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Access to Credit -- A Right, Not Just an Opportunity: Leonard Cheshire International

By: Sarah Dyer, Leonard Cheshire International

MDG #1:  Eradicate extreme poverty and hunger.

Leonard Cheshire International is a United Kingdom-based NGO working to assist people with disabilities around the world to achieve their human rights.  In this case study, Deputy International Director Sarah Dyer describes the effects of one inclusive microfinance program in the Philippines.  A strong partnership between a development organization and an association of disabled people has resulted in success for both institutions and the people they serve.

Microfinance - one option to help improve the income of poor people

Traditionally, microfinance is seen as providing credit through small loans to poor people to help them to engage in productive activities or expand their own small business enterprises. In fact, microfinance is more than credit and now includes a much broader range of financial products, which can be accessed and used by both poor and very poor people.
 

Typical users of microfinance institutions are people with a low income who cannot access formal finance. They are generally self-employed and engage in small business enterprises such as farming, petty trade, shop keeping, street vending and food production.

Microfinance and poor disabled people

If you are poor and disabled you are doubly discriminated against and will have very little likelihood of being able to access finance, either in the formal or informal sector. Negative attitudes, preconceptions and misconceptions about disability, as well as issues of physical access, mean that disabled people are often excluded from programs operated by mainstream microfinance institutions.

Mainstream microfinance institutions may not have consciously excluded disabled people, but by not affirming their inclusion, they have not tackled the challenge of how to enable poor disabled people to have full and equal access to their programs.

Leonard Cheshire International, through our International Self Reliance Program, has been working with microfinance institutions, with the aim of promoting inclusion of disabled people in their programs, thereby improving their income. One of our main partners is Opportunity International (UK), a global network of microfinance institutions.

At present we have established mainstream microfinance programs in Tanzania and in the Philippines, where disabled people and family members are part of an inclusive group-lending scheme.

An inclusive microfinance program in the Philippines

AKAY is the microfinance arm of the disability organization, Tahanang Walang Hagdanan (TWH). Although AKAY grew out of a disability organization, it has operated as a registered microfinance institution in the Philippines for a number of years.

Because of its origins as a disability organization, AKAY is better equipped to develop programs that include disabled people. Many of its staff, including the Chief Executive Officer, Jess Docot, are disabled people.

In early 2001, Leonard Cheshire approved funding to AKAY to operate a group-lending scheme targeting groups of the poor, women, disabled people and family members of disabled people. As well as providing financial support for the start up fund and some project staff, Leonard Cheshire has recruited and funded a part time advisor who is providing technical advice and monitoring the impact of the program.

Since the program was started loans have been disbursed to a total of 1410 borrowers in 31 centres around metro Manila. Twenty percent of the borrowers are people with disabilities or family members of disabled people.

The impact of credit

took out his first loan through the AKAY program. He used the funds to buy more stock for his food stall. This means he does not have to go out to the market each day to get supplies and has also increased the range of products he sells.

Rogelio operates his stall from a mobile tricycle unit which he moves using a hand operated cycle. He is currently paying in installments for the adaptations he made to his cycle.

Previously Rogelio worked in a metal workshop and this is his first business venture. With the expansion of his business, he has more than doubled what he earned previously when employed in the workshop.

He hopes to apply for a second loan in the future to help him expand his business further.

 
Lisa lives in Makita with her two children and husband Luoloi. Luoloi is disabled as a result of gunshot wounds and because of this is unable to walk very far.
 

Lisa is in a group with four other women. She has used her first loan to set up a sari sari stall that sells popcorn, rice, fruit and vegetables, and some dried fish.

Lisa has enjoyed being a member of the group and has gained a lot from the support of the other women in the group. As well as the meetings and training sessions, they go as a group to the main market to get supplies for their stalls each week.

She is pleased with the progress her business has made and has set up a savings account that she contributes to each month.

Danny started his watch repair business and sari sari stall with his first loan from AKAY in December 2001. It is his first business venture. He was previously employed in an accounts department.

He has had some success with his business, but is very dependent on the local school children for much of his trade. This means that when schools close for holidays his income drops and it becomes hard to meet the loan repayments.

He has a good site for his business, but the rent is high. He is seeking a cheaper site and, if successful, will apply for a second loan.

Aims for the future

The outcomes of this project are encouraging. As well as ensuring that the income of poor and disabled people increases, one of our additional and important aims is to look into the factors which have promoted or limited the successful inclusion of disabled people in the programs.

The findings from the field work are being collected and compiled into training and resource materials which will both assist disabled people to have better access to microfinance institutions and for these institutions and their staff to be more prepared and better able to include disabled people in their work. 
We are currently extending our work further based on existing field experiences. A new initiative is currently being implemented in partnership with the credit arm of a social development NGO, NORFIL Foundation Inc., that for nearly 20 years has worked with families (especially women, children and youth) in urban and rural communities in the Philippines.  We are also currently planning and developing new inclusive programs in Tanzania, Uganda, the Philippines and Afghanistan.