reducing vulnerability and promoting self- employment of roma in eastern europe through financial...
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REDUCING VULNERABILITY AND PROMOTING SELF-EMPLOYMENT OF ROMA IN EASTERN EUROPE THROUGH
FINANCIAL INCLUSION
Joost de Laat Human Development Economics Senior Economist World Bank
Barbara KitsConsultant
Sandor KaracsonyConsultant Brussels, March 15, 2013.
2
Report Objectives:
Do Roma face financial exclusion broadly? E.g. lack access to
financial services such as bank accounts and savings accounts?
Do Roma have access to microcredit and can microcredit
boost (self-) employment among Roma?
Policy recommendation for financial inclusion
REDUCING ROMA VULNERABILITY AND PROMOTING SELF-EMPLOYMENT THROUGH FINANCIAL INCLUSION
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Even compared to non-Roma neighbors of similar socio-economic status,
Roma households are
17 percentage points less likely to have a current account
10 percentage points less likely to have a savings accounts
9 percentage points less likely to have a credit card
17 percentage points less likely to have saving
21 percentage points more likely to have arrears
Households speaking Romani at home are even less likely to use banking
services in general
LOWER ACCESS TO FORMAL FINANCIAL SERVICES AND GREATER FINANCIAL VULNERABILITY
ROMA SELF-EMPLOYMENT (MALE/FEMALE) RATES ARE RELATIVELY LOW, EXCEPT IN ROMANIA…
Bulgaria Czech Republic
Hungary Romania Slovakia0
10
20
30
40
50
60
70
80
90
100
32 39 3223 17
10 42 19
3
Employed by employer Self-employed
Bulgaria Czech Republic
Hungary Romania Slovakia0
10
20
30
40
50
60
70
80
90
100
22 18 12 12 9
41
1 70
Employed by employer Self-employed
Roma working age men Roma working age women
5
24- 40% of working age men and 14-35% of working age women
BUT INTEREST IN SELF-EMPLOYMENT IS HIGH
Bulgaria Czech Republic
Hungary Romania Slovakia0
10
20
30
40
50
60
70
208 12
28
11
20
18 12
12
14
10
42
19
3
Yes MaybeAlready self-employed
Perc
enta
ge o
f wor
king
age
men
inte
rest
ed in
se
lf-em
ploy
men
t
Bulgaria Czech Republic
Hungary Romania Slovakia0
10
20
30
40
50
60
70
16
39
21
7
19
11
10
13
12
4
11
7
0
Yes Maybe Already self-employed
Perc
enta
ge o
f wor
king
age
wom
en in
tere
sted
in
self-
empl
oym
ent
Roma working age men Roma working age women
Microcredit largely provided to existing businesses, by commercial banks, beyond reach of many Roma entrepreneurs
Greater depth of outreach in Bulgaria, Hungary, Romania Microcredit programs successfully reaching Roma are
often small in size
SUPPLY SIDE BARRIERS TO ACCESSING MICROCREDIT
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Face considerable challenges accessing credit:
lack work experience
lack collateral such as savings
are indebted, and
have lower education than the average person from general
population who has been refused credit
Findings consistent with field experiences by microcredit
providers E.g.: Kiútprogram, Autonómia, Mikrofond
DEMAND SIDE BARRIERS TO ACCESSING MICROCREDIT
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Follow incremental approach to financial inclusion
Focus on savings facilitation, especially targeted savings
Focus on access to standard bank accounts
Address financial literacy and business skills
Facilitate smaller group of (aspiring) Roma entrepreneurs with
asset transfers and accessing MFI microloans, alongside
business support services
Monitor financial access using available survey questionnaires
and rigorously evaluate financial inclusion programs
COMPREHENSIVE APPROACH TO FINANCIAL INCLUSION
FINANCIAL INCLUSION EFFORTS CAN BUILD ON EXISTING EXPERIENCES
Promoting targeted savings and access to basic accounts ETP Slovakia’s "Individual Development Account“ for housing Kindergarten-to-college (K2C) initiative in USA Channelling government social safety net transfers through bank accounts
instead of cash
Global “Graduation” pilot program Several poor and middle income countries From addressing basic needs, to savings, to skills transfer, to asset transfer
Promoting financial literacy ETP Slovakia and Autonomia work
Promoting access to microloans Kiut and others
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