Kiútprogram was an initiative that offered an integrated package of business support for disadvantaged people living in poverty. The programme ran from 2010 to 2012 and its main objectives were: (i) to promote social mobility and integration of disadvantaged groups, particularly Roma women and men, through self-employment and business creation; and (ii) to address discrimination and improve social attitudes towards Roma people. Kiútprogram also sought to convert informal business activities into legal enterprises. The scheme provided microcredit and supplementary business support services, including mentoring and training.
In Hungary, Roma people are significantly less likely to be self-employed compared with general population. Moreover, Hungary has the lowest self-employment rate for Roma community within Central and Eastern Europe. This group often faces severe challenges in (re)entering job market. The main obstacles to business creation include limited access to finance, little experience of running a business, and low levels of education and financial literacy. The situation is further exacerbated by negative stereotypes held in society and media about Roma population.
Kiútprogram was initiated by the Polgár Foundation for Opportunities, a non-governmental organisation, as a pilot project in microfinance. The scheme was also supported by the European Union, the Raiffeisen Bank, the World Bank, and the United Nations Development Programme. A managing company was set up to implement the scheme, including training and co-ordinating field workers, screening and training clients, delivering business development services, and managing the loan contracts in partnership with the Raiffeisen Bank. Trained field workers were the key actors in the scheme delivery. The scheme prioritised clients from deprived regions, particularly women. The selection involved initial screening of settlements and visits of potential clients to assess their economic and social conditions. Following the Grameen model, the scheme was based on group lending. Loan groups of eight or nine candidates were formed and group meetings organised to explore clients’ past business experiences. Each group member had to create a simple business plan and the individual loan applications were evaluated by the credit committee of the managing company in consultation with the field workers. Loan groups served as a substitute for the lack of collateral and as a forum for sharing experiences and mutual learning. Group dynamics and operating rules were intended to enforce repayment since the group members received loans sequentially, and on the condition of no failure. Loans were provided following three schedules: a loan of EUR 670 to repay over six months; a loan of EUR 1 670 to repay over 12 months; and a loan of EUR 3 330 to repay over 18 months.
Monitoring data show that 192 people took part in Kiútprogram, of which 138 joined a loan group and 49 received loans with an average loan of EUR 1 825 per person and an average duration of 52 weeks. The project succeeded in reaching unemployed people and households with low income.
This case study was adapted from material published in: OECD/EU (2016), Inclusive Business Creation: Good Practice Compendium, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264251496-en