Dáil Éireann Debate, Tuesday - 22 October 2013
222. Deputy Pearse Doherty asked the Minister for Jobs, Enterprise and Innovation the number of persons employed, and relevant pay bands for Microfinance Ireland to administer the microenterprise loan fund; and the management or other fees paid to the Social Finance Foundation for its role in oversight, administration or management of Microfinance Ireland. [44594/13]
View answer223. Deputy Pearse Doherty asked the Minister for Jobs, Enterprise and Innovation the ratio of total value of loan to administration cost for all loans made by the microenterprise loan fund. [44595/13]
View answer224. Deputy Pearse Doherty asked the Minister for Jobs, Enterprise and Innovation the recommendations or options developed from the consultation exercise conducted in the lead-up to the development of the microenterprise loan fund; the recommendations and options relating to possible delivery bodies; the name of the group that conducted the consultation on behalf of or in partnership with his Department; and if he will make the full consultation report available. [44596/13]
View answerI propose to take Questions Nos. 222 to 224, inclusive, together.
The Deputy will be aware that Microfinance Ireland (MFI) opened for business on 1 October 2012. As of 21 October 2013, 8 staff are employed by MFI. Total salary costs in MFI may amount to not more than €500,000 in any 12 month period. As Social Finance Foundation (SFF) is the only shareholder in MFI, MFI does not pay fees for oversight, administration or management to SFF.
Annual administration costs for MFI for the year to December 2013 are forecast to total approximately €900,000. Salaries are the largest component of MFI's annual budget. In the first full year of operations which encompass all the establishment costs the ratio of loans to administration is 2:1. This is to be expected in a difficult start up environment and MFI expects to improve on this indicator as awareness and demand increase. The key ratio MFI is targeting is operating costs per job created/sustained. At the end of the first full year this is €3,420 per job. This measure does not take account of cost avoided by the exchequer or exchequer receipts that may accrue as a result of each job. MFI expects to drive down this indicator over time as awareness and demand increase.
On foot of the Programme for Government my Department developed the Microfinance proposal, in close consultation with relevant stakeholders, including the Department of Finance, the Department of Public Expenditure and Reform, the European Investment Bank, and more detailed discussions with practitioners already in the area of Microfinancing. A detailed analysis of other alternative delivery mechanisms was undertaken, such as: First Step, Multiple Lending Funds, Enterprise Ireland/County Enterprise Boards and Credit Unions. Following this analysis, it was agreed by Government that there was no alternative model which could achieve the scale of lending and containment of credit risk required to fulfil the Commitment in the Programme for Government. As set out in the Regulatory Impact Analysis published in April 2012, a single lender would (i) minimise overall management costs which are traditionally high with microenterprises, (ii) ensure a clear financial and management information reporting structure, (iii) enhance the possibility for EIF assistance and (iv) allow for a clear identification of the costs involved in operating the scheme.
As of 18th October 2013 MFI has approved 109 applications to the value of €1.674m supporting 107 microenterprises and 237 jobs. My Department publishes quarterly progress reports on the Microenterprise Loan Fund on my Department's website www.enterprise.gov.ie. The progress report detailing the analysis and performance for the quarterly period ending 30 June 2013 is available on my Department's website. I intend to publish the next progress report to end 30 September 2013 shortly. The report is currently being finalised.
