Credit Where Its Overdue: Microlending to Vulnerable Customers

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Credit Where Its OverdueMicro-lending to
Vulnerable Customers

• Experiences from Bulgaria, Macedonia and Romania
• May 26, 2005

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Panel

• MFIs
• Georgi Breskovski, Mikrofond, Bulgaria
• Pavel Velev, USTOI, Bulgaria
• Vase Davaliev, Horizonti, Macedonia
• Anca Ciobanu, CDE Romana
• Facilitator
• Piotr Korynski, OSI/Soros Foundation

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Goals and Objectives

• To look at microfinance in CEE from the point of
  view of social inclusion
• To share field experience of several MFIs
  lending to Roma customers
• To discuss challenges and opportunities lending
  to vulnerable customers

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Structure of the Session

• Introduction (10 min)
• Video Presentations (20 min)
• Mikrofond EAD, Bulgaria
• Horizonti, Macedonia
• Economic Development Center (CDE), Romania
• Additional comments from the programs (15 min)
• Discussion (30 min)

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Vulnerable Customers

• In CEE there are a number of vulnerable groups
  that get little attention in terms of enterprise
  support and microfinance
• Roma about 7 million people all over Europe,
  majority in 5 CEE countries (Czech Rep., Slovak
  Rep., Hungary, Romania, Bulgaria)
• European Apartheid Decade of Roma Inclusion
• Other marginalized groups long term unemployed,
  youth, women over 40 years of age, mentally
  disabled, ex-offenders, etc.

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Financial Inclusion

• Financial systems are not inclusive yet
• lack of access to services mismatch between
  supply and demand
• outright discrimination and refusal of services
• Neither is microfinance in CEE
• microfinance in CEE is trailing on the edges of
  banking institutions (little depth)
• a few programs begin to tend to vulnerable
  customers and operate on difficult to reach
  market niches

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Reaching out to Roma

• Opportunities
• Roma are entrepreneurial and independent
  (traditional way of life)
• have no options hence can be loyal customers
• live in easily identifiable communities
• Challenges
• difficult to reach and develop trust relations
  with entry points into ghettos and communes
• lower education and skills levels
• loan sizes smaller cost/sustainability issues

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First Experiences

• Different approaches to credit
• Mikrofond, Bulgaria individual loans through a
  trust agent in the urban ghetto
• Horizonti, Macedonia small group lending to Roma
  women
• CDE, Romania, modified village banking for rural
  borrowers
• USTOI, Bulgaria group lending in rural and
  peri-urban areas (via credit cooperatives)
• Not only credit! More is needed
• connect with other programs and provide
  additional support services

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Questions

• Three questions while you are watching the
  videos
• Do you think the program works well? Why/Why not?
• What would you suggest to change and/or improve?
• How would you introduce a similar program into
  your own operations?

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Stay in Touch

• Mikrofond, Bulgaria
• www.mikrofond.bg
• USTOI, Bulgaria
• www.catholicrelief.org
• Horizonti, Macedonia
• www.catholicrelief.org
• CDE, Romania
• www.cde.ro