> Posted by Debashis Sarker, Senior Manager, BRAC Microfinance Program, Bangladesh
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Microfinance institutions in Bangladesh have more than 30 years of glorious experience of serving poor people with the twofold objectives of women’s empowerment and poverty alleviation. The proven microfinance lending model has been replicated in many developing countries, and more people in Bangladesh have become financially included over time. But what about financial inclusion of a most vulnerable group, persons with disabilities (PWD)?

People with disabilities simply did not get access to the leading lending sources in Bangladesh because of discrimination and accessibility barriers. Regular discrimination, taking the forms of negative attitudes, social exclusion, lack of economic opportunities, and unpaid or underpaid work, has long been an integral part of the lives of PWD. Extremely poor disabled people in rural Bangladesh mostly work in the informal sector with minimum wage rates, reflecting severe discrimination in the workplace. Family members often see them as burden. They may be turned down when trying to rent houses in urban areas. People with disabilities, especially women, are disadvantaged when it comes to education, employment, and even marriage. They may be left out of decision-making and participation in social occasions. In fact, many Bangladeshi people see disability as a curse and cause of shame to the family, and at the national level, Bangladesh has not yet passed an anti-discrimination law.

MFIs have not put much effort into serving disabled people in extreme poverty. Disability-friendly policies are absent at the operational level in most of the MFIs, and therefor few people with disabilities are mainstreamed into the microfinance program. While some people with disabilities are able to present themselves as meeting all the conditions for getting a loan, many such people have managing all the prerequisites. In these cases, loan officers are likely to discriminate against these people in the cycle of information dissemination, selection, etc. Due to the transaction cost, negative mindset, and lack of understanding, top management of MFIs has not been interested in serving this vulnerable group.

The government of Bangladesh introduced a law in 2001 to protect disabled people from stigma and prejudice, but many academic and non-academic professionals are confused about the effectiveness and appropriateness of this law. Government is trying to cover this group through social safety net programs, but these programs are very limited. Research shows that only 31 percent of extremely poor disabled people households received disability benefits, and many of those who do receive benefits find themselves in a ‘benefit trap’ that dis-incentivizes economic productivity.

Lack of information makes it hard to know how to proceed. The statistics on disabled people are diverse and authenticity is questionable. Different research shows different dimensions. Microfinance institutions don’t know how many disabled people are economically active, how disabled customers expect services, how to adapt products for disabled people, and so on. Profitable partnerships between MFIs and disabled peoples’ organizations (DPOs) could help but have not been formed. Meanwhile, the aging of the population means that increasing numbers of people will acquire disabilities as they age. Bangladesh Bank, the regulator for all commercial banks, urges banks to provide special care for ensuring financial access of disabled people, but it remains only an instruction so far.

BRAC Microfinance Programme started a project for disabled people in 2011 with the partnership of the Center for Rehabilitation of Paralyzed (CRP), a DPO. Initially, loans were provided to some of their members with spinal cord injuries, with interest rates and conditions as for regular loans. The result was highly positive in terms of repayment rate (99 percent), savings (in most cases higher than average savings) which reflects the capacity of disabled people who are economically active. Some disabled people become ongoing clients and were more empowered financially and socially. At the same time, some CRP referrals refused offers of loans, for lack of confidence in their ability to repay or in some cases because they feared losing benefits from government or donor agencies.

There are numerous challenges to reaching people with disabilities. For example, they are geographically scattered, and locating them is costly. Another challenge is the mindset of staff, who need specialized training to be sensitive, patient, and able to analyze a client’s situation in depth. A third challenge is to get and use data to learn from experience. For example, when the DPO provided a list of only the more capable of their clients, it was then not possible to what happens when clients are more vulnerable. It is also important to be able to the livelihood changes of disabled people who take loans.

In partnerships between MFIs and DPOs it is important to recognize a gap in knowledge and views on both. DPOs are not attuned to analyzing project results in the same way MFIs may wish to, and given their immersion in a benefit- and subsidy-driven world, they are often dissatisfied with MFI interest rates and other features of the regular offer (though in this pilot the regular offer worked well). The asymmetric distribution of information between the “disability world” and the “microfinance world” impedes crucial communication and allows negative attitudes and perceptions to persist.

Microfinance is claimed as a tool for poverty reduction and empowerment of women and vulnerable people but very few examples exist where microfinance serves disabled people. It is interesting that some MFIs or donor funded projects, generally pilots and experiments, have revealed that disabled people are economically active, can become their best clients, and can be self-employed and confident. Though people in this segment constitute a very good market for MFIs, the challenge of locating and including them through conventional practices hinders financial inclusion. Considering the number of disabled people, there is an ample opportunity to innovate and introduce different products and ideas for providing services to these people. It is evident that microcredit with the most vulnerable group could be effective and sustainable. Persons with disabilities can be economically sustainable if they get necessary finance with some training and other technical support. Through involvement with the financial system, they could generate more savings and gain ability to face contingency situations, enhance social respect, and increase peer relationships.

Raising awareness and making people with disabilities active for income generating activities could be the best idea for empowerment. Economic rehabilitation begins when integration happens by blending social protection and necessary resources for income generation. A few changes in credit design and disabled-friendly policies could reduce discrimination and increase financial inclusion of this group. Simply providing loans, savings or insurance services is not enough, MFIs needs to offer a credit plus approach, recruit and train disability friendly staff, change the mindset of decision makers, and most importantly, develop their confidence to serve this group. Apart from this, MFIs could develop strategic partnerships with DPOs. It is also urgent to improve the skill set, knowledge base and attitudes of disabled people. At the same time microfinance institutions should keep focus on the ability of these people who want to become economically active. To protect the future of disabled people in Bangladesh, MFIs, NGOs, DPOs, Government as well social safety net programmes could contribute to financial inclusion.

For more, read Debashis Sarker’s article “Microfinance for Disabled People: How is it Contributing”

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