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KPMG microcredit study: "1 euro invested in access to microcredit generates 4 euros for the community"

KPMG microcredit study

Each euro invested in microfinance generates four times that amount for the community. This is the conclusion of a study conducted by KPMG and presented on the 19th of October during a press conference organised by Microstart and BNP Paribas. KPMG Partner Bart Walterus explained the results on the third European Microfinance Day.


Partner, Head of Management Consulting

KPMG in Belgium


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KPMG microcredit study

Microstart is a cooperation with a social purpose that operates in microfinance. Since 2010 they have been financing and assisting recipients of social security benefits and businesses not eligible for bank financing looking to set up or expand a small independent business. BNP Paribas is Microstart's main shareholder and requested that KPMG calculate the social impact of microfinance.

Bart Walterus, Head of Management Consulting to KPMG: "Microfinance is a collective name for financial services that are provided with limited sums – microcredits – to disadvantaged groups. Its setup is twofold: first and foremost save people from poverty by assisting them towards receiving an income via their own business. But also to strengthen the social fabric in society; people who are independent won't need to depend on an unemployment benefit or a living wage. The profit is therefore double: for the entrepreneurial start-up AND for society."

Microfinance is usually associated with support in the south, but this concept is also being implemented in our own society. Cedric Vandamme, Senior Adviser to KPMG: "The credits granted via microfinance to entrepreneurial start-ups are limited: Maximum EUR 15,000. But this does involve vulnerable groups that are not eligible for a credit via regular financing. Receiving such a limited credit means they CAN get started. But microfinance is more than just granting a credit. It is also about guiding these entrepreneurial start-ups, in order for them to obtain a business management certificate, for example." 

KPMG study: Each invested euro generates four euros

Bart Walterus: "It was a pleasure to conduct this study: KPMG operates in the world of start-ups. Stimulating entrepreneurship AND strengthening the social fabric are both very close to our heart. The study shows that the microcredit's effect creates a positive spiral that can save society considerable expenses in terms of social benefits (unemployment, living wage) and collect important tax revenue (income tax, corporate income tax) and social security contributions".

KPMG has calculated the current net value. That is the average contribution to society by taking the sum of the generated income – the taxes – and the avoided costs such as  benefits. That of a candidate micro-entrepreneur is estimated at EUR 4,125.10 prior to the intervention of Microstart. This amount increases to EUR 18,642.80 two years following the Microstart. This therefore constitutes a gross economic impact of EUR 14,517.80. If we divide this number by the average cost of the effort by Microstart before providing the loan, the cost of dubious debtors and further guidance for each micro-entrepreneur (EUR 3,592.60 per person), then this results in a positive impact ratio of 4.04.

"In other words: for each euro invested in the microcredit programme, the community receives four euros after two years", concludes Walterus.

© 2019 KPMG Advisory, a Belgian civil CVBA/SCRL and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

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