POLICY PROPOSAL: INCREASING ACCESS TO MICROFINANCE FOR DISABLED WOMEN IN KENYA

by Gabriella FleischmannContributing WriterA policy proposal directed towards Mrs. Phumzile Mlambo-Ngcuka, Executive Director of the United Nations Women AfricaExecutive SummaryI propose that the UN Women Africa make a partnership with the Kenya Women Microfinance Bank (KWFT) to ensure that their services are extended to disabled women in Kenya. Targeted efforts need to be made to reach and educate disabled women about how to access and successfully use microfinance. Disabled women are particularly vulnerable, and have less economic security than non-disabled women. While there has been an emphasis on using microfinance as a tool to empower women, disabled people have been left out of the promise of microfinance to uplift disadvantaged groups. The UN Women Africa should partner with microfinance institutions that serve women, beginning with the KWFT as a flagship program, to implement the following policies: (i) incentivizing the KWFT to hire qualified disabled women as credit officers, (ii) ensuring that the KWFT provide disability-friendly materials and services, (iii) partnering with disabled women in the community to provide leadership training and to understand the needs of disabled women, and (iv) outreach to disabled women to help them understand how they can take advantage of microfinance. Statement of Issue/ProblemMicrofinance is a type of banking in which small amounts of money are made available, often in the form of low-interest loans, to poor people and businesses who usually would be denied credit. Microfinance has been identified as a possible mechanism for poverty alleviation in Kenya by allowing recipients to participate in the economy, smooth income and consumption shocks, and grow businesses (Kiiru, 2007). Making microfinance available for disadvantaged groups has increased the opportunities for disadvantaged people to participate in the economy (Ibid). Many MFIs have directed their efforts and services towards women in particular, including the Kenya Women’s Microfinance Bank (KWFT). However, disabled people are still largely excluded from microfinance, due largely to discrimination by MFIs or self-exclusion due to low self-esteem (Mersland and Martinelli, 2010). The heightened vulnerability of disabled women, and their continued exclusion from markets, has received very little attention from women’s organizations. Nowhere on the websites of UN Women Africa or the KWFT are disabled women acknowledged. Many microfinance institutions seek to empower women, but need to recognize that disabled women are further disadvantaged compared to non-disabled women. It will take a concerted effort to help integrate disabled women into the economy. Microfinance institutions have made a pointed effort to extend their services to women for several reasons. Women often are excluded from market participation, and thus giving them credit through microlending gives them an opportunity to participate in the economy and in some cases “increases their bargaining power in the household” (Vonderlack and Schreiner, 2002). This is both beneficial from a social justice standpoint and an economic standpoint. Secondly, women are more likely to invest loans in household and family consumption, such as food, health and education, and have better rates of loan repayment (Sooryamoorthy, 2005; Brana, 2013).While microfinance in Kenya has made efforts to include other disadvantaged groups that often are “excluded from the traditional banking system,” such as the poorest people and rural-dwellers, it has done little for disabled people (Brana, 2013; “The Link Between”). Labie et al. (2015) found that disabled people were more likely to be discriminated against by MFIs. Many may argue that disabled people are less capable than non-disabled people and thus are unable to pay back loans and are not worth the risk (Martinelli and Mersland, 2010). However, there is evidence that disabled people are able to leverage microfinance successfully, save regularly, and overcome obstacles to running their businesses in creative ways (Bwire, Mukasa and Mersland, 2009; Martinelli and Mersland, 2010; Lewis, 2004).It is imperative that women’s organizations recognize the heightened discrimination and vulnerability that disabled women face. A United Nations document on the link between poverty, gender and disability proposes microfinance as a possible method of integrating disabled women into the economy. Bwire, Mukasa and Mersland (2009) found that influencing MFIs to work with disabled people required individualized partnership, and disabled people often were misinformed about MFIs. Thus, in order to successfully reach out to disabled women in Kenya, the United Nations Women Africa should partner with the KWFT to promote outreach and education as well as eliminate discriminatory practices. While limited access to microfinance for disabled women is an issue in Africa in general, partnering with the KWFT in Kenya can serve as a valuable flagship program. Origin/History of the Problem and Current ContextDisabled women are multiply disadvantaged, experiencing discrimination for both their gender and disability. Compared with disabled men, they experience higher rates of unemployment and less access to services such as education and rehabilitation (Parnes et. al, 2009). Compared with non-disabled women, they are less likely to get married or receive inheritance (Ibid.). Disabled girls are the most likely to be abandoned by their families, the last to get family resources, and last to be employed (Lewis, 2004). However, both the United Nations Women Africa and the KWFT currently do not have an agenda for reaching and empowering disabled women. Martinelli and Mersland (2010) define microfinance as “the supply of financial service to micro-enterprises and poor families” (218). This can take the form of microcredit (or small loans) as well as savings, insurance, and other services (Ibid.). Many MFIs are convinced of the potential of microfinance to empower women, rural-dwellers, and other disadvantaged groups, and have a socially benevolent mission. The KWFT website claims that the bank’s mission is the “empower” and “uphold the dignity” of women (“Kenya Women”). The Kenyan government has even acknowledged the potential of microfinance to uplift disadvantaged groups, first providing credit to a struggling agricultural sector, and then broadening to provide credit to “individuals involved in both small and micro- enterprises like handcrafts and home based business” (Kiiru (2007), 2). However, disabled people have largely been left out of microfinance, due both to self-exclusion (disabled people are less likely to seek microfinance services) and exclusion from communities and institutions (Martinelli and Mersland, 2010). Lewis (2004) asserts that “[microfinance lenders] assume that, by virtue of their disability, women with disabilities are not appropriate for microcredit or business services, or that they are adequately and better served by rehabilitation programmes and charities” (31). Martinelli and Mersland (2010) further that many MFIs argue that lending to disabled people is too great a risk. Many of the women in Zambia and Zimbabwe whom Lewis (2004) studied reported being denied loans, oftentimes “explicitly on the basis of disability” (34). One woman reported being told that “[a disabled woman] is always a beggar” when she applied for a loan (33). While there has been less research in Kenya about disability-based discrimination in microfinance specifically, there is evidence of disability-based discrimination generally in society in Kenya. In a study of disabled people in Kenya, 86% reported unequal treatment, oftentimes even exploitation from family members, and “80% claimed having experienced segregation, isolation and lack of support for their needs on the grounds of disability” (Parnes et. al (2009), 1177-1178). Thus, it is likely that disability-based discrimination extends to microfinance in Kenya.The primary stakeholders in expanding access to microfinance for disabled women are the MFIs that will expand their services and the disabled women who will be offered microfinance. Disabled women benefit by being included in the local economy and gaining access to markets. For MFIs, there may be costs associated with expanding their services to disabled women, including translating materials into braille, hiring interpreters, hiring more disabled women, and spending  time and resources finding potential clients whom may be less likely to come to the MFI themselves. Even though disabled women may represent an untapped potential market of capable entrepreneurs, MFIs may not see the benefits as being worth all of the associated costs. Critique of Policy OptionsThere have been limited attempts to target disabled women through microfinance. There have been several attempts to use microfinance to target disabled people in general, but this has been largely unsuccessful or unsustainable. Alternate policy options include: partnering with non-profit organizations and disability-focused groups rather than MFIs, and using wage incentives and training to encourage credit officers not to discriminate on the basis of disability. However, both of these policy options are flawed.Partnering with non-profit or disability-focused organizations makes sense in theory, as helping disabled women is explicitly in line with the goals of these organizations (rather than maximizing profits, the ultimate goal of most MFIs) and thus they may be more receptive or fully invested. Martinelli and Mersland (2010) claim that these attempts were unsuccessful, in fact, because they were carried out by non-profits and disability- focused groups rather than MFIs. These groups had limited understanding of microfinance and could not afford to provide more than one loan; oftentimes the first loan is not enough for an individual to see a marked change in her life (Ibid.). Martinelli and Mersland (2010) argue that the necessary conditions for a disabled person to successfully use microfinance are no different than those for a non-disabled person: a good MFI and sufficient willingness and capacity to repay on the recipient’s part. With full information and no discriminatory biases, a good MFI should be have no reason to turn away a disabled woman who is a good candidate for microfinance, and the disabled woman should not need anything from the MFI that a non-profit or disability-focused organization would provide. Thus, the emphasis should be on eliminating biases from the side of the MFI, and finding and attracting good candidates for microfinance amongst disabled women.In a study of MFIs in Uganda, Labie et. al (2015) find that credit officers are the most likely staff members to agree that the MFI discriminates based on disability, controlling for belief about the credit risk of a disabled person. Given that credit officers grant loans at their own discretion, Labie et. al conclude that credit officers may be “a key channel through which discrimination may operate” (4). However, they note that even a socially benevolent MFI may not wish to use wages to incentivize credit officers not to discriminate, because the more that is spent on officers’ wages, the less that is available for loans to help the poor. “Aiming for optimal mission fulfillment may drive the MFI to tolerate some discrimination,” and so wage incentives for credit officers may not be an optimal solution (Ibid., 10). Martinelli and Mersland (2010) argue for better training of employees, but this is also costly and could result in continued discrimination for the same reason. Thus, it is likely that investing in employee training or incentivizing client officers not to discriminate through wages would not be cost-effective.Policy RecommendationThe United Nations Women Africa should partner with the Kenya Women Microfinance Bank to help it extend its services to disabled women in Kenya. If the program is successful, the UN Women Africa should replicate the program with other MFIs, as the problem is widespread. The KWFT is appropriate for a flagship partnership because it is an MFI that has been successful in reducing gender-based discrimination in a country where disability-based discrimination is still a persistent problem (“Kenya Women”; Parnes et. al, 2009). The KWFT is the only bank in Africa specifically for women, and claims 800,000 clients (“Kenya Women”). The KWFT has the institutional knowledge, expertise, and security to implement a program to target disabled women. Furthermore, it understands the needs and special considerations of women that other MFIs may not be as sensitive to. Success can be measured by the number of disabled women who are granted microfinance relative to the current level, their ability to repay loans, and differences in these women’s livelihoods following receipt of microfinance.Policies need to be in place to ensure that women are not discriminated against on the basis of their disability, and there needs to be better outreach to disabled women so that they know how to take advantage of microfinance. I propose: (i) incentivizing MFIs to hire qualified disabled women as credit officers, (ii) ensuring that MFIs provide disability-friendly materials and services, (iii) partnering with disabled women in the community for leadership training and to understand the needs of disabled women, and (iv) outreach to disabled women to help them understand how they can take advantage of microfinance. It may be difficult for an MFI to incentivize its credit officers not to discriminate against disabled women if they are biased against disabled women. Thus, hiring qualified disabled women as credit officers may be the most effective method to eliminate discrimination. Most MFIs have less than one percent disabled clients, and many disabled people have reported being denied microfinance on the basis of disability (Martinelli and Mersland, 2010; Lewis, 2004). Ten percent of the world population is disabled, and they are disproportionately in developing countries (Labie et. al, 2015). One in five of those who live on less than one dollar a day are disabled, and Labie et. al (2015) claim that “the low incidence of disabilities among MFIs’ customers cannot be explained by higher credit risk only” (6). As mentioned previously, wage incentives or training for credit officers may not sufficiently eliminate discrimination. D’Espallier et. al (2009) found that female credit officers were more likely to grant loans to other females, and Labie et. al (2015) recommends the same model for overcoming discrimination on the basis of disability: hiring disabled credit officers. As disabled men may have biases against disabled women on the basis on gender, it is imperative to hire disabled women specifically. However, this model is based on the assumption that MFIs are socially benevolent. Discrimination against disabled women may be happening because MFIs are profit-maximizing and believe that disabled women are too high risk. It is important that MFIs understand that disabled women represent an untapped market, not just a social responsibility. According to Martinelli and Mersland (2010), disabled people should be presented “as resourceful entrepreneurs” rather than as “needy” (240). Lewis (2004) studied disabled women in Zambia and Zimbabwe who were granted loans, and found that they were able to overcome additional difficulties imposed on them by their disabilities in order to repay their loans and grow their businesses. Some of these mechanisms included working from home, forming business collectives in order to pool resources and skills, and rely on family members or hired assistants for services such as transportation. Martinelli and Mersland (2010) found that, in a survey on 841 disabled Ugandan business owners, 74% saved regularly and had a month’s income worth of cash on hand, in contrast to the idea of disabled people as beggars. Profit-seeking MFIs need to be made aware of these facts in order to view disabled women as a potential source of income.MFIs may unintentionally exclude disabled people by not providing information and services that are accessible to disabled people. Lewis (2004) argues that MFIs should reach out to women with disabilities, particularly leaders of organizations, both to understand their needs and to offer information and services. Simple disability-friendly interventions include making information available in braille and through interpreters, holding meetings in accessible locations with ramps or on first floors, or making low technology adaptations of materials (Ibid.). MFIs need to make efforts to help disabled women overcome their own self-exclusion. While exogenous discrimination is a serious reason for exclusion of disabled people, many disabled people will not seek out microfinance services in the first place due to low self-esteem. They are often the last to receive services from an early age and “have little chance to develop the confidence and assertiveness required to succeed as a borrower and businesswoman” (Lewis (2004), 32). Thus, it is important to recognize that expanding microfinance services to disabled women may require demand-side interventions - such as making disabled women aware of microfinance opportunities and helping them most effectively leverage them - in addition to supply-side interventions. Very few disabled women even apply for microfinance because they are unaware of the services or because they do not believe their applications will be accepted. Lewis (2004) advocates for partnerships between MFIs and disabled women in order to provide training, mentorship, and support for disabled women in leadership and capacity-building. By understanding the needs of disabled women and helping them attain positions within organizations, MFIs can better serve disabled women and provide them what they need to effectively use microfinance. ConclusionDisabled women are a part of two groups that are frequently discriminated against, but each group is served by different organizations and interests. Rather than being uplifted by microfinance with non-disabled women, they have remained untouched by it with disabled people in general. While women’s groups have acknowledged the multiple disadvantage of the poorest and rural-dwelling women, they have not extended the same understanding towards disabled women. As with other particularly disadvantaged women, special consideration needs to be made for disabled women to ensure that they are able to access services. Extending microfinance to disabled women may have immediate positive impacts by providing these women credit to grow their businesses, and it may also have long-term impacts on the social expectations of disabled women. MFIs are in a unique position to boost the confidence of disabled women: “being trusted by a credit company… can totally change a person’s self-respect. For many disabled persons this is of absolute importance” (Martinelli and Mersland 2010, 237). Implementing the proposed policies through a partnership with the KWFT will be an effective way to increase access to microfinance and uplift disabled women in Kenya. References:Brana, S. “Microcredit: an Answer to the Gender Problem in Funding?”Small Business Economics, vol. 40, no. 1, 2013, pp. 87–100.JSTOR, www.jstor.org/stable/23360591.Bwire, Flavia Nakabuye, George Mukasa, and Roy Mersland. "Access to Mainstream Microfinance Services for Persons with Disabilities - Lessons Learned from Uganda." Disability Studies Quarterly 29.1 (2009): n. pag. Web. 20 Apr. 2017.d'Espallier, B., I. Guérin, and R. Mersland (2009), “Women and Repayment in Microfinance”, RUME Working paper 2009-2."Kenya Women Microfinance Bank - Our Story." Kenya Women Microfinance Bank - Banking on Women. Kenya Women Microfinance Bank, 2017. Web. 31 May 2017.Kiiru, Joy M. "Microfinance, entrepreneurship and rural development: Empirical evidence from Makueni district, Kenya." 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