Freedom from Hunger research explored insights on Microfinance and Healthcare needs

Photos by Karl Grobl: Burkina Faso (Source: Freedom from hunger)

Microfinance Focus, March 13, 2010: Freedom from Hunger has been working with three Microfinance Institutions in India, Bolivia, and Burkina Faso to develop and test the feasibility of specific health loans products, said Marcia Metcalfe, Director, Microfinance and Health Protection at Freedom from Hunger in a discussion forum of Microfinance Focus.

Explaining the learning experiences of action research with Bandhan, a Kolkata based Indian Microfinance institution, she said, “ Market research findings indicates that clients had access to healthcare providers (public and private) but were challenged by affordability, total out-of-pocket expenditures for health, and how to manage the shocks of major illness or accident. In this case, clients did have a slight preference for private vs. public providers and this was related to dependability.

“After about a year and a half Bandhan has disbursed about 2,000 health loans and has 0% PAR on the health loan portfolio. Interest rates are somewhat lower than the regular business loan and clients have a year to repay, she added.

In Burkina Faso, they have experiences similar learning with their partner microfinance institution. “In Burkina Faso, RCPB (Réseau des caisses populaires du Burkina Faso) developed and piloted a health loan product that is linked to health savings. The combination enables clients to use savings for frequent/low-impact health needs and then also access health loans (also at lower rate than for business loans) for less frequent, but higher impact health events. PAR is also 0%, clients are extremely happy with this combination, and RCPB is proceeding with scaling these products to enable availability to all of its clients, she explained.

Many above poverty line families fall into poverty trap because they lack access of affordable and timely finance and other safety net measures like microinsurance.  Health loans and health savings can be products could be an effective safety net for microfinance clients to manage the impact of illness. “Financial Diaries of the Poor”, a recent book point out that the poor use a variety of sources of funds to finance their needs.  “There are too few affordable and appropriate health micro insurance schemes or mutual available to the poorest, and although health loans and health savings may not be total solutions, they are important and valuable as products that can be sustainably provided by MFIs, said Metcalfe.

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