginning, he started working

as a bricklayer, plumber, carpenter, but working as an employee didn't

satisfied him completely. He desires starting an own business to ensure a

better future for his daughters and his wife. He contacts PerMicro with a

clear idea: detecting a space where selling Romanian products and foods.

So he rents a warehouse and renovates it completely. The Radu strong

entrepreneurial spirit and determination convinces PerMicro, that gives

him a loan, which is used for rent, equipment and the payment of the first

supplies.


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Activity Romanian food retail

Amount disbursed 6.000 euro (purchasing the goods and the

equipment)

Moral guarantor

Chilean by birth, now Italian by adoption, Marcela has a cuisine of

typical food of his country. After moving to Italy in 2000, she decided,

two years after, to take out a shop selling ethnic food. The activity has

already started, but Marcela, young and with big desire to set up a local

dynamic and original, decided to detect and renew them. She

refurbishes part of the local, sells typical dishes and sets up a sort of

outdoor area. Despite her young age, her great determination convinces

PerMicro, who decides to grant the requested micro-credit. Marcela

now works in his food shop, helped by her boyfriend and her shop is the

only one selling South American dishes in the area.


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Activity South American food

Amount disbursed 5.000 euro (for taking out activity and purchasing

the goods)

Moral guarantor

-

PerMicroCorso Massimo D'Azeglio 74

011 658778

www.permicro.it

Thanks for your attention!

CONTACTS

Documents

Petit dejeuner Phitrust Partenaires - PERMICRO - 3/03/2011