The Marginal Cost of Integrating Microfinance with Education Using the Unified Approach

This paper was commissioned by the Microcredit Summit Campaign in 2006.The study examines the methodology of 'Credit with Education' that integrates two services: financial and non-financial. The paper states that:

• Non-financial services are related to satisfaction, loyalty and indexes of client default;
• Organizations that work with the Credit with Education services have shown that it is possible to render efficient educational services during borrower group meetings;
• This helps in the efficient use of resources and the consolidation of an institution with social objectives.

The paper is divided into the following sections:

• An analysis of the different forms of integrating education with financial services;
• A description of the methodology used by CRECER - a Bolivian institution that uses the unified services approach - with a detailed look at the procedures;
• A cost survey of the educational component that specifies the method and the results of the cost analysis;
• A presentation of arguments related not only to the investments of financial services, but also the results and impacts generated by them.

The study concludes that:

• There is a marginal cost to providing education as a unified service to clients from inside a financial institution;
• However, there are many more benefits to the clients as well as to the institution;
• Cost analysis is an important tool to analyze the feasibility and sustainability of non-financial services linked to financial ones.