1. REDUCING VULNERABILITY AND PROMOTING SELF- EMPLOYMENT OF ROMA IN EASTERN EUROPE THROUGH FINANCIAL INCLUSION Joost de LaatHuman Development Economics Senior EconomistWorld Bank Barbara Kits Consultant Sandor Karacsony Consultant 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 2 REDUCING ROMA VULNERABILITY AND PROMOTING SELF- EMPLOYMENT THROUGH FINANCIAL INCLUSION

3.  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 3 LOWER ACCESS TO FORMAL FINANCIAL SERVICES AND GREATER FINANCIAL VULNERABILITY

4. ROMA SELF-EMPLOYMENT (MALE/FEMALE) RATES ARE RELATIVELY LOW, EXCEPT IN ROMANIA… Roma working age menRoma working age women

5.  24- 40% of working age men and 14-35% of working age women 5 BUT INTEREST IN SELF-EMPLOYMENT IS HIGH Roma working age menRoma working age women

6.  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

7.  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 7 DEMAND SIDE BARRIERS TO ACCESSING MICROCREDIT

8.  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 8 COMPREHENSIVE APPROACH TO FINANCIAL INCLUSION

9. 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 9 9

10. THANK YOU! 10 FOR INQUIRIES PLEASE CONTACT: JOOST DE LAAT (JDELAAT@WORLDBANK.ORG)JDELAAT@WORLDBANK.ORG