Here contributor Julie Potyraj, a former Peace Corps volunteer and the MPH@GW Community Manager, examines how microfinance institutions globally are stepping up with more innovative solutions for improving access to health services:
The Consultative Group to Assist the Poor defines microfinance as "a broad set of financial services tailored to fit the needs of poor individuals." While these services originally focused on smaller loans made to borrowers with little or no collateral, they have since evolved to include an array of financial products. Those who benefit tend to be small businesses and low-income people in developing and emerging economies who are underserved by traditional banks.
Today, there are over 10,000 microfinance institutions (MFIs) worldwide, ranging from commercial banks to government agencies. But although microfinance has proven effective in fighting poverty and hunger across the globe, its impact can be jeopardized when an uninsured client gets sick and is unable to make payments or grow their savings. For a myriad of reasons — such as low enrollment and high costs — insurers are reluctant to extend healthcare coverage to the poor. That’s why MFIs globally are stepping up with more innovative solutions for improving access to health services.
What’s Being Done?
From cardiovascular disease to cancer and diabetes, the world’s poorest populations are disproportionately affected by disease and illness. This can be attributed in part to urbanization, changing diets, and increased longevity combined with lack of preventive care. However, in rural and resource-poor areas, building health-system capacity is difficult. So what’s the solution? The integration of microfinance has already been shown to impact healthcare across an array of areas:
- Health financing options. The Microfinance and Health Protection initiative, launched in 2006 by Freedom From Hunger, helps MFIs offer financial products and programs that make health-related services available to the poor. For instance, local microfinance group participants are able to access health loans, health savings accounts, and micro-insurance programs designed to help them pay for vital services.
- Health education. Multiple studies show that incorporating health education into microfinance services improves knowledge that in turn drives positive behavioral change. These new behaviors have been associated with better health outcomes among the poor. For example, in a CARE microfinance program in Mali, community health agents helped to reach 4,000 local women with family planning information and services. Those who participated were more than twice as likely to use contraception as those who did not.
- Affordable medicine. Mercy Corps, an international development organization, used a "microfranchise" model to increase access to medicine for rural communities in impoverished Guatemala. This involved setting up independent, locally owned rural stores that provide medicine and health supplies to local residents. As of 2013, 27 stores were providing health products to nearly 88,000 people.
- Direct delivery of services. Research indicates that adding healthcare programs to microfinance can impact essential areas such as management of acute health problems, family planning, and preventive services.
- Capacity building. In Uganda, researchers evaluated a project in which private health providers were given business skills training and micro loans in order to boost the capacity of small, private healthcare clinics. These practices showed higher patient attendance as well as major improvements in patients' perceptions of quality of care.
A global health crisis is happening. It’s not brought on by plagues and epidemics, but by everyday, preventable diseases. There is a major opportunity to use microfinance as a platform for strengthening health systems — and outcomes — worldwide. Since good health is a catalyst of economic development, making it more achievable for the masses is essential in helping our poorest countries escape poverty.