Our first guest speaker for our series on nonfinancial services is Chris Dunford from Freedom from Hunger. He will be discussing Health Care Services and how they relate to microfinance and our borrowers.
Chris has over 30 years of rural development experience in Africa, Asia, Latin America and the United States. He joined Freedom from Hunger in 1984 as Director, Arizona Programs and is currently President of the organization. Chris was co-creator of the Credit with Education methodology and now provides organizational leadership and speaks and writes for international audiences on numerous issues including the impacts of microfinance for the chronically hungry, on measurement and management toward social objectives, and on integration of microfinance with life skills education and health protection.
Freedom from Hunger was established in 1946 and is recognized for fighting hunger with innovative self-help programs. Throughout their history, they have been guided by evidence of impact, scientific rigor and their commitment to helping families achieve food security for the long term. Freedom from Hunger brings innovative and sustainable self-help solutions to the fight against chronic hunger and poverty. Together with local partners, they equip families with resources they need to build futures of health, hope and dignity.
Consider this diagram of a train. The locomotive is a local financial institution offering group-based microfinance. It is fueled by the financial margin on credit operations, which may in turn be fueled by savings.
microfinance plays an important role in poverty alleviation, there are many critical nonfinancial services that can also be offered to clients in order to address a wider variety of needs.
Credit and savings products address only one factor out of many constraining the poor: a lack of liquidity. Increasing income and assets alone is a slow and insufficient strategy for combating serious issues such as:
• childhood malnutrition,
• avoidable maternal and neonatal mortality,
• the spread of HIV/AIDS,
• suffering due to preventable illness such as diarrhea and malaria,
• lack of basic business and household money management skills.
Chronic hunger is common among vulnerable people served by microfinance, and their hope for leaving chronic hunger behind depends on having access not only to money but to information and linkages to whatever services are locally available, especially health services. This lack of knowledge and experience combined with potentially poor health can create huge obstacles, especially when it comes to repaying a loan with interest, becoming food secure, and ultimately rising out of poverty.
Let me be more concrete. Freedom from Hunger’s recent research in Benin (home of Kiva Field Partners Alidé and Finadev) and Burkina Faso (home of Kiva Field Partner Micro Start/AFD) in West Africa revealed a shocking statistic: an average of 30 percent of the income of poor, rural families goes to treatment of malaria.
One disease takes nearly a third of their income! Clearly they need more than money; they need to know how to prevent malaria. Many rural West Africans do not know that getting bitten by a mosquito is the one and only cause of malaria. Think how hard it would be to persuade people to sleep under a mosquito net if they don’t know that mosquitoes are the cause of malaria. It is hotter to sleep under a net, and a bother to put it up properly. So why would someone go through the trouble of putting it up? Unless you know that if you don’t, you may get malaria, get very sick and maybe die, especially if you’re very young or pregnant and malnourished. It’s pretty basic education. And it’s vital … meaning, it saves lives.
Who is going to do this education for better health, better business practice and better household money management? This is a long-standing question for the international development community. Why not all those field staff of the microfinance organizations all over the world? Consider again the train diagram. The arrival of the locomotive with its credit and savings wagons attached is welcomed by the poor, but think how much more welcome this train would be if the hauling power of the locomotive were harnessed to bring added value in the form of education by the microfinance staff and linkages to other services, like medical care, health protection products (like mosquito nets), business development services, and so on.
Over the last two decades, microfinance institutions have created an infrastructure of service delivery to their clients. Where microfinance is the only effective service available, the microfinance practitioners are often motivated to provide nonfinancial services to their clients, because they recognize the need and hear the demand. You can read about the kinds of nonfinancial services offered by Kiva Field Partners on their partner pages. Click on a Field Partner to read about how they are improving the lives of their borrowers. A few exceptional Field Partners in this area include Interactuar in Colombia, Esperanza International in the Dominican Republic, Al Majmoua in Lebanon, Soro Yiriwaso in Mali and ASKI in the Philippines.
However, the concern for sustainability, interpreted as the financial viability of the microfinance service as a business, has made practitioners very cautious about nonfinancial add-ons. Some believe that nonfinancial add-ons can only be a drag on the drive for institutional sustainability.
On the other hand, tens of thousands of microfinance staff fan out across the world every day to meet clients. These relationships and channels can be leveraged at low cost to deliver services beyond credit and savings, bringing greater benefit to the end customer. And microfinance institutions can make financial gains in the process. Their managers see competitive as well as social advantages in adding value to their microfinance services by providing or facilitating access to nonfinancial services.
There is a limit to how much freight this locomotive can haul, but that limit is not so low that no more than credit and savings services can be delivered while still being a profitable financial institution.1
In part 2 of Health Care Services - Freedom from Hunger's Chris Dunford will discuss how MFIs are integrating health care services into their regular operations in the field.
For quick links to each part of the series click on Introducing Kiva's Nonfinancial Services Blog Series.
1Dunford , Christopher. “Building Better Lives: Sustainable Integration of Microfinance with Education on Child Survival, Reproductive Health, and HIV/AIDS Prevention for the Poorest Entrepreneurs.” Chapter Two in Daley-Harris, Sam, ed. Pathways Out of Poverty: Innovations in Microfinance for the Poorest Families. Bloomfield, CT: Kumarian Press, 2002.