Paper

Microfinance: A Selective Introduction with Special Focus on HIV/AIDS

Provision for additional services by MFIs to combat HIV/AIDS
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This paper discusses the effects of HIV/AIDS on microfinance institutions (MFIs) and strategies to be adopted by these institutions in combating this pandemic.

The paper provides a brief introduction of microfinance and highlights:

  • Types of financial services routed through MFI;
  • Different actors involved in microfinance activities;
  • Critical factors for achieving financial sustainability and increasing outreach;
  • Role of microfinance in achieving the millennium development goals.

The paper states the following two main approaches for providing additional services such as education and healthcare through MFI:

  • Parallel approach;
  • Integrated approach.

It then presents learnings based on the experiences of institutions working in areas affected by HIV/AIDS:

  • Direct targeting of credit to HIV/AIDS infected is extremely risky and should be avoided;
  • The microfinance system:
    • Represents a cost effective way for promoting services and information,
    • Reduces operational costs and risks for insurance provider;
  • Strategic partnership with health insurance providers and organizations specialized in fighting HIV/AIDS is a win-win situation.

The paper elucidates the:

  • Effect of HIV/AIDS on MFI staff;
  • Financial risks associated with providing credit to a HIV infected person.

Finally, it highlights the strategies that should be adopted by MFIs working in areas affected with HIV/AIDS:

  • Awareness creation among clients through partnership with HIV/AIDS institutions;
  • Provision of new products such as insurance of outstanding balance against death of client;
  • Seeking of support from donor agencies to introduce pilots on new products.

About this Publication

By Bondevik, P.
Published