Microcredit for self-employed disabled persons in developing countries

Mersland, Roy (2005): Microcredit for self-employed disabled persons in developing countries.

Abstract

Microcredit has become a popular instrument to promote economic empowerment among poor entrepreneurs, and is increasingly being recommended to improve economic rehabilitation among persons with disabilities. However, the majority of the advocates of microcredit for persons with disabilities seem not to be informed on the involved “rules of the game”. At the same time the microfinance community lacks information on disability issues. In this report we aim on closing the gap in knowledge and culture between the disability- and the microfinance communities. We apply resource based theory to analyze when microcredit for disabled persons is an appropriate tool and when it is not. We argue that asymmetric information between microfinance institutions and the disabled population is probably the main hindrance for increased penetration of microcredit services to disabled persons. We recommend disabled entrepreneurs with the necesarry resource base to be included as regular clients in mainstream MFIs or as regular members in self helping microfinance systems like ROSCAs. We provide lists of recommendations that are both easy to understand and to apply for MFIs, DPOs and donors. Due to the lack of theoretical and empirical knowledge available we see this report as a starting point and we advocate for increased research efforts within this field.

• Item Type: MPRA Paper
• Institution: Atlas Alliance, Norway
• Language: English
• Keywords: Microfinance; disability; MFIs; donors; DPOs
• Subjects: I - Health, Education, and Welfare > I0 - General > I00 - General; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources ; Human Development ; Income Distribution ; Migration

References

AGHION, B. A. D. & MORDUCH, J. (2005) The Economics of Microfinance, London, MIT Press. ALDRICH, H. E. (1979) Organizations and Environment, Englewood Cliffs, NJ, Prentice-Hall. ALLEN, H. (2002) Care International's Village Savings & Loan Programmes in Africa. Tanzania, CARE. ALTER, G., GOLDIN, C. & ROTELLA, E. (1994) The Savings of Ordinary Americans: The Philadelphia Saving Fund Society in the Mid-Nineteenth Century. The journal of Economic History, 54, 735-767. ASHE, J. (2002) A Symposium on Savings-Led Microfinance and the Rural Poor. Microfinance Journal, 4. ASHE, J. & PARROTT, L. (2002) PACT's Women's Empowerment Program in Nepal: A Savings- and Literacy-Led Alternative to Financial Building. journal of microfinance, 4. BARNEY, J. (1991) Firm Resources and Sustained Competitive Advantage. Journal of Management, 17, 99-120. BOEKER, W. P. (1989) Strategic Change: The Effects of Founding and History. Academy of Management Journal, 32, 489-515. BOUMAN, F. J. A. (1995) Rotating and accumulating savings and credit associations: A development perspective. World Development, 23, 371-384. C-GAP (2003) Donor Brief No. 10, Credit Components. C-GAP. COOPER, A. C. (1993) Challenges in Predicting New Firm Performance. Journal of Business Venturing, 8, 241-253. DFID (2000) Disability, poverty and development. DFID. DYER, S. (2003) Disability and Microfinance. Leonard Cheshire International. ELWAN, A. (1999) Poverty and Disability - a survey of the literature. World Bank. FIKKERT, B. (2003) Christian Microfinance: Which Way Now? Paper presented at Association of Christian Economists, 20th Anniversary Conference. FREEMAN, J., CARROLL, G. R. & HANNAN, M. T. (1983) The Liability of Newness: Age Dependence in Organizational Death Rates. American Sociological Review, 48, 692-710. GARTNER, W. B., STARR, J. A. & BHAT, S. (1998) Predicting New Venture Survival: An Analysis of "Anatomy of a Start-Up." Cases from Inc. Magazine. Journal of Business Venturing, 14, 215-232. GRANT, W. J. A. H. C. A. (2002) CARE's Mata Masu Dubara (Women on the Move) Program in Niger: Successful Financial Intermediation in the Rural Sahel. journal of microfinance, 4. HAMBRICK, D. C., CHO, T. S. & CHEN, M.-G. (1996) The Influence of Top Management Team Heterogeneity on Firms' Competitive Moves. Administrative Science Quarterly, 41, 659-684. HAMBRICK, D. C. & MASON, P. A. (1984) Upper Echelon: The Organization as a Reflection of Its Top Managers. Academy of Management Review, 9, 193-206. HANNAN, M. T. & FREEMAN, J. (1977) The Population Ecology of Organizations. American Journal of Sociology, 82, 929-964. HANSMANN, H. (1996) The ownership of enterprise, Cambridge, Massachusetts, The Belknap Press of Harvard University Press. HOANG, H. & ANTONCIC, B. (2003) Network-based research in entrepreneurship - A critical review. Journal of Business Venturing, 18, 165-187. HULME, D. (2000) Is microdept good for poor people? A note on the dark side of microfinance. Small Enterprise development, 11, 26-28. HULME, D. & MOSLEY, P. (1996) Finance agains Poverty. Routledge, London and New York. ILO, D. P. (2002) Disability and Poverty Reduction Strategies - How to ensure that access of persons with disabilitites to decent and productive work is part of the PRSP process. ILO. JOHNSON, S., NTHENYA MULE, ROBERT HICKSON AND WAMBUI MWANGI (2002) The managed ASCA model – innovation in Kenya’s microfinance industry. Small Enterprise Development, 13. KING, R. G. & LEVINE, R. (1993) Finance and Growth, Schumpeter might be right. The Quarterly Journal of Economics, 108. LEONARD-CHESHIRE (2004) Microfinance investment and support facility for Afghanistan (MISFA) Disability Micro-Fiance Team, Visit Report & Project Proposal. London, Leonard Cheshire International. LEWIS, C. (2004) Microfinance from the point of view of women with disabilities: Lessons from Zambia and Zimbabwe. Gender and Development, 12, 28-39. MATIN, I., HULME, D. & RUTHERFORD, S. (2002) Finance for the Poor: From Microcredit to Microfinancial Services. Journal of International Development, 14, 273-94. MERSLAND, R. (2005) Including persons with disabilities as clients of microfinance institution in Uganda. Oslo, Norwegian Association of the disabled. MIUSA (1998) Loud, Proud and Prosperous. Mobility International USA. MONTGOMERY, R. (1996) Disciplining or protecting the poor? Avoiding the social costs of peer pressure in micro-credit schemes. Journal of international development, 8, 289-305. MORDUCH, J. (1999) The role of subsidies in microfinance: evidence from the Grameen Bank. Journal of development economics, 60, 229-248. NORAD (2002) The Inclusion of Disability in Norwegian Development Co-Operation. NORAD Guidelines. The Norwegian Agency for Development Cooperation. NORWAY (2003-2004) White Paper 35, Fighting Poverty Together. Oslo, Norwegian Ministry of foreign Affairs. PACT (2004) Women's Empowerment Program - ROAD TO WEALTH. Self instructive manual, PACT. PFEFFER, J. & SALANCIK, G. (1978) The external control of organizations, New York, Harper & Row. RUTHERFORD, S. (2000) The poor and their money, Dehli, Oxford University Press. RUTHERFORD, S. (2003) Money Talks: Conversations with Poor Households in Bangladesh about Managing Money. journal of microfinance, 5. SANDBERG, W. R. & HOFER, C. W. (1987) Improving New Venture Performance: The Role of Strategy, Industry Structure, and the Entrepreneur. Journal of Business Venturing, 2, 5-28. SHEPHARD, D. A., DOUGLAS, E. J. & SHANLEY, M. (2000) New Venture Survival: Ignorance, External Shocks, and Risk Reduction Strategies. Journal of Business Venturing, 15, 393-410. SIMANOWITZ, A. (2001) Guideline # 4: Microfinance for the Poorest: A review of issues and ideas for contribution of Imp-Act. Improving the impact of microfinance on poverty. Imp-Act. SMITH, S. C. (2002) Village Banking and Maternal and Child Health: Evidence from Ecuador and Honduras. World Development, 30, 707. SONFIELD, M. C. & BARBATO, R. J. (1999) Credit and Equity support as components of Self-Employment development programs. http://www.gdrc.org/icm/micro/sonfield-barbato.html. STINCHCOMBE, A. L. (1965) Social Structure and Organizations. IN MARCH, J. G. (Ed.) Handbook of Organizations. Chicago, Rand McNally. THOMAS, M. (2000) Deasibility of intergrating people with disabilities in savings and credit programmes in Bangladesh. Asia Pacific Disability Rehabilitation Journal, 11. UN (1993) 85 th penary meeting of the UN. Standard Rules on the Equalization of Opportunities for Persons with Disabilities (A/RES/48/96). United Nations. WORLD-BANK (2003) Global Development Finance 2003. World Bank.