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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.
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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
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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 3 LOWER ACCESS TO FORMAL FINANCIAL SERVICES AND GREATER FINANCIAL VULNERABILITY
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ROMA SELF-EMPLOYMENT (MALE/FEMALE) RATES ARE RELATIVELY LOW, EXCEPT IN ROMANIA… Roma working age menRoma working age women
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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
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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 7 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 8 COMPREHENSIVE APPROACH TO FINANCIAL INCLUSION
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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
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THANK YOU! 10 FOR INQUIRIES PLEASE CONTACT: JOOST DE LAAT (JDELAAT@WORLDBANK.ORG)JDELAAT@WORLDBANK.ORG
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