Self-Employment through Social Microcredit: A Way Forward for Roma’s Financial Inclusion in Eastern Europe

September 4, 2012

BRUSSELS, September 4, 2012—Opportunities of self-employment through small-scale entrepreneurship supported by micro-lending and intensive community engagement ("social micro-credit") in marginalised Roma communities of Eastern Europe and policy recommendations for promoting their financial inclusion were the focus of discussions at a conference in Brussels today. The “A Way Out and a Possible Way Forward: Social Micro-credit, Financial Inclusion, and Self-Employment for Roma” event, 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 brought together many high-level interlocutors on the subject, including EU Commissioner for Employment, Social Affairs and Inclusion László Andor.

In his opening address, Commissioner Andor highlighted the importance of creating an enabling environment for the marginalised Roma to start up a business within the formal economy. “In Central Europe and the Balkans, the majority of Roma continue to live in unacceptable conditions. Local leaders must invest in improving relations with mainstream society and creating opportunities. Social business offers a way forward for many. The EU's Progress Microfinance currently promotes microcredit providers in 14 Member States. The use of inclusive social microcredit should be encouraged in other countries as a positive example,” said Commissioner Andor.

EU Commissioner for Regional Policy, Johannes Hahn added: "I strongly believe that outcomes of the Roma pilot project, recently managed by DG Regional Policy in the Commission, will impact on Roma policy development both at EU and national levels. Today's Kiútprogram conference is important to disseminate lessons learnt, to highlight the better use of EU Funds, and to help break the vicious circle in which these communities seem to be trapped over time."

The policy lessons learnt from the experience of the Kiútprogram-Commission programme "Pan-European Coordination of Roma Integration Methods – Roma Inclusion, Self-Employment, and Micro-credit”— a social micro-credit facility piloted in the most disadvantaged micro-regions of Hungary—were presented at the conference and added to the debate on the impact of micro-credit as an effective financial instrument for poverty alleviation. The programme aims to promote entrepreneurship and self-employment among the unemployed living in deep poverty—primarily, but not exclusively Roma—by providing social support and financial services.

The experience of Kiútprogram demonstrates that helping the socially and economically-disenfranchised members of the society, such as Roma, overcome entry barriers for entrepreneurship to create sustainable enterprises requires an intensive effort, including well-trained field workers who are familiar with social work, lending and business knowledge.

Elaborating on the experience of Kiútprogram, András Polgár, Chairman of the programme and founder of Polgár Foundation, noted that despite its significant operation costs and challenges of becoming a sustainable business model, the programme has significant opportunities as a social facility for widespread social benefits that may be achieved through increasing formal self-employment, income taxes and contributions, and lower social payments.

It needs to be acknowledged upfront that social micro-credit schemes are not and cannot be profitable. The objective is to capacitate the target audience and beneficiaries by providing training and mentoring as well as providing social micro-credit in an environment that assists rather than impedes sustainability of these new ventures and entrepreneurships. The funds provided and to be provided for the social micro-credit schemes and our investment will bring returns to the whole society as real jobs are created and sustained in these marginalized communities. These returns can be measured as early as the newly employed become taxpayers. These gains should be reinvested into social micro-credit programmes and the provision of funding should continue in order to secure the much desired financial and economic inclusion of Roma, said Polgár.

Furthermore, the recommendations of Kiútprogram point to the outstanding potential of EU Structural Funds in social micro-credit programmes. This was echoed by several speakers, highlighting the current opportunities to impact on negotiations on future cohesion policy, to optimise the position of social micro-credit programmes in funding programmes. The new regulatory proposals on cohesion policy provide all necessary conditions for launching such actions, and offer new opportunities, for example, loan funds supported by the European Social Fund.

Following the presentation of a new World Bank report “Reducing Vulnerability and Promoting the Self- Employment of Roma in Eastern Europe Through Financial Inclusion,” launched at the conference, the World Bank Senior Economist and lead author of the report Joost de Laat said that several entry barriers make entrepreneurship among the Roma very difficult: Roma entrepreneurs generally lack collateral, are indebted, and have a lower level of education than the average person from the general population who has been refused credit.

“Financial inclusion of the Roma is currently very limited in Eastern Europe, and the improvement is crucial for increasing Roma‘s economic welfare. While accessible micro-credit funding is key to promote self-employment, its scope to substantially raise Roma employment rates will remain limited unless basic financial services gaps are also addressed, especially those focusing on facilitating access to targeted saving services, as well as training and tailored assistance to acquire business- and budgeting skills,“ said de Laat.

“Fortunately, Eastern European countries can take advantage of the many experiences in tackling financial inclusion as more than 60 countries across the world have initiated financial inclusion reforms in recent years. These reforms include innovative institutional approaches to reaching financially excluded groups with basic financial services, such as bank accounts and savings targeted at educational investments, financial literacy, and micro-credit. We also have good practice examples being implemented by Roma-focussed NGOs.“

The conference also included presentations from Kiútprogram workers and beneficiaries, and discussed policy recommendations for facilitating social micro-credit in the 2014-2020 European Structural Funds programming period.

For more information please visit:

A Way Out and a Possible Way Forward: Social Micro-credit, Financial Inclusion, and Self Employment Conference

Polgar Foundation for Equal Opportunities

EC Inforegio Newsroom

Executive Summary of the World Bank Report “Reducing Vulnerability and Promoting the Self-Employment of Roma in Eastern Europe Through Financial Inclusion”

Media Contacts
In Washington
Dorota Kowalska
Tel : +44 7764 853 077
In Brussels (European Commission)
Sinéad Meehan
Tel : +32.229.84094
In Budapest (Kiútprogram and Polgár Foundation)
Attila Nyari
Tel : +36.20.2689779