In Teleorman, Romania, Aura Drăgușin, a mother of three, spent years searching for stable work, often in vain. As a member of Europe’s Roma community, she faced persistent barriers to employment. Tired of waiting for doors to open, she decided to build her own business — a car wash.
Yet while traditional lenders routinely approved small business loans for mainstream Romanian entrepreneurs, Aura’s applications were denied.
Aura’s story is not unique. Roma, among the most disadvantaged communities in Europe, are routinely denied access to commercial loans. The reasons vary: Many live in informal housing and cannot offer collateral; others lack a credit history, which makes them “invisible” to financial institutions. As a result, Roma borrowers often face both systemic barriers and direct ethnic discrimination from bank staff and loan officers.
Aura felt no one believed in her. That was until Patria Credit, a microcredit facility, stepped in. Unlike other financial institutions, they calculated potential where others saw only risk.
With that support, Aura was not only able to start her business but turn it into a thriving enterprise and offer financial security to her family.
Proving Roma Entrepreneurs are Bankable
In 2022, the Soros Economic Development Fund made a pilot investment in the Roma Entrepreneurship Development Initiative, or REDI — which enabled Patria Credit to support borrowers like Aura Drăgușin — in order to answer a question that had long hindered access to capital for Roma-led businesses: Will lenders get repaid?
Three years later, the results are in: Repayment rates among Roma entrepreneurs are on par with those of mainstream borrowers. The answer is a resounding yes.
The findings from this modest pilot have outsized importance. With a population around 12 million — comparable in size to a mid-size European country — Roma are the largest transnational minority in Europe and one of the most socially and economically excluded ethnic communities on the continent. They fare worse than any other European group when it comes to measures of well-being such as education, health, employment, housing, political engagement and access to basic financial services.
REDI’s support has allowed Roma entrepreneurs like Anife Redjepi to open TIANDE4U, an organic cosmetics shop in the local mall in Tetovo, North Macedonia; Sladjana Vasić to register and formalize a tailoring business in Valjevo, Serbia; and Senada Ramadanović to expand a fast-food business in Belgrade. The impact of these opportunities has been life changing.
The results of our investment have helped overcome biases and blind spots and transmute them into market opportunity. REDI has attracted additional investors, including the Council of Europe Development Bank, European Investment Funds, and private investors to join the effort. By 2026, REDI’s loan portfolio is projected to reach €15 million across six countries.
The REDI story also offers valuable lessons for impact investors.
Lesson one: Impact investment as R&D capital
Being a first mover in uncharted territory is often necessary to address stubborn market failure. In our nearly 30 years of catalytic impact investing, we’ve seen this across sectors, from financial inclusion and climate to healthcare and independent media.
While microcredit has an important history as a tool for financial inclusion around the world, it had never been applied to the Roma context. Before launching REDI, Petrica Dulgheru — a Roma scientist and civic leader — tracked 90 small Roma-owned businesses in Bulgaria and Romania that applied for bank loans. Eighty-six saw their applications rejected. Those wholesale denials inspired him to create a lending facility specifically for Roma entrepreneurs. But he quickly ran into a familiar catch-22: Investors wanted proof of concept, yet proving the concept would require investment.
Our risk-tolerant capital helped to break that cycle, supplying the R&D dollars to test the market and de-risk it for other investors.
Lesson two: Proximity matters
Backing local leaders can be a powerful advantage. Dulgheru’s deep ties to the Roma community enabled him to map market dynamics with nuance to shape the initiative’s design in ways outsiders could not. For example, it soon was evident that loan capital was a critical constraint, but not the only one. Roma entrepreneurs needed business mentorship services and Roma financial officers familiar with local conditions. REDI addressed these gaps on both the supply and demand sides, with technical assistance funding from its partner NGO.
Lesson three: Real versus perceived risk
One of the most powerful roles impact investing can play is to reshape perceptions of risk. For example, conventional lenders often view borrowers without documented credit histories as high risk and high cost. In the absence of data, impact investors can provide the resources to test whether borrowers are in fact credit worthy and share the results with the marketplace. If successful, data correcting perceptions of risk should prime the pump for commercial capital to flow.
By the end of 2025, REDI will have deployed over 1,000 loans, averaging €7,000 each, with the majority going to women-owned businesses. These investments in turn create jobs, improve livelihoods and engage a young and entrepreneurial segment of the population on a continent in demographic decline.
We’re still in the early stages of this journey. But the initial outcomes and insights offer an encouraging blueprint for more inclusive growth in Europe and around the world.
Georgia Levenson Keohane is the CEO of the Soros Economic Development Fund.
Guest posts on ImpactAlpha represent the opinions of their authors and do not necessarily reflect the views of ImpactAlpha.
