Gerald Nash (Louth, Labour) | Oireachtas source

-----whose contributions are always enlightening, as I think you will agree, a Cheann Comhairle, and I know the Minister of State will agree.

As a former Minister of State with responsibility for business and employment from 2014 to 2016, I took a huge interest in the development of Microfinance Ireland and the various schemes it operated. I recall making some significant changes back in 2015 - for example, the removal of the impediment that lay in the way of lots of microenterprises that required funding from MFI. That was the obligation to receive a formal refusal from a bank before seeking a loan from Microfinance Ireland. I think and I hope that that measure worked and removed some obstacles for microenterprises that required funding when they could not obtain that funding from funders in the market.

I and my party are broadly supportive of this Bill, which will bring further reform to the scheme. I do wish, before I proceed, to place on the record my thanks to the Social Finance Foundation and successive boards of Microfinance Ireland, and indeed successive Ministers, who have done an excellent job working together to administer the scheme up to this point. Social Finance Foundation was established in 2007 and has managed to do what few organisations have managed to do in this country, that is, to use the profits and resources from the major retail banks for the common and wider public good. Social Finance Foundation has been funded by the Irish banks with an initial grant of €25 million in 2007, followed by €72 million in low-interest loans from 2009 to 2020 and further low-interest loans totalling €44 million from 2021 to 2025. It makes sense at this time for overall responsibility for the scheme to pass to the Minister for Enterprise, Trade and Employment, in my view. That would give the scheme further layers of accountability and bring it within the purview of the Committee of Public Accounts and, therefore, the Comptroller and Auditor General, and that can only be a good thing.

Thousands of small companies have benefited from the scheme and the work of Microfinance Ireland since its establishment in 2012. It has supported thousands of jobs working closely, as Microfinance Ireland does, with our local enterprise office network. The microenterprise loan scheme provides loans ranging from €2,000 to €25,000 to microenterprises whether they be startups or existing small businesses unable, for a variety of reasons, to source funding through the traditional sources. We knew many years ago that there were blockages and issues in accessing finance. Microfinance Ireland has helped to address that market failure, if I can describe it as such. These small businesses employing fewer than ten people are in many ways, as we all know, the backbone of our economy and the lifeblood of every community. The small loans Microfinance Ireland has been enabled to help those businesses to keep their heads above water through choppy economic times such as during the pandemic and beyond to the current cost-of-living crisis, from which I hope we are emerging. These small loans have helped businesses to start up and expand, to manage dips in cash flow and have even helped them to get back on their feet after flood damage. On many occasions, I worked with local businesses to assist them to access funding through Microfinance Ireland, often via the local enterprise office. The success of those businesses has proven the value of Microfinance Ireland over the years. The fund has proven to be a success, broadly speaking, with well over 10,000 applications for funding and some €82 million in loans approved, supporting more than 10,000 jobs in almost 5,000 microenterprises. A great thing about Microfinance Ireland and how the funds have been managed is that there is a really good geographic spread around the country, with only 22% going to businesses in Dublin and the remaining 78% spread around the country, including my own county, Louth.

A concern I have about the performance of the scheme is that about half of the applications fail. There is a multiplicity of reasons for that. Approved applications hovered around the 50% mark over the past three years but fell to just 39% in quarter 3 of last year, according to the figures we have seen. I would like to see more detail on why so many applications are failing and what supports might be needed to ensure more businesses can successfully access this vital funding, which is available. A wide range of businesses are accessing the funding, however, with the wholesale and retail trade, as well as motor mechanic repair businesses, being the most common beneficiaries of the scheme. It is your local shop, garage, which might struggle to put together a business case to access funding from the big banks that are being kept alive and, in some cases, allowed to thrive and survive thanks to the fund. The funding has proved particularly important for startup microenterprises, which make up about 40% of the approved applications for the scheme. Women business owners make up about 36% of the approved funds, which is a really good thing, and was something Microfinance Ireland has been focusing on for some time. I would like in the future to see a greater emphasis on the funding of and support for applications by members of migrant communities. We know those who move to Ireland are enterprising in nature. It would be a good day's work if we could look at what Microfinance Ireland and our local enterprise offices can do better to help support those who are relatively recent arrivals to our country and have business ideas they wish to develop and help them to become employers.

I am surprised, given the level of funding won by startups, that so few young people have had successful loan applications under the scheme. Only nine applications appear to have been approved from 18-25 year-olds in 2022. That can perhaps be looked at in the future to ensure that bright, ambitious young people who want to get their own small business off the ground are supported by the scheme. Close to 30% of our workforce is employed by microenterprises, according to census figures. Towns and villages simply could not function without this sector. It needs our continued support. Microfinance Ireland allows the State to support these small but vital cogs in our local communities. From MFI's reporting, it appears that the scheme is growing in popularity with microenterprises. Loan applications were up 5% in 2023 compared with the year before. The Labour Party supports the continuation of the fund and the small businesses, jobs and communities it helps to support. It is important the scheme is administered fairly and openly and observes best practice in its governance. Bringing the scheme under the auspices of a Department will ensure that happens and that the scheme is subject to all of the rigours that offices like the Comptroller and Auditor General and committees such as the Committee of Public Accounts bring to bear. From now on, when this legislation is enacted, the chief executive of Microfinance Ireland will be accountable to the line committee in the Oireachtas, which is an important accountability measure. I supported it in the past and continue to support it now. I hope the new structures for its future governance facilitated by this Bill will allow it to support even more small businesses and jobs as we move forward.

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