Microfinance: A Journey Through Romania

From June 28 to July 1, Martin Cech, the fund manager of ERSTE RESPONSIBLE MICROFINANCE, traveled to Bucharest, Romania, on a microfinance trip. The country, with an area of just under 240,000 km², has a population of approximately 19 million and has been a member of the European Union since 2007.

Political Situation

Following a period of political uncertainty, Romania is once again in a phase of consolidation, but it continues to face significant challenges. Among the most important issues are fiscal consolidation, the implementation of reforms related to EU funds, and the strengthening of state institutions. The domestic political debate is heavily influenced by issues of public finances, inflation, and economic competitiveness. At the same time, Romania remains a reliable member of the EU and NATO, which is particularly important given the geopolitical situation in Eastern Europe.

A key political issue is reducing the high budget deficit. Since 2025, the government has adopted extensive fiscal consolidation measures, including tax increases and spending discipline. These measures are economically necessary but are the subject of heated social and political debate.

Economic Situation

The Romanian economy has made significant strides in recent years, increasing its per capita GDP from about 44% of the EU average in 2007 to about 78% in 2024. This makes the country one of the most successful “catch-up” economies within the EU.

Currently, however, the economy is going through a period of weakness. Following growth of just 0.7% in 2025, the European Commission expects growth to be virtually stagnant in 2026 (+0.1%), before rebounding to about 2.3% in 2027. The main reasons are fiscal consolidation, high inflation, and weaker domestic demand.

Inflation and Purchasing Power

Inflation remains one of the biggest problems. An average inflation rate of around 7% is expected for 2026. Among the causes are higher energy prices, tax increases, and the expiration of government price caps. As a result, the purchasing power of many households is under pressure.

Public Finances

Romania has one of the highest budget deficits in the EU. The government deficit stood at around 7.9% of GDP in 2025. It is expected to decline to about 6.2% in 2026, but will still remain well above EU targets. At the same time, public debt continues to rise and could reach over 63% of GDP by 2027.

The Microfinance Market in Romania

The Romanian microfinance market is one of the most developed in Central and Eastern Europe and plays an important role in financing small businesses and farmers, who often lack sufficient access to traditional bank loans. Unlike in many developing countries, microfinance in Romania focuses less on consumer loans and more on:

• Microenterprises
• Sole proprietor
• Startups
• Farms
• Self-Employed Individuals in Rural Areas

The providers are primarily non-bank financial institutions (NBFIs), credit unions (CARs), specialized microfinance organizations, and government- or EU-supported assistance programs.

The industry has grown significantly in recent years. Even before the pandemic, the volume of microfinance portfolios had doubled to over 280 million EUR and reached more than 90,000 clients. Romanian institutions are also among the most active users of European microfinance programs such as EaSI (Employment and Social Innovation) and InvestEU.

Recent benchmark studies by the Romanian MicroFinance Association show that the industry continued to expand between 2020 and 2024 and that the digitization of lending is increasing significantly.

From an investor’s perspective, Romania appears attractive for the following reasons:

• Insufficient financing for small and medium-sized enterprises outside major cities.
• Agricultural financing, as Romania has one of the largest agricultural sectors in the EU.
• EU-funded loan programs that reduce risk and enable high leverage.
• Increasing digitalization and fintech solutions, especially in rural areas.

Investments in Romania currently account for 3.8% of the ERSTE RESPONSIBLE MICROFINANCE portfolio. This places the country sixth in terms of weighting. As a result, Romania has by far the highest share of any CEE/SEE country. In the I-AM Vision Microfinance fund, investments in Romania account for 4.7%.

Visits to selected microfinance institutions and end customers

During the trip, the delegation visited three microfinance institutions—Agricover, Vitas, and Rocredit—as well as two end customers.

Microfinance Institutions

Agricover

With a weighting of 2.0%, Agricover is the second-highest weighted institution in the ERSTE RESPONSIBLE MICROFINANCE index. The motto of this MFI, which primarily serves agricultural clients, is “Understand your clients,” a shift from the previous motto, “Know your clients.” Agricover operates 12 branches in Romania and employs 65 sales representatives. The advice and support provided to clients is multifaceted and also includes financial and sustainability training. For example, drones are sold or available for lease to monitor the condition of fields, which have two harvest periods per year depending on the crop; these drones can cover up to 150 hectares per day in this way.

Biographies

Vitas was founded in 1996 and is a smaller MFI based in Timisoara. Fifty employees serve customers at 10 branches. Loan agreements are concluded digitally via a platform. Loan amounts range from EUR 5,000 to EUR 150,000. The total loan portfolio amounts to approximately EUR 32 million and includes a high proportion of agricultural loans. Loan terms are tiered: 12–4 months for working capital, 60 months for investments, and 120 months for the purchase of land and storage space. The European Investment Fund (EIF) supports loans of up to EUR 50,000; eligibility requirements include a maximum of 9 employees and a maximum annual revenue of EUR 2 million. Vitas is owned by Global Communities, a U.S.-based nonprofit organization.

Rocredit

End Customers

PetExpress Retail

Euro Meat Trade

Meat producer “Euro Meat Trade”: The company, located in Podu Pitarului east of Bucharest, has been in operation since 2016 and sources its raw materials from Romania, Hungary, Belgium, and the Netherlands. It produces exclusively pork in the form of sausage (20%) and meat (80%). Fifty employees process 150 metric tons of meat per week, with an emphasis on high quality and “traditional production” methods that avoid the use of chemicals. The current loan of EUR 165,000 will be used to significantly expand and modernize the production facility. The installation of a photovoltaic system is in the planning stages.

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