MICROFINANCE PAPER WRAP-UP: Microfinance Programs and Better Health: Prospects for Sub-Saharan Africa; by Paul M. Pronyk, James R. Hargreaves and Jonathan Morduch; Published by The Journal of the American Medical Association (JAMA)

By Paul M. Pronyk, James R. Hargreaves and Jonathan Morduch, published by the Journal of the American Medical Association (JAMA), Volume 298, Number 16, October 2007, available at: http://jama.ama-assn.org/cgi/reprint/298/16/1925.pdf

In this paper, Paul Pronyk, James Hargreaves and Jonathan Morduch examine available evidence on the potential for microfinance to contribute toward achieving the United Nation’s (UN’s) Millennium Development Goals (MDG), with specific focus on improvements in health and the challenges and opportunities for expanding such outcomes in Sub-Saharan Africa, in particular.

Microfinance institutions (MFIs), which distribute small loans to facilitate income generation, have the potential to reduce poverty directly, while simultaneously producing wider benefits including improvements in health. At the most basic level, access to reliable ways to borrow and save can also make it easier to pay for medicines and clinic visits. A higher and steadier income level also makes it easier to feed one’s family everyday. Better nutrition, in turn, leads to better health.

Several microfinance programs have recognized the potential connection between economic and health gains and have sought to provide additional health services, health education or health insurance products. A number of studies have demonstrated the positive effects of these programs, which include higher immunization rates, the adoption of healthier breastfeeding practices and better management of diarrhea. A study from Bangladesh suggests that such programs may lead to a greater use of contraception among those who do not participate in microfinance but live in villages where MFIs operate. Several unnamed “well-established” programs in Bangladesh have also demonstrated positive effects on nutrition with improvements in upper arm circumference in children 6 to 72 months of age and lower rates of general malnutrition among households that make use of microfinance, relative to control groups.

Despite these developments, a number of obstacles to an integrated approach remain. Microfinance institutions are under pressure to be financially sustainable, and offering public health interventions directly increases costs. Many donors and policy makers argue that microfinance providers should stay focused and pursue efficiency in their operations.

The authors conclude, “Microfinance is just one entry point for linking economic interventions to concrete health and development outcomes, but the track record so far is encouraging. Conceptualization of new models is at a relatively early stage, and the time is right for further innovation and rigorous evaluation.”

By Conner Brannen, Research Assistant

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