Frederic RuazMicrofinancing in Burkina Faso
What really strikes the traveler arriving by air in Ouagadougou, the capital of Burkina Faso, is the obvious poverty. From the plane, one can see the small huts where large families live in this capital city. Typically, the wood of the hut is red, dirtied by the dust and its sheet metal roof provides no protection from the elements. Burkina Faso, a landlocked nation in West Africa, is one of the poorest countries on the continent. In the capital, more than 50% of the population lives on less than $1USD. The situation is even worse in the rural part of the country where the illiteracy rate is over 80%! In this city of one million inhabitants, the airport is a small warehouse and the only international company is Air France (Burkina Faso was a colony of France until the 1960s). Making business in this country should be not easy and implementing microfinance loan would be quite challenging.
I’ve been trying to put my responsibilities here into context. As part of the MAHP, I am collecting and analyzing the results of a beta test of micro-lending. Ouahigouya, Yako and Gourcy are three towns in north Burkina where micro-financing health loans were issued in anticipation of their national implementation. But - how can I develop a micro-loan system if I do not know the cost of medicines? It cost between $4 and $300 to cure malaria, the most common disease. But in Burkina Faso, one of the poorest nations in the world, many families cannot even afford to eat rice (with $25, one can feed a family of 8 to 10 members during one week). In February, riots over the constantly rising prices of basics like food, gas and cloth shocked Ouagadougou. Clearly the inflation and the rise in food prices are also challenges.
These are three towns in the poorest part of one of the poorest countries in Africa. Gathered here are all the challenge we face developing micro-finance: poverty, illiteracy (how to explain the principle of loan and interest, of to identify the beneficiaries, to make people sign), distance, lack of communication…
I’ve found that one opportunity to understanding the local context, and dialoguing with those taking out the loans, is through Burkina Faso’s blend of Muslim and African cultures – both of which have a long tradition of friendliness, hospitality and warm welcomes. One of my first tasks was to meet all the peers and executives I will work with for very long presentation meeting. These courtesy visits could seem useless, but are indeed necessary to gain confidence from colleagues.
Despite all of these disadvantages and a much different way of conducting business and meetings, there are some encouraging signs. People are really interested by micro-loans and, results show, are able to pay off these loans without delay! It looks like we can make a positive impact on the health of the Burkinabé.
I will stay one week in North Burkina Faso and return on a regularly basis.
Journal 2:
In the region of Ouahigouya, it rains two months per year in the region. During that precious time, the mostly-rural population harvests millet, corn and a little rice, providing a case study on how Ouahigouya farmers can use microfinance to improve their health and wealth as they bridge the seasons. In general merchants borrow between $50 and $100 during of the rainy season in order to buy crops, transport their goods or equip their stand. They repay the full amount at the end of the year.
Rain brings the water necessary for life, but also is the origin of maladies including typhoid fever and malaria. Many diseases are not treated due to poverty and often worsen; forcing sick people to stop their commerce and prevents them from repaying loans. Supported by Freedom From Hunger, the bank has consequently developed a separate program for health micro-loans. The objective is not just to provide a cure to the poorest people, but to spread the cost of an illness over a year so recipients can afford to treat their first symptoms. Another benefit is the educational value Ouahigouya inhabitants gain when they consult with a doctor. In this way, the loan also protects the micro-enterprise on which entire families depend, and reduces risk for the microfinance institution.
In reality, the health loan functions as a benefits package. In order to be eligible for a health loan, an individual must first open a health savings account. In six months, he or she is able to save $30 on average. This amount can be used only if the subscriber or family is sick, and documentation is required. The account is a seed to future security. If the sum in the account is insufficient for required treatment, the saver can borrow up to $600 “to finance more tests or hospitalization,” explains doctor Cisse. The subscriber can participate in group information sessions on topics like hygiene or preventative care. In nearby villages - and also in Ouahigouya – few “Burkinabe” have knowledge about even basic healthcare. One of the first lessons is just to explain whether an illness is grave or not, when to go to the doctor or not.
One of the main targets of MicroFinance Institution (MFI) is women. African women work as hard, if not harder, than their husbands. They take care of the children, feed the livestock, till the field and sell the harvest in the local market. Given all that they do and take care of, targeting women for health savings and health loans make sense not only for business but as a social decision. In many villages, women organize themselves in “working group” to form small cooperative enterprise. They call this group of 10 to 20 women “Caisse Villageoise.” The group borrows $100, as would every company, to fund a small business. Micro finance helps women to gain confidence and dignity, as well as independent incomes, in the very masculine African society.
However, most subscribers of health financial products are men. Few women have a guarantee, or even identification; that is why they borrow money as a group. Usually, only the leaders of the group have ID. But a health loan is necessarily an individual credit. Nobody can borrow money for another individual. I’ve realized that we need a new mechanism to deal with these contradictions. I hope to develop a process where the Caisse Villageoise would guarantee the health loan for a sick woman. The group leaders would then be responsible for ensuring repayment.
Journal 3:
Second trip in Ouahigouya, Yako and Gourcy – Burkina Faso
Part of my job is to lead a focus group among microfinance clients. The feedback is used not only for marketing purpose, but more so to detect problems and to improve the financial service. Information and communication appear to be huge problems in Burkina Faso. Many clients of the health loan don’t know its conditions. In the north area, some people barely speak French (the official language). More than 95% of the north Burkina population is illiterate.
The only way to promote the health loan is to organize regular information, or ‘town hall,’ meetings in order to convince people to subscribe to these financial products. Usually, the MFI talks to a person 3 times before convincing them to subscribe. Yet, clients and potential clients do not understand they need a prescription to qualify for the loan, and often end up traveling from distant villages more than once. Even the cashier and the credit managers do not receive the latest update. The post office does not work. Internet is not widespread. The phone is pretty expensive and not very convenient. This context can, and does, easily create misunderstandings between clients and cashiers. It’s evident that the condition and the characteristics of the products really need to be clarified and simplified.
July and August are the rainy season in Burkina Faso. There are frequent storms which flood the streets and the roads. People cannot come to the MFI office to pay back and sometime cannot even work. There is no market when it’s raining. The MFI ask for a monthly reimbursement, but this frequency is perhaps not well adapted to the weather conditions. It’s another barrier we are working to overcome.
