We've all heard of the dire situations: "Every x seconds, y children/women/people die of z disease around the world."  For many years, health crises--HIV/AIDs, malaria, diarrheal diseases, etc.--have been a prominent focal point for the efforts of the development community.  Only recently, however, have people begun to consider private sector strategies for helping to stymie the overwhelming need for more adequate healthcare delivery to the BOP, often considered the province of governments and aid.  But there IS some willingness and ability to pay among the BOP for healthcare.

This idea isn't so monstrous when one considers that the BOP already must spend for healthcare and that often, available options are of poor quality and costly to access, especially for rural dwellers.  The size of the BOP health market worldwide is estimated to be at least $158.4 billion.  How could the private sector provide high-quality, accessible, affordable treatment and medication to this market?

On NextBillion, we have already discussed the ability of microfranchise models, such as CFWshops Kenya (affiliated with Healthstore), Mi Farmacita, and Janani, to overcome many of the challenges of operating in BOP markets.

The data in The Next 4 Billion suggest that there is a ready market for such private sector interventions.  Pharmaceutical spending comprises the bulk of BOP health spending.  In the report's 34 measured health markets, pharmaceutical purchases tally up to $56.7 billion, well over half of all measured health spending.

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Guest blogger James Dailey worked at Grameen Foundation's Technology Center for five years and lead the development of the Microfinance Open Source project. He also teaches Microfinance at the University of Washington. He is a founding member and CTO of MicroFinance ClearingHouse.

By James Dailey

The grande Waldorf Astoria Starlight Room in in mid-town Manhattan was above its capacity of 300 with participants at the second annual "Microfinance: Cracking the Capital Markets" conference. Based on the attendance and presentations of major banks and investment houses (Citi, Deutsche Bank, Credit Suisse, JP Morgan, etc), the capital markets are listening. This is an industry, or a sector of the financial industry depending on who you talk to, that is more often associated with charity and Nobel Peace Prize winner Mohammed Yunus and Grameen Bank, than with structured finance deals. Maria Otero, President and CEO of Accion International, which co-hosted the event with Credit Suisse, commented that even five years ago she could not have imagined being surrounded by the likes of these banks in front of the financial media press. That coincidentally, is how long I have been in the microfinance field, and I was also struck by how many new faces and new ventures I saw at this conference.

Microfinance, loans to the poor and often uncollateralized, has grown tremendously in recent years, and there is a danger that it could become more grist for those looking for the downside to globalization. On this point, several prominent social responsibility funds were represented, including Klaus Tischhauser of responsAbility Fund, Switzerland and Scott Budde of TIAA-CREF, both of whom took pains to stress the importance of double-bottom line accounting and measuring progress out of poverty, to ensure that the social returns continue to be valued even as the transaction sizes get larger. responsAbility has funds of $96 MM (million) invested and TIAA CREF has placed $43 MM (with ProFund) of $100 MM fund, are by no means the only or the largest investor funds.

Elizabeth Littlefield, CEO of CGAP (Consultative Group to Assist the Poorest, a part of the World Bank) was one of several people who, with experience in both Wall Street and Microfinance, admonished the assemblage to help put the structures in place now and for the future, to ensure that financial services to all those left out continued to guide the efforts. Bob Annibale, Citigroup's Global Director of Microfinance, and one of the most outspoken bankers on this subject, remarked that there remains a need for credit enhancements, access to ratings, and currency hedging.

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