Wednesday, January 18, 2012

Learning from the tumultuous history of microcredit in India

Arogya Parivar, the rural healthcare initiative created by Novartis, uses a unique approach to equip rural healthcare facilities with the machines they need to serve their cliente. AP partners with local microfinance institutions (MFIs) to create microcredit facilities used to finance the purchase of new equipment. This is a well worn idea in the world of development: provide banking services to un-banked population to help them work their way out of poverty (or ill health, in this case). While India has been fertile ground of MFIs, it also was the setting for an ugly evolution of the practice only a couple years ago.

Fortunately, Novartis has designed their scheme to minimize unnecessary and burdensome lending at the rural clinic level. They identify needs a the rural level and connect the MFIs with the equipment providers. Funds do not pass through the hands of doctors or rural clinicians and they are not responsible for the (often timely) process of applying for loans. This set up allows health professions to provide more care and removes the risk of clinics acquiring unnecessary equipment and overly burdensome debt.

- Casey

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