The impact of a microfinance program on client perceptions of the quality of care provided by private sector midwives in Uganda

Health Services Research, Dec, 2004 by Sohail Agha, Asma Balal, Francis Ogojo-Okello

In recent years, there has been considerable interest in understanding and augmenting the role of the private sector in the provision of reproductive health services in developing countries. Although there are some concerns, due the absence of regulatory mechanisms, about the quality of services that are provided by the private sector in developing countries (Brugha and Zwi 1998), health sector reform, the recognition of the potential for greater efficiencies in resource allocation through market segmentation (Sine 2002; Foreit 2002), contraceptive security concerns, and the potential for rapidly scaling up the provision of reproductive health services drive an interest in the private sector.

Efforts to increase the quality and viability of the private sector supply of health services in developing countries have included franchising and accreditation schemes (Mills et al. 2002). Microfinance is a mechanism with the potential to increase the quality and viability of services offered by small-scale private providers such as midwives. Microfinance may also be used, within a social franchise framework, to help establish relationships between a franchisor and a franchisee.

Although they run their practices as businesses, many small-scale providers lack access to capital investment that could be used to improve the quality or increase the range of services that they offer. Moreover, they lack the business skills needed to make their practices more viable. Training providers and enabling them to make financial investments in their health practices may help them to increase the quality and the viability of their services.

This study assesses the impact of a microfinance program on client perceptions of the quality of care offered at private midwife clinics. The main objective of the loan program was to improve the viability of midwife practices by increasing client flows (through greater client loyalty and the establishment of the clinic reputation for quality services), by increasing sources of revenue (from an increased range of services and the consistent availability of drugs), and by a higher level of provider savings. Improving the technical quality of service provision was not an explicit objective of the intervention. Improvements in the perceived quality of care may be expected to lead to increased client flows by leading to greater retention of current clients or by attracting new clients.

BACKGROUND

Between the 1950s and 1970s, microfinance programs supported by governments and donors primarily focused on providing subsidized agricultural credit to small and marginal farmers to improve farm productivity. During the 1980s, microcredit was targeted at poor women to enable them to invest in small-scale businesses and generate income for their households. The emergence of microfinance institutions (MFIs) spurred growth and diversity in microfinance projects in developing countries. Donor efforts to increase resources for microfinance were accelerated in 199,5 after the establishment of the Consultative Group to Assist the Poorest (World Bank 1999). The rationale for microfinance is to facilitate the availability of credit for lower-income individuals who are unable to get credit through mainstream banks. Lower-income entrepreneurs are not typically served by commercial financial institutions due to a variety of reasons, such as the high cost of small transactions, the lack of traditional collateral, and geographic isolation. Micro finance facilitates access to credit for the poor by allowing small loans (sometimes less than US$50), and relaxing collateral requirements by accepting "social collateral" through group-lending schemes where members of the group co-guarantee each other's loans. This method became well known after the Grameen Bank experience in Bangladesh (Adams and Fitchett 1992).

Microfinance schemes have the primary objective of alleviating poverty, though the functional areas of emphasis may vary from one program to the other. Some of the intermediate objectives typically include empowerment of women, increases in assets, and children's schooling. There is little documentation of microfinance programs designed for small-scale private health care providers. In many countries, small-scale health providers are considered "unbankable" and cannot access credit through local commercial banks because they do not have adequate collateral and because small loans are too costly for a bank to process.

There appears to be only one documented instance of the use of microcredit to strengthen the delivery of reproductive health services. In Indonesia, a revolving loan fund was used to help train midwives to establish or expand private practices delivering family planning and reproductive health services. Although no formal impact evaluation was conducted, midwives reported an average of 207 new family planning clients within a year of receiving loans (Summa Foundation n.d.).

No published study has assessed the impact of a microfinance program on the perceived quality of services available at health facilities in developing countries. Evidence does indicate, however, that microfinance programs can lead to improvements in the quality of life: studies show the positive impact of microfinance programs on consumption, asset accumulation, in reducing domestic violence and on an overall improvement in living conditions (MkNelly and Watetip 1993; Montgomery, Bhattacharya, and Hulme 1996; Schuler et al. 1996).