Petra edina reszketo twists and turns


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Petra edina reszketo twists and turns

  1. 1. Twists and turns – Main lessons How to provide an option to a real way out of poverty? Petra Edina Reszkető Budapest Institute for Policy Analysis Brussels, June 2013 1
  2. 2. Background information Subjects of our interest Main lessons and CEE-specific recommendations Issues to discuss Content 2
  3. 3. KIÚT Microcredit Programme Sponsors The Polgár Foundation DG REG Pilot Project Pan-European Coordination of Roma Integration Methods - Roma Inclusion (co-financing) Timing January 2010 – June 2012 Main goals Enabling people leaving in deep poverty to become self-employed Promoting social mobility and integration of people in disadvantaged areas (explicitly, but not exclusively Roma) Tools Group-based, unsecured micro loans (Grameen model) Support services: business development and administration services Active community work and daily field work (task of group mentors: community meetings, family visits, group meetings, business planning, training) Perfomance of the programme Screening: 202 settlements, 900 persons Cliental: 44 settlements, 44 loan groups, 138 clients, EUR 1,825 average loan/ client Monitoring and evaluation WB survey – monitoring database BI ongoing evaluation (esp, mid-term changes in targeting) 3
  4. 4. Lives in a small settlement in North Hungary Is male, 36 years old, within a household of 4.5 people Has a monthly household revenue of HUF 68.250 (ca. EUR 225) Has no secondary or higher education Is satisfied with his/her life though unemployed for long term prior to the programme Believes that he can do something to improve his life Does not think of himself as being a ‘risk taker’ Has access to sewerage inside the home The nearest bank branch is 18 minutes away The nearest employment office is 32 minutes away Runs a retail business, or manages animal husbandry, or cultivates crops Source: WB survey, 2011-12 The representative client ... 4
  5. 5. József 5
  6. 6. Not everyone, get the targeting right • Carefully assess entrepreneurial skills (self-confidence, risk- propensity, endurance, creativity, diligence – Shane- Venkataraman 2000, Taylor 1999, Shane 2003, Kopasz 2005) • Test commitment to his/her own „business dream” • Check credit history & last resorts (family support, accumulated savings) • Expand knowledge on local markets, supply networks  Shift to more „upmarket” clients and/or locations with access to more market, turning away from the ‘poorest of the poor’  Provide ongoing training and information sharing – even after the disbursement of the loan Lesson 1: Born-to-be-entrepreneur 6
  7. 7. Ildikó 7
  8. 8. Necessity of local presence - „the impossible checklist” • Social empathy • Basic and practical financial/ business know-how • Information broker • Interest representation (when dealing with local and national agencies and bureaucracies) • Leveraging group pressure • In sum: „mother and sister” at the same time ... plus, costly and time-consuming exercise  Freeride on existing networks of local mentors/ community workers if you can  Cooperate with government / NGO stakeholders active in the same districts / settlements Lesson 2: Ideal mentor / community worker 8
  9. 9. Gábor 9
  10. 10. With the business environment • Information gaps • Extremely high administrative burden compared to old MSs, developing countries • Discrimination (entering public offices!) With the public policy context • Social transfers (strong disincentives, high opportunity costs) • Taxation (competitive disadvantage on legalising incomes)  Lobby for business deregulation and simplification with special focus on self-employed, primary producers. Hardly anyone else will do that for your clients!  Provide a „welfare bridge” (cash transfer to facilitate initial phase, HU: VVT) Lesson 3: External coherence 10
  11. 11. Highly volatile local demand • Dependence on incomes from seasonal/ temporary work, public work programmes Extremely limited local purchasing power  Ease access to regional business networks, markets  Find a local hero – capitalise on his/her networks  Cooperate with (central/ regional) development agencies – crucial linkages to projects: • Local infrastructure • Mobility due to improved public transport services • Geographically targeted capacity-building (esp. PES, social services, and the administrative staff of municipalities) Lesson 4: Local market w/o integration 11
  12. 12. • Cash is necessary, but not sufficient  How to channel complex programmes into mainstream EU structural funds? • Isolated interventions are costly and not sustainable  How to encourage and enforce efficient cooperations – G2G, G2C, C2C?  How to harmonise development efforst, geographical targeting of various operative programmes? • Political rationality is hard to overcome  How to commit national/ local politicians hunting for the vote of the (often racist) median voter to the issue of Roma inclusion? Issues to discuss 12
  13. 13. Autonómia – Autonómia Alapítvány 2008. Mikrohitelezési tapasztalatok. Autonómia Alapítvány, Mikrohitel Rt. Kézirat. BI 2010. Adminisztratív terhek Magyarországon – szektorális és vállalat-méret szerinti specifikus elemzés. Budapest Szakpolitikai Elemző Intézet. BI 2011. Background material for an EU Roma strategy framework, Hungary. Budapest Szakpolitikai Elemző Intézet. Mimeo. BI 2013. Impact assessment of SME-development measures within the Economic Development Operative Programme, Budapest Institute, mimeo. Kopasz Marianna (2005): Történeti-kulturális és társadalmi tényezők szerepe a vállalkozói potenciál területi különbségeinek alakulásában Magyarországon. PhD értekezés, Corvinus Egyetem. Lengyel György (2008): A vállalkozói hajlandóság hatása a vállalkozásra és a jólétre / A Magyar Háztartás Panel néhány tanulsága (1992–2007). In Kolosi T. – Tóth I. Gy. (szerk.): Társadalmi riport, 2008. TÁRKI, Budapest, 429–450. Shane, Scott Andrew and Venkataraman, S. (2000): The Promise of Entrepreneurship as a Field of Research. The Academy of Management Review Vol. 25, No. 1 (Jan., 2000), pp. 217-226 Shane, Scott Andrew (2003): A general theory of entrepreneurship: the individual-opportunity nexus. Edward Elgar, Cheltenham, UK. Szalai Júlia 2004/ 2005. A jóléti fogda I. és II., Esély, 2004/6; Esély 2005/1. Taylor, Mark P. (1999). “Survival of the Fittest? An Analysis of Self-Employment Duration in Britain,” Economic Journal, Vol. 109, No. 454, pp. C140-C155. Disclaimer: Source of the portraits is the website of the KIÚTProgramm. They are only for illustration. The characters are fictitious ones, though inspired by real-life persons, progamme clients. References and disclaimers 13
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