European Microfinance Week 2019

INTRODUCTION

Patricia RICHTER opened the session and explained it would start off with a brief introduction to child labour and its relevance to MFIs. To illustrate the subject further, the speakers would discuss two examples: one from the Opportunity Bank Uganda and one from the RICHES project of the Grameen Foundation in El Salvador and the Philippines. Richter added that, at the end of the session, the audience would be able to ask questions and participate in an interactive exercise looking at practical tools developed by the RICHES project to better equip policy makers and service providers to address child labour. 

To introduce the subject and make it relatable to the audience, Richter made use of the poll function in the EMW app, referring to 4 pre-formulated questions relating to child labour and to the role of MFIs in reducing child labour and improving working conditions. Results showed that 60% of the audience has experienced a conversation about child labour in their workplace. In addition, 60% of the audience believed that the main role for MFIs lies in raising awareness among clients and households. 

Richter then introduced the main international conventions pertaining to child labour: the UN Convention on the Rights of the Child, which is the fundamental convention on the civil, political, economic, social, health and cultural rights of children; and two ILO conventions: 1) ILO Convention No. 182 on the Worst Forms of Child Labour and; 2) ILO Convention No. 138 on the Minimum Age for Admission to Employment. She highlighted that, according to these conventions and acknowledging that children are defined as human beings below the age of 18, some children are indeed allowed to work, but only specific types of work and under conditions which are admissible to certain age groups. For example, light work might be allowed starting as early as 13 in some countries, while hazardous work, including soldiers in armed forces or night shifts in factories, is strictly excluded. 

In drawing the relationship between child labour and microfinance, Richter underlined that MFIs can address child labour among clients, be it through non-financial or financial services. She emphasised that, as a very first step, MFIs need to understand what root causes are at play. She detailed that these causes can be found in: 1) Demand, such as the need for specific manual labour using small hands; 2) Social norms, such as the transfer of a profession between generations; 3) Costs and quality of education, which leads parents to involve their children in income-generating activities; 4) Vulnerability / exposure to shocks, such as replacing a sick parent and 5) Income poverty. Richter stressed that the root causes are inter-linked, and need to be addressed as a system in order to effectively prevent or reduce child labour. The ILO has collected numerous experiences from working with MFIs worldwide and tested innovative interventions to address child labour, for example through its Microfinance for Decent Work action research.

PRESENTATIONS

Alex AHABWE, from Opportunity Bank Uganda Ltd. (OBUL) discussed the involvement of the bank in child protection after a traumatic event, in which the daughter of a client was raped on her way to school. He revealed that OBUL worked through one of its partners in designing modules of child protection, which were provided under a professional development program for school teachers. This program created clusters of educational specialists, whose role was to supervise and monitor them. Ahabwe added that each school was also tasked to have a child protection focal person, who would safeguard the implementation of client protection and act as a counsellor to students. The program also installed a toll-free number for reporting of child abuse. 

The involvement of OBUL also addressed financial literacy in schools. Ahabwe described that the bank organises parent sensitisation meetings on financial literacy, educates children on savings as well as life skills and entrepreneurship, and provides scholarships to less-privileged families. He added that these are supported by awareness materials such as wall pictures and newspapers that promote students’ self-esteem and keep them at school. 

In a broader context, Ahabwe described that child labour is a huge problem in Uganda, where the biggest challenge lies in children dropping out from schools to work, especially on farms. He added that most Ugandans do not have the cash flow to secure their children’s attendance to school. This is where OBUL saw an opportunity to develop a solidarity-group loan that could help marginalised and underserved groups to acquire loans at low interest rates, thus having an impact on school withdrawal. 

Amelia KUKLEWICZ, from the Grameen Foundation, spoke about RICHES project in El Salvador and the Philippines, funded by the US Department of Labour, and aiming to integrate the issues of child labour alleviation and acceptable conditions of work into women’s economic empowerment initiatives. Kuklewicz added that the cross-sectionality of these two subjects is a global issue, but which lacks data to be fully understood. The observations presented during the session were derived from a research conducted in the project’s target countries.

She revealed that the results of the research unsurprisingly show that there are a number of factors that include poverty, access to quality education and lack of access to financial products like credit as drivers of child labour and/or unacceptable working conditions. While some of these causes are outside what women’s economic empowerment (WEE) actors can provide, other root causes could be addressed by WEE actors. In general, the research found there is a lack of sensitisation and understanding among WEE actors as well as end beneficiaries, which leads to a lot of undocumented child labour within households, for example. Kuklewicz detailed that child labour has higher incidence in informal sectors, agriculture and rural areas, where some MFIs are most active. She added that MFIs have the potential to play a role in decreasing child labour and unacceptable working conditions since some of the causes of these issues are within a Women’s Economic Empowerment actors’ mission.

However, MFI policies and conditions related to collaterals and repayment schedules, for example, could also pose barriers to entrepreneurship and end up affecting child labour and unacceptable working conditions. The research also proposed recommendations as far as areas for action and potential tools for investors, MFIs, NGOs and policymakers.

Kuklewicz also named a few existing gaps identified in the research, including: not enough engagement of governments and MFIs in cross-section efforts. She also mentioned a few promising fronts, including interventions that help make women’s enterprises more successful, which can in turn reduce the risk of child labour and unacceptable working conditions, as well as transfers, health insurance and increased access to schooling. Among the recommendations for the sector, Kuklewicz addressed both the organisational and the client-level. Within the organisational level, she highlighted, for example, that social investors can play a role in encouraging risk assessments, SPM, diversification and implementing do no harm, while MFIs should conduct risk assessments, create action plans and implement tools that monitor or help do no harm for child labour and unacceptable working conditions within clients’ businesses. At the client level, Kuklewicz mentioned, for example, increasing awareness-raising, fostering intra-household and gender dialogues, offering education and training support services to families.

DISCUSSION

The first comment from the audience revolved around the context of child labour in Western China, where children from rural areas commonly drop out from school and move to urban areas in the Eastern regions to work in factories. In reaction to this dilemma, Richter voiced that addressing the issue most likely lies outside of the framework of microfinance, but that microfinance might have tools that could help. She gave the example of vocational training, which could increase the qualifications of youth, and eventually lead to them starting their own business. 

Another discussion point addressed the investor’s point of view towards child labour. Because investors work with many MFIs simultaneously, it is difficult for them to act at the client level. Kuklewicz explained that investors could include tools like risk assessments around these topics when they are completing their due diligence as well as encourage MFIs to implement tools. Richter agreed, and further urged that they start questioning their investees about child labour. She elaborated that this is a subject which is often overlooked from MFI research since, once they start recognising the problem, they will also be responsible to take action.

ACTIVITY

The session ended with a short discussion on three draft tools produced by RICHES for WEE actors, including social investors, to address child labour and women’s economic empowerment. The audience was divided into groups to review and answer key questions on the following draft tools: Education session for clients; Social Performance Indicators for MIVs; and Child labour and unacceptable working conditions risk assessments. 

In general, the groups found the tools useful, practical and easy to use. Regarding the tool “Education session for clients”, the group’s main comment revolved around the design and application of the tool, which is through a participatory and gradual approach, given that the subjects addressed could be very sensitive for women to speak openly about. The group commenting on “Social Performance Indicators for MIVs” suggested that the tool expands its focus not only on the client, but also on the household. This group further commented that the tool could address child labour more directly. Lastly, the group covering “Child labour risk and unacceptable work conditions assessments” pointed out that the logic of the questionnaire is easily understood, and suggested to include action steps after the tabulated score. Furthermore, the group suggested that different questions have different weights on the final score, since some of them have a more direct relationship to child labour risks.