Gender Equality National Report Hungary - European-microfinance ...

c.) Micro-finance of micro-enterprises that are not bank-worthy has a long past.
The members of the Network, the local enterprise agencies in the counties and the
capital city ® - for the first time in Hungary and among the first in Europe - started their
micro-finance activities with professional and financial support from the PHARE SME
program in 1992.
The foundations are independent organizations with legal entities. It is important to mention
that the foundations were selected by way of call for tender in order to implement the PHARE
SME program. The operating bodies (i.e. the LEAs) of the foundations are managed by the
managing directors. The managing directors are appointed by the advisory boards elected by
the founders; and the boards are also the main supervisory bodies of the foundations.
Upon the total establishment of the network, the twenty centres (19 in the counties and one
in the capital) operated a total of 150 sub-centres or offices, through which the services
provided by the network became easily accessible from the smallest settlements.
In 1996 EU experts and politicians claimed the Hungarian micro-credit program to be a
success story not only in terms of the Hungarian program but in terms of all the Eastern-
Central European PHARE programs.
In May 1998 in the framework of South-Eastern European Co-operation Initiative (SECI) and
together with USAID, the UNO-EEC organized an Expert Meeting for the Best Practice of
Micro-lending, with the participation of 12 Central-Eastern European countries - including
Greece and Turkey. According to the British Bannock Consulting firm, the Hungarian
practice of the time was the best micro-lending program in the region!
From the beginning the LEA Network made over 26,000 loan contracts and provided
over HUF 45 billion ( ca. EUR 180 million ) worth Micro-credit and Micro-credit Plus for
the micro-enterprises, while its operation was often hindered by lack of resources or
shortcomings in central regulations. The shortcomings of the central regulation and the
occasional lack of resources are well illustrated in the following diagram (No.1.)
Diagram No.1:
10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
Microloans granted 1992-2006 1992 2006
0
1992 1994 1996 1998 2000 2002 2004 2006
2007.05.09. Kovács István OVK Kht.
29
}
26,000 db
45 bn HUF
number of
loans
total amount
granted (bn
HUF)
30