Almost 90 per cent of the population of sub-Saharan Africa is not insured against the risk of illness or accident. In order to help the most disadvantaged and vulnerable groups cope with life's contingencies, social protection is a powerful means of reducing poverty, emphasizes the report prepared for the Eleventh African Regional Meeting (Note 1). The ILO's worldwide STEP (Strategies and Techniques against social Exclusion and Poverty) programme (Note 2) is working to extend social protection and access to care to people excluded from existing social security systems. One of its strategies is based on micro health insurance.

DAKAR, Senegal (ILO Online) – Fatou S. and her husband live with their four children in Pikine, an overcrowded suburb of Dakar where the informal economy is the main source of livelihood. Fatou's husband is a self-employed carpenter. His income varies depending on orders from customers, and is not always enough to cover the family's needs.

Fatou decided to start a small multi-service business. Just when she had obtained a loan to help start her enterprise, her five-year-old son became ill with malaria. In order to pay the hospital bills, Fatou had to use the money from the loan she had been granted by the Icotaf Boubess Savings and Lending Society (MECIB), which was originally intended to finance her business.

Health care expenses are the main reason for microloans being used for purposes other than that for which they were intended, or not being repaid. These costs can undermine households' efforts to escape from poverty. So when, in 2003, MECIB introduced a system which would cover members' health care costs, Fatou signed up straight away.

MECIB in Pikine is a savings and lending bank affiliated to the Union of Mutual Benefit Societies in Partnership for Savings and Loan Mobilization in Senegal (UM-PAMECAS), a union with more than 125,000 members which receives support from the Canadian International Development Agency (CIDA) to promote micro-finance institutions in Senegal.

To safeguard its loan portfolio and respond to growing demand among its members, the network has established a mutual benefit society for health with technical support from the STEP programme. The micro health insurance system operates on the basis of small contributions and covers consultations, hospital stays, childbirth and medicines. Members receive effective care locally, thanks to the positive involvement of nurses, health station heads and pharmacists, who have participated in developing management tools.

However, the majority of micro health insurance schemes in Africa encounter difficulties in collecting contributions and financing. Direct payment is difficult for members and managing the collection of monthly contributions is both burdensome and costly for the schemes. In addition, finding the money to pay contributions is often beyond the means of many families in the informal economy, particularly in rural areas.

"The problem is not so much that people never have money available at any time during the year to pay for health care, but that they don't have that money when people fall ill", explains Christine Bockstal, STEP coordinator for Africa.

STEP tries, among other things, to encourage States to take action to extend social protection for health. "If people make an effort to cover part of their health care costs, the State, for its part, should channel subsidies through a system of mutual benefit societies so that every individual who contributes can benefit from co-financing by the State to access a range of essential health services", says Ms Bockstal.

The micro-insurance/micro-finance combination has enabled two innovative mechanisms to be introduced for financing and collecting contributions. On the one hand, automatic or "at source" deductions (for example on income from selling crops) prevent members from forgetting to pay or having to travel long distances to pay their contributions. On the other, contributions can be shared between several actors: direct contributions by members, employers, cooperatives, management, the State, etc.

Since they are based at community or local level, micro-insurance schemes generally face fewer problems with fraud and misappropriation than centralized health insurance systems, in that the members know each other, belong to the same community and have common interests. This social proximity makes it easier to communicate and raise awareness, to ensure that the range of services covered responds to the needs of the population, and hence to extend the system at community level.

"A healthy population is a productive population", adds Christine Bockstal. "Health coverage contributes significantly to the fight against poverty – both directly by offering financial protection that keeps households affected by illness from falling into poverty, and indirectly through its positive impact on economic performance and productivity."

According to the report, entitled The Decent Work Agenda in Africa: 2007–2015, "The main challenge for social protection in Africa is to extend coverage of social security to ensure that people have access to health care and enjoy at least a minimum level of income security. Only in this way will it be possible to make the right to social security, as embodied in Article 22 of the Universal Declaration of Human Rights, a reality on the African continent. […] Stepping up efforts to provide basic social protection is thus a viable way to reduce poverty and insecurity for countries in sub-Saharan Africa."

An increasing number of African governments consider micro-insurance to be a very useful tool for developing social protection and are including it in the strategies being prepared to address the issue (Note 3).

For more information (Reports, press releases, etc.) on the 11th African Regional Meeting in Addis Ababa, please click here.

Note 1 - The Decent Work Agenda in Africa: 2007–2015, Eleventh African Regional Meeting, Addis Ababa, April 2007. Report of the Director-General, International Labour Office, Geneva, 2007.

Note 2 - For more information on the STEP programme, see /step.

Note 3 - For more information on micro-insurance as a tool for extending social protection, see http://www.microinsurance.org.