Advantages and expertise of – and opportunities for – the Luxembourg Financial Sector in the creation and registration of microfinance investment funds

This memorandum is based on a study prepared by Mr Jacques Elvinger and Mr Marc Elvinger within the framework of the "Luxembourg Round Table on Microfinance" at the request of ATTF, with the support of the Luxembourg Ministry of Finance. 

This study was presented during the Luxembourg microfinance week: Capital Markets – European Dialogue – Rural Finance, which was held from 17-19 October 2005 in Luxembourg.

As defined by ATTF, the aims of this study consisted in the examination of the following issues:

• What are the main reasons for which certain existing microfinance investment funds have or have not been incorporated in Luxembourg?
• What can the Luxembourg financial centre offer to an entity wishing to incorporate a microfinance investment fund? What are the advantages and skills of which Luxembourg can currently avail itself with regard to this market segment
• Which orientations can and should be taken, both publicly and privately, in view of positioning the Luxembourg financial sector on the market segment of microfinance investment funds?

This memorandum is based on the same structure as the study mentioned above. 

Sections 6. to 10. (previously sections 7. to 11.) have been updated. Only sections 1. to 5. (previously sections 1. and 3. to 6.) have been left unchanged. Although the latter have not been updated, the findings remain substantially relevant to date. What is important to mention, however, is that in recent times increasing concerns have been raised with regard to making sure that microfinance achieves its social and development goals. Thus, in order to maintain the confidence of those who are ready to invest in microfinance because of the double bottom line promised, it will be important, in the future, to enhance the efforts made to measure the social performance of microfinance institutions (and of microfinance investment vehicles, such as investment funds) so as to enable investors to channel their investments towards those within these institutions which are able to show the best record in this respect.