Impact of HIV-AIDS on Microfinance with a Case Study on HIV/AIDS Mitigation

This paper was commissioned by the  Microcredit Summit Campaign in 2006.The paper lists the impact of HIV/AIDS on MFIs and their clients operating in areas of high HIV prevalence:

• Impacts of HIV/AIDS on microfinance clients: Affected households go through often predictable cycles when a member is infected.
• Impacts of HIV/AIDS on microfinance institutions: Institutions that do not implement appropriate mitigation may have to face increased and/or new risk factors including delinquency, staff absenteeism and related costs, attrition and decline in group cohesiveness:
  • Risks to financial sustainability;
  • Risks to operational efficiency;
  • Risks to financial products;
  • Risks to group delivery methodologies.

The paper highlights four examples of HIV/AIDS mitigation measures in the microfinance industry:

• The CARE SIMBA program in Zimbabwe: A self managed, village savings and lending scheme;
• SEF/RADAR IMAGE project: Intervention with microfinance for AIDS and gender equity;
• Christian Enterprise Trust Zambia: An independent MFI affiliated with Opportunity International;
• FINCA Uganda: A non-profit village banking organization.

The paper further discusses the process of implementation of HIV/AIDS mitigation activities using the Mennonite Economic Development Associates (MEDA)/ Development Alternatives (DAI) Action Research project as a case study. The project is currently underway in Mozambique.The paper finally:

• Examines factors leading up to the project;
• Presents a profile of the participating institutions,
• Lists various mitigation measures being implemented,
• Details obstacles and opportunities encountered;
• Points out the methods used to address the obstacles.