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CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
This chapter reviewed related literature on investment practices of persons with disabilities in informal micro finance groups globally. It helped to inform the state of persons with disabilities in investment, saving and borrowing in informal micro finance institutions in Uganda and other parts of the world. It also informed the available policies and theories related to the study. It was guided by the three study objectives in chapter one. The discovered gaps in reviewed literature justified the researchers’ purpose of the study. This chapter introduced briefly the theoretical framework adopted for the study and the supporting related other theories.
2.1Theoretical Framework
2.1.1 The Social Model of Disability
The social model of disability by Hughes (2010), examined the investment, saving and borrowing practices of selected Persons with disabilities in informal micro finance institutions in Ibanda district. The model conceptualizes disability away from the individual person alone. But also, the interaction between the persons with disabilities and the social- environmental. These barriers hinder full and effective participation in society on an equal basis with others. For example, a person using a wheelchair might have difficulties gaining in IMI not because of the wheelchair, but because of social-environmental barriers. Barriers like facility accessibility and negative perception towards Persons with disabilities income generating activities. This model emphasizes environment change to accommodate the accessibility needs of the individual Persons with disabilities.
Related to the above models is the positioning theory by (Harre, 2012) it shows how negative positioning of Persons with disabilities by others, leaves Persons with disabilities with inner self- pity and denial. It is a result of this model that various disability specific policies, legislation and instruments are anchored upon (Konrad, 2019).
Persons with disabilities often experience exclusion and rejection due to community unnecessary negative perception. The accumulation of such repeated negative experiences produces secondary hindrances such as low self-esteem or lack of self-esteem. This often leads to self-exclusion of Persons with disabilities from public and private services including micro finance (ILO, 2019). Besides, some Persons with disabilities and their families have the expectation to receive charity (Thomas, 2010). Having a charity mind, some families do not invest in children born with disabilities. Thus, denying them opportunities for knowledge and skill gaining (Simanowitz,2017).
Due to attitudes and prejudices within society, the leaders of informal micro finance groups too can deliberately or unconsciously look down upon Persons with disabilities in rendering their services. Informal micro finance institutions often lack the necessary expertise and training to distinguish between real credit risk and perceived credit risk. Often a credit officer is not able to see through the disability and recognize the ability of a person with disability to pay back the borrowed money. This social model of disability will help to change the negative perception among persons with disabilities towards investing and saving in groups because informal micro finance institutions give loans in groups not as individuals. Modification of physical environment will ease mobility while saving and investing with other ordinary group members.
2.2 Perceptions of persons with disabilities regarding investment, saving and borrowing from informal micro finance groups
Equalization of opportunities according to the United Nations is a right for persons with disabilities (UN, 2017). In addition, the principle of equalization of opportunities is further emphasized in the human rights-based approach. It conceives that all human beings are equal. This implies that despite ones’ disability, Persons with disabilities ought to be accorded the same opportunities availed to non-Persons with disabilities. More so, it stresses that all developmental programmes should consider human beings as their own actors in their own development. Therefore, persons with disabilities and other marginalized groups should be focused on in all development efforts, with the solo goal of enhancing equality. Most donor agencies express their priority towards the disadvantaged population but Persons with disabilities continue to be a low priority or wrong-treated target group when it comes to socio-economic integration (ILO, 2019; Lewis, 2015). This low priority in social economic activities towards Persons with disabilities is due to lack of trust that, the borrowed resources might not be refunded. This negative perception cannot favour Persons with disabilities to participate in income generating activities (Karlan, 2017; Ntegamahe, 2021; Musinguzi, 2015; Nuwagaba, 2012).
During the last decades, micro finance has become an important and popular tool for enhancing development (Aron, 2017). United Nations Organization (UN, 2015) saw micro finance as a tool for development and to be owned locally. The disabled population are seeing themselves not benefiting because of the negative perception from Persons with disabilities themselves and other ordinary people that they are unable due to the disability nature in most cases (Hughes, 2010).
According to Avallo (2018), there has been a tendency during the last years to see micro finance as a panacea and a magic formula for development among the vulnerable. There is a need for a balanced critical position when the issues involved are to be analysed for equal opportunities. Most Persons with disabilities are marginalized when it comes to micro credit groups. The negative perception among persons with disabilities to participate in income generating activities is brought by lack of enough business knowledge. Over protection of most Persons with disabilities by their caretakers denies them many opportunities including business knowledge.
Baxter et al. (2019) examined most Persons with disabilities have a perception that, during investment, saving and borrowing will be cheated, especially Persons.with visual disabilities. Persons with disabilities need human support as their eyes in business, whom they cannot even trust fully. This makes it hard for investment expansion beyond their localities.
Persons with disabilities face numerous barriers in realizing equal opportunities like environmental accessibility, legal and institutional plus attitudinal, which cause social exclusion. Social exclusion is often the hardest barrier to overcome, and is usually associated with feelings of shame, fear and rejection. Negative stereotypes are commonly attached to disability. People with disabilities are often assigned a low social status and in some cases are considered worthless” (Bennet, 2016). Hence, there are good reasons to have disabled people as a prioritized target group for development efforts. However, it often seems that, disabled persons are not necessarily destitute. Many disabled persons act to improve their own lives. Many have proven their capability to run businesses on their own account. Nevertheless, there is still much to be done to ensure that small enterprise schemes and micro finance institutions (MFIs) recognize this potential and actively seek to support its development (Bennet, 2016).
Persons with disabilities, especially those with permanent limitations in their daily activities due to their disability, need interventional strategies that can improve their condition on a permanent basis. General recommendations for interventions aiming at improved living conditions for persons with disabilities do therefore highlight the importance of including persons with disabilities in the mainstream private and public services and development actions (Cuevas, 2016).
Any intervention aiming at increasing the Persons with disabilities access to micro credit should therefore focus on including the Persons with disabilities into existing micro finance sustainable systems.
Assumption among Persons with disabilities is that, they see themselves as economically inactive, not expected to work. This is rooted in the charity model of disability; it sees Persons with disabilities as objects of charity and empathy. Most Persons with disabilities are used to a life of help financially. However, many educated persons with disabilities can and want to work unfortunately, few organizations in developing countries employ Persons with disabilities leaving majority to opt for self-employment, which is extremely challenging. Most self-employed Persons with disabilities living in developing countries lack efficient social security systems (Braverman, 2016). Many disabled persons need social protection and most traditional social protection policies do not favour Persons with disabilities. Most Persons with disabilities in developing countries do not own land and family property that could be used as social security. This limit borrowing, saving and investing in informal micro finance institutions.
Persons with disabilities are a low priority and an ill-treated target group with regard to socio-economic integration (ILO, 2019; Lewis, 2015). Employers often resist hiring persons with disabilities in developing countries, 80–90 percent of disabled persons do not have formal jobs, and most turn to self-employment (United Nations, 2017). One of the obstacles facing the self-employed is access to capital. Therefore, access to micro credit should be a priority in pro-disability policies (Cramm & Finkenflugel, 2018). The authors are fully aware of the ongoing debate on whether, Persons with disabilities, poor women and men benefit from accessing small loans. (Bwire etal. 2019). Report that only around 0.5 percent of micro finance institution (MFI) customers are Persons with disabilities.
Conclusively although, informal micro finance institutions are tools for development in developing countries, there is a negative perception among persons with disabilities regarding investment, saving and borrowing as a group from informal micro finance institutions because they believe that might be cheated by ordinary group members especially the visually impaired (Aaron, 2017). Mobility challenges due to unmodified environment make persons with disabilities to prefer home based income generating activities than working in groups. Group business ventures mostly locate according to market opportunities, causing a need for necessary movement to and from their business centre. This too leads to further expenses on transport affairs, mobility aids and premise rent thus not an economical venture for persons with disabilities.
2.3 Investment choices of persons with disabilities as individuals and in group
Literature reviewed show that persons with disabilities are twice likely to be unemployed compared to other people without disabilities. Some prospective employers are concerned about the costs of accommodations, others with the stigma for visible disabilities. Some employers think of indirect costs to the company like morale and customer care interactions as well as direct costs like training costs, employee retention assistive devices, modifications to mention but a few. This allows Persons with disabilities to make their own investment choices for self- sustenance and from charity to independent living (Rule & John, 2011).
The reviewed literature revealed that investment choices among persons with disabilities include self-employments, home income generating activities and family investments to mention but a few (Dondo, 2019).The real idea of micro finance is to help the poor members of a society. He further calls for differentiation between two categories of the poor, those able to increase their income by themselves, create activities that would enable them to move closer to or above the poverty line and those unable to do so and would need permanent financial support from micro finance institutions (Nuwagaba et al.,2012; Lwanga- Ntale, 2003). Most scholars have revealed that the influence of pull factors like desire for independence, unemployment, discrimination, lack of other alternative opportunities and negative perceptions among employers make persons with disabilities to prefer self-employment. These limit opportunities for open employment and Persons with disabilities to start their own income generating activities (Doyel, 2002; Johns & Latreille, 2011; Meager & Higgins, 2011)
Nature and level of disability directs the investment choices among Persons with disabilities. Disability affects a wide range of social-economic activities, including participation. Therefore, self- employment is a potential rehabilitation vocational tool to achieve faster and better integration into the labour market. This treats entrepreneurship as social inclusion and inclusive growth (Abimanya, Ochom, & Mannan, 2014).
Dresse (2019) in Zambia, concluded that those who graduate from their first to a second loan on average experience significantly higher growth in their profits and household income as compared with other similar business operators. Borrowers also diversify their business activities more rapidly. However, some borrowers become worse off particularly, those who leave the programme after receiving only one loan. The study also indicates that micro finance has a polarizing effect, as there is discrimination in favour of richer clients who benefit from better access to credit and exclusion of poorer people. If one of the aims of micro finance is to assist the poorest of the poor, then micro finance is not always the most appropriate intervention. (Dresse, & Sen, 2019).
Hulme and Mosley (2016), argue that the better off the borrower, the greater the increase in income from a micro enterprise loan. Borrowers who already have assets and skills can make better use of the credit. They argue that the poorest are less able to take risks or use credit to increase their incomes. Some of the poorest borrowers become worse off because of micro enterprise credit, which exposes them to high risks. In addition, the study that examined the impact of owners of small business participating in entrepreneurship programmes in operational efficiency and growth of small businesses in Nigeria. Indicated that small businesses whose owners have experience participating in entrepreneurship programmes exhibited superior managerial practice and higher gross margin rate of growth than small businesses whose owners did not have super experiential learning. This had a practical implication that there is a need to improve managerial practice of small businesses through exposure of owners to entrepreneurship in order to enhance their performance and their transition to medium and large businesses (Dyer, 2016).
Faulu (2017), conducted a study in Malawi and discovered that education and training empower Persons with disabilities to make their own and group investment choices. With knowledge and skills training acquired, persons with disabilities can start and manage their business ventures with limited challenges.
England (2016), avers that disability and education promotes Persons with disabilities from charity to investment. Poor education lowers employment rates and leads to concentration of Persons with disabilities employees in low paid occupations, poor credit rating after long- time benefit receipt; discrimination on the part of the banks; lack of accessible information on sources of grants and loans, relevant knowledge and skills in special business management, legal and finance expertise due to relevant education and employment experience, managerial skills all reflect the concentration of Persons with disabilities employers at a high end of organization job hierarchies.
According to Johns and Latreille (2011), assert that Persons with disabilities make an investment choice in order to earn a living and contribute to a wider economy. Those whose disability is not work limiting appear more similar in almost all respects to those without any form of disability. Labour market disadvantage is particularly high among those with mental health problems or learning difficulties (Berthoud, 2008; Meager & Higgins, 2011).
Department for International Development (DFID 2000), reveals that most people with disabilities prefer to work alone rather than employing others. Persons with disabilities prefer sole entrepreneurship and to operate from home. This is due to reasons like mobility challenges, personal freedom and payment for rent.
In addition to above Davidson (2011) concluded that self-employment might be a valid option for many disabled individuals since it facilitates achieving a better balance between disability and working life.
Bennet and Cuevas (2016), argue that only when people have some economic security that access to credit can help improve the productivity of their enterprise or create new sources of livelihood. Dresse and Sen (2019), contend that micro finance specialists increasingly view improvements in economic security as the first step for investment. Access to monetized savings facilities can help the poor smooth consumption over periods of cyclical or unexpected crisis thus greatly improving their economic security. Strong micro finance institutions have the capacity to mobilize resources in the market, provide micro finance services demanded by small businesses despite the myth that the poor are not bankable, and since they cannot afford the required collateral, they are considered un-creditworthy. Hence despite efforts to overcome the widespread lack of financial services, especially among small businesses, the majority still have only limited access to bank services to support their private initiatives (Braverman & Guasch, 2016).
Mosley (2019), states that micro finance makes a considerable contribution to the reduction of poverty through its impact on income and asset level. The mechanism, through which poverty reduction works, varies between institutions. Generally, institutions with average smaller loans increase investment choices among Persons with disabilities. Whilst institutions giving larger loans reduce investment among poor people. In order to ascertain whether Persons with disabilities specifically are targeted as an interest group, it is necessary to understand the barriers they face in accessing finances. Issues regarding finance service provision among poor Persons with disabilities are traditionally left to organizations that work in the disability sector.
Benefit trap Boylan and Burchart (2000), European Medical Device Distributors Association (EMDDA, 2009), Foster (2010), emphasizes that the knowledge of the benefits available and expectations that income from entrepreneurship might be high, contributes to perception of self-employment and if vice versa may deter business start-up.
Most financial institutions consider Persons with disabilities as a high-risk category when it comes to lending. Micro-credit lenders increased in Bangladesh with more than one thousand opening since 1990 and offering interest rates between 10% and 30% (Chowdry & Wright, 2005) . The schemes work on a peer-group basis with delivery systems such as the Bangladesh Rural Advancement Committee (BRAC) and the Association of Social Advancement (ASA). Often, defaulting on loans by any member is the responsibility of the entire group (Johnson & Rogaly, 2017; Thomas, 2017).
Some Persons with disabilities are less motivated for socio-economic rehabilitation as they expect food grants rather than a self-generating income project (Fiasse, 2019) . A study conducted by (Nuwagaba et al., 2012) on accessibility to Micro finance services by people in Bushenyi District, Uganda, concluded that although disability in itself may not necessarily deny access to MF for those that meet the requirements; there were nonetheless several factors that could improve Persons with disabilities usage of MF. Some of these controllable factors related to the knowledge and attitude of the Persons with disabilities but there were also other externalities such as limited mobility, poor access to information and disabled persons’ own negative attitudes that limited the ability to improve the persons with disabilities chances of success (Nuwagaba et al., 2012).
Dyer (2016), In her article on the inclusion of disabled people in mainstream micro finance programs argued; although the woman’s face of poverty has importantly been acknowledged and social exclusion and economic inequality due to race or ethnicity resulting in poverty is also acknowledged; disability is a dimension of poverty which on the whole remains neglected. Her review of major strategy papers and documents of governments, donors and development organizations on poverty alleviation reveal that the real needs and rights of this group of marginalized and poor people are rarely acknowledged. Only recently has it been recognized that in order to achieve the millennium development targets set, disabled people will need to be included in the poverty alleviation strategies already defined and there is need to develop specific initiatives which address disability (DFID, 2017; World Bank, 2015).
According to a survey conducted by (Nakabuye et al. (2019), it was observed that, over the years, the Norwegian Association of the Disabled (NAD), together with their counterpart the National Union of Disabled Persons of Uganda (NUDIPU), had been searching for intervention models to improve access to mainstream micro finance services for persons with disabilities as a group. Studies had been carried out and several discussions with stakeholders had taken place for person with disabilities group investment but, it has yielded few fruitful results. The message from the micro finance institutions was always that Persons with disabilities were too risky a group for lending because of their limited savings capacity. When approaching micro finance institutions, NUDIPU and NAD tended to present the target beneficiaries to be Persons with disabilities and to lower their interest rate compared to non-disabled counterparts. The informal micro finance institutions on the other hand demonstrated little willingness to understand the disability segment and give persons with disabilities individual loans. This shows that informal micro finance institutions do not understand disability challenges of working in groups than as individual persons, should listen to individual persons with disabilities reason for individual saving, investment and borrowing and give individual loans accordingly. Conclusively some persons with disabilities prefer individual investments due to disability challenges while some prefer group investments to be supplemented in their weak areas.
2.4 How persons with disability acquire the knowledge and skills they use while investing resources obtained from informal micro finance
Some persons with disabilities acquire foundation skills through basic education and family life. They include, for example, literacy, numeracy, ability to learn, reasoning and problem-solving. These types of skills are needed for work everywhere, in all contexts and cultures, whether formal or informal economies (Christen et al., 2019).
Most Persons with disabilities get some training from technical and vocational institutions to undertake a particular business. They equip Persons with disabilities with skills and knowledge to start-up an income generating activity (Lyman & Rosenberg, 2019). Persons with impairments through vocational training gain business skills required to succeed in running a business activity (Copestake etal. 2019). Gained skills help in relating to customers, self-presentation, effective listening and communication, creative thinking and problem-solving (Johnson, 2019).
Core life skills are required by everybody, whether disabled or not, to succeed in both life and work. But they assume a particular importance for people with disabilities because they contribute to acquiring self-confidence changing perceptions (Johnson, 2019). Core life skills are learned and formed through interaction within the family and the community. Confidence comes through developing positive attitudes, acquiring knowledge and skills for life and work. If a training programme focuses on technical skills and development of attitude, it is likely to succeed in enabling its trainees to find sustainable work and employment.
People with disabilities learn and develop their knowledge, skills and attitudes necessary to earn their livelihood (Daley, 2019). Self-effort, home-based skills acquisition mostly are acquired through insight learning. Most Persons with disabilities do not proceed for further studies due to over protected and mobility challenges. Basic education, vocational training, community-based Rehabilitation empower Persons with disabilities with knowledge and skills to start and maintain an income generating activity. The choice of the most appropriate method of skills development depends upon the interests, capabilities and resources of the individual person with disability.
Community-Based Rehabilitation programmes have given Persons with disabilities knowledge and skill for income-generating activities. Community Based Rehabilitation workers identify opportunities for skills development, bearing in mind that everyone has his/her own interests, talents and abilities (Diagne & Zeller, 2016). Girls and boys, women and men are given equal opportunities for training. Training is not limited to traditional gender roles or segregation.
The form of disability can be a major barrier in accessing information. Microfinance institutions provide information in verbal and written forms. This makes it inaccessible to the deaf and visually impaired persons respectively. In many developed nations, news bulletins must be provided simultaneously in sign language or with subtitles for those whose hearing is impaired. Accessibility standard policy in Uganda (2014) states that all public buildings must be accessible by persons with disabilities. Alternative access using rumps, rails and elevators must be provided in every public building. This eases mobility for Persons with disabilities in accessing knowing and skills for income generating activities. In Uganda, despite the government efforts in sensitizing Persons with disabilities about their right to education and vocational rehabilitation, the practice has not yet greatly improved. This is due to few governments vocational training centres. The few vocational institutions are far from Persons with disabilities homes, this requires transport fee to and from vocational institutions and most Persons with disabilities cannot afford (Nuwagaba etal, 2012)
Three-quarters of the disabled population in most developing countries reside in rural parts of the country. Despite a protective legislative framework, such as the (Disability Act, 2006), which mandates a 3 percent reservation for persons with disabilities in government jobs and in rural development programmes. Still income generating activities among persons with disabilities is exceptionally low due to limited skills and knowledge (Chowdhury et al., 2016). Persons with disabilities get knowledge and skills on hands on or in practice in vocational schools and colleges but most persons with disabilities due to mobility challenges do not go further in regular education which limits chances for vocational trainings. Low literacy level, lack of special training aids, educational facilities, assistive devices, awareness about training programmes, adequate access, vocational training and rehabilitation make Persons with disabilities fail to get business information. Persons with disabilities due to poor knowledge cannot invest more in business activities thus poor income and low investments. According to Jensen’s model of economic development, poverty among people is due to lack of employable skills and knowledge to start and sustain an income generating activity. Most Persons with disabilities are overprotected in their homes and cannot access relevant investment information. One of the main obstacles among Persons with disabilities to start income generating activities is access to information on reliable markets. People with disabilities need skills to engage in livelihood activities. They get knowledge and skills from families and communities (Wright, 2015). Persons with disabilities often lack access to basic education, making them unqualified to join skills training courses. These lead to limited skills, low confidence, little expectations and achievement. Different types of skills are required for successful work. Self-centered knowledge and foundation skills from family used by Persons with disabilities are not enough to start and mention a business activity. Most business skills required to succeed in self-employment, core life skills and personal attributes among Persons with disabilities are acquired from peer and village training.
2.5 Conclusion
In conclusion the literature reviewed is evident that disability as a dimension affects investment practices and choices. This largely depend on nature and level of disability. Due to mobility challenges, persons with disabilities in informal micro finance groups do not benefit as required compared to ordinary persons. Limited mobility leads to acquisition of little knowledge and skills needed for business investment. Most persons with disabilities acquire knowledge and skill from basic education, family life, insight learning and work experience in relating with customers. The real needs and rights of people with disabilities are rarely acknowledged in informal micro finance institutions due to disability ignorance. Disability is not included in business curriculum. Persons with disabilities are perceived as unable to pay back the borrowed resource, which limits Persons with disabilities borrowing, and saving capacity. This factor contributes to the low penetration in micro finance services. Persons with disabilities are discriminated against due to the negative perception that they are unable to operate a business due to their physical appearance. Most informal micro finance institutions fear that they might not be able to pay back the loan. The right to equal participation in society is a fundamental human right and no institution can ignore it. The recent social model of disability advocates this, that societies should be friendly with modified facilities to enable fully community participation of persons with disabilities.
