David Cullinane (Sinn Fein) | Oireachtas source

I welcome the group representatives to the meeting. Along with my party, I supported the establishment of Microfinance Ireland for good reasons because the Minister had set some very ambitious targets. The ten-year strategy includes a target of €90 million, an additional lending to 5,500 micro-enterprises and the creation of 7,700 jobs. I would love to believe that we will reach the targets. The group and Ms Murray have talked about reaching those targets and she is satisfied that they will be met. However, I have concerns because of the success rate to date. I will put this in context by providing some figures which were supplied to me by means of replies to parliamentary questions submitted to the Minister. The annual administration costs for MFI for the year ended 2013 are forecast to total approximately €900,000 with an additional €278,000 start-up. That amounts to €1.1 million over this year. Over the same period, MFI will have loaned out €1.62 million across 170 enterprises, with an average loan value of approximately €15,000 and an approval rate of 45%. Over the first three quarters of the year, the number of applications has fallen from 149 in the first quarter to 71 in the third quarter. This is a concern. A total of 33% of applications are in the retail and wholesale sector. Of the total of 295 applications which have been submitted to date, 64 applications were from Dublin, 25 from Cork, eight from my own city and county of Waterford and three from Kilkenny. I will give other examples later of other counties from where there has been a small number of applications but none approved.

MFI offers loans for three or more years at 8.8% fixed rate for all types of business needs, including working capital and financing of business equipment. These loans are offered to people who have been refused credit by the banks. There is no doubt that we need some sort of scheme to provide micro-enterprise loans but I agree with the previous speaker that it cannot be regarded as a panacea nor can it be an add-on to bank lending or a substitute for a lack of bank lending which is still a problem in this State. I wonder whether the targets set out by the Minister are over-hyped and over-ambitious, given the current position of the scheme. I ask the witnesses to explain the geographic spread and I will give examples. Six applications were made from Leitrim but none was approved; four applications from Donegal but none approved; eight applications from Waterford with three approved. In the big city of Dublin, 27 of 64 applications were approved. I acknowledge the scheme is at an early stage but these are very low figures and there has been a very low take-up in some counties. I ask why is this the case. How will the group seek to increase the take-up? I note the witnesses have challenged us public representatives to take some responsibility but we are limited in our scope. I ask the group how it intends to encourage more people to make applications and hopefully the targets will be reached. I do not see us reaching the targets. How will the new relationship with the local enterprise offices improve the situation? What targets have been set for next year and are they realistic? I am sure we will be asking the group to come back here next year and we hope that whatever targets are set will be met. What is the view of the group on how to reduce the cost of loans for business? One of the concerns raised with me by people who are in business and by chambers of commerce and other groups is that the loan rate of 8.8% is still very high and it can be a problem. The group talked about customer feedback. How is that feedback received because this will provide information about why some view the scheme as not being as generous as it should be and why the take-up is not satisfactory? What is the customer feedback information?

We need to consider new ideas and practices in other countries. One of the criticisms expressed to me is that the scheme is very rigid and traditional in its bureaucracy and application process. Peer lending is done in other countries and I ask if those models can be considered. I will explain the concept of peer lending which is where five or six micro-enterprises come together.