Microfinance and Disabilities: Where can this relationship go? Mike Goldberg Private Sector cluster LAC Region April 6, 2006

The Microfinance Basics Objective Breaking the barriers to access to financial services Commercial orientation Relatively high market interest rates, full cost coverage Subsidies for new product development Scale matters (low marginal costs) Economically rational institutions Increasingly competitive markets – wide range of actors No Direct Targeting Choosing clients with potentially profitable ventures Risk diversification Remember: Credit is not an entitlement … it is a financial option with risks

Implications of the Basics Group methodologies (village banks, coops, SCAs, solidarity groups, etc.) Adapting technology to service delivery (ATMs, palms, voice technology, etc.) Bias toward urban (density of clients) Bias toward women (superior performance) Creative collateral… or none

Disabilities: Who are the clients? For Disabilities, broad definition could include… Entrepreneurs with disabilities Entrepreneurs with workers who have disabilities Entrepreneurs making products for the disabled (hearing aids, wheelchairs, glasses, artificial limbs, etc.) Entrepreneurs who buy from providers who are disabled (sheltered workshops) Consumer credit to purchase products for the disabled Disabled who use financial services (savings, transfers, remittances) Remember: (i) potentially profitable, (ii) scale (large number of microfinance clients)

Special Needs vs. Mainstreaming How are these clients different? Physical access (access to branches, to ATMs) Self-selection of groups -- could this lead to exclusion? Transaction costs can be very high (bus to city; group meetings) Sales may be linked more to subsidies received by clients How are they the same? They seek access to a range of secure, affordable financial products Can provide character references as collateral (DPOs) Level of financial literacy unknown (like MFin. clients)

What do we need to move forward… together? We need information and examples: examples of products by and serving the disabled statistics on market potential for these products potential borrowers (savers, transfer and remittance recipients) For example: Angola, Mozambique, Afghanistan, etc. etc. People needing artificial limbs due to land mines Local producers, their costs and financing needs For example: Fundación Carvajal, Cali, Colombia (1985!) Microcredit to Hotchkiss wheelchair producers (bicycle industry) Consumer financing of wheelchairs Teletón, AT International provided seed capital 120 clients in Cali, 80 in Bogotá in 1985… then what? Other examples: Wheelchairs in Sri Lanka, Zimbabwe, Brazil