Drivers and barriers for migrant, refugees and asylum seekers: Microcredit in Balkans and EU

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Drivers And Barriers For Migrant, Refugees
And Asylum Seekers:
Microcredit In Balkans And Eu

Vittorio Emanuele Agostinelli
Consulta Giovanile Del Pontificio Consiglio Della Cultura



La migrazione è influenzata da una complessa combinazione di fattori economici, ambientali, politici e sociali, che possono agire come fattori di spinta che motivano i migranti ad allontanarsi dal loro Paese di origine o fattori di attrazione che li spingono a trasferirsi nel Paese di destinazione. Una recente analisi di mercato della Commissione Europea fa emergere dati e raccomandazioni interessanti sul fenomeno migratorio. I Paesi dell’Europa sudorientale affrontano molteplici sfide: governance debole, fuga di cervelli, gravi livelli di disoccupazione giovanile e corruzione dilagante. Inoltre, questi Paesi si sentono in una certa misura meno legati all’UE, anche se hanno riacquistato importanza agli occhi dell’UE. Nonostante questo contesto problematico, i Balcani stimolano l’interesse per la ricerca scientifica sulle politiche verdi con particolare attenzione sul settore della microfinanza. L’innovazione sociale rappresenta un potente approccio per affrontare le molteplici sfide del nostro tempo. Emerge in varie forme, attraversa confini e settori, rispondendo a richieste della società ancora insoddisfatte. Le agenzie ed enti di microfinanza possono svolgere un ruolo significativo nei progetti di innovazione sociale del futuro.

Key Words:

Migrants, refugees, asylum seekers, labor market, economic crisis, training, entrepreneurship, employment and education.

  1. Microcredit for migrants, refugees and asylum seekers in the European Union1.

Migration is influenced by a complex combination of economic, environmental, political and social factors, which can act as push factors that motivate migrants to move away from their country of origin or pull factors that incite them to move to their country of destination. Frequently, they reflect a combination of the two.

Historically, the relative economic prosperity and political stability of the EU has exerted a considerable pull effect on immigrants. In the last decade, combined with massive push factors that drove people away from their countries, Europe has increasingly become the destination of a significant immigration flows.

In the past decade, migration to Europe experienced several fluctuations. After a peak in 2007, when the number of newly arrived persons to the EU Member States stood at 3.9 million, the number dropped in 2008 and 2009 due to the global financial crisis and then almost stagnated until 2012 at around 3.3 million migrants per year.

As shown in the Graph 11, in the past five years, with the increasing flow of asylum applicants due to the global refugee crisis, the number of migrants picked up again and reached its peak in 2015 when more than 4.7 million migrants were recorded. Among them, 1.2 million people applied for asylum. Since 2016, that number has dropped again slightly. In 2017, 4.4 million persons immigrated to one of the EU Member States, comprising: 2.0 million citizens of non-EU countries, 1.3 million people with citizenship of a different EU Member State from the one to which they immigrated, and 1.1 million persons who migrated to an EU Member State of which they had citizenship (i.e. returning nationals); it is likely that this trend will increase slightly, thanks in part to a new phenomenon in this context – migration because of climate change.

In terms of the composition of the migrant population in EU Member States, in 2018 there were 22.3million persons with citizenship of a non-member country, representing 4.4% of the total population. In addition, there were 17.6 million persons living in one of the EU citizenship of another EU Member State, reflecting the free mobility of labour in the internal EU market and the improved economic conditions throughout the EU.

In relative terms, the EU Member State with the highest share of non-nationals was Luxembourg (27.5% of the total population). Furthermore, a high proportion of foreign citizens (above 10%) was also observed in Cyprus, Austria, Estonia, Malta, Latvia, Belgium, Ireland and Germany. At the other end of the scale, non-nationals represented less than 1% of the population in Poland and Romania (0.6% in both countries) and in Lithuania (0.9%). Poland and Romania are the two countries from which most EU movers departed to other Member States.

In absolute terms, on 1 January 2018 (Graph 13), most non-nationals living in the EU Member States were in Germany (9.7 million persons), the UK (6.3 million), Italy (5.1 million), France (4.7 million) and Spain (4.6 million).

Between 2014 and 2018 (Graph 14), a total of 4.6 million people made applications for asylum in the EU, reaching a peak in both 2015 and 2016 of around 1.3 million. In 2018, 646 000 asylum seekers applied for international protection in the EU Member States, corresponding to 0.12% of the EU population, a 10% decrease compared to 2017.

In 2018, the largest number of asylum applications were registered in Germany (184 000; 28.5% of all asylum seekers), followed by France (120 000; 18.6%) and Greece (66 900; 10.3%). However, the share of registered asylum applications is higher than the countries population compared to the overall EU population.

The global refugee crisis will continue to put massive pressure on European policymakers and financial institutions. While the number of asylum applicants dropped after 2016, political and environmental crises will continue to push people to take refuge in Europe.

For asylum seekers and refugees to have a better and more dignified future for themselves and their families, they need access to work and employment, identity documents, etc. Access to adequate financial services represents a further crucial component for building a future for themselves and their families.

There are several demand- and supply-side barriers that may prevent asylum seekers and refugees from accessing formal financial services, including:

refugees often have little understanding of and trust in the financial system, leading to a preference for cash-based channels;

they are uncertain about their future (i.e. residence status, integration in the labour market) resulting in economic decisions often made from urgency and necessity;

they might lack a valid and recognised proof of identity, which is key to accessing (financial) services and formally participate in the economy;

there is little support for entrepreneurship finance and self-employment, and requirements are often too complex.

In order to overcome the barriers to financial inclusion faced by refugees, European microfinance

providers should consider the following recommendations.

Better understanding of the specific demand: Microfinance providers need better access to objective, relevant information and data on the refugee population in their country to determine which segments they might be able to serve. MFIs can conduct feasibility studies to better understand their demand, assess the potential business case, and match it to their respective products and service offering;

Clear KYC guidance for microfinance providers: the need to have a recognised identity document and proof of residence as part of know your customer (KYC) requirements often creates a disincentive both for refugees to approach formal financial institutions and for providers to serve them. What is required is clear and unambiguous KYC guidance for microfinance providers, covering the validity and procedures applicable to refugee identity documents. Therefore, governments need to inform microfinance providers on the documents that are issued to refugees (and other non-nationals), while central banks are required to provide clear guidance to providers around regulations relating to KYC, combating the financing of terrorism and anti-money laundering;

Improved financial capability and consumer protection: as refugees often have little understanding of and trust in the financial system, measures that enhance their financial capabilities and build their self-confidence in managing financial resources are key. This can encompass one-to-one financial coaching and general financial education (even as part of integration and language courses). As the economic and financial contexts of refugees vary greatly, customised advice can be crucial;

Improved access to finance for refugee entrepreneurs: Microfinance providers should review their current risk management measures in order to expand access to finance for refugee entrepreneurs, while still balancing the risk. This could include using alternative data and credit scoring mechanisms that could be based on character assessment, performance in integration courses, and references from refugee associations. Also, alternative mechanisms for credit guarantees, such as group or non-cash guarantees, could be effective (such as joint liability groups), alongside schemes that initially offer small loans for short terms and subsequently adjust the loan size and repayment plan according to repayment performance and entrepreneurial capacities.

  1. Balkans for a green economy2.

Countries in Southeast Europe face multiple challenges: weak governance, brain drain, severe levels of youth unemployment and rampant corruption. In addition, these countries feel less connected with the EU to some extent, even though they have regained importance in the Eùs eyes. Although this problematic context, the Balkans spur interest in scientific research on green policies. Protecting the environment is now a priority worldwide; the green economy results from a process that can reduce inequality and scarcity of resources and environmental risks (UNEP, 2010). Both private (Taghizadeh-Hesary and Yoshino, 2019) and public capital should generously support green investments (Lindenberg, 2014). However, economic actors are reluctant to supply adequate financial support to green projects, primarily because of the modest return (Yoshino et al., 2019). Another probable cause might rest on the apparent lack of political willingness or political unsustainability (Lockwood, 2015). These significant barriers reveal conflicting priorities and cultural backgrounds that acerbate the general political process and economic betterment.

Environmental awareness comes from the bottom and from employees of companies who adopt the same environmental protection attitude as their companies (Jankovic’ and Jovkic’, 2016). They found that most companies focus on their businesses’ economic benefits rather than on environmental impacts. The solution suggested is raising ecological consciousness in companies. Employees must be able to know and understand how the environment can be affected by their decisions. In Serbia, social responsibility in areas of employeÈs relations as well as women’s equality has roots in the past because Socialism defended social responsibility for workers’ interests; social responsibility rooted only recently in other areas such as customer protection, environment, and ethical business (Mijatovic et al., 2015). Stakeholders’ activism and public awareness are the basis for a modern concept of social responsibility. From the customers’ point of view, despite the socialist past, it is perceived that companies practice CSR programs primarily with the motive to ensure market success (Vukovic’ et al., 2020), even if such programs are carried out only by larger companies (Vukovic’ et al., 2016).

The number of people employed in green jobs is about 2000 and 30.000 more people rely on the green economy indirectly (Vukadinovic’ and Ješic’, 2018). Considering that green jobs comprise an excellent economic growth opportunity, their number could soar through sustainable and massive investments in the public and private sectors, Vukadinovic’ and Ješic’ (2018) say.

Serbia lacks a properly developed financial system. Innovative firms find it hard to have access to credit. Young companies have limited credit access because of high country risk because of unnecessary bureaucracy, inefficient judiciary and the weak rule of law (Trbovich et al., 2018). These companies rely more on internal financing sources or chase grants, subsidised bank loans and equity investments. Even if resorting to equity finance prevents excessive exposure to the risk of defaulting, financial reforms and subsidised government programs would be welcome a less gap between equity and venture capital financing. To finance SMEs’ survival, the country should set up a new financial institution and perfect the legal framework (Radovic-Markovic and Radovic, 2016). For instance, the Law on Microcredit Organizations allows financing green SMEs.

Serbia has made significant improvements concerning waste management (national waste management strategy); however, financial resources still are limited (Ilic’ and Nikolic’, 2016). The barriers stay at a low level of reuse and recycling and a lack of innovative technologies and incentives. Domazet and Simovic’ (2015) pointed out that there is good potential for the electronic waste industry. Since Serbians produce e-waste with an increasing trend, the authors suggest that by creating and developing proper recycling centres that can extract electronic material from non-recyclable goods, there is potential to create new green jobs. The same model is suggested to other Balkan countries that share the same socioeconomic environment. Vujovic et al. (2020) showed that biomass from agricultural waste and biodegradable waste from households presents the highest potential for renewable energy. Unfortunately, it is currently transmitted directly into the soil due to inadequate disposal in existing landfills. With such negligible treatment of biodegradable waste, Serbia remains far from achieving the EU landfill directivÈs goals.

On waste management in the banking industry, Knez’evic’ et al. (2018) concluded that circular economy and waste management reporting remain behind the European standards. Only one-third of commercial banks (35.7%) have a waste management report, while banks are still unwilling to finance green projects. The National Bank of Serbia includes all WM (waste management) indicators (quantitative and qualitative) in its social responsibility report; only three commercial banks report qualitative indicators. The remaining banks have no information about waste whatsoever. The authors finally denounce a lack of government policies and regulations. This is a significant barrier if we consider Serbia as a candidate for EU membership.

  1. European Social Innovators Report3.

Social innovation represents a potent approach for meeting the manifold challenges of our time. It emerges in various forms, crosses borders and sectors, responding to yet unmet societal demands. Acknowledging the potential of social innovation and more specifically social entrepreneurship, the European Commission has been working on creating an enabling environment for innovators and changemakers over the last decade. Through milestone policies and funding initiatives such as: the Innovation Union Initiative (2010); the Social Business Initiative (2011); the Start-Up and Scale Up Initiative (2016); Horizon 2020/Horizon Europe; and the current Employment and Social Innovation (EaSI) strand of European Social Fund Plus (ESF+) (2021), Europe is paving the way for the inducement, uptake and scaling of socially innovative solutions. All over Europe, innovative changemakers contribute to the creation of jobs, social inclusion and the equalling of opportunities. Just as Europe is broadly diverse, a point which it prides itself on, so too is there vast diversity in its social innovation landscape.

Social innovations are new ideas that meet social needs, create social relationships and form new collaborations. These innovations can be products, services or models addressing unmet needs more effectively. They are innovations that are not only good for society but also enhance individuals’ capacity to act.

The institutional framework for this was provided by the Innovation Union Initiative (2010), as well as by the Social Investment Package (2013), while research is fostered through Horizon 2020/Horizon Europe and funding is granted by the ESF and the EaSI Programme. Furthermore, competitions for social innovators and changemakers, such as the European Social Innovation Competition, enrich the wide range of initiatives by the European Commission to leverage social innovation.

Despite the above-mentioned endeavours to create an enabling. Europe-wide environment for social innovation, national characteristics of innovative opportunity structures and outputs differ quite significantly. The European Innovation Scoreboard 2021’s Innovation Index illustrates this by clustering EuropÈs innovative ecosystems into four categories, ranging from Innovation leaders (Switzerland, Sweden, Finland, Denmark, Belgium), strong innovators (Netherlands, Luxembourg, United Kingdom, Norway, Germany, Austria, Iceland, Ireland, Israel, France, Estonia), and moderate innovators (Cyprus, Spain, Slovenia, Czech Republic, Malta, Italy, Lithuania, Portugal, Greece), to modest innovators (Hungary, Slovakia, Latvia, Turkey, Serbia, Poland, Croatia, Bulgaria, North Macedonia, Montenegro, Ukraine, Romania).

On the European level, the capacity to self-organise is enhanced by providing support to incubation structures and EU-wide networks. Through its funding programmes such as the EaSI strand of ESF+, the European Commission furthermore provides funding to social innovation and social entrepreneurship support organisations and networks and thus directly and indirectly contributes to the plethora of support structures available to social innovators.

Social innovation is a concept that has entered the Romanian public discourse only recently. All in all, its potentialities are not fully comprehended by several decision makers. This is partly reflected by the European Innovation Scoreboard 2021, which classifies Romania as a modest innovator.

As far as financing opportunities are concerned, the main public support mechanisms addressed to social enterprises are promoted by the EU Funds, specifically the ESF+. The ecosystem of private social finance providers, on the other hand, appears to not yet be mature, lacking a widely diffused culture of social investment. Despite some exceptions, there are also gaps within educational and training support areas. In fact, social entrepreneurial and innovation skills are often sought and acquired outside national borders. Furthermore, excessive bureaucratisation and a lack of clear fiscal incentives for social innovation or entrepreneurship highlight how the sector in Romania is still yet to be fully developed. There are, however, a few encouraging signals for the future.

Social enterprises are legally regulated by the Law on the Social Economy (Law 219/2015), which allows de facto social enterprises (as defined by the SBI) to acquire the by law social enterprise status by means of a certificate issued by the National Agency for Employment. However, Law 219/2015 receives only in part the definition provided by the SBI, not fully integrating the requirement of multi-stakeholder governance. Furthermore, the Law focuses exclusively on WISEs, leaving out the rest of the organisations working within different general interest domains. Lastly, Romanian organisations that acquire the ‘label’ of social enterprise do not benefit from particularly advantageous fiscal conditions – no more than the incentives already provided to de facto social enterprises (social economy organisations). This, therefore, by association, would impact on the recognition, support and stimulation of social innovativeness and entrepreneurship.

Despite the limited support coming from government and private sector, it can be noted how some interesting grassroot initiatives are working effectively to address urgent social and environmental issues in Romania. One of the most active organisations fostering social innovation in the country is Ashoka Romania.

The main source of public funding for Romanian social entrepreneurship comes from the ESF+, implemented at national level through several Operational Programmes. Apart from EU Funds, other relevant public support measures are the Start-Up Nation Programme, the Micro-Industrialisation Programme and the Trade and Services Programme – although all of them are specifically tailored for SMEs. Support instruments for social economy organisations (associations, foundations, etc.) appear limited and inconsistent. Public procurement is another option available but rarely exploited due to knowledge/culture gaps and lack of clarity on procedures.

On the private side, banks are generally risk-averse when it comes to financing socially innovative or entrepreneurial activities. This is due to a lack of a social investing culture, an unfavourable legal and political framework and technical skills that social entrepreneurs often do not have. However, there are several interesting private support organisations which, besides providing non-financial services, also offer grants to social innovators and entrepreneurs. Ultimately, it can be concluded that the landscape of financial opportunities is not conducive to the spread and growth of social innovation in Romania.


1 European Commission, 2020, Microfinance in the European Union: market analysis and recommendations for delivery options in 2021-2027,

2 Antonio Licastro, Bruno S. Sergi, 2021, Drivers and barriers to a green economy. A review of selected balkan countries,

3 European Innovation Council, 2021, European Social Innovators – Insight Report – Spotlighting EuropÈs Ecosystems for Social Innovation,

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