Linkage Banking
Linkage banking is where banks link with the informal or semi-formal financial sectors to enhance accessibility of deposit and credit facilities for micro-enterprises or groups. This strategy involves the creation of relationships between two or more formal and informal institutions through which they expect to capture the comparative advantages that each possesses in offering financial services. Whereas the VSLAs need safe custody of their funds and additional resources to enable their clients expand business opportunities, FIPA has the funds and ready to lend out with of course a 10% interest rate. Therefore the relationship will be mutually beneficial. Groups could save with FIPA then have access to credit services.
Micro insurance: Micro-insurance are insurance products characterized by low premium, low coverage limits sold as part of a typical risk pooling and marketing arrangement and designed to service low income people and business not served by typical social and commercial insurance firms. Integrating micro-insurance in VSLAs will be recognized as a useful tool in economic empowerment because low income people who don’t have access to adequate risk management tools are generally more vulnerable to fall back into poverty in times of hardship.
FIPA promotes the use of social welfare fund as micro-insurance premium to protect caregivers against unplanned expenses, risks, shocks and stress consequently reducing their vulnerability level.
Micro-insurance, like regular insurance, may be offered for a wide variety of risks. These include both health risks (illness, injury, or death) and property risks (damage or loss). A wide variety of micro insurance products exist to address these risks, including crop insurance, livestock/cattle insurance, insurance for theft or health insurance, life insurance, death insurance, disability insurance, insurance for natural disasters, etc. however, FIPA focuses on medical/health insurance and funeral.
Our aim would be to build a mechanism and provide extra safety net for at least 2500 VSLA members through micro insurance component in an effort improve the health and socio-economic wellbeing of caregivers.