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Fighting Malaria with Microfinance?

David McKenzie's picture

Diseases like malaria, diarrhea and intestinal worms plague hundreds of millions of people in the developing world. A major puzzle for development researchers and practitioners is why the poor do not purchase available prevention technologies that could reduce the burden of these diseases. While much of the recent literature has focused on price elasticities of demand and behavioral explanations, another potential explanation is that liquidity constraints prevent the poor from undertaking profitable health investments. If this is the main barrier, microfinance could potentially help overcome it.

A new experiment in Orissa, India conducted by Alessandro Tarozzi, Aprajit Mahajan and four other researchers tests whether micro consumer loans can increase adoption of insectide-treated bednets and improve health outcomes, and compares these effects to those achieved with free distribution. Key details are as follows:

Context: villages in rural Orissa, India in which BISWA, a micro-lender, was already operating. Orissa is one of the poorest states in India and the state with the highest incidence of malaria. About 20% of individuals in the study tested positive for malaria. So following the criteria in my external validity rant, this seems an appropriate and interesting location for such a study.

Sample: 141 villages, randomized at the village level into 3 groups of 47 villages each. 15 households per village who were existing BISWA clients were then randomly selected to be interviewed (although the intervention was done with all BISWA clients, which constitute about 20% of the households in the village). Total baseline sample is 1,844 households with 10,062 individuals.

Interventions: Villages were randomly allocated into control, micro-loans, and free distribution. All three groups got a brief information session on malaria prevention. BISWA households in the free treatment villages received at no cost a number of betnets determined by their household compostion; BISWA households in the micro-loan treatment villages were offered contracts for purchase of bednets and re-treatments of insecticide using consumer loans at 20% (the lender’s standard interest rate) with a one-year repayment period. Bednets in the loan treatment were at market prices, about the cost of 20kg of rice.

Timing: Impacts were measured at between 1 year and 18 months after treatment.

So what did they find?

·        The Good: 52% of households in the micro-loan treatment purchased at least one bednet, almost all on credit (despite the option to pay cash).

·         The not-so-good: take-up and usage of bednets in the micro-loan villages fell well short of those in the free distribution villages: At follow-up, 16 percent of individuals in micro-loan villages used a treated net the previous night, vs 2 percent in control villages and 47 percent in free-distribution villages.

·         The surprising bad news – no health improvements: neither micro-loans nor free distribution led to reductions in the proportion of individuals infected with malaria, nor to reductions in anemia prevalence. Both were measured using rapid diagnostic tests which took small blood samples. This is a relatively precise zero with the point estimates actually giving slightly (but not significantly) higher prevalence levels in treated areas.

·         The other bad news for microfinance: These were one year loans. At follow-up 1-1.5 years later, only 49% had been repaid in full, and 20% of households with loans had not repaid anything.

What is going on? The authors examine several explanations for the lack of a health effect, and conclude that the most likely reason is that the distribution programs didn’t achieve sufficient village-wide coverage (they were only offered to BISWA clients) or sufficient regular usage (there were not intensive follow-ups to encourage usage), to break the cycle of malaria transmission – as with the studies of worms, the externalities from others really matter here.

Note also that the study gives an upper bound on how much difference micro-finance can make – since the study also effectively is a supply intervention as well, by directly marketing the bednets to households in the treated villages but not directly marketing them to households in the control villages, the authors can’t separate how much is due to liquidity constraints vs this additional marketing effect.

On one hand the fact that 52% of treated households actually borrowed to take a net is really high, and potentially encouraging for micro-finance. But these were all existing BISWA clients – microfinance borrowers in many places might do anything their lender tells them or suggests that they do, either because the microfinance organization has built up trust, or because the borrowers think it will help them in getting future loans. We know that take-up for microfinance in the general population tends to be quite low in many places. Given this, it seems microfinance alone is unlikely to be enough for diseases in which collective action to break externalities matters. I would be interested to know whether micro-loans have more potential for health technologies which work well even if you are the only one in the village using them?


Submitted by Swati Mishra on
David, Nice to see this post. Coming from Orissa and having spent my childhood in some of the rural parts of Orissa, I can relate to this problem. Re 'micro-loans having more potential for health technologies', I guess it depends. What I have seen, at least in the western and coastal Orissa, microfinance is considered as an avenue to build up entrepreneurial activities. However, women Self Help Groups have gone a step further and utilised the profits from their enterprises to build health facilities in their slums or villages. Also, many lack proper information re the various usages and as you mentioned rely on MFIs guidance. Nonetheless, this is a great initiative and certainly has potential to do well. Thanks for sharing this. Swati

Submitted by Maroti Upare on
It is interesting and important study.As the poor are victims of malaria due to financial resource constraint for protecting from malaria. I have conducted study for women micro-enterprises in coastal Orissa under FAO. It was observed that health hazard was major problem for fishing community .Malaria is prominent since they do not have pacca houses.They stay in huts with poor sanitation hence such help for providing treated mosquito nets will certainly help to enhance health standard and will prevent them from malaria.Microfinance institutions should take initiatives for providing loans for purchase of nets.

Submitted by Bobbi Gray on
Dear David, I found your post and this research very interesting. I’m not surprised at the higher ownership/take-up rates among those with free mosquito nets, since as you’ve stated, other randomized control trials have shown that free distribution tends to perform better when compared to mosquito nets sold at various prices. I have two comments on other dimensions of your research. The first comment is about the performance of the micro-credit for purchase of the mosquito nets and how take-up is often related to internal and external marketing and communication about the financial product. Freedom from Hunger worked with Bandhan in India, CRECER in Bolivia, and RCPB in Burkina Faso to develop health loans for a wide-range of medical needs. All three, although mature microfinance institutions, had difficulty in the initial roll-out of these health loans (and therefore, the subsequent use of health services and products). The reasons varied somewhat. CRECER, primarily offering group financial services, had to figure out how to provide an individualized loan to its clients and how to market these loans effectively. In the first year, they had very poor repayment (compared to their group loans) but much of this was an internal communication issue about how to manage the provision and repayment of these loans. After the first year, their repayment rate improved greatly. RCPB already provided individual savings and loans but had to figure out how to market the loans effectively. Their product was actually a health savings account tied to a health loan. Clients had to reach a certain savings level before they could access the savings and if the savings were depleted due to a health cost, they could access a health loan. They had extremely low uptake of the health savings and loans in the first year of product availability. After making a huge marketing push, they went from 1,000 health savings accounts to 12,000 savings accounts in one year. Bandhan made access to the health loans somewhat cumbersome initially and eventually had to make the process easier for their clients to access the loans. Because of the risk of providing this type of loan, they had multiple levels of verification before the person received the loan. Eventually they streamlined this process so that clients could receive loans more rapidly and therefore reduce any delay in seeking treatment or for paying for their health expense. Interestingly, all three of these institutions provided their health loans at lower interest rates compared to their microenterprise loans. All the benefits of these health financing products are documented on Freedom from Hunger’s website (all non-RCT evaluated results at this point) so I won’t go into that here. But I think I’m actually posing a question as to whether the research team ran into any issues with BISWA or looked into how well the micro-loans were rolled out, marketed, and managed? My second comment is regarding the educational component you mention as being part of the treatment. Freedom from Hunger has conducted 2 RCTS looking at the benefit of malaria education among microfinance clients in West Africa. A summary of these results is located here: In brief, microfinance clients receiving malaria education in general own more nets and sleep under them. With the PADME study reference in this brief, we actually conducted the education with microfinance clients but had to do the measurement of differences among treatment and control groups at the community level—so PADME clients were only a small subset of the overall sample. We did not have the opportunity to look at actual infection rates or anemia, but the results are promising in terms of possible spill-over effects. Additionally, I think your point about the community-wide coverage of mosquito nets is really important…it takes community-wide coverage and use of insecticide treated mosquito nets to really reduce overall transmission rates in a community. However, along the same token, is that microfinance institutions can help support other community malaria programs, either by providing financing for health products as your research suggests, or providing health education that reinforces messages they hear through social marketing or public health campaigns. Freedom from Hunger had hoped to conduct a study as you did with BISWA with PADME in Benin (which is referenced in the malaria brief posted here) where we could look at a credit product to support the education they received on malaria, HIV/AIDS, and childhood illnesses, but they were new to the Credit with Education approach and we felt it necessary to work out the operational issues for integrating an education product with their credit product before introducing extra complexity. I would like to be able to explore the benefits of the malaria education in combination with either health financing (savings or loans) since we've been able to demonstrate malaria education among microfinance clients can be effective but our constraints are still access to and availability of mosquito nets as well as the costs to cover treatment when needed. -Bobbi Gray Research and Evaluation Specialist Freedom from Hunger

Thanks Bobbi for these great comments and examples. One clarification, this study was not done by me, but by Aprajit Mahajan, Alessandro Tarozzi, and four other researchers. I'll ask them if they have any follow-up comments to your post. The main issues of marketing and education are certainly important ones, which Jed tackles in Wednesday's post:

First, I would like to thank David for this post, and everyone for the comments. I would also like to mention the other four coauthor of our paper! They are Brian Blackburn (Stanford School of Medicine), Joanne Yoong (RAND), Lakshmi Krishan and Dan Kopf. Lakshmi and Dan are the ones who took care of implementing and supervising the field work in Orissa from 2007 to 2009, so I will ask them to add to my responses to Bobby if they think it would be useful. Bobby, what you write about health financing products is very interesting. In relation to our work, you first ask whether we "ran into any issues with BISWA or looked into how well the micro-loans were rolled out, marketed, and managed". I should first say that BISWA has been fundamental for the study. They gave us access to their areas of operations and to their clients' network. They designed the loan product and they had a key role in initiating contact with the study population, in implementing the sales, and in initiating the loans (which, it should be recalled, were not tied to standard BISWA loans or to any other product/initiative). However, despite the directives and interest from BISWA's Chairman (Dr Khirod Chanda Malick), in a number of cases the level of cooperation in the field was uneven, and in some areas it was our research team who had to take care of collecting repayments (the reasons for non-collection from the program officers is not entirely clear). About rolling out, BISWA ultimately decided to switch to a model were clients had to purchase ITNs as part of the main loan. Indeed, initially BISWA resisted the idea of allowing clients not to purchase the ITNs. In the end, we persuaded BISWA that from a policy perspective "forced loans" would have been much less compelling and scalable than voluntary purchases. In terms of the education campaigns we carried out, we have no evidence that it led to important changes. The campaign was short (about one hour), and most people in the area appeared to be relatively well acquainted with malaria and ITNs, although as we show in the paper ITNs were rarely found (but untreated nets were common). I would be happy to make the script of the information campaign available to anyone who is interested. We also show in the paper that we find no evidence of an increase in ITN ownership in control areas (where the information campaign was completed), and the small increase in untreated net usage can explained by the fact that the follow up survey was carried out during a period of more intense malaria transmission relative to baseline. However, I should add that we still have to analyze in detail additional data we collected from a new set of villages that were comparable to those we study in the paper but were not part of the baseline survey. In other words, these villages can be considered as a 4th experimental arm, a "true control" where no intervention at all was completed, including no education campaign and no baseline survey. This should lead to some interesting insights, because there is growing evidence that surveying itself modifies behavior (see for instance the recent paper by Alix Zwane et al in Proceedings of the National Academy of Sciences Preliminary results (to be confirmed) suggest that control areas and these other "true control areas" remained overall similar over time. On the other hand, as we mention in our paper, households that were included in the baseline survey were more likely to purchase ITNs on credit, or even to receive ITNs for free, relative to other BISWA households not interviewed at baseline. Finally, I would like to add a word of caution about the interpretation of our results in the context of the coverage vs. protection debate. In his first post, David correctly writes that in looking for an explanation of the lack of impact on malaria indices, we "conclude that the most likely reason is that the distribution programs didn’t achieve sufficient village-wide coverage (they were only offered to BISWA clients) or sufficient regular usage (there were not intensive follow-ups to encourage usage), to break the cycle of malaria transmission". But note that given the data, we cannot nail down this hypothesis conclusively, and indeed we use the word "conjecture" in the paper. So, I would strongly urge anyone interested in our results to read carefully section 5 of the paper (Limitations and Conclusions). In particular, we are not arguing, at all, that ITNs cannot be an effective tool against malaria. We do argue that not enough is known, yet, on the relative role of community effects vs. personal protection of ITNs, especially in real-life situations which are not part of highly controlled experimental conditions.

Submitted by Bobbi Gray on
Alessandro, thank you for your comprehensive reply. First of all, is the final paper available for download somewhere? Second, did you ask any questions in your survey about whether people were satisfied with the loan product they used to purchase the mosquito nets? It strikes me that someone would have an entire year to pay off a mosquito net. The uptake of the loan seems relatively high to purchase a bednet and then the poor repayment strikes me as being a fairly important operational issue and I wonder whether the poor use of the net and poor repayment had anything to do with the client's perception of the loan product itself. Do you have any perceptions or data at this point that helps you understand client perception of the loan product? It's not clear from your description whether clients were actually required to purchase an ITN as a part of getting their microenterprise loan. Were clients in the treatment area for the loan offered the loan to purchase an ITN or were they forced to purchase an ITN either through the loan or cash purchase? Clarification on this would be reall helpful. Finally, just pondering this, how long did the "intervention" take to be completed? When you started the baseline, how many months occurred before the nets were either freely distributed versus the loan product being effectively marketed? If your evaluation period is 1 year to 18 months and I'm assuming this is the period between the baseline and the endline, were the product details and marketing strategies worked out before the baseline occured? Once the loans were on offer and the mosquito nets distributed in the other area for free, how many months were left for people to use the nets? From your description, it sounds like the endline happened closer to a time period where net use becomes more important. If most of the time to distribute and market the loans occurred during low malarial periods and they were just entering a period where people might be using nets more often for all sorts of reasons, really detecting impact of net use and hopeful lower malaria incidence was yet to occur. I don't know enough about Orissa to know whether the malarial seasons are as severe as they are in areas where we've evaluated our malaria education in West Africa. But I think the timing is really important to consider here since it appears there is a seasonality issue between baseline and endline and then, we're hoping to see a reduction in malaria incidence when we might not have expected a big dip anyway when malaria is about to spike. So, maybe this is a roundabout question as to concluding that we didn't see reductions in malaria incidence when you would have expected a growing spike in it anyway and then second, maybe the time between actually getting the program fully rolled out and getting people sleeping under them was too short a time period to detect a difference. Maybe your other author, Brian from Standford, could share any other research out there that might show the amount of time you would need to detect improvements in malaria incidence. Is there a rule of thumb you need "X" months of sleeping under a bednet--is there any other research showing a malaria intervention actually reducing incidence of malaria though the same measures you've used? This is an area we've struggled with when it comes to health impacts --are our 1 year evaluation periods really enough to expect health impacts of this sort? I'd love your thoughts on this. I'm asking these questions to also help us understand the lessons learned too in how evaluations like this might be replicated so that would could conceivably detect an improvement in the malaria and anemia tests you conducted..this is an area we haven't explored yet. But if it's true that your endline happened at a time you'd expect more people to get malaria, it seems a bit of an overstatement to conclude neither free distribution or those with loans to purchase saw improved health outcomes when we wouldn't have expected them anyway. Is this accurate or have I misinterpreted your point as well as David's summary of your research? If I have, apologies. I'm hoping to learn as much as I can from the experience of this evaluation that might not be evident from the final paper as this is likely an evaluation we'd like to see replicated on some of our programs. Also, I will be very interested in seeing the results of your "4th arm." We've had a few conversations about the survey effect in our evaluations (and we had no way to measure it) and I'd love to see how this plays out in your evaluation. Thanks so much Alessandro and David for starting and contributing to this conversation. - bobbi

Hi Bobbi, thanks for your additional comments and question. The paper can be downloaded from my or Aprajit's web pages. Here is the link from mine About your 1st question, we did not ask about satisfaction with the loan, although we did ask about satisfaction with the nets, and overall the results were encouraging (I was actually somewhat surprised by this, given that we do not find health benefits, but still nets protect from buzzing bugs...). I think the low repayment rates were largely the result of poor repayment enforcement, due to some field officers' choices. In fact, the lowest repayment (~45%) rates where found in two districts only. In the other three districts, repayments were much higher. About "freedom of choice" to purchase the nets, clients were completely free to decide whether they wanted to buy, and how many nets. That's why the uptake was not 100%! There was no link at all with existing loans. In the paper we also show that we do not find a link between probability of purchase and pre-existing loans from BISWA (see Table 3). In the paper (Section 2) you can find all the information you need about the timing of the study, so here I only summarize. Baseline: spring of 2007. Intervention (free distribution or sale): fall 2007. Re-treatments: 6 and 12 months later. End-line survey: Dec 2008-March 2009 mostly. The time between baseline and follow-up was more than enough to have impacts. Several of the RCTs in the literature had time intervals similar to ours, sometimes shorter (in several cases less than a year), so this is really not a plausible explanation for our results. You can find plenty of supporting evidence in the excellent review by Lengeler cited in our paper (, not sure this link works outside of a university network!). In Orissa, malaria is seasonal, but even during the dry and hot spring we found ~10% prevalence. The higher prevalence at follow-up was expected, and was just the result of the fact that (as you say) follow-up happened closer to the peak malaria season, which is during/after the monsoon, in the summer. Also, you write "But if it's true that your endline happened at a time you'd expect more people to get malaria, it seems a bit of an overstatement to conclude neither free distribution or those with loans to purchase saw improved health outcomes when we wouldn't have expected them anyway." This is not correct, but it is useful that you bring it out, because it is easy to get confused if you are not too familiar with RCTs. The fact that the follow-up happened at a different time cannot explain the results. Seasonality of malaria means that prevalence in season A is generally higher than in season B. But if a technology reduces malaria, then you should expect to find lower prevalence in areas where the technology is present regardless of whether you measure it at time A or at time B (at long as prevalence is not zero). Another way to see this is that if ITNs had been effective, we should have expected a SMALLER INCREASE in treatment areas (not necessarily no increase, or a decline). Indeed we did expect to observe an increase in malaria everywhere, but we certainly were hoping to observe a smaller increase in Free and Micro-loan areas. About the results from the "4th arm" (the pure control), I look forward to them myself, so stay tuned!

Submitted by D'Balentine on
I might be a little off topic here, but I in a recent research project of mine I study on an organization that has had some very impressive and high percentage repayment rate. They have their yearly info available to the public if you would like to see how their model is successful in microfinance in poverty regions. And here is the page where public info can be downloaded under data snapshots:

Submitted by Bobbi Gray on
Alessandro, thank you again for your clarifications and reply. First of all, when I replied, I was thinking of the comparison between baseline and endline and wasn't thinking about the endline comparisons. You're completely right about regardless of seasonality, the difference between the treatment and control groups would be the primary comparions we'd be looking at. It's also great to know that there is literature out there showing improvements in anemia and malaria prevalence shown in a short period of time. Since we do quite a bit of evaluation regarding health, it's been hard to dig through all the literature and identify find benchmarks of time where one can expect certain health impacts. Not that you have to answer this directly, but I am wondering that when we're doing RCTs that include the introduction of financial instruments to assist in the purchase of a product or service we're really evaluating (mosquito nets, etc.), whether it should become standard practice to evaluate client satisfaction with those financial products. We haven't consistently done this through the quantitative surveys, but we often include it in a qualitative assessment at some point expecially if the financial product is new as well. It might help us understand better where the "chain" is breaking down ---so that when we get to the endline, we're not having to guess so much about how much dissatisfaction with the financial instrument matters and contributes to poor uptake/repayment, etc. From your reply, it appears that this might not have been the case for your evaluation. I'm wondering how prevalent it is for RCTs and researchers to include these type of operational questions and whether they've been helpful in evaluating whether the financial instruments provided are actually fully appreciated or not. This has been a very useful conversation and thanks for sharing your research and allowing me to understand it fully. -Bobbi

Submitted by Rajaratnam Abel on
I read with much interest the discussions on ITBN through micro credit groups. We have been introducing health through Micro finance groups in Tamil Nadu. I am not sure we have identified a health product. Our groups are providing health through health insurance and operating their own health institutions primarily for the members' families and to others for maintaining scale of operations. Without any health products, the micro finance groups were able to significantly reduce anaemia which continues to be a problem where we work. Coming to malaria in Orissa we worked through 20 organizations in 16 districts covering a population of a little over 100000 population. Our strategy was 1. Comprehensive approach with Behaviour change communication. 2. Early diagnosis and treatment of malaria cases. 3. Prevention of malaria using any of the methods of their choice. We had baseline and end evaluation after 12 months. Officially we had no controls but the consultant from the funding agency did carry out a small control study which showed significant differences in knowledge on malaria, decrease in cases of fever, decrease in deaths due to suspected malaria. A write up on this can be seen in the following link. This will give a brief summary. If you click on the file at the end of the page it will give the full length unpublished article. From my experience, interpreting your study, the research question was whether micro finance was a good approach to ensure access to ITBN? If the question was worded as whether micro finance groups can help control malaria using all available methods, then I am sure you will see a positive result. Seasonal factors are important. Our baseline was carried out immediately after the super cyclone and it resulted in possibly low baseline prevalence. I would value the feedback of anyone who would like to see malaria controlled in Orissa. Rajaratnam Abel