Ensuring access to microfinance services for people with disabilities

-Workshop for stakeholders

from the disability and microfinance sectors

Day 1

Workshops rules

• Confidentiality

• Respect for the opinions of others

• Listening

• Speaking freely

• Co-responsibility

• Punctuality

• Photographs

Disability&

Inclusive Development

Definition

Persons with disabilities include those who have long-term physical, mental, intellectual or sensory impairments which, in interaction with various barriers, may hinder their full and effective participation in society on an equal basis with others.

(Art. 1 - UNCRPD)

International Convention

• The Convention on the Rights of Persons with Disabilities received its 20th ratification on 3rd April 2008, triggering the entry into force of the Convention and its Optional Protocol 30 days later.

• This marks a major milestone in the effort to promote, protect and ensure the full and equal enjoyment of all human rights and fundamental freedoms of persons with disabilities, and to promote respect for their inherent dignity.

Disability is a Human Rights Issue

• Disability is an unavoidable and universal part of human diversity

• There has been a change in the way the person with disabilities is viewed: From being seen as an object of charity

and a burden = approach of assistance To a subject of law = approach based on

the respect of all human beings

Shift from a charitable to a rights-based approachwhereby the individual is respected and

empowered

• In light of this change, four core human rights values take on particular importance in the context of disability :Dignity: respect for a person’s physical and moral

integrityAutonomy: capacity for self-directed action,

decision and behaviourEquality: no discriminationSolidarity: social support

Everybody has the same rights and should have the same access to their rights

The problem is within the individual: the disability is the direct result of the person’s impairment

Disability is only a health (thus medical) issue

Solutions are designed by « medical experts » on the basis of a medical diagnosis

Focus: elimination or cure of disability ; normalisation

Reference to people with disabilities as an oppressed minority

The environment of people with disabilities is the problem

Disability is the result of barriers linked to the physical environment, attitudes, information and communication. This leads to unequal access to opportunities

Focus: elimination of barriers linked to physical space, attitude and information/communication

Disability viewed as an individual pathology

MEDICAL MODEL

Disability viewed as a social pathology

SOCIAL MODEL

Contrasting disability models

Adapted from Rioux, 1997 - Cité par Interactif déc 2002 - Understanding disability : look, then act

SOCIAL PARTICIPATION

Environmental factors

Interaction

Personal factors

Human development model (RIPPH, 1996)

Intrinsic Extrinsic

HUMAN DEVELOPMENTAL MODEL

Personal factorsPersonal factors

Life HabitsLife Habits

HUMAN DEVELOPMENTAL MODEL

Facilitator - Obstacles

Environmental Environmental FactorsFactors

CapabilitiesAbility – Funct. impairment

Organic systems Integrity - Impairment

Social Participation - Disabling Situation

Interactions

Adapted from the Disability Creation Process, Fougeyrollas et al., 1997

Approach that respects the full human rights of every person, acknowledging diversity, eradicating poverty and ensuring that all

people are fully included and can actively participate in the development process and in activities, regardless of age, gender, disability,

state of health, ethnic origin or any other characteristic.

Inclusive development

Specific services

Access to mainstream services

whenever necessary

For an « equal enjoyment of all human rights and fundamental freedoms »

Twin-track approach !

United Nations Convention on the Rights of Persons with Disabilities - 2006

whenever possible

TWIN TRACK APPROACH

Specialised services(direct rehabilitation services for

PwD)

• Physiotherapy• Occupational therapy• Prosthetic + Orthotic

services• Sign language• Corrective surgery• Information leaflets in

Braille• Care-givers, etc…

Mainstream services(non-specialised services for society in

general)

• Awareness campaigns to change communities’ attitudes towards disability (positive attitude)

• Removal of physical barriers• Accessible information

/communication• Access to livelihood

opportunities• PwDs included in mainstream

MFI targets, etc…A principle :access to mainstream services whenever possible, and a specialised approach whenever necessary

Disability, povertyand livelihoods

General figures…

10% - 12% of the world’s population has some form of impairment disability (over 600 million people)

80% live in low-income countries

82% of people with disabilities live below the poverty line

80% of people with disabilities of working age are unemployed

… & Facts

Women with disabilities are generally worse off than men with disabilities

The majority of people with disabilities in developing countries live in rural areas

There is a higher rate of unemployment among people with disabilities than among the rest of the population

Link between poverty and disability

Sources : DFID

Disability: a dormant factor…

… which does not affect people facing severe and chronic poverty.

Sources : National disability survey in Afghanistan - 2005

The impact of being a person with disabilities is felt when the situation

starts improving

The situation in Afghanistan

Livelihood opportunities

• Employment

• Social security resources / safety net

• Self-employment

Lack of opportunities in the job market

Exist in only some developed countries

Most often the only option available : 80% of disabled people who have an economic activity are self-employed

Conclusion ✓ People with disabilities suffer from high poverty levels and high rates of unemployment; yet employment is essential to earning a living, helping to support the family and improving self-esteem.

✓ Self-employment is often the only option open to many people with disabilities. In most cases, it is difficult for them to find a formal job in developing countries.

Being self-employed

Non-specific to

PwD

Specific to PwD

Needs for starting

and managing a business

Non-specific to

PwD

Specific to PwD

Needs for starting

and managing a business

•Technical skills•Business management skills –experience•Conducive legal environment•Reliable suppliers – good products & services•Market – potential clients•Capital (to buy tools, equipment, supply, etc.)

•Physical access to facilities (business sites, market, suppliers sites)Absence of discrimination – community support•Adapted workstations•Self-confidence

Access to capital

Grants

Own capital (savings)

Loans

In the absence of collateral

In the absence of a source of income/business (very poor)

Existing business management capacity and technical skills

To compensate competitive disadvantages

Providing grantsIn what situations is it appropriate to provide grants?

Needs assessment of the individual situation and business plan

•Entrepreneur follow-up – combine with a loan

•Define appropriate business plan

•Develop access to other sources of capital (savings or loans)

•If in cash, require receipts/invoices and conduct follow-up visits

•If in kind, allocate resources

•Seek contributions from authorities, community, existing entrepreneurs

•Set-up clear procedures & criteria – democratic decision-making process – ensure that controls are enforced

Providing grantsAdvantages Disadvantages

•Limiting risks for the entrepreneurs

•Usually the poorest are targeted

•Tends to take responsibility away from the person concerned

•Usually limited in amount

•Usually one shot

•If in cash, could be misused

•If in kind, complex to manage

•Not sustainable for the « donor » - difficulties in raising funds for grant schemes

•System could be unfair/corrupted

Preventive & corrective measures

Existing repayment capacity (existing business or income)

Existing business management capacity and technical skills

Existing collateral or possibility of pressure

Needs assessment of the individual situation

Providing loansIn what situations is it appropriate to provide a loan?

Advantages Disadvantages

Preventive & corrective measures

Providing loans

•Motivation to succeed in business

•Once the person has a good credit record, s/he could be provided with successive and bigger loans to develop the business

•Sometime, the only source of capital accessible

•Sustainable system

•Interest to be paid

•Capital to be reimbursed – burden on the business

•System could be or become discriminating

•Not for the poorest

•Create an interest-free non-profit mechanism

•Business follow-up & counselling; provide training; support/initiate business development activities (creation of cooperatives, organisation of fair)

•Raise awareness of microfinance services providers

•Combine with a grant system

Existing saving capacity and saving

habits

Existing business management capacity

Need to develop saving habits

Using one’s own savingsIn what situations is it appropriate to use savings?

Advantages Disadvantages

•Autonomy

Using one’s own savings

•Vulnerability once savings are used up by starting one’s business

Preventive & corrective measures

•Develop/maintain saving habits

•Provide savings scheme

What ismicrofinance?

Definition• Microfinance refers to the provision of

financial services to low-income clients, including consumers and the self-employed, who traditionally lack access to banking and related services (Wikipedia)

• Microfinance offers poor people access to basic financial services such as loans, savings, money transfer services and micro-insurance (CGAP)

Objectives of microfinance services

•To increase income

•To reduce vulnerability

Loans, money transfers

Saving, micro-insurance

History

In the 70’s : the first known experiences in Brazil and Bangladesh : ACCION and Grameen

In the 80’s: development of numerous initiatives worldwide

2004: 3000 MFI and 120 million accounts.

Grameen bank, BRAC, FINCA, Prodem…

Microfinance service providers

• Formal sector: banks, cooperatives, NGOs, credit unions

Microfinance Institutions (MFI)

• Informal sector: money-lenders (usurer), self-help groups, rotating savings and credit associations

Microfinance methodologies

• Individual lending: usually a larger loan for microenterprises - collateral

• Group lending: can start from a very small amount - groups of borrowers of between 5 and 30 – peer pressure – women as priority target

• Village banking: loan to a community in charge of lending out smaller amounts

Being a MFI client

Saving may be compulsory prior to accessing credit

Collateral may be requiredCharges to be paid in addition to the capital to

be reimbursed: for opening an account, interest, on late repayments, etc.

Need for repayment capacityA good repayment record usually gives access

to bigger loans

Difficulties encountered by disabled entrepreneurs

-Supporting the entrepreneurship

of people with disabilities

Most people with disabilities…

• Prefer not to apply for microcredit, even if it is available locally

• Are able to adapt and learn quickly• Are risk-averse, afraid to lose what they

have• Consider a loan as a last resort• Do not know how to approach an MFI• Have had unhappy experiences in

approaching officesMersland - 2005

• Are misinformed about MFIs and existing MF products

• May wait for specific programmes

• Who were denied access to a loan believe it is because of their impairment (even if the real reason is business capacity)

• May have higher operational costs in their activity

Most people with disabilities…

Mersland - 2005

Difficulties-

solutions

Internal External

In accessing funding

In managing a business