Microfinance and disability

1
Microfinance and disability

• The World Bank and Leonard Cheshire International
• Video Conference
• Tuesday April 4, 2006

2
Some facts

• 10 of a population can be defined as disabled
• 27 of all families have a disabled member
• Poverty and disability are interrelated. Disabled
  persons in developing countries are generally
  poor, but not all of them are poor
• Social exclusion is often the hardest barrier to
  overcome
• Negative stereotypes are commonly attached to
  disability

When we have money they call us by our names
not by our disabilities, Lewis (2004)
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Inclusion requires mainstreaming

• Real inclusion of disabled persons requires
  mainstreaming into public and private services
• Mainstreaming requires societies willing and able
  to include
• Knowledge and information
• Attitudes and behavior
• Mainstreaming also requires disabled persons
  willing and able to be included
• Self confidence
• Knowledge, information and behavior

4
The logics behind the demand for better access to
microfinance

• Inclusion into the society requires
  rehabilitation
• Rehabilitation requires economic improvement
• Economic improvement requires in most cases
  self-employment
• Self-employment requires capital
• Capital requires access to banking services
• Savings
• Credit
• Permanent access to banking services requires
  mainstreaming into regular MFIs

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The logics of microfinance

• Savings as important as credit
• Microcredit is microdebt high risk
• Institutional sustainability needed to secure
  permanence
• Access for all democratization of banking
• Competition is heating up search for new niches
• Access to credit requires repayment capacity
  which requires resources

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Resources necessary to create viable businesses

• Three groups of resources (Barney 1991)
• Physical capital resources (Capital)
• Human capital resources (Competence)
• Organizational capital resources (Contacts)

Competence
Capital
Contacts
Viable Business
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A categorization of the market based on resource
access
Access to microcredit
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Main questions

• What are the appropriate interventions for each
  market category?
• How can savings be stimulated for all categories?
• What hinders potentials from becoming
  examples?

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Hindrance 1Knowledge and attitude in MFIs

• When I move into a bank the first thing they
  will see is my bad foot
• When I went to apply, I was never successful.
  They actually said, Somebody who is disabled
  cant manage to do anything
• We, the non-disabled, have to accept that we are
  part of the problem
• Learn to be more sensitive
• Learn to distinguish between perceived credit
  risk and real credit risk

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Hindrance 2Group methodology

• Group methodologies are used to mitigate problems
  related to adverse selection, moral hazard and
  enforcement of repayment
• Delegation of selection and monitoring of
  borrowers to peers (neighbors, friends etc.)
• However, a major concern is that peers may use
  selection criteria not fully aligned with MFIs
  preferences
• Repayment willingness and capacity YES
• Stigmatization in society (e.g. low-castes and
  disabled) NO
• Time and ability (e.g. mobility) to participate
  in numberless meetings YES/NO

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Hindrance 3 Architectural and informational
barriers

• Architectural
• Location of branch offices
• 3rd floor with narrow and steep steps
• Standing cash counters
• Overcrowded inside
• Informational
• Hearing and sight disabilities
• Reading knowledge (illiterate or wrong language)
• Poor people in general are often uninformed or
  misinformed
• Consumer education (microfinance - pros and cons)

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Hindrance 4 Self-exclusion from services

• Repeated experiences of exclusion and rejection
• Lack knowledge
• Lack self-confidence
• Lack motivation
• Expect charity and special conditions
• Overprotection by family members

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The objectives

• MFIs
• New market opportunity
• Less self-exclusion in all segments (not only in
  the disability segment)
• Improved services for all clients
• Information architecture - methodologies
• Better positioned for corporate social
  investments
• Disabled persons
• Improved income from business activities
• Improved self esteem
• Improved social capital
• Better integration into society

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Some recommendationsMFIs

• Identify and learn from existing disabled clients
  and use them as cases in promotional efforts
• Partner with DPOs and promote your services among
  disabled persons
• Try to reduce architectural barriers
• Revise methodologies keeping disabled persons
  needs in mind
• Search for ways to overcome the problems related
  to group methodologies
• Train your staff in diversity awareness

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Some recommendationsDPOs

• Learn the rules of the game of microfinance
• Promote savings among all their members
• Partner with MFIs
• Provide useful market information
• Train MFIs staff in diversity awareness
• Disseminate relevant information among their
  members
• Pre-screen and educate potential clients
• Confront self-exclusion among their members
• LEAVE THE PROVISION OF MICROFINANCE SERVICES TO
  SPECIALISED INSTITUTIONS

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Some recommendationsDonors

• Support initiatives aiming on mainstreaming
  disabled persons into MFIs
• Build bridges between the microfinance and the
  disability communities
• Enhance market information
• Support research efforts and pilot programs
• Consider disability as a cross-cutting issue when
  supporting microfinance projects