Gender Equality National Report Hungary - European-microfinance ...

Compared to the previous year, the county employment centres spent 55.1% less on the
support of self-employment in 2006, totalling ca. HUF 300 million.
b.) The business development services provided or mediated by the local enterprise
agencies (LEAs) can certainly be used by unemployed people who are thinking about
starting a business. In recent years there have been a number of such consultancies in 2.1.1
of GVOP (Economic Competitiveness Operative Program). Basic consultancy was free of
charge up to a time limit for entrepreneurs and potential enterprises, and they were able to
use exceeding services at a reduced price.
Unfortunately the programs of the 2004-2006 period are no longer in operation while the
supported counselling programs of the new 2007-2013 period are not yet operating,
therefore - due to lack of capacity and funds - these consultancy services are limited.
3.2.6 Access to Finance Score 3.6
Although the outer finance resources of enterprises have expanded in the past years, the
companies in the country can involve much less outer resources to finance their expansion
than their counterparts in the developed countries. Almost 80% of Hungarian enterprises
work without using loans while in developed countries the proportion is 15-20%. The
loan/income ratio of enterprises in Hungary is much lower (25.7%) compared to the average
of the EU-15 countries (which is 44.7%). Thus in spite of the improvement sustained since
the 90s, further interventions are necessary on the Hungarian loan market in order to ease
financing difficulties of micro-enterprises and for easier access to finance resources.
The fact that a population of the country did not have notable entrepreneurial traditions,
experience or knowledge nor the necessary accumulated capital, significantly hindered the
development and efficient operation (or simply the survival) of the enterprises in the sector.
Even today a notable under-capitalization and lack of resources of micro- and small
enterprises remains a problem.
The evolved entrepreneurial group does not have a multi-generation entrepreneurial past,
which could have enabled capital accumulation, on the other hand profit-oriented actors of
the financial market are averse from financing entrepreneurs, for the following reasons:
- Small volume loans have low profitability (high expenses due to high counseling and
follow-up demands opposed to low income), and significantly high risks due to higher
failure rates.
- A risk-raiser in their case is the fact that the majority of these enterprises do not have a
considerable entrepreneurial past. (This entrepreneurial sphere self-sustains to a high extent
from the „grey economy”, even those enterprises can operate at a suitable level that are
permanently "in the red" in their books, this however can not be assessed by the bank
sector.)
- In the early '90s lending organizations bore remarkable losses en masse, therefore they
have a much too "careful" business policy due to bad experiences in the past.
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