Microfinance Focus, Sep 6, 2010: Non-profit organization Freedom from Hunger and five microfinance banks have recently completed a $6 million Microfinance and Health Protection (MAHP) initiative launched in January 2006 with funding from the Bill & Melinda Gates Foundation.

The initiative aims to develop and test integrated microfinance and health protection products and services that positively impact clients’ lives while being practical and sustainable for microfinance institutions (MFIs).

The 4-year grant enabled Freedom from Hunger and microfinance banks in Africa, Asia and Latin America to add health protection options to their financial offerings.  This project reached more than 1.5 million of the world’s rural poor in five countries including Benin, Bolivia, Burkina Faso, India and the Philippines.

Participating microfinance institutions include Bandhan (India), CARD (Center for Agriculture and Rural Development, Philippines), CRECER (Crédito con Educación Rural, Bolivia), PADME (Projet d’Appui  au Développement des Microentreprises, Bénin), and RCPB (Réseau des Caisses Populaires du Burkina, Burkina Faso).

Each MFI developed a “package” that combined several elements to meet the specific needs of their clientele in a cohesive manner. The package included health education, health financing and micro-insurance, linkages to health providers and access to health products.

As of December 2009, MAHP products and services were reaching more than 300,000 clients across five countries. Freedom from Hunger has also documented changes in knowledge and behaviour of the beneficiaries. For instance in Bolivia, 24% of CRECER clients interviewed have said that they had never seen a doctor before participating in the program. In India, the life-saving use of oral rehydration solution to treat children with diarrhoea which is a leading cause of death in local children—went from 60% to 88% in Bandhan’s program area.

Freedom from Hunger has also studied the impact of health related products on the overall financial performance of MFIs and the costing analysis revealed that various services result in a net cost to the MFIs of US$1.59 per client per year, on average.

Evidence suggests that increases in client growth and retention occurred in MAHP areas compared to areas where the MFIs were not yet offering the products. If these products resulted in 5% more new or retained clients, then they would effectively result in a net profit for the MFIs meaning that the health protection products were cost-neutral or better, says the study.

“Microfinance is succeeding at putting money into the hands of poor people but too often ill health causes them to slip back down the ladder into poverty again,” said Chris Dunford, President of Freedom from Hunger.  “Our solution is to bring together the economic development and health sectors to develop practical and coordinated tools that have more power to create lasting change.”

“These are incredible outcomes after only a brief intervention period and they show that this work is having impact,” said Marcia Metcalfe, Director of Microfinance and Health Protection at Freedom from Hunger and former CEO of a U.S.-based health insurance company.  “Microfinance has enormous potential as a financially viable mechanism for reaching poor, rural people with simple but life-saving health protection services.”

Daouda Sawadogo, leader of one of the participating microfinance providers, RCPB in Burkina Faso, pointed out, “These services go a long way to addressing the needs of our clients and helping them overcome poverty—and if they can be offered at low or no marginal cost, then that is a double win.”

Freedom from Hunger supports 72 partner organizations in 16 countries to deliver microfinance, education, and health protection services to more than two million women and families in Africa, Asia and Latin America.

A Video

12-minute video entitled, “Healthy Microfinance:  Innovations in Microfinance and Health Services.

http://www.youtube.com/watch?v=zJ652vEa4Ko