Microfinance and Health Protection

Illness is a common reason women default on their microloans. Ill health results in loss of income and crushing debt that can devastate a family for years. Freedom from Hunger developed the Microfinance and Health Protection initiative to safeguard the health of microfinance clients and their families.

Microfinance is an important contributor to the common goal of ending world poverty. But even the best microfinance programs can be undermined by the illness of borrowers or their family members, causing late repayment or even default. This is especially true for very poor, rural communities, where people are exposed to more health risks and have few options for health care. These same poor, rural communities are the ones Freedom from Hunger is determined to reach and serve with value-added microfinance.

Freedom from Hunger launched the Microfinance and Health Protection (MAHP) initiative in 2006 to help our in-country partners create and sustain key health protection services that complement their microfinance services by safeguarding family health and protecting clients and their families from the shocks of major health expenses.

Made possible in large part by the Bill & Melinda Gates Foundation, MAHP builds on Credit with Education, which combines credit and savings services with education on health and other topics of vital interest to poor communities. Women who participate in Credit with Education programs come together every week or two to borrow money or repay loans and deposit savings. At these same meetings, or in separate community-wide meetings, women engage in learning sessions on topics such as breastfeeding, child health and nutrition, family planning, women's health and also business management and household money management.

Roselyn

Roselyn, here with her Preferred Provider Program green card from our partner CARD in the Philippines, receives discounts from a network of private healthcare providers. Her CARD membership made it easier and less expensive to take her son to a local doctor when he was sick with diarrhea.

"I joined CARD because they have many benefits; my favorite benefits are the health benefits."

MAHP complements this education by enabling microfinance institutions to offer financial products and other services that improve access to actual healthcare services and medicines. For example, in Bolivia, a woman may learn about women's health through education at a weekly meeting, and then through the local MAHP program she also has access to regular check-ups to prevent problems or diagnose them early. If treatment is needed, she has access to health loans, health savings, or linkages to health microinsurance to pay for the services.

Ninfa

Ninfa recovers from reconstructive surgery, which was paid for through a health loan.

"I am very appreciative of CRECER, which is the only institution that cares about my health."

-Ninfa, client of Freedom from Hunger's partner in Bolivia, CRECER

Five prominent and profitable microfinance institutions-Bandhan in India, CARD in the Philippines, CRECER in Bolivia, PADME in Benin and RCPB (a federation of credit unions) in Burkina Faso-have successfully partnered with Freedom from Hunger's technical advisors, trainers and researchers to develop their own experiments in providing health protection products and services for their poor women clients. Together we have explored and demonstrated the value of a variety of health protection options to address the common needs of microfinance clients and their families.

Microfinance chart.

Freedom from Hunger and its partners are discovering that offering these health protection options not only protects the health and household incomes of poor families (the cost of paying for treatment can be a major setback for very poor families), it also improves their ability to repay loans on time and increases their loyalty to the microfinance institution, enabling it to better sustain and grow its operations. Some of these service innovations generate income for the microfinance institution (e.g., health loans) and others are subsidized as "marketing" costs (e.g., health education and linkages to health providers).

Women participating in MAHP recognize the value of these additional services. As one of the RCPB's clients said, "When you go to the market in the morning, you never know what will happen. But when you have the health savings and can get a health loan, you have the security of knowing that if something does happen, you will be protected." The leaders of our partner microfinance institutions are also convinced of the advantages that health protection brings to clients as well as to their social missions and financial bottom lines. As the initial demonstration of the MAHP innovations draws to a close, the successful MAHP products and services are being extended to thousands of additional clients.

Freedom from Hunger's technical assistance and training is now helping microfinance institutions in other developing countries around the world to bring this powerful and sustainable combination of health and microfinance to many more women and families in poor communities.