Microfinance programs and better health: prospects for sub-Saharan Africa.

ALTHOUGH SOCIAL GRADIENTS IN MORBIDITY AND MORtality fromscrofula, rickets,andscarlet feverwerenoticedinEnglandasearlyas1845,currentunderstandingof therelationshipbetweenpovertyandillhealth is still evolving. A detailed examination of the social determinants of health is the current focus of a World Health OrganizationCommission,andaglobalagendathataddressestheoverlappingvulnerabilitiesofpoverty, social exclusion, andhealth recentlyhasbeenarticulated intheUnitedNationsMillennium Development Goals (MDG) framework. Sub-Saharan Africa remains the area of the world at greatest risk of failing to meet any MDG targets. Some experts suggest that conditions of extreme deprivation characterizing much of the region create “poverty traps” that limit access to proven interventions and constrain potential gains in employment, income, food, shelter, and education, carrying dire immediate and longer-term health consequences. The interdependence of poverty, health, and development might seem obvious, but cross-sectoral experience on how and where to intervene remains limited. Microfinance programs are increasingly at the center of this nexus, and new ideas can extend their potential benefits. Microfinance institutions (MFIs) provide poor households with access to financial services, allowing them to borrow and save in reliable and convenient forms. The success of the microfinance sector has been impressive. Across a wide variety of models, reported loan repayment rates, even among the poorest clients, often exceed 95%. Global experience has demonstrated that MFIs can recover all or most of their administrative costs through interest rates and user fees. Thus, rapid growth and wide scale are possible, even when donor funds are limited. By the end of 2005, more than 3000 MFIs were reported to have been providing services to 113 million clients, 84% of whom were women. The 2006 Nobel Peace Prize to Muhammad Yunus and Grameen Bank was given in recognition that microfinance also promises to effect social change. Small loans used for income generation have the potential to reduce poverty directly, while simultaneously catalyzing wider benefits including better health. At the most basic level, higher and steadier incomes make it easier to put food on the table each day. When health problems emerge, access to reliable ways to borrow and save can make it easier to pay for medicines and clinic visits. Financial access also can help individuals cope with unemployment caused by illness and forestall their need to sell off valuable assets. Thus, interventions to improve financial access may complement interventions to improve health conditions. Opportunities also are emerging for MFIs to broaden their scope and benefits that as yet remain largely unrealized. Microfinance institutions operate in villages, slums, and neighborhoods in which the lack of financial access is just one of many deprivations. In creating neighborhood-based associations of women that meet regularly and focus on tools to improve livelihoods, many MFIs may have the potential to more directly address health-related concerns. Doing so will not make sense for every institution and population, and microfinance leaders rightly have been wary of weighing down institutions with added responsibilities. But evidence is mounting to suggest that combining financial and health interventions can be powerful. These understandings are evolving, and expectations need to be realistic. Despite a tide of global optimism, beneficial effects of microfinance programs have not been witnessed in all contexts, and experimental evaluations, common in assessing health interventions, are virtually absent in the microfinance sector. Furthermore, although sub-Saharan Africa has the highest proportion of people living in extreme poverty, with more than 40% living on less than $1 per day, access to microfinance services remains extremely limited, extending to less than 10% of those who need it. In this Commentary, we discuss the global experience and availableevidenceonthepotential formicrofinance tocontribute toward achieving MDG targets, with specific reference to health gains, and we examine the challenges and opportunities forexpandingaccess tosuchservices insub-SaharanAfrica.