COMPLEMENTARY APPROACHES 159


knowledge about running businesses, can exacerbate repayment difficulties and lead to higher default rates. Borrowers affected by HIV and AIDS may also be less able to attend meetings. In many cases, when a family member is diag- nosed with HIV or AIDS, the borrower stops repaying the loan due to diminished motivation and psychological trauma (Wilkinson 1999; Bondevik 2003). Despite these risks, there are innovations to make microfinance viable for HIV/AIDS-affected clients. From the perspective of microfinance institutions (MFIs), maintaining a diverse portfolio—a mixture of HIV-affected and non- affected beneficiaries—can preserve profitability (UNCDF/SUM 2003; Nya- mandi 2005). From the perspective of households, microfinance can play a role in mitigating the impact of HIV by providing cash that has protective and preventive functions (Nyamandi 2005). Arguments for additional roles that microfinance can play are based on the facilitating role that MFIs and imple- menting partners tend to play in the course of program operations. These include organizers of community gatherings, which are opportunities for shar- ing information and implementing prevention activities (for example, using nonformal education techniques to promote behavior change and linking cli- ents to other prevention services) at low cost (Nyamandi 2005). For example, by relying on existing financial staff to deliver preventive HIV/AIDS messages to large numbers of microfinance clients during monthly microfinance gather- ings, the NGO Credit with Education can provide these important additional services at low cost (Bondevik 2003). The Intervention with Microfinance for AIDS and Gender Equity (IMAGE) program in South Africa also linked poverty- targeted microfinance with participatory adult learning on topics such as sexual behaviors, gender-based violence, and HIV prevention (IMAGE 2002, cited in Gillespie and Kadiyala 2005, 72). As suggested earlier, these kinds of adult education and awareness campaigns can be carried out in the context of a cash grant as well as a loan, but microcredit can take advantage of the infrastructure and staff of existing loan dispersal programs. In addition to linking microfinance with health information, awareness raising, and education, several design elements have been suggested for micro- finance programs in an HIV/AIDS context. The United Nations recommends that microfinance services be targeted to clients who are HIV-positive but still productive family members and to surviving family members (UNCDF/SUM 2003). Loans can be designed with built-in flexible terms that provide a “rest” for clients between loan cycles and do not require that clients neces- sarily move to larger loans (Nyamandi 2005). MFIs can incorporate innova- tive financial products, including health insurance covering costs involved with dealing with opportunistic disease, burial and funeral insurance, insur- ance of outstanding loan balances against the client’s death, or emergency loans (Bondevik 2003; Nyamandi 2005).


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