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10.04.2310.04.23

The role of micro-credit in promoting entrepreneurship and its effects on social inclusion

Rainer IrmenMember of the Board Sächsische Aufbaubank – Förderbank –

Open Days

Brussels, 9 October 2007

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SAB – Sächsische Aufbaubank:

SAB is primary vehicle for regional, national and EU promotional programmes in Saxony

Bank has no competitors, no commercial bank activities

Close cooperation with state government, private banks, saving banks as well as KfW

SAB implements State Economic and Regional Policy in Saxony, Germany

balance sheet total € 11,064.4 m

capital resources € 635.8 m

business in 2006 € 1,747.4 m (loans & guarantees: € 394.3 m / grants: € 1,353.1 m)

employees 696

Saxony:

one of 16 German Länder

4.3 m inhabitants

GNP ~ 70 % of West German Länder

GNP-growth ~ 4,2 % in 2006

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ESF-promotion by SAB in 2006

Grants for

start-ups and

employment

Advanced

training

programmes

Apprentice-

ship training

programmes

ESF–Micro-

finance

ProgrammeTotal

Number of

approvals 1,308 1,783 3,049 302 6,442

Approval

amount in T € 8,047 98,946 48,869 4.304 160,166

Number of

promoted

individuals1,308 43,428 45,333 522 90,069

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ABCDEESF - microfinance programme of SAB

Results 2006- 8/2007:

consultations 8935

applications 798

approvals 495

approval sum € 7.1 m (= € T 14)

investment sum€ 8.3 m

job effects 926 (331 created and

595 safeguarded)

Advantages for the Entrepreneur:

promotion during the first three years after

the set-up of the business

credit up to € 20,000 for investment or

working capital purposes

low interest rate: EU-reference rate + 1 %

only personal liability

no commission/fees to be payed

grace period of 6 months

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Findings

approval ratio 60 %; current default rate 5 % (after 18 months)

58 % of approved projects to overcome unemployment

extensive consulting and support efforts necessary, since the target group of the programme has deficits in

commercial and financial knowledge

good and efficient co-operation with chambers and other experts is key

significant output in relation to the limited subsidies granted

combination of ESF grants and microloans proves to be successful