Integrating Health and Microfinance in India

> Posted by Somen Saha, Indian Institute of Public Health Gandhinagar, with inputs from Marcia Metcalfe, Freedom from Hunger and Sabina Rogers, Microcredit Summit Campaign

Microfinance institutions (MFIs) and self-help groups (SHGs) in India are increasingly recognizing the potential of offering both health and financial services. In a query of 25 MFIs across the country providing integrated services, the number of borrowers totaled nearly 18 million. A new report, Integrated Health and Microfinance in India, Volume II: The Way Forward, highlights best practices in integrating health and microfinance programs, particularly in light of India’s aim for universal health care, showcases potential interventions that can be adopted by microfinance institutions and NGOs that serve SHGs, and outlines the role of India’s existing livelihood promotion SHG initiatives in addressing access barriers to health services.

For the 1.3 billion people around the world who live on less than $1.25 a day, poverty means vulnerability. The poor face a disproportionate risk of disease and a heightened financial burden that includes both the direct costs of medical care and the indirect costs of work time lost. This financial impact also limits the ability of the poor to fully participate in financial services, as poor health is one of the most frequently cited reasons for loan default and drop-out. Because the poor are one illness away from losing everything, there is an increasing realization that countries need a pro-poor pathway towards universal healthcare.

In India and worldwide, approaches to dealing with these challenges are largely sector-specific, with health improvement in the domain of the health sector, while financial inclusion efforts tend to shortchange or ignore opportunities to contribute to better health. However, innovative development practitioners are exploring ways to combine poverty alleviation and community health interventions into an integrated strategy that leverages existing resources to achieve deeper impact and greater scale. By linking financial services for the poor with proven community health interventions, two fundamental needs can be met simultaneously. Existing microfinance outreach infrastructure provides a unique, low-cost approach to expanding access to health services to a greater number of people.

Institutions providing financial services such as credit, savings, and insurance to poor families stand to achieve wider impact if they can bolster the capacity of clients to also improve health and nutrition. Some of these highly effective, low-cost interventions can be integrated with existing self-help microfinance programs to:

  1. Promote health and sanitation awareness;
  2. Provide health loans in cases of major illness;
  3. Enable access to safe water and sanitation; and
  4. Provide village-level nutrition day care centers, low-cost generic drug points, and discounted preferred medical provider networks.

Most MFIs and similar institutions seeking to link health and financial services require initial technical assistance and often funds to support program planning, piloting, and internal capacity-building.

The report outlines the role of researchers, policy planners, donors, and apex development banks in addressing some of the challenges to broad-scale replication and scale. The report also presents a framework of key unmet health needs in India that can be addressed by combining health and financial services through microfinance-based women’s groups.

By endorsing and supporting the integration of microfinance and health services, we can address multiple Millennium Development Goals, achieving sustainable impacts on poverty, gender equity, women’s empowerment, maternal and child health, and the fight against persistent diseases such as HIV and malaria. The microfinance sector is already leading in efforts for cross-sectoral collaborations, but a very large opportunity remains for more active dialogue within and beyond the microfinance sector.

The 17th Microcredit Summit (September 3-5) will feature a workshop on WASH programs and a full day event right afterward called “Collaborating for Health: Linking and Integrating Health and Financial Services” to look at the measurable impact of integrated programs and to identify concrete opportunities for collaboration to deliver break-through health services.

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