Health, Development, and Microfinance:Coupling health education with micro-credit

Submitted by:Lauren Smith, PA 510

Women’s Development and Microfinance Final Research Paper

May 29th, 2007

Outline

I. Introduction

II. Food Aid A Study of BRAC in Bangladesh. Reaching the “poorest of the poor.” Putting theory into practice. Accomplishments and drawbacks of the program.

III. Health Education and Services Adding value to microfinance. Healthy women, healthy business: a comparative study of Pro Mujer Advantages and drawbacks.

IV. Suggestions on coupling health and education in India. Integrating ideas. How health and microfinance may best be coupled together to produce

effective and positive changes. Questions to pose in field study.

Worldwide development priorities for governments, donors, and non

governmental organizations (NGOs) are guided by the Millennium Development Goals

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(MGDs) adopted at the Millennium Summit of the United Nations in September 2000,

which are a set of targets for reducing extreme poverty and extending human rights by

the year 2015 (Allen, 2006). Although the World Bank’s mission is to “…help

developing countries and their people reach the MGDs by working with our partners to

alleviate poverty…,” it spends less than one percent of its annual budget on microfinance

(Watson, 2006). Therefore, non governmental organizations (NGOs) have played an

integral role in attaining theses goals through the microfinance movement (though we

still have much farther to go to reach goals by 2015). Moreover, momentum behind

microfinance has been growing worldwide and has been realized as an effective strategy

for alleviating poverty and fostering women’s empowerment. Microfinance in the form of

women’s self help groups (SHG) and savings and credit groups (SCG) create self reliance

among poor communities, thus creating a greater impact over change than micro-credit

alone. Micro-credit can best be explained as offering small amounts of credit to people

without collateral who otherwise would not be able to secure loans. These loans are

typically given to women to be invested in micro-businesses and re-paid incrementally in

small amounts until the loan is paid off. However, microfinance institutions (MFIs) must

remember that the poor are not a homogenous group, but rather have different

characteristics and thus need different forms of assistance (Matin, 2003). Therefore,

because the problem of poverty is multi-dimensional, the solution must also be multi-

dimensional.

Before a multi-dimensional microfinance approach is discussed, however, we

must first characterize the “poor” as it relates to the developing world. The poor, as they

relate to this study, can be grouped into several categories: The “hardcore poor” are those

who fall below the poverty line, experience extreme poverty in terms of not being able to

provide basic needs (food, clothing and shelter), and lack opportunities for upward

mobility, meaning poverty lasts throughout life and is handed down generationally; the

“poor” are those who fall just below the poverty line, but may be able to provide basic

needs more often than the “hardcore poor”; and the “moderately poor” are those who fall

between the upper and lower poverty lines depending on financial shock throughout the

year because of seasonal work, bad weather, or illness (Matin, 2003). It is presumably the

hope of many MFIs and NGOs to reach the poorest families (though at times they are

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purposefully excluded from these groups) but has been difficult to do because many

“hardcore poor” feel they cannot take advantage of microfinance because they will be

unable to repay loans, ultimately risking default and perceived community disdain

(Armendariz de Aghion, 2005). Therefore, how might this group effectively be reached?

This paper will present two models, Bangladesh’s IGVGD program which

incorporates food aid with microfinance and Pro Mujer’s incorporation of health

education and direct health services alongside microfinance in Latin America in addition

to offering a brief example of how health and microfinance have worked in Ghana. The

paper will seek to merge the two models and offer suggestions on how this development

scheme might work to target India’s poorest women and households (those hardest to

reach), as well as the poor and moderately poor.

Food Aid: BRAC’s IGVGD program in Bangladesh:

One reactionary approach to reaching the “hardcore poor” is found in a study

from Bangladesh. The burden of poverty remains disproportionately high on women in

Bangladesh in terms of nutritional intake, access to gainful employment, wage rate, and

access to maternal health care (Matin, 2003). However, there is broad consensus that

even well respected programs fail to reach the chronic poor, and a nationally

representative survey found that 41% of eligible, poor households did not have any

contact with the NGOs operating in their localities (2003). The dominant approach to

targeting the chronic or hardcore poor has been through food transfer, but unfortunately

only provides short-term food security (2003). Therefore, in 1985 BRAC partnered with

the United Nations’ World Food Program (WFP) and “…sought to combine food relief

with its skills training program to create a basis for enhanced household income in the

future. In addition, participating households were to make compulsory savings of 25 taka

per month during the period of their food relief to build up a lump sum for investment”

(2003, p. 653). At the end of the 24-month program period the participants were

encouraged to graduate, thus becoming eligible for access to micro-credit, legal

awareness, and other services provided by BRAC (2003, p. 653). A BRAC study of the

pilot program found that participants’ incomes increased significantly and approximately

80% of the women had entered the Rural Development Program where they could access

micro-credit and other services (2003). However, economic impacts varied over time,

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showing an average income rise of 717 takas at the time of program completion, but three

years after completion average income had declined to 415 taka because of the

withdrawal of the food subsidy. This forced about a quarter of the households back into

destitution. However, it must be noted that the new micro-credit options kept some

household incomes well above pre-program levels (Matin, 2003).

Reasons for program lapse:

As in many program implementations, practice deviates from theory due to

unforeseen challenges/factors. This case was no exception. The program experienced

“downshifter” households whereby moderately poor households downshifted their

financial status and entered the IGVGD program in the areas where they would otherwise

not be eligible to participate (food subsidy). Also, IGVDG experienced repeats in the

program where households were “graduating,” but due to failing financial status, repeated

the program. Moreover, it was difficult for the program members to manage shocks,

particularly relating to ill health and health expenses from which they could not recover

(2003, p. 658). Abandoned wives and widows with young children are highly susceptible

to shocks and thus are likely to remain long-term poor. Consequently, all of these factors

prevented BRAC from reaching a number of eligible households in the communities.

Lessons Learned:

  Lessons learned from the IGVGD    Targeting Access to program was not seen as "fair" by villagers.  

Program The Provision of food aid, skills training, savings schemeComponents and micro-credit is not sufficient to assist some/many very

poor households to improve their situations.

Role of Having BRAC's staff take on training and microfinanceBRAC Staff services for IGVGD did not provide clients with the intensive

customized support they needed.

Assimilation Not all IGVGD clients can be rapidly assimilated into VOsand gradua- according to a rigid timetable. Some clients will fall behind

tion and need additional support.    

Source: Matin, Imran. (2003), Programs for the Poorest: Learning from the IGVGD Program in Bangladesh,

World Development, 31(3):647-665

BRAC recognized that the poorest need more than one “additional step” on the

path of poverty reduction. Asset transfer, health care, and social development training

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have since been added to the current IGVGD program and it now appreciates that the

chronic poor will improve their living standards at different speeds, but recognizes that

shocks will occur. Therefore, emergency or shock loans and stage repetition preparation

will be necessary in the future (Matin, 2003). However, the study recognizes that “…a

small proportion of the population will always need more traditional ‘social welfare’

support [from government] to avoid persistent deprivation” (2003, p. 662).

Based on findings from the BRAC study, it is evident that food aid and micro-

credit alone are not enough to, first, reach the poorest clients and, second, to promote

adequate health practices in order to avoid financial shock among households. Therefore,

we must look to another model for potential solutions.

One of the main focuses of microfinance is the promotion of better health

practices in terms of nutrition. Many MFIs assume that with more income comes better

nutrition because households are able to purchase more food and make better food

choices than they were before program participation. Moreover, health has shown a direct

link to development over time. Statistical evidence shows that focusing on health

initiatives (more so than on wealth) leads to greater developmental change at a faster rate

in terms of an empirical shift from large families with short lives to smaller families with

longer lives (exemplified in western society) (Roslings, 2004). The following case study

will illustrate how health education and health services have been successfully coupled

with microfinance and other services to create healthy women and healthy businesses.

Health Education and Services: Pro Mujer Study

“For every child who dies, millions more will fall sick or miss school, trapped in a vicious circle that links poor health in childhood to poverty in adulthood. Like the 500,000 women who die each year of pregnancy-related causes, more than 98% of children who die each year live in poor countries” (Allen, 2006).

A woman living in poverty is more likely to bear too many children close together

at a relatively young age, and a lack of adequate financial resources limits the ability of a

poor family to deal with theses health events and, as pointed out in the previous section,

causes the household to plunge deeper into poverty. On the other hand, however, a family

with fewer children who are free from illness is better equipped to save, invest, and grow

its finances (Allen, 2006). Pro Mujer is an international microfinance and women’s

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development organization with MFIs in Bolivia, Nicaragua, Peru, Mexico and Argentina

that offer a full range of microfinance and health services along with other human

development services (Junkin, 2006). This study will focus on three different countries

(Bolivia, Nicaragua, and Peru) in which Pro Mujer has implemented health education

strategies alongside microfinance because they found that health problems often led to

problems with loan repayment (Junkin, 2006). Pro Mujer decided to focus its health

services on health education, primary preventative and curative healthcare (Junkin,

2006). However, the organization realized early on that programs needed to be adapted

on a country level because adapting to local conditions is the best way to effectively

respond to client demand and operate in varying political, legal and financial

environments. Each MFI chose a different service delivery strategy: parallel services

whereby different services were offered by separate staff within same organization,

unified services whereby different services were offered by the same staff within the

same organization, and linked services whereby different services were offered by

different organizations serving the same clients (Junkin, 2006).

Bolivia:

Pro Mujer Bolivia began in 1989 by providing training in maternal-child health

and women’s empowerment training, then in 1992 incorporated parallel micro-credit and

business training including credit services and business skills development training

(Junkin, 2006). Prior to Pro Mujer’s incorporation in Bolivia, health services were

primarily delivered through public sector facilities, but were inadequate and private-

sector health system access was limited to the wealthy and middle class. Moreover, there

was little awareness of basic health education among Pro Mujer poor clients (both before

and during participation) and even though health training had increased client’s overall

health knowledge, their health practices remained poor (Junkin, 2006). Therefore, Pro

Mujer Bolivia decided to expand its existing health education/training program to

providing direct healthcare services through in-house clinics at its focal centers (places

where self help groups meet to repay loans), thus offering clients “one-stop” access to a

range of services (Junkin, 2006).

Nicaragua:

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Pro Mujer began operation in Nicaragua in 1996 and began with unified credit

and health training with financial services staff providing the health training. This unified

approach, however, proved to be unsatisfactory to female clients because trainers lacked

specialization and medical knowledge. Nicaragua later created a Human Development

Program that offered training in women’s rights, leadership education, self-esteem,

women’s empowerment, domestic violence prevention, as well as child health and

hygiene training. This time training staff had sociology backgrounds, but clients still

demanded more specialized health services (Junkin, 2006). Pro Mujer Nicaragua finally

decided to establish clinics, thus forming alliances with third-party health service

providers and hiring medical doctors to offer direct services (Junkin, 2006).

Major health issues in Nicaragua were cervical/uterine cancer (a major cause of

death for women), family planning, and family violence. Therefore, gynecological exams

were offered along with family planning, self-help groups focused on combating family

violence, and health counseling along with community health networks whereby clients

were trained as health promoters were introduced (Junkin, 2006). Moreover, PMN

negotiated with hospitals and private clinics to offer reduced fees for referred clients.

Currently, nurses and other health educators travel to rural areas via motorcycle, offering

pap smears, family planning, and other medical-related services in areas far from

hospitals and clinics for added convenience to clients (2006).

Peru:

Pro Mujer Peru began only offering financial services in order to establish

financial sustainability for itself; however, clients became impatient when they realized

health services were not being provided. PMP eventually incorporated low-cost health

education activities such as educational videos, radio programs and “radio-soap operas”

on health-related issues (Junkin, 2006). Rather than acting as a direct service provider as

it had in the other two countries, Pro Mujer Peru decided to act as a facilitator by

establishing links to healthcare providers with which it negotiated reduced rates. Clients

choose from a list of outside providers and receive care at their clinics (2006). Moreover,

due to limited funding and lack of internal management capacity, Pro Mujer Peru relies

heavily on volunteers, although clients have expressed preference for specialists (2006).

Healthcare providers do spend days in Pro Mujer’s focal centers to provide vaccinations,

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pap smears, and dental care for clients’ convenience. Financial meetings and health

services were shortened so they could be held consecutively in one sitting (Junkin, 2006).

Due to all of these initiatives, women reported that they increasingly practiced

family planning, better nutrition and overall pregnancy care in addition to receiving

routine pap testing. Moreover, sexual reproductive health has led to fewer pregnancies

close together, better breast-feeding practices (fewer reports of giving infants water in the

first month of life) (Watson, 2006), and noted increases in self-esteem and empowerment,

resulting in positive changes in both health practices and social status (Junkin, 2006).

Before these programs began, many women stated they feared seeing a doctor, but have

now overcome the fear and are more proactive in health matters, which suggests

increased levels of personal empowerment. They see doctors on a regular basis and thus

are able to build trust over time. About 65% of focus group participants reported having

seen a healthcare professional in the last six months (Junkin, 2006).

Although this study provides a good deal of qualitative research, it does not

provide an extensive amount of statistical evidence compared against control groups.

Both the authors of the study and this analysis of Pro Mujer realize that certain impacts

are hard to measure, but Pro Mujer has compiled research not only from clients, but also

from program staff and medical practitioners. Furthermore, women seem to be more

conscious of basic health and hygiene issues than they were before program

implementation. Moreover, credit and health were the only two services mentioned by

100% of focus group participants and they were listed as numbers one and two in overall

satisfaction. However, these programs are still relatively young and more evidence is

needed to draw formal conclusions. Furthermore, there was no mention of reaching the

poorest clients, only statistical evaluations of the percentage of those living below the

poverty line. Therefore, the programs may or may not reach the poorest clients. On the

other hand, common sense presumes that coupling health education with any

development scheme will yield positive results and Pro Mujer initiatives are no

exception. The programs, thus far, have proven to be sustainable financially as well,

showing all three operations are profitable, and self-sufficiency ranged from 109 percent

to 141 percent respectively (Junkin, 2006).

Evidence and/or programs from other regions:

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From a public health perspective, three features of microfinance interest public

health planners. More income and assets achieved from microfinance enable the poor to

put what they learn from health education into practice (Dunford, 2003). Second, group-

based microfinance brings poor women together and provides opportunities for women to

pass along health education information to other women who would ordinarily not be

reached (2003). Essentially these women act as mentors and information liaisons. Third,

program-generated income can sustain the educational effort by the same staff (2003).

“Freedom From Hunger has tested the proposition that a field officer can simultaneously

and effectively offer loans, savings opportunities, and education for child survival and

health to groups of poor women” (Dunford, 2003, p. 2). Furthermore, based on Freedom

From Hunger’s research in Ghana, only one percent of participants did not know a way to

prevent diarrhea, compared to 32 percent of the control group. Moreover, although

feeding frequency was not greater for participants, the dietary quality of the food and

caloric intake was significantly higher among participants (2003). This evidence does

show that if the educational programs are in place, women will both partake and improve

upon family (and personal) health. “Throughout the world, microfinance experts are

beginning to understand that if we are to serve the poorest, we must be able to provide

more than just micro-credit—helping the poorest to make their way out of poverty

requires the integration of microfinance, education, and health care services” (Baue,

2004).

Coupling Health and Education in India

The Grameen Bank and other pioneering microfinance institutions have

established awareness of better health practices among all regional operations. In fact,

many of the sixteen decisions of the Grameen Bank focus on improving health practices

of participants (Grameen Bank). Therefore, why not integrate health education and/or

services into MFI programs in India. In fact, Chaitanya, one NGO operating in India,

listed the creation of a women’s health program and providing education through self-

help groups as one revision to training programs (Handy, 2006). Therefore, interest

seems to be spreading in the direction of integrated health services.

Integrating Ideas:

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The first section of this paper illustrated how offering food aid along with

microfinance is one way of reaching the “hardcore poor.” However, in the BRAC

example in Bangladesh, the study noted that adding health education to its platter of

services would meet both organizational and client needs more fully. The program, in its

first round of pilot services, was constrained by certain factors, but resulted in positive

results for the most part. In integrating health strategies to incorporate food aid and

microfinance, improved financial status for the poorest may be sustainable. Therefore, it

is suggested that NGOs in India use food aid to attract or target the poorest of the poor,

but require a savings program along with food aid so households may save what they

would otherwise spend on food. In addition, these participants will receive health

education and services, teaching improved nutrition practices and basic health. Upon

completion of the food aid program, participants can “graduate” as they did in IGVGD,

but rather than moving directly into micro-credit they will move into a continuing health

education program along with gaining access to micro-credit where they will learn about

basic nutrition, hygiene, family planning, cervical cancer prevention, sexual reproductive

rights, sexually transmitted diseases, pregnancy and abortion risks, child’s health

(breastfeeding, dehydration, respiratory infections, vaccines), self-esteem, and mental

health. Furthermore, the self-help groups will work as a network of mentors to assist and

advise on multiple issues of interest in addition to their loan initiatives. Women must

meet certain criteria, qualifying them among the poorest based on the financial

environment in which they live. Poor and moderately poor families may qualify for the

health services, savings programs, and micro-credit programs. Gradual integration of

services will likely be cost effective for MFIs and will result in the prospect of the

hardcore poor’s ability to attain both financial security and health awareness over time.

Moreover, NGOs should develop a “linked system,” partnering with other NGOs

and government (if possible) to provide public health services such as doctors, nurses,

clinics, etc. This too will create greater cost effectiveness. Furthermore, perhaps NGOs

can work towards dipping into India’s large pool of doctors and/or student doctors might

be offered incentives for doing rotations in rural clinics or gain benefits for working with

MFIs to provide medical services. Perhaps NGOs could also seek grants specifically for

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the payment of doctors and nurses salaries. Since the ranges of services are expanding,

theoretically the pool of funders will expand as well.

These suggestions are not guaranteed to work as well in practice as they are in

theory, however. The implementation will ultimately depend on India’s political

environment, reliability of partnerships and the ability to create them, funding

mechanisms, and overall need for these types of services. However, the role of health

education and direct services will prove to be an integral part in reaching Millennium

Development Goals because poverty alleviation can only be successful if all basic needs

are met. Coupling health and wealth have shown positive results in many other regions,

and thus seems to be the most effective path towards development.

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References

Armendariz de Aghion, Beatriz and Jonathon Morduch. (2005), The Economics of Microfinance, Cambridge: The MIT Press.

Baue, William. (2004), Fonkoze Partners with Zanmi Lasante to Link Microfinance and Health in Haiti, Retrieved from www.socialfunds.com/news/print.cgi?sfArticleId-1552 on May 23, 2007.

Dunford, Christopher. (2003), “Finance for the Poor: Adding Value to Microfinance and to Public Health Education—At the same time,” ADB, 4(4): 1-4, Retrieved from www.adb.org/documents/periodicals/microfinance on May 23, 2007.

Grameen Bank. (1998), The 16 Decisions of Grameen Bank, http://www.grameen-info.org/bank/the16.html.

Handy, Femida, Meenaz Kassam, Suzanne Feeney, and Bhagyashree Ranade. (2006), Grass-roots NGOs by Women for Women: The Driving Force of Development in India, New Dehli: Sage Publications.

Junkin, Ruth, John Berry, and Maria Elena Perez. (2006), “Healthy Women, Healthy Business: A Comparative Study of Pro Mujer’s Integration of Microfinance and Health Services,” Case Study.

Matin, Imran and David Hulme. (2003), “Programs for the Poorest: Learning from theIGVGD Program in Bangladesh,” World Development, 31(3): 647-665.

Roslings, Hans. (2006), Gapminder World, www.gapminder.org.

Watson, April Allen and Christopher Dunford. (2006), “From Microfinance to MacroChange: Integrating Health Education to Empower Women and Reduce Poverty,” Microcredit Summit Campaign, Washington: Tackett-Barbaria Design Group.

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