Croatia Development of Partnership


Objective of Good Practice

To support microenterprises that are rejected by traditional banks through the establishment of an Ethical Bank in Croatia using the European Social Entrepreneurship Fund

Timeframe of Good Practice

2014 – Ongoing

Cooperative for Ethical Financing

The Cooperative for Ethical Financing (ZEF) was created in 2014 with the primary goal of establishing the first ethical bank in Croatia to provide loans to people that are willing to start a business but are excluded by the traditional financial system. ZEF was financed through the European Social Entrepreneurship Fund (EuSEF) with loan and equity contributions from the European Commission. The main objective of the EuSEF is to finance investments in the social economy, which includes the implementation of social entrepreneurship initiatives. The ZEF includes more than a hundred physical and legal persons (e.g. companies, cooperatives, associations, trade unions, local governmental bodies, municipalities’ development agencies, etc.) who operate across regions that decide on all important issues related to the work of the cooperative and elect and dismiss the members of the managing body. All ZEF members are also co-owners of the total assets of the cooperative, and therefore, of the ethical bank set up by ZEF as well. ZEF’s main goal was the creation of the Ethical bank “ebanca”, which is a solidarity organization that provides accessible financing conditions, advisory services and active risk mitigation to its clients. Clients can receive a loan only for income generating ideas, and as a means to avoid over indebtedness, it is not possible to receive a consumer credit. All profit that is gained through interest rates is re-invested in social goals and projects of the bank. ZEF is currently operating in 6 offices throughout Croatia where all potential clients can get the necessary information about “ebanca“ and loan possibilities with a maximum interest rate of 4 %. No guaranty is requested from micro entrepreneurs and there are no currency clauses. Microloan provision is complemented with nonfinancial services such as mentoring and long-term support
services to social entrepreneurs, as well as the sharing of the IT platform for project monitoring/management etc. Non-financial support to the micro entrepreneurs is provided through the ZEF network across Croatia.

Institutional profile
Cooperative for Ethical Financing is a legal entity established on April 22, 2014 and brings together physical and legal persons interested in development of the economy based on democracy, social responsibility, transparency and solidarity. In addition to interested individuals, members of the Cooperative are companies, cooperatives, crafts, family farms, associations, trade unions, local action groups, local self-government units and development agencies
Type of Organizatione
Products & Services provided
Financial: Business microloans, Personal loans
Non-financial: Financial education, Mentoring, Support services to social entrepreneurs
Gross Loan Portfolio
Number of clients
Target Audience
People excluded from the mainstream financial services
Organization Website
http://zef.hr/ https://www.ebanka.eu/

Information on Good Practice

The cooperative approach to financial inclusion is innovative because it offers various types of financial instruments such as loans, crowdfunding between members and the possibility to invest in other member’s projects and thus enhance the networking and business environment. Furthermore, members can open a savings account that is encouraged through the payment of higher interest rates, or clients can “save” by investing in projects from the Ethical bank. Clients don’t pay any bank fees and account maintenance is completely free. Proactive risk mitigation is also ensured through non-financial support and IT support in the form of open-source solutions designed for clients (e.g. project monitoring).

The Cooperative bank has reached 1.300 members and has financed a wide range of activities, from agriculture to architecture projects, development in the IT sector, media, and food production to name a few.

The cooperative has a wide membership base and has been steadily growing. Although profits are not the main goal of the Ethical bank, more members lead to more possibilities for development and investments in other socially responsible projects. In this bank, crediting is in service of people and their ideas, and not the other way around. All profit gained through the day-to-day business is put into cultural, social and ecological projects that are useful for the entire community. The belief is that people will recognize the long-term benefits and join the Ethical Bank. In order to ensure financial equilibrium and incentivize long-term commitment from members, the ratio for crediting (amount of loan) is 1:8 on the invested membership fee. Furthermore, the member base includes local and regional administrations that can directly support the disbursal of loans at more favourable conditions.

Given how regional or governmental involvement helps to issue credit at more favorable conditions, the goal in the future is to increase this kind of membership to provide more capital and subsidy of the interest rate. Furthermore, members feel that in this way, they contribute to the development and better life quality for the entire local community. This concept is easily transferable and there are already some countries and regions interested in developing their own Ethical Bank (e.g. Slovenia and Greece).

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