> Posted by Sonja E. Kelly and Misha Dave, CFI
If there is one thing we have learned from working on disability and age inclusion in financial services, it is that including these populations in financial services is in some ways easier than practitioners expect it to be but, in other ways, harder than it looks.
In our research on aging and financial inclusion, one of the key insights was that financial service providers of all sizes often apply age caps on credit products. However, many institutions we talked with did not know exactly where these standards came from. Some attributed them to concerns about life expectancy of older clients, some to institutional history (“that’s just the way we do it”), some to the increase of credit portfolio insurance it would incur, and some to a perception of older people as economically dormant.
Many of these concerns can be mitigated by better research and dispelling myths about the creditworthiness of older people. Easy, right? In fact, there are some institutions that apply creative ideas to providing credit to older people. Group guarantees and automatic withdrawal payments on loans from publicly administered pensions through government partnerships are both examples of this.
However, such institutions providing credit to older people seem to be the exception rather than the rule. Worse, convincing institutions to care about this population is not easy. One institution we spoke with in India was baffled by the idea of providing credit to people over the age of 55. “But [the older people] could die and wouldn’t pay the loan,” the product developers insisted. Doing the research and articulating the issue was the easy part — now the hard work begins of advocating on behalf of older people.
Similar attitudinal barriers exist in financial institutions for serving persons with disabilities. Let’s take stock: over one billion people around the world — 1 in 7 of us — have a disability and four-fifths live in developing countries like India. Despite this and the fact that many microfinance institutions (MFIs) claim to be dedicated to “serving the world’s financially excluded people,” less than 1 percent of their clients are persons with disabilities.
In India, disabled persons have limited or no access to formal credit and other financial products for education, housing, skills development, business, and such. In addition, insurance companies in India do not cover assistive technology like wheel chairs and hearing aids that disabled persons need to be mobile, avoid further injury to themselves, and work and live full lives. The gap between demand and supply is enormous, and this creates a dangerous hotbed for informal credit and loan sharks to exploit an already vulnerable and marginalized population, dragging them further into poverty.
Disabled persons and older people have similar physical challenges (mobility, visual, and hearing impairment) and misperceptions about their capabilities to work and run businesses. Therefore, helping to financially include one group will serve to make positive changes for the other. Whether it be through changing attitudes and perceptions or implementing universal design principles in their operations, financial institutions can better serve all clients with physical challenges by becoming disability inclusive and friendly.
Through financial inclusion of disabled persons in India, we see a compelling story of social inclusion at the community level. Leveraging the group-based model in microfinance, disabled persons, mostly women, receive community support and social acceptance from other group members. Dhanalakshmi, an Equitas client, exemplifies this.
Dhanalakshmi was not born blind. She was badly burnt and lost her vision 23 years ago when her husband poured acid over her, her two sisters, and mother. While her sisters recovered with minor injuries, got married, and have families of their own, Dhanalakshmi lost her vision and sustained major burns on her right-hand side. Constrained by her disability, she confined herself to her home for many years.
Four years ago, Dhanalakshmi joined Equitas as a member. She took out a small loan and started her garments business, buying clothes from the wholesaler and selling them door-to-door. Dhanalakshmi’s group has fully included her by using very simple accommodation measures like reciting the MFI pledge aloud and taking turns to assist her in attending meetings. This has given her the confidence and the ability to support herself and her mother financially. Along with economic independence, she has also been socially accepted by people around her.
Group members often help support disabled persons in their businesses, as well. For example, they may purchase raw materials, sell/distribute products, and collect and repay loans on behalf of the disabled client. This inclusion is creating role models by empowering disabled persons to be economically self-sufficient while also empowering communities to break down social stigmas and attitudinal barriers on what a disabled person can and cannot do.
To help further financial inclusion for persons with disabilities, CFI’s Disability Financial Inclusion Program in India has provided trainings and resources to sensitize and equip microfinance institutions to serve this marginalized and underserved population. The program provides disability awareness and sensitization trainings, inclusion assessments, and recommendations to make operations and processes more disability inclusive and friendly.
In the past two and a half years, the program has helped sensitized three microfinance partners (Equitas, ESAF, and Annapurna Microfinance) in three states (Kerala, Tamil Nadu, and Orissa). These three MFIs have financially included more than 30,000 low-income disabled persons, including over 2,000 visually impaired individuals, a severely excluded disability segment. Last year, the program won an award for its innovation in promoting accessibility and universal design to “ensure a life of equality and dignity for disabled persons.”
This year, we are expanding to three more financial partners in four new Indian states (Karnataka, West Bengal, Jharkhand, and Uttar Pradesh). One partner organization has a network of 33 sub-partners providing social and as well as financial support, spreading the seed of inclusion across India. We are also developing strategies to expand disability inclusion with our partners and other stakeholders through advocacy and awareness. We are facilitating partnerships between the financial industry and disability organizations in India, many of which provide livelihoods training, skills development, and other social supports to disabled clients. In sum, we are helping provide a strong ecosystem for sustainable financial inclusion for persons with disabilities.
We remain convinced of the value of including persons with disabilities and older people in financial services outreach. Indeed, financial inclusion is a valuable instrument to equip people with the tools they need to manage and grow their income. As we continue to pursue this goal — despite how challenging it can be at times — we eagerly look forward to the day when all people who can use financial services have access to a broad range of quality financial tools.
This post was also published on the Microcredit Summit Campaign’s 100 Million Ideas blog. Almost a year ago, CFI launched two Campaign Commitments for further research and action on the inclusion of persons with disabilities and older people in financial services.
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