HIV/AIDS and microfinance

One of the major problems Africa has to cope with is the widespread prevalence of HIV/AIDS. This deadly illness affects many households in several ways, but most importantly it significantly decreases the workforce. Zimbabwe is one of the countries with highest rates of people infected with HIV and this fact poses some threats on the success of microfinancing. However, it is also interesting to examine what effects microfinancing has on microentrepreneurs households that are affected by HIV.

The epidemic is so strong that between 2002 and 2006 the population is estimated to have decreased by four million people (Pembrey). The life expectancy of women is 34 – the lowest anywhere in the world and of men is 37. Zimbabwe has the world’s fourth – highest rate of HIV prevalence and has been grappling with food emergency, declining economic performance and the sharpest rises in child mortality in history (UNICEF).

So far there has been only one major study on how microfinancing helps the affected clients. The survey covered 338 Zambuko clients and 241 matched non-client microentrepreneurs. They were interviewed in 1997 and reinterviewed in 1999.

In case of death, the loan group has to collect money to pay the outstanding loan from the person’s family and if it is unable to provide financial resources, the group members are responsible to pay. This condition was recently introduced because as a participant explained, "Initially Zambuko wrote off loans of people who had died, but they stopped after realizing that some people would go to the officers and lie that some had died when she/he was alive." (Barnes)

They study found that approximately 40% of microentrepreneurs households may be affected by HIV/AIDS. The major finding of the study was that participation in Zambuko’s program had a positive effect on the HIV-affected client households, although it may create a burden if serious illness or death occurs when the microentrepreneur has a loan outstanding. One of the most significant results of the microfinancing is that it smoothes the flow of household income. When all sources of income were taken into account, the affected families averaged 2.8 sources in 1999 versus 2.3 sources for the non-affected households. Analyzing the data from the survey, it can also be noted the microfinancing positively influenced the saving patterns of microentrepreneurs. “In 1999, 13% more of the affected clients than the affected nonclients insisted on a deposit when they extended credit to their matched enterprise customers. Also, 16% more affected clients than affected nonclients had an individual savings account with a formal institution. In addition, the average number of ways the respondents saved was higher for the affected clients than affected nonclients.” (Barnes)

Although the participants recognized the burden that HIV poses on repayment of the loans, they felt that the deteriorating economic situation in the country during the end of the last century was more of a factor than illness. That is why one of the recommendations that was given was to have another evaluation of the relationship between HIV and microfinancing in Zimbabwe when the economic crisis would be overcome (Barnes).

Bibliography

Pembrey, Graham . "HIV & AIDS in Zimbabwe." Avert. 31 Oct 2007. Avert. 14 Dec 2007 <http://www.avert.org/aids-zimbabwe.htm>.

"Zimbabwe." UNICEF. UNICEF. 14 Dec 2007 <http://www.unicef.org/infobycountry/zimbabwe_1403.html>.

Barnes, Carolyn. "Microfinance and Households Coping with HIV/AIDS in Zimbabwe: An Exploratory Study." June 2003

Written by Avrora Keremidchieva