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Microfinance and Health: A Case for Integrated Service Delivery - English

Microfinance and Health: A Case for Integrated Service Delivery

World Bank sources indicate that more than 1 billion people live on less than a dollar a day worldwide. The Human Development Report 2003 states that out of 42 million people living with HIV/AIDS in the world, 39 million live in developing countries. The link between poverty and poor health is evident.

Poverty is a multidimensional problem requiring a comprehensive solution strategy. Microfinance institutions (MFIs) have emerged as an important strategy for poverty alleviation. Most MFIs focus on improving the poor people’s incomes. By ignoring health and education as important needs of the poor, ‘minimalist’ MFIs (financial services only) provide an incomplete solution.

This paper identifies the value of MFIs focusing on fulfilling other basic needs of the poor by incorporating ‘better health of clients’ as a primary goal. By doing so, MFIs can have a greater impact on poverty alleviation. Though this presents a challenge for MFIs in terms of financial sustainability, MFIs cannot ignore their clients’ health concerns. Health service provision strategies are outlined in the paper. MFIs must choose strategies appropriate to their internal and external context to balance social objectives and financial constraints. Poverty alleviation is successful only when all basic needs are fulfilled.

This paper highlights the necessity of incorporating health as a primary goal for MFIs and makes recommendations to take advantage of the MFI service model to provide comprehensive solutions to the problem of poverty. The recommendations are potentially transferable to education services, although further research is required.

The paper’s first section provides a brief description of microfinance and highlights the positive impacts on client, their families and the community at large. It then presents the case for focusing on the positive externalities (specifically health), including them in institutions’ primary goals. The second section offers strategies to accomplish better health and education. An example of a program incorporating health and credit services is provided. The analysis in this paper is meant to provide MFIs better understanding of client needs and how to (re)structure programs to increase impact addressing such needs.