1. 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

2. 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
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3. governmental organizations (NGOs) are guided by the Millennium Development Goals
(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
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4. hope of many MFIs and NGOs to reach the poorest families (though at times they are
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
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5. micro-credit and other services (2003). However, economic impacts varied over time,
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 scheme
Components 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 microfinance
BRAC 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 VOs
and 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
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6. path of poverty reduction. Asset transfer, health care, and social development training
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
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7. its finances (Allen, 2006). Pro Mujer is an international microfinance and women’s
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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8. 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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9. 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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10. 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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11. 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
the payment of doctors and nurses salaries. Since the ranges of services are expanding,
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12. 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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13. 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 the
IGVGD 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 Macro
Change: Integrating Health Education to Empower Women and Reduce
Poverty,” Microcredit Summit Campaign, Washington: Tackett-Barbaria Design Group.
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