COMMENTARY
Microfinance Programs and Better Health
Prospects for Sub-Saharan Africa
Paul M. Pronyk, FRCPC, PhD problems emerge, access to reliable ways to borrow and save
can make it easier to pay for medicines and clinic visits. Fi-
James R. Hargreaves, PhD nancial access also can help individuals cope with unemploy-
Jonathan Morduch, PhD ment caused by illness and forestall their need to sell off valu-
able assets. Thus, interventions to improve financial access may
A
LTHOUGH SOCIAL GRADIENTS IN MORBIDITY AND MOR- complement interventions to improve health conditions.
tality from scrofula, rickets, and scarlet fever were no- Opportunities also are emerging for MFIs to broaden their
ticedinEnglandasearlyas1845,1 currentunderstand- scope and benefits that as yet remain largely unrealized. Mi-
ing of the relationship between poverty and ill health crofinance institutions operate in villages, slums, and neigh-
is still evolving. A detailed examination of the social determi- borhoods in which the lack of financial access is just one of
nants of health is the current focus of a World Health Organi- many deprivations. In creating neighborhood-based asso-
zationCommission,2 andaglobalagendathataddressestheover- ciations of women that meet regularly and focus on tools
lapping vulnerabilities of poverty, social exclusion, and health to improve livelihoods, many MFIs may have the potential
recently has been articulated in the United Nations Millennium to more directly address health-related concerns. Doing so
Development Goals (MDG) framework.3 will not make sense for every institution and population,
Sub-Saharan Africa remains the area of the world at great- and microfinance leaders rightly have been wary of weigh-
est risk of failing to meet any MDG targets.4 Some experts ing down institutions with added responsibilities. But evi-
suggest that conditions of extreme deprivation character- dence is mounting to suggest that combining financial and
izing much of the region create “poverty traps” that limit health interventions can be powerful.
access to proven interventions and constrain potential gains These understandings are evolving, and expectations need
in employment, income, food, shelter, and education, car- to be realistic. Despite a tide of global optimism, beneficial
rying dire immediate and longer-term health conse- effects of microfinance programs have not been witnessed
quences.5 The interdependence of poverty, health, and de- in all contexts, and experimental evaluations, common in
velopment might seem obvious, but cross-sectoral experience assessing health interventions, are virtually absent in the mi-
on how and where to intervene remains limited. crofinance sector.6 Furthermore, although sub-Saharan Africa
Microfinance programs are increasingly at the center of has the highest proportion of people living in extreme pov-
this nexus, and new ideas can extend their potential ben- erty, with more than 40% living on less than $1 per day,
efits. Microfinance institutions (MFIs) provide poor house- access to microfinance services remains extremely limited,
holds with access to financial services, allowing them to bor- extending to less than 10% of those who need it.7
row and save in reliable and convenient forms. The success In this Commentary, we discuss the global experience and
of the microfinance sector has been impressive. Across a wide available evidence on the potential for microfinance to contrib-
variety of models, reported loan repayment rates, even among ute toward achieving MDG targets, with specific reference to
the poorest clients, often exceed 95%.6 Global experience health gains, and we examine the challenges and opportuni-
has demonstrated that MFIs can recover all or most of their ties for expanding access to such services in sub-Saharan Africa.
administrative costs through interest rates and user fees.6
Thus, rapid growth and wide scale are possible, even when Eradicating Poverty and Hunger
donor funds are limited. By the end of 2005, more than 3000 A number of mechanisms exist through which access to mi-
MFIs were reported to have been providing services to 113 crofinance may stimulate wider health and social benefits. Fore-
million clients, 84% of whom were women.7 most among these is supporting improvements in household
The 2006 Nobel Peace Prize to Muhammad Yunus and Gra-
meen Bank was given in recognition that microfinance also Author Affiliations: Rural AIDS & Development Action Research Programme, School
promises to effect social change. Small loans used for income of Public Health, University of the Witwatersrand, South Africa (Drs Pronyk and
Hargreaves); London School of Hygiene and Tropical Medicine, London, England
generation have the potential to reduce poverty directly, while (Drs Pronyk and Hargreaves); and Robert F. Wagner Graduate School of Public
simultaneously catalyzing wider benefits including better Service, New York University, New York (Dr Morduch).
Corresponding Author: Paul M. Pronyk, FRCPC, PhD, Rural AIDS & Development
health. At the most basic level, higher and steadier incomes Action Research Programme (RADAR), School of Public Health, University of the Wit-
make it easier to put food on the table each day. When health watersrand, PO Box 2 Acornhoek 1360, South Africa (pronyk@[Link]).
©2007 American Medical Association. All rights reserved. (Reprinted) JAMA, October 24/31, 2007—Vol 298, No. 16 1925
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COMMENTARY
economic well-being, including poverty reduction and an en- Despite concerns over a potential double burden placed
hanced capacity to meet basic needs such as food security. No- on women as both caregivers and new entrepreneurs,19 evi-
tably, the share of people living in extreme poverty in sub- dence supports a positive association between microfi-
Saharan Africa has changed little since 1980 and nearly 26% nance and the enhanced health and social status of wom-
of children in the region are reported to be malnourished.4 en.20 Most experience comes from programs in South Asia,
Evidence of the effects of microfinance on poverty reduc- primarily India and Bangladesh, a region where microfi-
tion from diverse settings is generally encouraging.8 For ex- nance has a 3-decade history, services are accessed by nearly
ample, longitudinal studies from Bangladesh have found an half of poor households, and social and cultural norms dif-
association between poverty reduction and greater consump- fer substantially from those in sub-Saharan Africa. How-
tion attributable to microfinance participation, particularly ever, research from South Africa in communities with no
among female loan recipients.9 Other evidence points to sub- prior exposure to microfinance has suggested that combin-
stantial financial returns to capital investments made by small- ing microfinance with a gender training curriculum can lead
scale entrepreneurs (60% per year and higher).10,11 Although to a reduction in levels of intimate partner violence expe-
data from Africa are limited, a recent cluster randomized trial rienced by participants.21 In this study, regular loan center
in South Africa reported improvements in household asset own- meetings served as an entry point to more directly address
ership after 2 years of microfinance program involvement.12 health concerns. The first part of this training consisted of
Several studies also suggest microfinance can positively in- structured 1-hour sessions and used participatory adult edu-
[Link],longitudinalresearch cation techniques to cover topics such as gender roles, cul-
from Ghana, comparing participants both with nonparticipants tural beliefs, violence, and HIV with the aim of strengthen-
in the same communities and with residents of control com- ing communication skills, critical thinking, and leadership.
munities,reportsreductionsinstuntingandwastingininfants.13 The second part of the training encouraged wider commu-
Well-established programs in Bangladesh have demonstrated nity mobilization to engage both youth and men in the in-
similar effects on nutrition, where significant improvements tervention communities. The observed reduction in levels
in upper arm circumference in children 6 to 72 months old14 of violence was likely facilitated by positive shifts in nu-
and lower rates of general malnutrition have been noted among merous dimensions of empowerment, including self-
microfinance households relative to controls.15 confidence, challenging of entrenched gender norms, im-
provements in autonomy, communication, and the perceived
Increasing Access to Primary Education value of a woman’s contribution to the household.21
In the sub-Saharan African region as a whole, nearly one-
third of children fail to enroll in primary school, and of those Maximizing the Impact of Microfinance on Health
who do, nearly 20% do not reach grade 5.16 Although impor- In many respects, health indicators outlined in the MDG
tant in its own right, improving access to education framework depict the downstream clinical consequences of
also can have profound effects on health and well-being, in- social and economic vulnerabilities that have their source
cluding a better balance between family size and resources and further upstream. Thus, in sub-Saharan Africa, which lags
lower rates of illness, malnutrition, and childhood mortality. behind other lower- and middle-income regions of the world
Few rigorous studies have examined the effect of micro- in relation to targets for poverty, education, and gender eq-
finance on access to education, and thus the evidence base uity, this gap widens substantially for health outcomes, for
remains unclear. Studies from Bangladesh support positive which this region fares far worse for most indicators.4
associations between microfinance participation and rates Recognizing the potential synergy between economic and
of schooling, although differential effects in favor of male health gains, and similar to the South African example above,
children have been noted.17 In Africa, controlled studies from a number of microfinance programs have sought to pro-
Uganda also suggest that participation in microfinance is as- vide additional inputs to their financial products such as ba-
sociated with increased investment in children’s educa- sic health services, health education, or health insurance
tion.18 However, in South Africa, where access to educa- products.13 Such integrated packages may provide both the
tion is already high, one study provided little evidence for means (income/empowerment) and the knowledge to ad-
increased enrollment, suggesting that beneficial effects as- dress priority health concerns, and present the possibility
sociated with microfinance may be context specific.12 of substantial cost recovery for microfinance providers
(through interest charges and fees for other services), al-
Improving Women’s Lives lowing broader reach to target groups. Several evaluations
Participation in microfinance worldwide is predominantly have demonstrated positive effects of these programs. Quasi-
female, which underscores its potential to promote gender experimental studies suggest such models can lead to higher
equity and empower women.6 For many MFIs, women are immunization rates, the adoption of healthy breastfeeding
considered a better credit risk than men and loans received practice, and better management of childhood diarrhea.13
by women have been found to have wider household-level Work from Bangladesh suggests that through high levels of
benefits than those given to men.9 outreach, such programs also may influence social norms,
1926 JAMA, October 24/31, 2007—Vol 298, No. 16 (Reprinted) ©2007 American Medical Association. All rights reserved.
Downloaded from [Link] at Harvard University, on January 30, 2008
COMMENTARY
leading to greater use of contraception among nonpartici- couraging. Conceptualization of new models is at a rela-
pating residents of villages where MFIs operate.22 tively early stage, and the time is right for further innova-
Despite these opportunities for synergy, a number of ob- tion and rigorous evaluation.
stacles to integrated approaches remain. Microfinance in- Financial Disclosures: None reported.
stitutions are under tremendous pressure to become finan- Funding/Support: Dr Hargreaves is supported by a UK Economic and Social Re-
cially sustainable. Public health interventions are outside search Council/Medical Research Council Interdisciplinary Fellowship. Dr Mor-
duch is supported by the Bill and Melinda Gates Foundation through the Financial
their immediate expertise and offering such services car- Access Initiative.
ries inevitable costs. Many donors and policy makers argue Role of the Sponsors: Neither the UK ESRC/MRC nor the Gates Foundation had
any role in the preparation, review, or approval of the manuscript.
that microfinance providers should stay focused on their core
activities, pursuing efficiency in their operations and im-
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