1. Barriers hindering disabled people access to microfinance services Leif Atle Beisland University of Agder Roy Mersland University of Agder

2. 2 Background Employers often resist employing persons with disabilities. In developing countries 80–90% of persons with disabilities do not have a formal job, so most turn to self-employment (United Nations 2007). Disability is also a major explanation for extreme poverty; for those who live on less than $1 a day, 1 in 5 has a disability (United Nations 2007). One of the obstacles facing the self-employed is access to capital. It is therefore argued that access to microfinance should be a priority in pro- disability policies (Handicap-International 2006; Cramm and Finkenflugel 2008). Cramm and Finkenflugel (2008) and Martinelli and Mersland (2010) claim that few people with disabilities have access to microfinance. This study forwards the debate by bringing in results from a Ugandan survey where the disabled people themselves have been asked about their opinions regarding the possible accessing barriers.

3. Accessing barriers Building on Simanowitz (2001), Bwire et al. (2009) explain that there are several barriers excluding disabled people from accessing microfinance services: Exclusion by staff due to attitudes. Exclusion by credit design. Exclusion by non-disabled members in credit groups. Self-exclusion by the disabled themselves because of low self-esteem and repeated experiences of rejections during life. Exclusion because of the disability itself. Our study aims at identifying the barriers that the disabled persons themselves believe are the most important. 3

4. 4 Data and methodology Data: The data for this study are collected by the National Union of Disabled Persons of Uganda (NUDIPU) in trainings organized for economically active disabled people. The dataset represents disabled persons with existing economic activities. In total 841 respondents (varying number of missing observations due to no answer or don’t know-answer for some of the questions). Originally the intention of the survey was to get knowledge on how to improve NUDIPU’s activities on improving the livelihood of disabled people. Thus, many questions were asked that are not relevant for this article. However, five of the questions are related to the potential barriers hindering access to microfinance services.

5. Questions related to accessing barriers 1. Do you fear that the staff of the institution would reject you because of your disability? 2. If you wanted to take a loan from a financial institution do you fear it would be difficult because existing credit groups would not accept you as member due to your disability? 3. If you were to take a loan from a financial institution, would you feel shy and embarrassed because of your disability? 4. If you were to borrow from a financial institution, would you fear that the loan conditions (e.g. amount, interest rate, loan period etc.) may not suit your needs? 5. Would your disability make it troublesome for you to access the bank's buildings or to attend the regular meetings? 5

6. Prior research Even if the disability market is potentially huge, prior research (Bwire et al. 2009; Handicap-International 2006; Thomas 2000) indicates that few disabled people access credit in traditional MFIs or donor-supported savings and credit groups. Whether disabled people have access to commercial banks, SACCOs or ROSCAs is often not discussed in the literature. However, using the data from the NUDIPU-survey, Beisland and Mersland (Forthcoming) show that disabled persons’ use of microfinance services may be larger than previously assumed. Beisland and Mersland (Forthcoming) report that 89% of the survey’s respondents have used at least one type of microfinance services. However, informal self-help schemes are more easily accessed than formal institutional schemes, and disabled people access more savings than loans. 6

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9. Barrier 1 – Exclusion by Staff Members 9

10. Barrier 2 – Exclusion by Group Members 10

11. Barrier 3 – Self Exclusion 11

12. Barrier 4 – Exclusion by Credit Design 12

13. Barrier 5 – Exclusion by the Disability Itself 13

14. Conclusions Self-exclusion does not seem to be an important barrier. 22-30% of the respondents list exclusion by staff, group members, and the disability itself as important hindering mechanisms. However, the most important barrier appears to be credit design; 46% fear that the loan conditions may not suit their need. The policy implication is obvious; the most urgent action required to increasing the access to microcredit for disabled persons, is to design the product to better fit the disabled persons’ needs. An immediate recommendation coming out of this study is that those advocating for disabled persons rights and those offering microfinance services need to come together in order to better understand each other and to design services appropriate to serve the needs of the disabled people. Probably, if a microfinance product is considered “disability friendly” the product would be friendly to most of the poor customer segments. 14