Microfinance for the unemployed in Copenhagen

The municipality of Copenhagen is introducing a new microfinance initiative for the unemployed, reports Danish Radio (DR)

The municipality of Copenhagen is establishing its own “bank” where unemployed citizens can apply for capital to start their own business.

From 2013, people who have taken early retirement or who are claiming benefits can apply for a micro loan, ranging from DKK 5,000 to DKK 50,000.

The hope is that this will help some of the recipients to become self-supporting citizens, which would also limit the outflow of public finances and increase the tax base.

- This is a way for people to contribute and be a part of society. Subsequently, there is an economic gain in getting people off benefits and turning them into taxpayers, says Henrik Appel, member of the City Council, and originator of the concept.

The idea for the project comes from a two-year pilot initiative in Århus where the proposal yielded positive results. Three out of the ten people that received funding to start their own business are no longer on benefits and according to Steen Rehoff Larsen, who was head of the project in Århus, there have been academic and social gains for the participants as well.

- If we look at these ten people, there is no doubt that they have personally benefitted from taking part in this program and that has been on a social as well as a practical level, says Steen Rehoff Larsen.