OPPORTUNITIES FOR SELF-EMPLOYMENT

The business grant programme did not make much effort at the beginning to examine the economic and social context in Hungary for self-employment opportunities for ex-Yugoslav DPs. The DPs proved they knew the situation weil enough, if only because they had no alternative but to struggle to survive. Though unable to work legally, DPs had seized ali opportunities to work for a bit of money "in the black". They worked seasonally in agriculture and occasionally in other (mainly manual) service activities. Having been confronted with the day to day need to supplement the assistance they received, DPs knew far better than those who had concoeted the business grant project what could be done with the proposed grants. The diversity of activities they have undertaken are witness to their

ingenuity and capacity for survival against the odds. The diverse activities are also evi-den ce of opportunities that exist today in Hungary, particularly in the informal sector, for those living near or below the "poverty line" and for other victims of the "transition", such as Gypsies.

AGRICULTURE AND ANIMAL HUSBANDRY

Of the 559 grants effectively distributed by 31 March 1997, nearly half (263) were granted to agriculture (mainly vegetable growing) and animaI brecding (main ly pigs, but also chickens, rabbits, sheep, cows) projects. Few DPs had been engaged full time in eco-nomic activities linked to agriculture in their country of origin, but the great majority had had some experience in vegetable growing and animaI husbandry for they had lived a life astride the cityand the countryside. This W3S a great advantage in today's Hungary (at least in the southern part) due to the availability of land and space for rent (or even for free).

Since the change of regime production in most sub-sectors of agriculture, cattle and animaI breeding has dropped, sometimes considerably, and there are unmet needs. Small prcduc-ers can operate free from state control and are not taxed. Small producers appear to suffer less than medium or large ones from the increase in prices of (industrialised) inputs; they can also supplement the income from their own production by selling their labour season-ally for a wage. The gross retum (including labour) on the investment (of the grant) reach ed at least 100 per cent and, on average, reached 150 per cent.

PRODUCTlON, SERVICES, BUT NOT TRADE

Most of the other grants went to independent semi-skilled or skilled workers or crafrs-men in activities ranging from building construction, metallurgy, carpentry. electricity, clectronics, plumbing, painting to tailoring, knitting, shoe repair, leather work, eleariing.

and so on. Catering activities were sometimes supported, but very rarely. As a matter of principle, trading was not financed. In most cases there was a direct relation between the education of the recipients, their professional experience in the country of origin (and asy-Ium) and their choice of activities. They generally requested equipment and tools which they had had in the country of origin but could not bring with them when they left. Posses-sion of the equipment and tools necessary for their jobs made them more autonomous and increased their (labour) market value.

At one point in 1996 business gran ts supported the purchase of sewing machines (common and "overlock") for housewives who had no "business plan" but could start to work for themselves and their family and expand their activities into the "marker". Later UNHCR, which has access in Budapest to a choice of articles of better quality at cheaper prices, purchased ali equipment and tools directly. The practice has met with success as applicants saw a distinct advantage in receiving state of the ari equipment.

Apart from trading (generally in open-air markets or bazaars), no activities were ru led aut as a matter of principle. Ali proposed plans were seriously examined, discussed, and approved when the applicants demonstrated they had the necessary experience and a

rea-sonable knowledge of the market. Thus artists, including musicians and one writer, re-ceived grants, asdid breeders of dogs, chinchillas and pigeons. Even a handicapped person untrained and unable to perform any physical activity received a grant to purchase a ma-chine tocopy keys.

WORK IN THE INFORMAL SECTOR

Activities of DPs outside agriculture were to an extent hampered by the fact that they are not allowed to work legally. Their status as temporarily protected persons has not been regulated in Hungary; in fact they are ina legal limbo. They enjoy the same rights as other foreigners, though, and hence are allowed to seek a licence for independent work (Bt.).

UNHCR often conditioned the disbursement of a grant on the applicant's obtaining a Bt., andarranged for a lawyer to assist them free of charge for this purpose.

Generally speaking, DPs are no more likely to be harassed or prosecuted for working

"on the black" th an the tens of thousands of Hungarian citizens who also do it. The infor-mal sector, which has been in existence since long before the demise of acentralised econ-omy, issaid toaccount for up to 30 per cent of total production.

ELlGIBILITY

Ali Dps, whatever their citizenship, ethnicity, sex, age or education, could apply for business grants. After the passing of an amnesty law in June 1996, DPs originating from the Federal Republic ofYugoslavia were no longer eligible asthey were considered able to return to their place of origin. With that exception, the characteristics of those who re-ceived business gran ts by and large are the same as the characteristics of those who ap-plied. This is a prima facie indication that strictly technical (business) criteria have pre-vailed inUNHCR decisions.

Although not prevented from applying, DPs considered to be already self-sufficient were denied grants whatever the quality of their business plans. Conversely, applicants deemed particularly vulnerable (families of 5 or more and single parents, in particular) were often given the benefit of the doubt if their application failedatechnical point. Young DPs fresh aut ofschool and trying to enter the labour market were not favoured. They were instead channelled towards apprenticeships which could result in some sort of partnership or joint venture.

THE ALL IMPORT ANT APPLICA nON FORM

While UNHCR did hardly any preparatory work on market conditions befo re launehing the business grant project, it did carefully draft the application form, the main

implement-ing "tool" of the project. The UNHCR form is similar to standard applications for loans,

but it has been simplified and modified based on experience. For example, the most recent version requires the applicant to list the specifications, price, trade mark, and name of

seller, of ali equipment to be purchased. This ensures that the applicant has made a serious enquiry and helps rate his reliability; at the same time it allows UNHCR to make direct procurement, if appropriate.

To avoid delays in the start of the project, ensure that it quickly gained momentum and ac-quired experience, UNHCR decided not to eni ist the services of an implementing or opera-tional partner, but to administer the project directly. The staffmembers (one international and two local) have devoted part of their time to examining the applications, interviewing appIi-cants, assessing the merits of their plans, taking decisions and disbursing funds. They also followed up, time allowing, on the activities of beneficiaries. Four social counsellors covering different geographical areas where DPs are concentrated have been recruited to gather infor-mation (economic and social) on ali cases individually, assess their needs and determine the type of assistance, if any, that they require. The counsellors play an important role as they distribute applications, retrieve them and make a preliminary evaluation, particularly in re-spect to the reliability of the applicant. Counsellors are present during the interviews of the applicants and take part in the final decisions, especially on border line cases.

The reliability and seriousness of the applicant is ali the more important since UNHCR gives the gran ts with no strings attached. In contrast to a loan, the grant is a gift which is not to be returned with interest. Hence, care has to be taken to check on the real purpose of the applicant. Direct acquaintance with the applicant is a distinct advantage. Additional es-sential information can be obtained during the interview regarding the efforts already taken by the applicant to work, particularly in the area chosen in the business plan, and the ob-stacles he has faced. An applicant who has started or taken steps to start his project on his own is more likely than not to continue once in receipt of assistance. The grant is a unique chance for the DPs; they largely perceive it as such. It is unlikely that they would squander it on purpose.

GRANTS OR LOANS

From the start UNHCR did not give envision providing loans rather than grants. First, issuing and recovering loans would have required establishing a heavier administrative structure through an implementing partner (a financial institution or NGO) which was not readily available. Second, grants were viewed as an alternative to subsidies or as subsidies given in advance. Third, loans at market (35 per cent interest and above) or preferential (20 to 25 per cent interest) rates would have to be given at a higher level than grants. DPs can-not in general mobilise any resource other than their own labour; they typicaIly have no as-sets, although a few own practically valueless old cars.

There is no doubt, though, that the issuance of loans instead of grants would have of-fered distinct advantages and should generally be given preference. Applicants for loans must calculate precisely the rate of gross and net return over the investment contemplated, taking into account the terms of repayment. This forces recipients to respect economic dis-cipline in the allocation of their resources, be they cash or labour. Moreover, micro credit is gaining ground in Hungary and the region. It is prornoted by international financial insti-tutions and NGOs that operate through local partners. These local groups could take the lead in implementing self-sufficiency projects for refugees.

SPECIFIC CHARACTERISTICS OF THE TARGET GROUP

UNHCR has no doubt that the project made a difference to the life of DPs, although the extent of the difference is difficult to gauge. UNHCR also believes the project could be replicated elsewhere with different groups of refugees. But the impact of the project on ex-Yugoslav DPs privately accommodated in southern Hungary has been affected by certain characteristics, positive and negative, of the beneficiaries and the situation in which they found themselves.

DPs had been living in Hungary for up to 4 years and had had time to reconnoitre the economic and social terrain, to think about ways to improve their income and sometimes to start some potentially durable activity. This is the main reason why UNHCR's offer of grants met with a quick response. The education and professional experience of the DPs gave them means to cope with a new but not totally unfamiliar environment. They were ready to undertake any type of activity on an independent basis. Com ing from a society whose "transition" to amarket economy had started even earlier than that in Hungary, they were prepared to put up with the hardships involved and to seize the chances it offered.

Besides, most spoke or sufficient Hungarian to relate to local inhabitants.

It is obvious that DPs would have benefited from holding a different status that allowed them legal access to employment, although access to legal employment and social benefits on apar with Hungarian citizens would not have necessarily given them jobs. As it turned out, they had to create their own jobs and, at least in the long term, may be better for hav-ing to do so. Nonetheless, the business grant project would have had a more positive im-pact if it had been part of a wider effort by ali actors concerned, in particular the go vern-ment, to integrate refugees or at least make th em self-sufficient. But that ",'l3S definitely not the policy of the government in 1995 or at any other time.

CAN THE PROJECT BE REPLICATED'?

The difficulties of replicating the project for the benefit of a different group in a differ-ent economic and social context appeared clearly when, as an experiment, UNHCR dis-tributed applications for grants to non-European refugees living in Budapest under the UNHCR Mandate. (As Hungary signed the 1951 Convention related to the Status of Refu-gees with ageographical reservation, UNHCR determinesthe status of non-European asy-Ium seekers and assists refugees under its Mandate.) The non-European refugees were, by and large, in the same legal situation as the ex- Yugoslav Dps. There were few non-European applicants. With one exception, they ali intended to engage in trading activities, including foreign currency exchange. But most lacked even sufficient experience in trade.

Their economic aspirations, partially justified by the higher cost of living in the capiral, were at least twice as high as those of ex- Yugoslav DPs. Their aspirations were ingeneral unrealistic and not in accordance wi th their education, experience and the employment op-portunities offered by Hungary. In fact, they had little interest, if any, of staying in the country.

By and large, ex- Yugoslav DPs did not need mu ch counselling as to the type of activi-ties they could engage in and were best equipped for. In any case, UNHCR and its staff

were not in a position to provide guidance. The process of examining applications was it-self educational, however. Ali applicants - sometimes up to 25 - are assembled in a room while one of them is interviewed. The public does not intervene but listens with attention while questions and answers flow. The applicants learn about the strengths and weaknesses of other candidates and about their own. This method also achieves transparency, an impor-tant aspect of the programme.

CONCLUSION

At the request of UNHCR, in 1996 the Institute of PoliticaI Science (Hungarian Acad-emy of Sciences) began a study of the activities of the recipients of business grants (termed subsistence oriented migrant enterprises). It will be completed at the end of 1997 and will involve a comparison with similar enterprises set up by Hungarian citizens. The results of this study should provide a wealth of information conceming the imp act of this effort to encourage self-sufficiency through self-employment. The analysis of the initial efforts be-hind the UNHCR business grants project should suggest future steps for this project and for similar projects started to assist displaced persons and refugees elsewhere.

ANNEX

TheDPlives in Hungary since...

Federal Republic of Yugoslavia