Fighting Malaria with Microfinance: Impact on Health and Productivity and Determining Willingness To Pay Presentation Given by Centre for Micro Finance Research Associate Daniel Kopf Principal Researchers: Brian Blackburn (Stanford), Aprajit Mahajan (Stanford) and Alessandro Tarozzi (Duke)

Focus of Presentation This presentation is about ongoing research. Thus we will focus on administrative data and preliminary results. The ideas and information in this presentation should be attributed to the Centre for Microfinance (CMF), a research organization based in Chennai, and not the principal researchers.

Insecticide Treated Bed Nets Some estimates show that there are 80 million cases of malaria yearly in India, and is a major deterrent to economic development. The use of insecticide treated nets (ITNs) is advocated by several international bodies, and studies have shown ITNs significantly reduce the chances of contracting malaria. Yet even though ITN have proven to be cheap and effective, usage rates remain low in many malaria endemic areas, including areas in India. Free government distribution of ITNs is ongoing across India, but the size of the net distribution program pales in comparison to the number of nets needed to cover the population.

What Do We Hope to Learn? Could selling ITNs on loan contracts to microfinance clients increase ownership and usage and improve health outcomes? Could distributing nets freely to their clients be an efficient use of resources for MFIs, or an efficient use of grant funding? Could ITNs increase the repayment ability and debt capacity of microfinance clients? Can microfinance distribution channels be used to provide badly needed health products?

Microfinance and Malaria Microfinance providers often serve the rural poor. These are the same people who are likely to be affected by malaria. Microfinance providers are in a unique position to sell/distribute free ITNs to those who need them: –MF providers have a system in place for collection of loan payments, so they can allow people to pay for ITNs over an extended period. –MF providers have exisiting local knowledge, physical infrastructure and labor –MF providers can easily mobilize the community and customers often appreciate the work of the MFI, and thus may be more likely to listen to their recommendation.

Researching the Impact of Selling ITNs through Microcredit In partnership with the NGO-MFI BISWA, which has strong presence across all of Orissa, our research began in early 2007 Biotech International Limited donated over 7,500 ITNs to be used for the project. The researchers chose to evaluate this impact through the process of a randomized evaluation

Research Design (part 1) 150 villages across 5 districts of Orissa in which BISWA has operations were chosen for the study. An extensive baseline survey was given to BISWA self help group (SHG) members in each of the 150 villages. The members were surveyed for basic health and economic indicators and rapid diagnostic tests were administered for malaria, lymphatic filoriasis and anemia. This survey was completed in May of 2007.

CMF Surveyor interviews an SHG Member

Research Design (Part 2) The 150 villages were randomly divided into three groups of 50 in which the BISWA SHG members would be offered differing interventions. –The members of villages selected for group 1 were given education on malaria and the use of ITNs as a preventative measure (no nets were sold or delivered for free to this group). –The members of villages selected for group 2 were given the same education and enough free nets to cover all or most members of the household. –The members of villages selected for group 3 were also given the same education and offered the opportunity to purchase ITNs from BISWA through loan contracts or in cash.

Purchase Contracts Offered to Clients ContractSingle (Rs.)Double (Rs.) Cash without retreatment Cash with 2 Retreatments Credit without retreatment 192 Rupees (16 per month) 252 Rupees (21 per month) Credit with 2 Retreatments 228 Rupees (19 per month) 276 Rupees (23 per month)

Baseline Data The baseline was completed in May of 2007 and the intervention was executed from September to November of % of the population was found to be currently infected with malaria. 70% of households reported at least one case of malaria in their household in the last 6 months, with each malaria episode costing a mean of Rs Less than 14% of those in surveyed households had slept under a net the night before and less than 3% under a ITN.

The Intervention During the intervention, 4,078 nets were delivered for free and 1,128 nets were sold on micro-credit contracts or in cash. SHG members in villages offered the opportunity to buy nets, were given two separate opportunities to purchase nets, separated by 1 month. Over 80% of all purchases were made in the first offer. 891 Nets sold during the first offer and 237 nets sold during the second offer.

Free versus Micro-Credit Villages Nearly 60% of SHG members offered the opportunity to buy ITNs through micro-credit did purchase at least one net. In our sample households, those in “free villages” received on average double the nets of those in “microfinance villages.” A market for ITNs sold on credit exists and it is possible this delivery mechanism could be a powerful tool. Up to now, self-reported data on net use does not indicate that those who purchased nets on more likely to use them than those who were given the nets for free.

Consumer Preference Given the choice of purchasing nets on cash and paying no interest versus paying 20% interest and being given a year to make repayment, 97% of nets purchased were purchased on credit. As mentioned earlier, members were given the choice of two contracts, one which included, for 30 more rupees, two additional treatments after 6 and 12 months and one which did not include these extra treatments. –Approximately half the nets purchased were purchased with the additional treatments, and the other half without. –Analysis of household traits and beliefs has led the researchers to believe that the choice of contract may be random. The implication of this would be that perhaps BISWA should have only offered the contract that included that two retreatments and purchasing decisions would not have been greatly affected.

Social Networks and Community Effects A short survey conducted on the community effects of delivering nets to SHG members demonstrated that, within the study area, those who were social contacts of those who were given nets for free were more likely to own nets 8 months after the intervention. –No such effect was found for the social contacts of those who purchased nets. This means that supplying nets through SHGs may have an impact on the community beyond just those members. Perhaps raising the profile of the MFI or bank who delivered nets, and creating a new customer base because of the improved health of other community members.

MF and Non-Financial Products A variety of MFIs already sell or are considering the sale of non- financial products through their distributution channels. These are usually products which may improve the lives of their clients… BISWA= Bicycles,.SKS = Solar Flashlights Lessons Learned From ITN Sale: –Must consider the capacity of the loan officer. Staff incentives, substantial training or parallel structure may be needed. –Product should be integrated into current loan structure. Perhaps sale should de done concurrently with distribution of loan, particularly if the product being sold is inexpensive compared to the larger loan. Collecting small repayments can be expensive and time consuming for loan officers. For very inexpensive products it may only make sense to offer the product on cash, and not take on the transaction costs of offering the product on credit

Project Status A follow up survey is currently being conducted on the same ~2,000 SHG members that were surveyed in the baseline 1400 non-BISWA members are also being surveyed to further judge community effects. This follow up should be completed by March of 2009 and additional publications will be available throughout 2009