Microfinance, poverty and disability

Written by Vanessa Haarhoff

Meet Mr. Toñanez, a barber who is deaf and runs a successful business in Paraguay. Toñanez is a client of the Fundación Paraguaya, a microfinance institution (MFI) that is working in conjunction with the Washington DC based Center for Financial Inclusion (CFI) on a pilot project known as the Smart Campaign. The Campaign aims to create a more client-focused industry based on standards, including things like non-discriminatory practice which addresses disability inclusion into credit schemes and training of credit managers and staff around issues of disability.
This campaign is a positive step towards breaking down barriers for people like Toñanez and the millions of other people with a disability (PWD) who live in the developing world gain access to credit schemes.
Traditionally, access to microfinance has been seen as an important way to assist people out of poverty in developing countries, yet, many PWD most of whom are more likely to live in poverty than their able-bodied counterparts are denied access to credit for various reasons, says Roy Mersland, Director of the Norwegian Centre for Microfinance Research.  
Brian Clancy, chair of the CFI’s advisory board confirms that a vast majority of PWD from the developing world are poor and among the largest vulnerable populations in the world, constituting around 15 percent of humanity. He states that despite this, no more than 0.5% of microfinance clients around the world are PWD. 
This figure seems staggering considering that most PWD are marginalised from the formal labour market as a result of various attitudinal and environmental factors in the workplace, making self-employment the only realistic option. According to research carried out by the United Nations in 2008, employers often resist hiring PWD because of their impairments, leaving 80-90% of this minority without formal jobs. Sergio Guzmán, lead specialist at the CFI and a member of the Smart Campaign team, highlights that because this minority is largely self-employed, access to capital should be a high priority. 

Despite the dearth of academic literature on microfinance and disability in peer reviewed journals, research carried out by Cindy Lewis (2004) and Theeraphong Bualar (2011) bring to light the challenges that his minority face when trying to access credit schemes. Lewis’ research focuses on microfinance from the perspective of disabled women in Zambia and Zimbabwe, revealing how MFI staff were a major barrier to accessing credit as they viewed this minority as lacking the ability to run a successful business, affecting their ability to repay their loans. Similarly, Bualar (2011: 857) portrays similar findings amongst disabled women in rural northeast Thailand facing "significant attitudinal barriers" from credit chairpersons and from their own families.

Additional to attitudinal exclusion, PWD struggle with environmental barriers that prevent them from accessing MFI materials. Flavia Bwire, Project Officer at the Association of Microfinance Institutions of Uganda explains how MFIs often provide information in both verbal and written forms that are inaccessible to people with hearing or visual impairments. Guzmán adds that he has not encountered a MFI that has signs, contracts or other information in Braille; in addition, sign language interpreters are a rarity, as well as ramps and other accessible design standards. Bwire and her colleagues (2009) cite self-exclusion as a barrier to accessing credit. PWD often experience socio-economic exclusion and rejection throughout their life; repeated exclusion creates low self-esteem and a retreat by PWD from public and private spheres, including micfofinance.
Guzmán says that of all the MFIs that he has visited, “none are successfully or actively reaching out to persons with a disability despite their potential market value”. He emphasizes that there is a “gap in market” when it comes to microfinance and disability, and MFIs have the potential to make sound returns working with PWD if they are sensitised to their specific needs and adjust accordingly. 

Anton Simanowitz, microfinance expert and programme manager at the Institute of Development Studies notes that  there is “such little awareness from microfinance institutions about the needs of customers or would-be customers with disabilities that may pass off as discrimination or stigmatisation when really it’s more about ignorance ”.
Jimena Vallejos, Project Coordinator of Fundación Paraguaya says that in order to encourage MFIs to adopt more disability inclusive policies, governments need to adhere more strictly to the United Nations Convention on the Rights of Persons with Disabilities. So far, only 144 countries have ratified it, and 80 countries have committed to the Optional Protocol (UN statistics). 
Vallejos states that it is vital to transform policy rhetoric into reality at a grass root level if PWD have a chance of transcending poverty. She adds that the one of the main reasons policy rhetoric is being infiltrated into many disability policies in Ecuador, is because the former Vice President lives with a disability and has therefore prioritised disability inclusion in the country’s development agenda which has had a lasting legacy. Although this is progressive for financial inclusion in Ecuador, this movement needs to be replicated on a larger scale “between the collaboration of policy makers and disabled people’s organisations”, says Guzmán.

Vanessa Haarhoff is a journalist and has recently done some research on the relationship between poverty and disability with the non-profit Action on Disability and Development. She is also a trustee for Uhambo, a non-profit that facilitates the local production of bespoke wheelchairs for PWD in Africa.