«ISSUE Vol. VIII No. 1 March 2013 ERENET PROFILE CONTENT SPRING MESSAGE PUBLISHER Dr. Péter Szirmai – Editor PAPERS Dr. Antal Szabó – ...»
designing loan products granting loans from the centralized funds (National Microcredit Fund) keeping credit records final decision prior to the disbursement of the loan checking of the LEAs risk management Local Enterprise Agencies (LEAs)
receiving loan applications assessment and preliminary decision on the approval of loan applications concluding loan contracts on behalf of the HFEP collecting loans checking loans.
keeping the separate programme accounts of the HFEP making bank transfers.
In this operating structure the creditor is the HFEP, the LEAs only participate as mediators in return for a fee, and the centralized fund is managed by the HFEP. The role of commercial banks is only limited to keeping the bank accounts and to perform the related transactions.
5.3 Interest matrix and the fulfilment of social goals, National Microcredit Scheme Without additional comment the interests in the programme are shown in the interest matrix (© Credinfo Ltd.) below.
6 OTHER IMPACTS OF THE CHANGES OF THE LEGISLATION
6.1 The option for alternative microcredit programmes The legislation described above did not lead to the appearance of further microfinance organizations (this is rather a question of interest and not legislation), but it paved the way to the launch of alternative microcredit programmes by the LEAs (Local Microcredit Programmes), which were more flexible and responded better to the needs of the businesses.
6.2 The internal regulation of the LEAs
When it became clear after the amendment of the legislation that the microcrediting activity of the LEAs did not violate the law, an internal regulation had to be worked out, which ensured a professional framework for the performance of the lending activity independently of the HFEP and the National Microcredit Scheme. When developing the internal regulation, we did not consider the structure and rules of ERENET Profile Vol. VIII. No. 1. www.erenet.org the Manual of the National Microcredit Scheme but the obligations prescribed for financial enterprises by the rules of law in force. Although there is no legal obligation with regard to the creation of the lending rules of the LEAs, the regulations developed meet all the conditions set for financial enterprises operating under the effect of the Act on Credit Institutions.
This compliance made it possible for the majority of the LEAs to join easily and quickly to the Hungarian JEREMIE programme, since this programme required these types of regulations.
The most important areas concerned by the relevant internal regulations regarding crediting:
Operating manual Risk assumption regulation Rules of procedure Valuation regulation Debtor rating regulation Client rating regulation Rules relating to the creation of provisions and expected losses Management Information System Document handling regulation Confidentiality regulation Regulation relating to the conflict of interest
7 THE APPEARANCE OF THE JEREMIE MICROCREDIT PROGRAMME AND THE
PROFIT ORIENTATED ‘MICROFINANCE’ ORGANIZATIONSThe apparent widening of the microfinance sector began when the JEREMIE Programme was launched in Hungary.
That is when the profit orientated money market players started to show real interest towards ‘microfinance’. The mediators are attaracted by the profit gained from the difference between the low source cost (the refinancing interest rate is 0.4%) and the interest paid by the clients. Profit orientated financial enterprises receive the sources under the same conditions as the non-profit foundations. The operation is financed from the profit. Although the range of businesses using the loans is limited (they have to be micro or small enterprises), no precise social goals have been set. As a result the financing of the mediators does not depend on the fulfilment of such goals. According to the rules of the programme the maximum amount that may be granted by the non-profit foundations is HUF 10 million (EUR 33 900) (in Hungary this is the amount under which the commercial banks are unwilling to grant loans due to economic reasons). In case of profit orientated financial enterprises this amount is HUF 50 million (EUR 169 500), and if the loan is combined with a nonrefunadable subsidy, this amount can reach HUF 20 million (EUR 67 800). According to the internationally accepted principles, due to the amounts that can be granted, the security requirement, and the range of clients financed, this type of financing is not considered as microfinancing.
7.1 Interest matrix and the fulfilment of social goals in the Hungarian JEREMIE Programme
. SUMMARY OF EXPERIENCEThe following shall be examined concerning the regulation of microfinance in Hungary (and generally): Does the legal regulation establish a proper legal framework for expanding and strengthening the microfinance sector in Hungary?
The question implies another question: Why is the expanding and strengthening of microfinance important?
Without replying this question, the demand for expanding and strengthening the microfinance would remain only a self objective. Of course the objectives shall be reviewed from the viewpoint of the society.
Taking the international practice of microfinance into consideration, we can determine the following
objectives being utile from the viewpoint of the society:
fight against poverty;
strengthening self- employment;
promotion of launching enterprises for the sake of self- employment and increase of work place establishment;
strengthening the micro enterprise sector via the durable financing of investments, for the sake of long term maintenance of their self-employment and work place establishing ability;
promotion of economics, in capital poor period, increase of outflow of money into the economy It is obvious that there is a significant difference between the first and the last item of the list. This means quite serious differences in financing and methodology in respect of the micro credit programs realising different social objectives.
Due to the fact that there are quite significant obstacles of the expansion of micro financing from the viewpoint of financing, sustainability and interests, the issue must be examined as complex. Following the
examination of the possible social targets, the initial question shall be raised such as:
Are the defects of the legal regulations or other factors the major obstacles of the strengthening of the micro financing realising social objectives and the micro financing sector in Hungary?
As expectations regarding sustainability are quite high towards current micro financing, the fact whether this factor can be realised, is to be regarded as key factor in the spread of micro financing realising social objectives. (The constructions of micro loans financed by investors expecting extra profit are not classified into this category.)
Factors having impact on sustainability:
Due to its lengthy nature, I would not like to introduce the analysis of the Hungarian situation based on the above factors (this was not the aim of the present study at all), but I would like to refer to the fact that the obstacles of the expansion of micro financing realising social objectives shall be examined in every country as a complex. A sole factor cannot be simply analysed. Nevertheless it is important and requires analysis that in a given society which objectives from the ones listed above, may enjoy priority, and which problem’s treatment is rendered by the economic and social environment possible via the help of the micro loan program. Finally, replying to the initial question–without detailed analysis–I am of the opinion that in the current Hungary it is not the legal and regulatory background which is the major obstacle of the spread and strengthening of the micro loan for social objective.
ERENET Profile Vol. VIII. No. 1. www.erenet.org Both the profit oriented and non profit actors’ operation is properly regulated in Hungary nowadays. The obstacles in financing, sustainability and the interest of other actors, deriving from the economic and social environment are much stronger obstacles to the expansion of micro loans realising social objectives than the legal obstacles.
A uniques artistic character is provided by the Kasárne/Kulturpark. It creates the platform for development of artists, activities and all those who want to be part of the new cultural scene in Košice and the project of European Capital of Culture 2013.
Kasárne (Kulturpark) With the transformation of the estate of the former barrack stores of Capt. Jaroš, a venue was established for various cultural functions that were lacking in the city. Kasárne/Kulturpark is the heart of the project Košice – European Capital of Culture 2013 and at present represents a mere fraction of what will take place here in the run-up to 2013: a modern independent cultural and artistic centre for all fields of art and age groups. The mission of the Kasárne is also to support local upcoming artists, to develop their artistic skills, provide space for presenting their works, while also creating the platform for creative cooperation between business and art in the East Slovak region, in line with trends of a creative economy of the 21st century. Kulturpark wants to go even further when it comes to the concept of developing creativity. It wants to convert the passive audience into active participants of artistic programmes and establish a Centre for education in area of creative and cultural industry and city exhibition premises.
Localisation: Kukučínova 2, Košice, www.kulturpark.sk. See www.kosice2013.sk Kasárne (The Barracks) The Kasárne is now home to the cultural centre Kulturpark. Every month it prepares an attractive multi-genre programme made up of concerts, workshops, lectures, performances, screenings and exhibitions. Co-operation in the creation of the cultural programme and the operation of Kulturpark comes from various entities – civil initiatives, formal groups, or companies, such as Bona Fide, the Na peróne Theatre, Pectus publishing house, MakeUp collective, Kassaboys or Artarch. Kasárne/Kulturpark also hosts international events in the area of contemporary art.
Centre for education in area of creative and cultural industries.
The aim of the centre is to provide support to organisations and companies dealing with various kinds of creative activity and the creation of a synergic effect by concentrating them in one place, i.e. the reconstructed premises of the buildings of the former barracks will be rented out cheap to upcoming and active artists, companies and other entities in the sphere of culture, art and creative industry, including media, and they will also serve for the presentation of works and for education in the field of cultural management.
City exhibition premises This project focuses on the creation of a new municipal institution with specific programme, which complements the cultural infrastructure of the city and the need for modern premises. It will be split into a museum and a gallery, which will document the transformation of society toward democracy and human liberty, and its artistic manifestations, including reflection. The Gallery will be used for presentations of visual art from the Centre for education in area of creative and cultural industries and projects as part of the overall concept of the Kasárne/Kulturpark.
The year 2013 will therefore mean new cultural and artistic premises and projects that will breathe a creative spirit into the abandoned army barracks, producing a special atmosphere. You should definitely make a visit.
"Young people have named employment as fundamental to being included in society and highlighted the transition from education to employment at a particularly vulnerable time,” said Fergus O’Dowd TD, Minister of State at the Department of Environment, Community and Local Government on the final day of the EU Youth Conference in Dublin.
The Minister spoke at the closing plenary of the EU Youth Conference, which brought together some 150 young people and 100 policy-makers from all 27 EU Member States.
The Minister noted that seven thematic areas, drawn from the results of national consultations in the 27 Member States, were explored at the Conference. Young people and Ministry officials from the 27 Member States have jointly defined aset of 21 priority conclusions. These will inform a Council Resolution on Social Inclusion at the end of the 18-month consultation cycle with young people. They will also inform Council Conclusions on the contribution of quality youth work to the development, well-being and social inclusion of young people to be proposed by Frances Fitzgerald TD, Minister for Children and Youth Affairs, under the Irish EU Presidency to the Council of Youth Ministers in May 2013.
The agreed discussion themes, based on the EU-wide consultation findings are:
Employment - Employment leads to inclusion Education – Inclusive education for all young people Participation – Equal rights and equal opportunities to participate in civic life Welfare - Access to welfare Support – Social and youth services for young people Youth Organisations – Youth organisations and social inclusion Quality – Assuring quality in youth work to enhance social inclusion.
The EU Youth Conference is an element of the Structured Dialogue process which brings together young people and policy makers across the European Union to jointly discuss and inform the development of youth policy at national and European level. The Structured Dialogue process was established by the Council of the European Union in its Resolution for a Renewed Framework for cooperation in the youth field (2010-2018). The Structured Dialogue process is an important instrument to ensure that the opinions and views of young people are taken into account in the formation of policies in the youth field.