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Microfinance and Disabilities: Where can this relationship go?

Microfinance and Disabilities: Where can this relationship go?. Mike Goldberg Private Sector cluster LAC Region April 6, 2006. The Microfinance Basics. Objective Breaking the barriers to access to financial services Commercial orientation

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Microfinance and Disabilities: Where can this relationship go?

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  1. Microfinance and Disabilities: Where can this relationship go? Mike Goldberg Private Sector cluster LAC Region April 6, 2006

  2. The Microfinance Basics • Objective • Breaking the barriers to access to financial services • Commercial orientation • Relatively high market interest rates, full cost coverage • Subsidies for new product development • Scale matters (low marginal costs) • Economically rational institutions • Increasingly competitive markets – wide range of actors • No Direct Targeting • Choosing clients with potentially profitable ventures • Risk diversification Remember: Credit is not an entitlement … it is a financial option with risks

  3. Implications of the Basics • Group methodologies (village banks, coops, SCAs, solidarity groups, etc.) • Adapting technology to service delivery(ATMs, palms, voice technology, etc.) • Bias toward urban(density of clients) • Bias toward women(superior performance) • Creative collateral… or none

  4. Disabilities: Who are the clients? • For Disabilities, broad definition could include… • Entrepreneurs with disabilities • Entrepreneurs with workers who have disabilities • Entrepreneurs making products for the disabled (hearing aids, wheelchairs, glasses, artificial limbs, etc.) • Entrepreneurs who buy from providers who are disabled (sheltered workshops) • Consumer credit to purchase products for the disabled • Disabled who use financial services (savings, transfers, remittances) Remember: (i) potentially profitable, (ii) scale (large number of microfinance clients)

  5. Special Needs vs. Mainstreaming • How are these clients different? • Physical access (access to branches, to ATMs) • Self-selection of groups -- could this lead to exclusion? • Transaction costs can be very high (bus to city; group meetings) • Sales may be linked more to subsidies received by clients • How are they the same? • They seek access to a range of secure, affordable financial products • Can provide character references as collateral (DPOs) • Level of financial literacy unknown (like MFin. clients)

  6. What do we need to move forward… together? We needinformation and examples: • examples of products by and serving the disabled • statistics on market potential for these products • potential borrowers (savers, transfer and remittance recipients) For example: Angola, Mozambique, Afghanistan, etc. etc. • People needing artificial limbs due to land mines • Local producers, their costs and financing needs For example: Fundación Carvajal, Cali, Colombia (1985!) • Microcredit to Hotchkiss wheelchair producers (bicycle industry) • Consumer financing of wheelchairs • Teletón, AT International provided seed capital • 120 clients in Cali, 80 in Bogotá in 1985… then what? Other examples:Wheelchairs inSri Lanka, Zimbabwe, Brazil

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