New World Bank Report Calls for Financial Inclusion of Roma in Eastern Europe through a Comprehensive, Incremental Approach
September 4, 2012
BRUSSELS, September 4, 2012—A new World Bank report “Reducing Vulnerability and Promoting the Self-Employment of Roma in Eastern Europe Through Financial Inclusion,” finds that financial inclusion can help improve the lives of marginalized Roma communities in Eastern Europe. Poor and vulnerable households anywhere in the world need a broad range of financial services. Providing access to a secure way to save, for example, allows the poor not only to respond better to income shocks and smooth consumption, but also to invest in education, pay for unexpected health expenses, or set aside a down payment for a micro loan. Similarly, access to microcredit may enable poor Roma households to obtain a legal land title for their home, rebuild a home, or enable aspiring Roma entrepreneurs to start a business and become self-employed.
The report, launched today in Brussels at the “A Way Out and a Possible Way Forward: Social Microcredit, Financial Inclusion, and Self-Employment for Roma” conference, hosted by the European Commission’s Directorate General for Regional Policy (REGIO), the Kiútprogram Non-profit Co, the World Bank, and the Polgár Foundation for Opportunities, finds that Roma in Eastern European by and large are excluded from financial services, ranging from basic bank accounts to microcredit. Efforts promoting financial inclusion can not only contribute directly to the welfare of Roma in Eastern Europe, but can also complement efforts to close the gaps in the education, employment, housing, and health sectors—areas which have traditionally been the focus of Roma integration policies.
In her opening remarks at the conference, World Bank Senior Adviser Katarina Mathernova underscored the report‘s message that Eastern European countries can take advantage of the many experiences in tackling financial inclusion. “There are several good practice examples that are being implemented by Roma-focused NGOs in the region, and more than 60 countries across the world have initiated financial inclusion reforms in recent years. These include innovative institutional approaches that have allowed countries to reach financially excluded groups with financial services, such as bank accounts and savings targeted at educational investments, financial literacy, and microcredit in some of the most challenging environments.“
Elaborating on the findings of the World Bank report, Joost de Laat, World Bank Senior Economist and lead author of the report, said that several entry barriers make entrepreneurship among the Roma very difficult. “The vast majority of Roma want to work, and many are interested in starting a business. However, many aspiring Roma entrepreneurs lack education and collateral, are indebted, and have little experience even with basic financial services such as bank accounts, let alone experience accessing microloans and registering a new business. To substantially raise self-employment rates among this group requires a comprehensive, incremental approach to financial inclusion that not only allows these aspiring entrepreneurs to access much needed start-up capital but also enables them to use it in the most productive ways,“ said de Laat.
“There is every reason to believe that Eastern Europe, with its well established financial markets and education systems, and eligible to receive considerable EU financial support to promote Roma inclusion, can achieve the same for its marginalized Roma population,“ added Mathernova.