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There was a fresh and exciting sense of possibility for microfinance in the air at the 2013 Partnerships against Poverty Summit. Plenaries, workshops, and animated hallway conversations covered break-through ideas that ranged from the use of mobile banking to reach millions of the unbanked, to innovative social businesses where investments keep on working to add value for poor families year after year after year.
Participants celebrated the success of microfinance (reaching over 200 million families around the world) and yet acknowledged that many more poor families still lack access to even the most basic financial services. What’s more, even those with microfinance services remain just one illness or accident or bad harvest away from slipping back into deep poverty.
Finding Pathways out of Poverty
Linking health to financial services such as microcredit and savings attracted considerably more interest this year than at previous Summits. Plenaries featured leaders of microfinance where health programs have been added to improve client health knowledge, access to health care, and the financial tools to afford these services.
Chandra Shekhar (“CS”) Ghosh, founder and head of Bandhan—the largest and fastest growing microfinance institution (MFI) in India—described how Bandhan’s health program is helping to create pathways out of poverty for their poorest clients.
The program, developed with assistance from Freedom from Hunger, provides community-based health education and trained health volunteers who provide health advice, link women to local health providers, and sell a range of affordable health products at the doorstep. Bandhan also operates three diagnostic health clinics and provides health loans through its regular microfinance channels.
According to Ghosh in the plenary, Bandhan found that 50 percent of the clients who defaulted on their microloans did so because of health problems, 80 percent lacked basic health information to prevent and manage illness, and 70 percent were not using sanitary latrines.
Programs such as the one provided by Bandhan and a growing number of other MFIs—CARD MRI in the Philippines, Grameen Bank in Bangladesh, CRECER (Bolivia), Pro Mujer in five countries in Latin American (to name just a few!)—can make all the difference for the poor, especially women who face persistent threats from poor health for themselves and family members.
Meet Alpana Mahish
Alpana Mahish lives in Shyampur, India, and has been a client of Bandhan for five years. Freedom from Hunger first met Alpana in 2009 as part of our evaluation of the impact of the program.
Alpana had taken one loan and she and her husband were on their way to becoming successful small entrepreneurs. But like too many others, Alpana’s family remained vulnerable to health challenges.
Diarrhea causes over 200,000 deaths of Indian children every year—deaths that are preventable when mothers and caregivers understand how to prevent and manage the illness. When Alpana’s grandson was hospitalized because of diarrhea several years ago, Alpana was grateful to have funds on hand from savings earned from her microenterprise to pay the bill.
We had a chance to meet with Alpana again recently. She proudly shared that her youngest daughter has married and that her son completed university to become a computer engineer.
Their small plot of land grows enough rice and vegetables for their family, and Alpana is an expert about which vegetables are the most nutritious. She said that her family’s health is quite good as no one, except her elderly mother-in-law, is sick or falls sick often.
Alpana attends monthly health education meetings in her village where women learn to prevent diarrhea and other common diseases and to seek care early to reduce the financial impact of illness. Her first stop for advice on minor illnesses or medicines is Bandhan’s community health volunteer who sells simple and essential health products such as water purification tablets, oral re-hydration salts, antacids, de-worming medications and much more. For more serious illnesses, or if first-line treatment does not work, she consults a doctor.
Although her family has a toilet, she is happy that Bandhan has recently promoted hygiene and sanitation and is offering loans for toilet construction to others in the village as she knows that improved community sanitation can significantly reduce the risk of children suffering and even dying from diarrhea. Eight loans and many health forums later, Alpana’s opinion is that they owe their success and growth of their business to the support from Bandhan.
A Commitment to Health and Financial Services
Alpana’s experiences are not unique. A growing body of evidence shows that these programs improve health knowledge and important health practices for women and their families.
In a country where 48 percent of children are malnourished and 5,000 continue to die every day from preventable illnesses such as diarrhea, these improvements are literally lifesaving for millions of clients such as Alpana, and they are low-cost and sustainable.
Adding a range of simple but highly effective health services to the existing distribution channels that MFIs have built to get financial services to the hard-to-reach can cost less than $1 a client a year. Some products such as health savings or loans pay for themselves.
And it’s about more than just the cost. Many MFIs report improved client capacity to borrow and save and higher loyalty and less turnover of clients and staff.
So, given the promising evidence of impact that is so relevant to improved child survival and health, the massive outreach of MFIs and other financial service providers to hundreds of millions of poor families, low costs and sustainable delivery mechanisms, why haven’t more health providers, policy makers, funders, and investors embraced this strategy?
Health innovators struggle to find ways to get their services to poor women and families, and MFIs seek reliable and affordable health services to meet the needs of their clients. Clearly much more is possible and needed to support effective partnering across these sectors.
As the 2013 Summit ended, numerous organizations had made measurable pledges of support to Microcredit Summit Campaign’s new 100 Million Project, a campaign aligned with the Millennium Development Goals to cut poverty in half by 2015.
Freedom from Hunger, the Microcredit Summit Campaign, and the Credit Development Forum (CDF) and Palli Karma-Sahayak Foundation (PKSF), both of which provide technical assistance and access to capital for MFIs in Bangladesh, made public pledges to expand their work in health and microfinance in India and Bangladesh to reach over 2 million women combined.
Hopefully many others will join these efforts.
We look forward to a time when microfinance can celebrate success in achieving universal financial access and the improvement of health and livelihoods. When hundreds of millions of women like Alpana can enjoy health, savings, good work, and a sense of achievement and security for their families, we will know that our job is done.