Microfinance and Health Protection
Bénin, Bolivia, Burkina Faso, Ecuador, Ghana, India, the Philippines, and Peru
Microfinance is a powerful tool in the fight against poverty and hunger. But the positive impacts of microfinance can be undermined when a client or family member falls ill, causing late payments or even default. This is especially true in very poor, rural communities, where people are exposed to more health risks and have few options for health care. These communities are the ones Freedom from Hunger is determined to reach and serve with value-added microfinance.
Pairing Microfinance with Health Access
In 2006, Freedom from Hunger launched the Microfinance and Health Protection (MAHP) initiative to design, build and sustain health protection services that complement microfinance services, safeguard family health and protect 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.
In addition to education, MAHP helps MFIs to offer financial products and other programs that improve access to health goods and services. In India, a client may learn about women's health through education at her weekly microfinance group meeting. Because her group participates in MAHP, she is able to access 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 micro-insurance programs to help her pay for the services.
As a result of the tremendous demand and proven impacts of the program, Freedom from Hunger is now reaching more than 1.9 million women in 10 countries, providing access and financing to meet their health needs.
Small Cost—BIG Impact
Freedom from Hunger’s research has shown that health services can be delivered on a cost-effective basis (on average $1.59 per client/yr), even in very rural areas, with significant improvements in health practices. This low-cost solution addresses a simple, but very real, problem, especially in areas such as sub-Saharan Africa, where Freedom from Hunger’s research has shown that some families spend as much as 30 percent of their annual income dealing with the impacts of malaria alone.
Adding health to microfinance services protects the health and household incomes of poor families (the cost of paying for treatment can be a major setback for very poor families), but it also improves their ability to be more successful microfinance participants, enabling them to repay loans and accumulate more savings. Clients show increased loyalty to the MFI, 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 very low "marketing" or social investment costs (e.g., health education and linkages to health providers). Freedom from Hunger’s partners are convinced of the advantages that health protection provides fortheir clients, as well as for their own social missions and financial bottom lines.
Women participating in MAHP recognize the value of these additional services. As one participant says, "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."