MICROFINANCE PLUS

Recently, I have been researching for a short paper that a colleague of mine, Akhand Tiwari, and I plan to write on microfinance plus activities. We want to discuss whether microfinance institutions (MFIs) can effectively play a role in issues outside of microfinance, or whether MFIs should stick to their core competency providing credit (and other financial services). Yet, I have reached a pretty early stumbling point; I am struggling to define microfinance plus activities, and even more fundamentally, microfinance activities. What is included within the traditional microfinance umbrella, would it include health insurance or is this a plus activity? After some searching and thinking, I have come upon a definition that I think is a good starting point for defining microfinance. It comes from the Grameen Foundation site (here), and follows below: "Microcredit refers specifically to loans and the credit needs of clients, while microfinance covers a broader range of financial services that create a wider range of opportunities for success. Examples of these additional financial services include savings, insurance, housing loans and remittance transfers." I agree with the above definition because non-traditional financial products (e.g., health or crop insurance, loans for education) still are financial by nature, and should be thought of as microfinance products. That said, what could microfinance plus activities include? Back to the Grameen Foundation, which explains microfinance plus in the following manner: "The local MFI might also offer microfinance plus activities such as entrepreneurial and life skills training, and advice on topics such as health and nutrition, sanitation, improving living conditions, and the importance of educating children." Building on this definition and current microfinance plus activities out in the field, I have come up with the following list of potential microfinance plus activities: 1. Financial literacy training (SEWA Bank in Ahmedabad) 2. Entrepreneurial/business skills training (Mann Deshi in Maharashtra) 3. Health education 4. Helping establish co-ops (e.g., dairy) 5. Market linkages

iv. Credit Plus Services A common trend of micro-credit programs in Bangladesh is to provide economic support to the target beneficiaries to enhance their economical condition only. As a result of that different Income Generating Activities (IGAs) are suggested to undertake by the beneficiaries through disbursement of donor funds. Unfortunately most of the micro credit programs do not critically analyze the sociocultural and sustainability aspects. Many organizations are now promoting micro-credit as a tool for economic development for the target beneficiaries. Therefore, economic upliftment as well as self-employment generation are being observed among different communities. But, unfortunately these are not positively influencing different social factors. As a consequence, sustainable changes in the life of targeted beneficiaries are not being observed. It is true that credit is one of the essential inputs for increasing the economic status of the poor if it can be integrated with the development process. Otherwise, micro finance may reach to the saturation point and may slide back due to ignorance, lack of diversified skill, less health concerns and other reasons. Therefore, the Executive Director, BEES introduced an innovative approach Credit plus Services under micro-finance program. He believes that parallel to financial support, people need to widen their periphery of knowledge and skill and; fulfill social requirements as well. This approach promotes nurturing of human qualities and; valuing social norms and cultures. BEES has

introduced this approach since last three years and a good number of beneficiaries are brought under these facilities on pilot basis. Micro-credit implementation alone without any other program component does not necessarily helps social development, changes in human attitudes, behavior, knowledge and practices. BEES provides Credit plus Services, which are linked with other essential services in a participatory manner. Under the program BEES has introduced basic health & nutrition, education, agriculture & social forestry, poultry and livestock program along with IGAs to the potential beneficiaries, which have direct impact on their welfare. In order to reinforce the program, training and other support inputs are also given to the beneficiaries. Monitoring is carried out regularly to observe the effectiveness of the approach. The Credit plus Services has been well received by the beneficiaries. Considering the demand of these facilities, BEES has a plan to expand this approach among all the target beneficiaries. In general, the available services under this approach through BEES are: General and Reproductive Health Services Antenatal care, Post-natal care, safe delivery, family planning counseling, adolescent health counseling, and referral services for STD/RTI and HIV/AIDS, free diagnosis, prescription, counseling and medicine supply to the poorest and referral services. Training Modern agricultural technology transfer, seed production and storing technology, fruits and vegetable production technology, small poultry firming and cattle rearing & fattening, rice-fish production technology, agro-forest nursery management, PHC, MCH-FP, adolescent health, food & nutrition, group formation and leadership development, group dynamism and other skill development training and monitoring. Input Delivery Services Distribution of seed, seedlings and saplings, fertilizers, fencing, supervision and follow-up, etc. The target beneficiaries receive these and other related services through group meetings and; static and satellite clinics established by BEES making them Human Capital in production. The appropriate Financial Services for this group of people are different from traditional microfinance, and those are: q Initial loan ceiling very small; q Loans coupled with grant for capacity building, consumption smothering and other life cycle requirement; q Flexible repayment installments/period; q Flexible rules for group exercise; q Flexible savings system; q Built-in insurance system; q Training for IGA-beneficiaries and for staff of the institutions; q Direct food subsidy to improve nutrition and health status of the target population; q Rehabilitation during disaster period; q Developing community based infrastructure, which will have direct impact on welfare of the extreme poor.