The Need for Micro-Credit in Wales
New initiatives should be taken to improve the accessibility
of credit for new and existing businesses in Wales, says a new report
from the IWA.
The report, Small Loans for Small Businesses: Developing Micro-Credit
in Wales, sponsored by the Bank of England Agency for Wales will
be launched on Tuesday 11 July at 6.00pm at the Agency's offices
in Cardiff Bay to which Press are invited.
The report finds there is a vacuum for small loans of up to £10,000
for start-up and small businesses in most of the Welsh economy.
Its recommendations include:
- Public sector organisations should work closely with banks to
develop new micro-loan funds,
- Partnership arrangements should be developed with experienced
micro-lending organisations outside Wales.
- Increased support should be given to credit unions to enable
them to enhance their lending to micro-size firms.
Some of the smallest businesses, particularly those
in disadvantaged communities, face considerable problems in accessing
much-needed finance from banks and other finance providers. In the
UK, micro-credit schemes (typically run by business support or economic
development agencies in partnership with banks), which lend small
amounts of money (usually up to £10,000) without security at
reasonable rates of interest, are increasingly being seen as an appropriate
way of improving access to business finance and assisting the development
of viable enterprises.
The report looks at the availability of small-scale non-bank loan
finance for firms in Wales and notes that there is plenty of scope
to develop new micro-credit schemes. The report argues that public
sector support for increased micro-credit provision can be more beneficial
than simply providing increasing numbers of grants. The money which
is lent, once repaid, becomes available to loan to other firms, thus
enabling the money to have a bigger impact.
The Assembly's National Economic Development Strategy sets ambitious
targets for the creation of new jobs in Wales over the next ten years
- 136,000 by 2010 - some 110,000 being in the Objective One region
of West Wales and the Valleys. The emphasis is on the development
of indigenous enterprise. The IWA's new says that the availability
of appropriate finance for start-up firms and small businesses will
be a vitally important factor in achieving these targets.
Experience elsewhere in the UK demonstrates that micro-credit has
been crucial in the economic regeneration of communities and in helping
to tackle social and financial exclusion.
Note to Editors:
Dr Nigel Blewitt was Research Officer with the Institute of Welsh
Affairs when he prepared this report.
|
