Next up in our series of guest blogs on the topic of the European Microfinance Award 2023 – Inclusive Finance for Food Security & Nutrition – Bobbi Gray from Grameen Foundation considers the (intolerable) sacrifices that poor households make to meet their financial services obligations, and the responsibility of the sector to address this.
Almost 10 years ago, I’d finished the book The Last Hunger Season, by Roger Thurow. I was so impacted by the book that I wrote two blog pieces (here and here) considering the relevance of the book to our work in microfinance. As noted in Myka Reinsch Sinclair’s blog launching the European Microfinance Award 2023 – Inclusive Finance for Food Security & Nutrition, our work at Freedom from Hunger and then through the merger with Grameen Foundation was grounded in the theory that microfinance plus health and nutrition education would reduce poverty and improve household food security. Financial services alone were not enough. Health and nutrition education were not enough. You had to provide both to support household’s agency and decision-making regarding more and healthier food consumption.
Fast forward to today, not much has changed. While we’ve celebrated reductions in global hunger in the past few years, it is again on the rise due to climate change and shocks, conflict, land degradation, to name a few.
With support from CGAP several years ago, my colleague Megan Gash and I had the coolest opportunity to just study the concept of ‘resilience’ and its relationship to financial services. For an entire year, we conducted a series of frequent surveys with approximately 40 households in Burkina Faso. We studied their food security, their exposure to shocks, and how they coped with these shocks. In a CGAP blog, we outlined some of the findings that struck us, and sometimes that shook us to the core. At times, the entire cohort was food insecure. Fifty percent (50%) of them reported that they had gone hungry to make a loan payment or a savings group contribution. We wrote: “When shocks occur, many households use negative coping mechanisms that increase food insecurity, such as reducing daily food consumption and selling grain stocks, which solve an immediate problem but can have long-term consequences.” When we gifted our survey participants a bag of rice for their continued participation in our research, they noted in a subsequent survey that this was a “positive surprise” and shared that this bag of rice ensured they didn’t go hungry that week. An unintended—but positive—consequence of our research.
This experience in Burkina Faso has spurred our continued interest in the unintended consequences of our work in financial services. Years ago, I remember being at a conference and participating in a group discussing client protection and the concept of unacceptable sacrifices came up, but this was directly related to the concept of measuring over-indebtedness. But the experience in Burkina Faso taught us that households make unacceptable sacrifices to make loan payments, savings group contributions and to engage in economic activities. More recently, we’ve studied the tradeoffs made by households that can result in child labor or the stresses that can result in gender-based violence.
When I think about the relationship between financial services, food security and nutrition, I think there are actions we’re likely already taking and some areas where we can be more creative.
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First, we have a responsibility to understand and mitigate the use of sacrifices when people use our financial services. But we have to expand our definition of ‘do no harm’ to go beyond over-indebtedness. We have to study the sacrifices people make using our products when we conduct market research, client satisfaction studies and outcomes/impact studies. If we do not ask the questions, we do not have the data nor the understanding of what is occurring and therefore, we’re doing nothing to mitigate this harm. In our research on child labor, we developed survey questions to help us understand the sacrifices households might be making (See the Impact Survey in the Monitoring and Evaluation Guide, Section J.)
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Second, we can ensure that we’re aligning the designs of products on common cash-flow and seasonal constraints, providing refinancing options so that households can manage debt when a shock occurs, and ensuring households have a portfolio of services that address income growth, consumption, and risk mitigation. All of these play a role in preventing households from using unacceptable coping mechanisms, such as reducing food consumption and choosing less nutritious foods.
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Third, we have to pay attention to gender and social norms. While we’ve measured food security at the household level, we’ve also tested what happens when you ask a woman the same questions, but about herself. A woman often ‘eats last and the least’, forgoing food for her husband, family elders, and her children. While research has often shown a woman will prioritise food security when she earns her own income, she still may have limited agency and must negotiate with others within her household for money to purchase food.
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Finally, some financial institutions have a history of providing health and nutrition education. Others teach their clients new agricultural and food preservation techniques. Not every financial institution has to provide food security and nutrition support directly but can do so through partnership. But these cannot be one-off, periodic activities that make headlines. They have to be thoughtful, long-term partnerships designed to make food systems work better and that provide vulnerable clients holistic services.
In summary, I don’t think the financial sector has to necessarily create something brand new. While it’s not sexy to make iterative improvements, sometimes this is what is most needed and could be the most impactful and responsible. Food security should be considered as part of the design of financial services, and not simply seen as an outcome. We have a duty to account for the opportunity costs of a family’s food resources. Use of financial services should not come at the cost of a household not eating or making other intolerable sacrifices.
Photo credits: Grameen Foundation
Bobbi Gray is Senior Research Director at Grameen Foundation USA. She has more than 18 years of experience in designing, implementing and coordinating research and evaluation on financial, health and agricultural programs for underserved communities across Latin America, Southeast Asia and Africa. Much of her recent research and programmatic experiences include understanding the barriers and opportunities to women’s economic empowerment and developing programmatic and evaluation tools for the same as well as studying the unintended impacts of women’s economic empowerment initiatives on the lives of women and their families. Bobbi holds a Master of Public Administration degree in International Management from the Middlebury Institute of International Studies at Monterey and a B.A. in French and Spanish from Texas Tech University.
