1. Roy Mersland Opportunity Consulting 1 Microfinance and disability The World Bank and Leonard Cheshire International Video Conference Tuesday April 4, 2006

2. Roy Mersland Opportunity Consulting 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)

3. Roy Mersland Opportunity Consulting 3 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. Roy Mersland Opportunity Consulting 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

5. Roy Mersland Opportunity Consulting 5 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

6. Roy Mersland Opportunity Consulting 6 Resources necessary to create viable businesses Three groups of resources (Barney 1991): Physical capital resources (Capital) Human capital resources (Competence) Organizational capital resources (Contacts) CapitalContacts Competence Viable Business

7. Roy Mersland Opportunity Consulting 7 A categorization of the market based on resource access Access to competencies and contacts HIGHLOW HIGHExamplesHazards LOWPotentialsQuestion marks Access to microcredit

8. Roy Mersland Opportunity Consulting 8 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”?

9. Quotes from Lewis (2004)Roy Mersland Opportunity Consulting 9 Hindrance # 1: Knowledge 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 can’t 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

10. Roy Mersland Opportunity Consulting 10 Hindrance # 2: Group 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

11. Roy Mersland Opportunity Consulting 11 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)

12. Roy Mersland Opportunity Consulting 12 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

13. Roy Mersland Opportunity Consulting 13 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

14. Roy Mersland Opportunity Consulting 14 Some recommendations: MFIs 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

15. Roy Mersland Opportunity Consulting 15 Some recommendations: DPOs 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

16. Roy Mersland Opportunity Consulting 16 Some recommendations: Donors 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