Over the past month, I have been asking whether the poor can become healthier and better nourished because of their use of microfinance services. Lynne Davidson Jarrell has provided us her summary of the main points of the six posts.
What does all this mean for Freedom from Hunger?
For 25 years, Freedom from Hunger has designed, tested and taught independent partner organizations worldwide (mostly in West Africa, the Andes, Mexico, India and the Philippines) a couple of forms of microfinance that deliver credit and savings services to and through groups of 10–30 women living in very poor, rural areas.
Some of these groups are trained and offered credit and savings opportunities by financial institutions of various types (MFIs, rural banks, NGOs and credit unions)—what we most often call Credit with Education. Others are trained by NGOs to become independent savings groups that provide credit from their own savings only—Saving for Change (developed jointly with Oxfam America and the Strømme Foundation of Norway).
The evidence is strong that when financial institutions offer health and nutrition education to borrower groups of women, the women gain knowledge, adopt better practices and thereby improve the health and nutrition of themselves and their families. These documented gains are modest, but over time, they can become important for the overall well-being of the family, especially when combined with increased ability to access and afford health services and products. The evidence is also strong that microfinance providers can effectively increase access and affordability by offering clients a variety of healthcare-financing options and linkages to healthcare and product providers.
There is far less evidence to date that savings groups and their facilitating NGOs can have similar impacts on health. The one promising example is the provision of malaria education to savings groups by Saving for Change practitioners in Mali.
A more general discovery is that microfinance providers, whether financial service institutions or independent savings groups, can facilitate access to effective education and nonfinancial services by treating their group meetings as efficient points of service for more than just microfinance, thereby addressing a broader range of client or member needs.
However, another general discovery is that the more effort and skill required to deliver a service, the more variable the quality of service delivery and therefore its effectiveness. Good-quality delivery requires management commitment to good-quality recruiting, training, supervising and incentivizing of the service-delivery staff—the field agents.
I also see a pattern overarching several of the Themes of the Evidence Project. Microfinance seems to achieve some benefits almost regardless of the delivery strategy or its quality while achievement of other benefits is quite sensitive to strategy and quality. For example, a wide variety of microfinance programs seem to foster improvements in client household consumption smoothing and shock coping (Theme Four). In contrast, enterprise development (Theme Three) and social capital building (Theme Five) by microfinance providers require more concerted effort and more particular design features. Therefore, these outcomes are less likely to happen. Yet, these features, including special training for field agents to provide additional education and facilitation, are incremental elaborations of what good microfinance providers do anyway to support their client groups and the clients’ individual enterprises.
Providing health and nutrition education and/or facilitating access to services provided by other organizations adds a whole new layer of effort and skill. The inverse law applies even more: the more effort and skill required by the program design, the more often it is implemented poorly, if at all. And the more likely it must be done well to have the intended positive impacts. Freedom from Hunger’s historical portfolio of partnerships with financial service providers illustrates the full range of implementation strengths and weaknesses. And we have the evidence to show that quality of implementation strongly affects the likelihood of impact. Microfinance and Health Protection (MAHP) programs are subject to the same inverse law, but the greater complexity of MAHP (health education plus) signals to provider management more clearly than does the simpler Credit with Education (just education) that the microfinance provider should not get involved unless its managers are willing to make the necessary commitment to quality delivery, meaning quality field agents.
We should not be discouraged by these discoveries, only more committed to the task at hand and realistic in our expectation of consistently high-quality performance across a variety of institutions. Generating more value for the poor means working harder and smarter and running the risk of stumbling and even falling. Integration of microfinance with interventions to improve client-household health and nutrition is unlikely to fit the objectives and capabilities of every microfinance provider or even the majority of providers. On the bright side, Freedom from Hunger has become quite effective at pre-qualifying microfinance providers before partnering with them to develop good-quality microfinance-health programs. With our technical assistance and training, the majority of these partners have designed and implemented them well.
Now I can expand Freedom from Hunger’s Theory of Change diagram to include what we’ve learned in Theme Six. I refer you to post # 18 for details of how to read this diagram.
I consider the evidence of impact on health and nutrition knowledge and practice to be as strong as it is for Theme Four (asset accumulation and consumption-smoothing). So the oval is light blue (= very good but not the “greatest” evidence). However, the likelihood of impact on health and nutrition knowledge and practice of the average member household is modest, because of uneven implementation. Microfinance providers have to work intentionally and diligently to achieve health and nutrition impact objectives. Weak performance may not produce much, if any, impact on knowledge, much less on practice, and even less on health and nutrition status.
Other than malaria prevention and treatment education for Saving for Change groups, there is little attempted implementation in savings group programs compared to Credit with Education programs. The likelihood of impact is modest for Credit with Education groups but even less so for Saving for Change groups because of the limited (one year) attention by field agents and the frequency of replication without malaria education. Therefore, I have drawn the arrow from credit groups at third-level width (medium likelihood) and from savings groups at second-level width (weak likelihood) on the five-point spectrum.
As always, these broad-brush conclusions are subject to revision as new, good-quality evidence is reported.
Onward to Theme Seven: Business Case for Credit-led Microfinance Integrated with Nonfinancial Services