Health-Care Provision Meets Microcredit Finance in Argentina: Microcredit Loans Have Transformed the Lives of Impoverished People in Many Countries by Allowing Them to Start Businesses. but Increasingly Microcredit Banks Are Realizing That Providing Some Kind of Health Coverage in Tandem with the Loans Is Essential If They Want to Fulfil Their Mission to Improve Lives

Article excerpt

Just north-east of the city of Salta, Argentina, Yolanda Alderete works from her cinderblock home making items such as baskets, chests and mirror frames out of recycled paper to earn a living. She is one of thousands of people in Argentina who do not qualify for a conventional bank loan.

But Alderete is a client of Banco Mundial de la Mujer, Women's World Bank--Argentina (BMM). BMM disburses loans from 500 pesos (about US$ 160) to help people lift themselves out of poverty by starting a business.

The bank currently has 5000 accounts and has already had 50 000 loans reimbursed. "Some clients take up to 30 loans, one after the other," says Silvia Nicolea, president of BMM in Argentina.

The bank is the only credit option for many people.

"Our clients have no place in the formal system," says Nicolea, referring to Argentina's commercial banking system. "To have access to private banking, people need to be registered and pay taxes. Our clients constitute part of the informal economy. Most have recently moved from rural to urban areas and practise manual trades."

Alderete is typical of BMM's clients. She works six days a week, making and selling products at markets or in the streets around Salta city. Three of her seven children help with the business, as does her husband.

"I learned this skill at a community centre seven years ago. My work comes from the heart," says Alderete. The loan from BMM has allowed her to turn a hobby into a business that supports her family.

The loans from BMM have been critical to her business, but without the health-care coverage the bank provides she would have risked having to default on the loan to pay medical bills if she or a member of her family had become ill.

"Argentina's public health system has all but collapsed," says Nicolea. "People who do not have social security or health coverage with BMM pay US$ 50-150 per month for prepaid medical services. Most of our clients cannot afford this amount because they earn around US$ 500 per month."

To the bank, providing health-care coverage has become as important as the business of lending money to improve lives.

BMM acted to take care of the health of clients like Alderete in March 2006, by signing agreements with two health-care companies: MEDICOS in Salta province and SER-CEGIN in the province of Jujuy. Since then, BMM clients in these provinces automatically gain access to health care services through a card that comes free with the loan.

Through a system of affiliated doctors, the card gives clients and their extended families access to a host of health care services such as gynaecology, paediatrics, dental services, ophthalmology, cardiology and general medicine. However, it does not cover them if they need hospital care.

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The bank pays the health-care companies US$1.70 monthly for each client. "This means that people only pay a third of the cost of a visit to the doctor," says Nicolea. …