Interview with MEP about microloans for Roma to build their own housing in Bulgaria, Romania and Slovakia

The future occupants do the construction work, aiding with the production of dignified housing and the labor market application of dozens of families. The European Parliament (EP) is financing the project, the European Commission (EC) is directing it, and it is being implemented by the Projekt DOM.ov nonprofit together with the Slovak Savings and Loan (Slovenská spořitelna); Romani communities in Bulgaria and Romania are also included in the pilot.

Slovak MEP Peter Pollák, himself of Romani origin, has contributed to the project from the beginning together with Czech MEP Tomáš Zdechovský. News server Romea.cz asked Zdechovský some questions about the construction projects underway in the three EU Member States.

Q: In eastern Slovakia, Romani people customarily live in unincorporated settlements on the outskirts of residential areas – how are you addressing the ownership of the land on which the buildings owned by the Roma will be situated?

A: Before construction can begin, the land has to be purchased and then prepared for building. Most of the plots are prepared for sale by the town or village, and they set the price. Usually they are charging between EUR 9 or EUR 10 per square meter including all of the engineering networks necessary.

Q: How are you managing to negotiate the sale of the plots with the local mayors and to obtain construction permits?

A: We have no problem with the mayors, what’s more difficult is to negotiate with the landowners, as many of them did not want to sell their plots because land reform has yet to be undertaken in Slovakia. Precisely for that reason we have to settle the ownership questions with dozens of co-owners, which at this moment is our biggest barrier. However, if a municipality already owns the plots, then mayors do have a motivation for their Romani residents to live in dignified conditions corresponding to the 21st century. Those applying for the loans must meet all of the necessary requirements, such as having income from legal employment, which means they pay into health insurance and social security, they are not in debt, and they have some financial resources of their own. Before beginning any construction, the Romani applicants attend a training focused chiefly on financial literacy, where they learn how to save money to purchase a plot. That phase takes at least one year.

Q: The applicants are provided micro-loans, how many have been approved so far?

A: In Slovakia alone, there are currently 11 microloans approved in the HERO project and another 109 families are saving and preparing to apply. The loans are provided by Slovenská spořitelna, and what is being financed from the HERO project money is just the aid to the Roma before and after they perform the construction, the social work with them, and their training. Some of the money from the HERO project goes to the bank to cover risky loans in case the clients become temporarily unable to pay them down. The project has been underway since 2016 and nobody has defaulted yet. The Government of the Slovak Republic has been considering whether to take over the microloan project and start approaching this issue in this way, because the pilot project seems quite successful and turns out to have potential for expansion to the entire European Union.

Q: For how many years, on average, are the Romani people being provided these loans?

A: The houses cost about EUR 20,000 and the applicants pay around EUR 120-130 monthly, and they have the loan for 19 years, with the proviso that the interest will be lower than the interest they would ordinarily be charged for a bank mortgage. Because most of these people have no banking history and have never deposited money in a bank, it would be highly unlikely that they would be given a bank loan under any other circumstances. Naturally they have the opportunity to pay down the loan earlier, without any sanctions.

Q: Does the applicant have to make a down payment from his or her own savings to buy the real estate, as one does with a mortgage?

A: They do, but the amount is not so high, it’s around 10 % of the total price of the house. On the other hand, it’s important that they buy the plot at the start of construction, because naturally that absolutely changes the entire situation and their motivation to start building. Because they have to invest their own savings into buying the land, the risk of their changing their mind is reduced significantly. Their biggest contribution is their own labor, because they build the houses themselves.

Q: How big are the houses?

A: Smaller houses have a living area of about 50 square meters, most have more than one floor or an attic space where one could comfortably sleep, so they have around 100 square meters of living space. Interest in smaller houses has been shown chiefly by families with one or at most two children. Families with more members consider larger houses. A big role is also being played by the nonprofit organization Projekt DOM.ov, which organizes the construction, teaches the Roma construction skills, aids them with acquiring the necessary construction and use permits, and assists them with buying construction materials for less.

Q: In which specific municipalities is construction underway?

A: Localities were selected chiefly in areas of eastern Slovakia where we have evidence of the greatest poverty and social exclusion of the Romani community. We chose approximately 12 localities and so far the project is underway in six of them (Zborov, Varhaňovce, Toporec, Vechec, Kamenná Poruba, Rudňany) and two more (Dobšiná, Jelšava) are currently preparing to launch the project. By the end of the year there should be a total of eight municipalities involved. At this moment, construction by the future occupants is the furthest underway in Zborov, a municipality located downhill from the castle of that same name in eastern Slovakia near the border with Poland. Other localities, naturally, will follow. At the moment a settlement near Spišská Nová Ves that is also comparatively quite poor is preparing for this.

Q: Where do you note the most interest in building new housing?

A: In Zborov, as I just mentioned, where five houses are going up, but we know another 30 families are interested in joining the project there. It’s interesting that along with this project, last year the number of pupils attending primary school also rose there, the number of families with full-time formal employment who contribute to health insurance and social security also grew, so we are seeing the very motivational nature of this project. Currently, the municipality is starting to prepare more plots for construction to meet the demand from more Romani families who want to join the project and build their own homes. Now we know that if we get the plots, at least 10 or 15 more houses could be built there.

Q: Does the project also think about community amenities, which are no less important?

A: The activities of the HERO project are more successful if a community center already exists in a municipality, one that is dedicated to the Roma across a wide spectrum of areas and works with them long-term, systematically, in a targeted way. Nonprofit organizations provide other activities building on the existence of such a center. Certainly that matter is quite important, too. However, it is necessary to say that the HERO project does not just aid with building houses for the most impoverished Romani people, but also lends a helping hand to the middle class of Roma living in excluded localities who are also unable to build or to finish building their own dignified housing. I can give you the example of two teachers from Varhaňovce village, who are both employed full-time, but who had problems with borrowing to build a bigger house, one that would correspond to their position, as no banks would finance the construction. The HERO project is providing them the necessary loan to successfully complete their house, which is bigger than the others.

Q: How much is this project costing in total?

A: Currently we have invested EUR 2 million, but the European Commission has pledged to invest several million more through the European Investment Bank. That institution is considering whether to invest EUR 10 million into the project as a whole, because interest in it is quite high, and it seems that the financial resources we already have might not meet the demand.

Q: When will the first houses be up?

A: Use permits for the first houses should be issued in December. Now we’ve completed the basic structures and roofs, we just have to add the exterior and interior plastering and to install the windows. We are counting on installing kitchens at the end of November and start of December. After that, the houses will be ready to be handed over and the families will be able to move in. It also depends on completion of the construction of the infrastructure (communications, hookups for power and water), which the municipalities perform. Frequently, the municipalities must wait for the release of the state subsidies promised for that construction.

Q: What impact will the HERO project have on the Romani minority living in eastern Slovakia?

A: An enormous one, because official employment of Romani people in these localities will increase significantly. Currently, Romani people are paying exorbitant rents, around EUR 300-400 per month, sometimes even more, to various traffickers to live in unfinished apartment units that don’t even have flooring, but the HERO project provides them the possibility of paying a far lower amount to live in a house that will meet all of the requirements that are standard today. An impact is also anticipated with regard to the educational attainment of the residents and an increase in their living standards. If you begin to live in good housing, you want to stay there. We observe that the attendance of children at primary school has increased significantly in association with this project, by tens of percentage points, which in future should reflect positively on the Romani population as a whole.

Q: Bulgaria and Romania are involved in the project along with Slovakia – how are those states implementing it?

A: I have to admit that the best collaboration, both with the nonprofit sector and with the state, is in Slovakia. It is actually the case that this project is proceeding most rapidly among our Slovak neighbors. In Bulgaria, localities are being selected at the moment, and if all goes according to plan, the building should be undertaken this year. So far we have made the least progress in Romania, where many nonprofit organization partners are not able to dedicate capacity to administering the project, although it’s not especially complex. Unfortunately, in Romania right now we are still negotiating about localities, because in the beginning they were not chosen in an absolutely appropriate way. The first localities selected there were for middle-class and richer Roma, but we actually want this project to reach the poorest Roma in Bulgaria, Romania and Slovakia.