Microfinance cannot by itself alleviate poverty. The poor need a combination between microfinance and other development services to improve their conditions (Dunford 2002). In this blog acting as a research and development manager in Small Enterprise Foundation (SEF) in South Africa (SA), I recommend integrating a HIV/AIDS education and prevention program service to increase the outreach to the poorer women clients. First, I will give an overview on SEF outlining its pro-poor features. Second, I will identify the needs of women in rural areas of SA suffering from HIV/AIDS. Third, I will illustrate the feasibility and effectiveness of applying the unified model in delivering HIV/AIDS education service in SEF following the Credit with Education program developed by Freedom from Hunger (FFH) organization. Finally, I will analyse the strengths and limitations of this outreach service model.
Brief Overview on SEF
SEF is a local non-for-profit microfinance institution that was established in South Africa (SA) in 1992 (SEF 2014). SEF’s mission is to work towards the alleviation of poverty (SEF 2014). It started its operation by providing financial services through a Microcredit Program (MCP) which utilized group-based microcredit methodology following the Grameen bank in Bangladesh. To illustrate the clients who require loan for their small business form a group of five and they are required to guarantee each other’s payment to be eligible for more credit (SEF 20114). Approximately 40 women gather fortnightly in loan centres to repay loans, apply for additional and discuss business plans (USAID n.d.).
Pro-Poor Approach Features of SEF
SFE is characterised with its pro-poor approach (SEF 2014). First, its area of operation is Limpopo Province, where 60 % of households live below the poverty line and 40% live below half this line. Second, in 1996 SEF established a special program, the “Tšhomišano Credit Program” (TCP) that targeted the poorest 30% of households in the province and especially women (SEF 2014; The Seep Network 2006). Third, it offers non-financial services of business skills development in addition to its financial services (The Seep Network 2006). Fourth, it uses the Participatory Wealth Ranking promoted by the Microcredit Summit Campaign as a poverty targeting tool. The following video shows this method:
Fifth, SEF gained international recognition for its success in reaching and ensuring positive impact on the very poor. For example in 2012, SEF received α (alpha) social rating by Micro-Credit Ratings International Limited (M-CRIL) which is the world’s leading microfinance rating agency (SEF 2014). The rating α (alpha) is an indication for strong social commitment, very good systems, and evidence for good adherence to social mission and values (Micro-Credit Rating International Ltd. 2009). Moreover, SEF is recognised for milestone achievement towards Pro-Poor Principles by Truelift (SEF 2014) which is a global initiative that renews focus on the pro-poor objective of microfinance (Truelift n.d.). Finally, in 2013 SEF was successfully complied with the Progress Out of Poverty Index (PPI) standards of use for Advanced Certification (SEF 2014) which is a poverty measurement tool for organizations and businesses with a mission to serve the poor (Progress Out of Poverty 2014). All these indicators show that SEF works with a pro-poor approach.
The Needs of Women with HIV/AIDS
South Africa has the largest number of people living with HIV in the world (UNAIDS 2104). In 2012 it was estimated that more than 3.4 million women are living with HIV/AIDS in SA (UNAIDS n.d.). Thus, women continue to be the worstaffected by the HIV epidemic in SA (UNAIDS 2014). The financial costs of illness and the seeking treatment is a large burden on poor households (Leatherman et al. 2011). The health shocks on clients due to HIV/AIDS can lead to reduced income due to loss of productive labour, increase in the households’ expenditures due to medical treatment as well as funeral costs, inability to pay the school enrolment fees for their children, and thus will force them to delay or default on their loan repayment (Leatherman et al. 2011; McDonagh 2001). In order to tackle these challenges there are three main client’s needs or market demands that MFIs can support; (1) adequate health information and knowledge about HIV/AID, (2) availability of effective healthcare products/services, and (3) financial ability to pay for health treatments and services (Leatherman et al. 2011).
HIV/AIDS Education and Prevention Service
In order to reduce the impact of HIV/AIDS on the clients, community, and SEF, I suggest implementing and mainstreaming an outreach service which will focus on raising awareness through health education following the well-known example Credit with Education program of FFH. To date FFH has reached more than 1.6 million people in 17 countries across Africa, Asia, and Latin America (Freedom from Hunger 2014). This suggestion comes from a deep belief that raising awareness and the dissemination of knowledge and information will lead to behaviour change to the clients (McDonagh 2001).
Unified Service Model
The unified service delivery model means that the same staff of the same MFI offers both microfinance and other non-financial service to the same clients in need (Dunford 2002). This model is based on group-lending approach where the field officer from MFI during the weekly or fortnightly group meeting in the village (or loan centres), fulfils dual responsibilities of administering the loans and leading a 30 minutes education session (Flores & Serre 2009). The education sessions could be delivered through sharing stories, role-plays, discussion, and songs (FFH 2014). FFH has developed several educations models on issues such as health, nutrition, business and money management. But in our case we will focus on HIV/AIDS education and prevention topics.
The Unified Model is Applicable to the Capacity of SEF
I believe that the unified service model is appropriate to the capacity of SEF. SEF as mentioned previously has a strong social mission, very strong system management, broad outreach, solid access, and good access to donor funding. SEF is also a local organization which means that the field staffs have a good knowledge of the South African culture, context, and language. Moreover, SEF uses the group-based lending approach which is essential for the unified service model as it provides a good forum for education. To demonstrate the HIV/AIDS education and prevention curriculum will be integrated in the existing group meetings that take place each 2 weeks. Furthermore, SEF has previously contributed in a five year study experiment on women with HIV/AIDS through Intervention with Microfinance for AIDS and Gender Equality (IMAGE) project which gave the organization a very good experience in dealings with such issue (USAID d.d.). All these show that the unity model is applicable to SEF.
Positive Impact of Outreach Service on Women
Integrating HIV/AIDS education and prevention program using unified model is also useful for women. For example in Uganda it was found that 32 % of women who received education about HIV/AIDS prevention through microcredit groups tried at least one HIV/AIDS prevention practice, compared to 18 % of non-clients (Leatherman 2002). Moreover, the IMAGE project has proved that combining HIV/AIDS education with microcredit can have a positive impact on the economic well-being of clients, women’s empowerment and reduced HIV risk behaviour (UNAID n.d.).
Strengths of Model
There are also several strength points in adopting HIV/AIDS education and prevention unified service model. First, it is more cost-effective (Dunford 2002) because one staff provides two services (Dunford 2013b). Second, health education services in general and HIV/AIDS in particular improves the living conditions of clients hence there capacity to repay loan and access other financial services (Flores and Serres 2009). Third, non-financial services such as health education increases the clients’ loyalty, makes them continue their on-time repayment, and gives the institution a competitive advantages than other MFIs (Dunford 2002). Fourth, through this model the cross- subsidy from microfinance to education can be sufficient to sustain education that is why it is the most likely model to be sustainable for MFIs (Dunford 2002; Dinford2013b). Finally, it gives a full ownership of MFI because it is one organization that is implementing both services to same clients.
Limitations of Model
However of all these advantages there are some limitations. It may seem a challenge for the MFI to maintain balance between the qualities of two types of service (Dunford 2002). Second, the quality of education in particular is likely to be lower because it is offered by a generalist field staff who is still not a specialist in health education (Leatherman 2011).Finally, it might be challenging to recruit, train, and supervise a multi-tasked field staff (Dunford 2013b).
To conclude, access to financial services is important in the alleviation of poverty but it is not sufficient to address multi-dimensional challenges and needs of poor people. Accordingly, it is important for MFIs in general to provide combination of financial and nonfinancial services to their clients. It was suggested that SEF with its pro-poor features has the feasibility to develop HIV/AIDS education and prevention program to its clients in SA. Adopting FFH’s Credit with Education program through the unity model was considered the most cost-effective and effective approach to raise awareness of HIV/AIDS which will lead to change in behaviour of clients and hence the capacity to repay their loans.
Dunford, C 2002, ‘Building Better Lives: Sustainable Integration of Microfinance with Education in Child Survival, reproductive Health, and HIV/AIDS Prevention for Poorest Entrepreneurs’, in Daley-Harris, S, Pathways Out of Poverty: Innovations in Microfinance for the Poorest Families, Kumarian Press Inc., United states of America, pp.75-132.
Dunford, C 2013a, ‘When Client Needs and Provider Responses Go Beyond Financial Services’, blog, 11 April, The Evidence Project Freedom from Hunger, viewed on 12 May 2014 <http://microfinanceandworldhunger.org/2013/04/when-client-needs-and-provider-responses-go-beyond-financial-services/#sthash.2kwtnILS.dpuf>.
Dunford, C 2013b, ‘Arguments For and Against Integrating Financial and Nonfinancial’, blog 14 April, Freedom from Hunger, viewed on 12 May 214 < http://microfinanceandworldhunger.org/2013/04/arguments-for-and-against-integrating-financial-and-nonfinancial-services/>
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