Francesca Mazzieri, MBA MIP                Eleonora Montanari,
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In Italy there are 60 millions of inhabitants and the rural population is of 32%. The GDP per capita is €28,057 and its growth from 2007 has been of 1.5%. There are 62 SMEs per one thousand inhabitants and the informal sector weighs on GDP for 27%, that is €400 millions. In Italy the 95% of enterprises are SMEs. The phenomenon of micro-enterprise is large: 9 million of people work in SMEs: the potentiality of this target is very huge. There are 4 million of migrants.  

There isn't a specific regulation for MFIs. Banking and not banking financial institutions are regulated by the law; some institutions providing non banking microcredit are regulated by banking legislation (art.106 of TUB). A legal framework doesn't still exist.

The exclusion is financial and social: it's very high, about 16% or 25%, depending on the target and on the type of marginalization. Italy has the larger financial marginalization in Europe. In South-Italy the main activities are focus on against usury actions. There is also the Borgomeo Report describing all the activities of microfinance in Italy. The target groups are migrants, poor people, women, start–ups enterprises. RITMI estimated a demand of €5 million for 2008.

There are a few institutions with a wide geographical coverage: 3 are nationwide, 13 are regional, and 17 are local: the fragmentation is very high, but at the same time a great effort can be observed to create MFI with nationwide coverage.

There is a growing interest from Banks and its Association (ABI) in expanding their involvement in microcredit. In Italy there are two main scenarios: banks act as financial services' and institutional grants' providers for MFIs or banks develop a specific business in microcredit activities (“Microcredito di solidarietà” is a spin off by Monte dei Paschi bank). There is no specific relationship with insurance companies. In regard guarantee funds, Confidi Network plays a networking role: 830 active entities with Euro 6.2 billion guarantees granted (2003) but no real cooperation with MFIs.

In Italy there are two different typologies: social microcredit (personal lending) and business microcredit. The average loan is € 7,192; the min. loans are € 1,800 and the max. loans are € 17,000. The average interest rate is 5.8%; there are strong differences between social microcredit (from 1.8%) and business microcredit (to 12%).

The trend we are assisting is a strong portfolio growth. The disbursed amount is increased from € 4 million to € 43.7 million for 3,223 loans. On the 24 surveyed institutions that provided data: the disbursed loans € 6.6 million for 923 loans. The retention rate to calculate the customer fidelization is n/a.

In Italy there is the usual dichotomy of entrepreneurial microcredit (that has no collateral) and the social microcredit (that has reference of a social network and/or personal guarantee). The most common lending is the individual loan; there are only 2 MFIs with group lending methodology.

There are the following monitoring procedures: repayment record, personal visits, Business Development Services. The client's credit history is checked during the preliminary investigation.

The portfolio's quality data are not significant; only 7 MFIs participated at the survey. The PAR30 has a range 0.8% - 72% (average value 25%). The range of Write-offs 0% - 28%; average of 5.9%. The restructured portfolio data is n/a.

About the Profitability and the Sustainability analysis there are data only for 3 MFIs. The Self- sufficiency is in a range from 180% to 14% (average value 98%).

There are 33 funding (33 MFIs), but only 2 are operative investments. The private funds are 13, the public funds 6 (local government agency with regional funds), the mixed funds 4 (guarantees or credit lines).

The 62% of the Institutions provide training or technical assistance. Services are either compulsory for all borrowers or for some, or on request.

The challenges for the growth are vision and strategy, funding, lack of scale and difficulties in meeting the demand. The solutions will be training and mentoring, networking and merging with other organization active in the area, public and private partnerships.

Source: EMN Annual Conference 2009