Background

Microfinance has proven to be an essential element for people in disaster situations, enabling them to start to rebuild their lives and improve their living conditions. However, in recent times there have been crisis situations where massive injections of donor funding—including capital for microfinance operations—have not achieved their intended purpose, largely because there was insufficient local capacity to deliver services in a timely and appropriate manner.

This failure raises questions about how a microfinance institution (MFI) should respond in a post-disaster context. On the one hand the MFI wants to protect its good reputation, putting the needs of its clients first as any successful business will do. On the other hand it wants to protect its identity as a long-term, professional financial intermediary—quite distinct from an ‘aid’ organisation.

Furthermore, while proponents of microfinance often state that its primary purpose is to provide capital for enterprise development so that clients can grow their income and assets, a complementary purpose must surely be to assist clients to protect their income and assets from the impact of crises such as natural disasters.

Thus the FDC project asked: ‘How can MFIs maintain their effectiveness in times of disaster?’ And it sought to answer this question by engaging microfinance clients and practitioners in tsunami-hit areas of India, Sri Lanka and Indonesia. The FDC team conducted field research to obtain clarity on a number of issues regarding appropriate post-disaster responses by MFIs. Is there a role for MFIs in disaster relief and if so, what is it? What is the role of microfinance in livelihood restoration? How can MFIs provide loans in contexts where relief grants are commonplace? These are just some of the questions that are discussed in a series of research briefs developed by the FDC team.

The research briefs and other learning were then synthesised into a curriculum, which was a challenging process due to the existence of such a wide range of microfinance providers—from licensed microfinance banks through to generalist NGOs, relief agencies and semi-formal self-help groups. All have different perspectives and roles, and for this reason the FDC team developed a ‘best practice’ manual as a series of six modules from which stakeholders can select topics according to their particular needs and context.

The training resources include a trainer’s manual, a participant’s manual, presentations, and handouts. These have been translated into the ‘tsunami’ languages—Bahasa, Hindi, Sinhala and Tamil. The resources are available free-of-charge through a dedicated website. A train-the-trainer program involved more than 60 people from nearly 40 organisations, and this cadre of trainers is now presenting the curriculum to others. Already nearly 500 microfinance personnel have received training.

FDC has marketed the resources to microfinance providers throughout the world and has attracted keen interest from stakeholders in numerous countries including Bangladesh, China, India, Indonesia, Laos, Nepal, Philippines, Sri Lanka, Sudan and Vanuatu. We have also responded to requests for access to the resources from numerous international NGOs including CARE, Concern, Opportunity International, Plan, and World Vision. Additional translations (Mandarin, Lao and Tagalog) are being prepared by third-party organisations, and these will be uploaded to the website in due course.

In these ways, the project has not only increased the capacity of microfinance providers to prepare for and respond to natural disasters, but it has created mechanisms and momentum so that the capacity-building process continues into the future.

The resources provided on this web site have been developed by an FDC team, with strategic inputs obtained from microfinance practitioners and providers in Tsunami-affected areas of India, Sri Lanka and Indonesia.

Citigroup Foundation provided a generous grant to allow the development of these resources, as part of Citigroup's contribution to post-tsunami rebuilding efforts.

The project was designed on the basis of a conceptualization of capacity-building that involves not just workshops, but learning by doing, with active participation in curriculum development though action research, field testing and participatory evaluation in each location.

Contributors

Stuart Mathison, Project Manager, Editor

Stuart has been engaged in International Development since 1996 in both the microfinance and ICT for development sectors. He holds a Master's degree in International and Community Development. He has served as Program Manager for FDC since 2002. Stuart was project manager for the Pan Asia Forum on Microfinance in Crisis Situations in June 2005. In 2003 and 2004 he conducted a series of workshops for World Vision International, focusing on Microfinance in Communities Impacted by Natural Disasters and Microfinance in Communities Impacted by HIV/AIDS, providing technical input and facilitating training and policy development activities.

Debjani Bagchi, Country Team Leader (India)

Debjani is a Microfinance Consultant and provides technical assistance to MFIs and donor agencies, strategic advisory and research services and evaluation of microfinance institutions and programs. She has provided training to MFI staff in numerous countries on areas such as financial management and credit management, market research and operations. Debjani has worked with the World Bank, IFC, USAID, Chemonics, MEDA and other agencies. She has a Master's degree in Public Policy from Princeton University.

Mayada El-Zoghbi, Country Team Leader (Indonesia)

Mayada is a founding partner of Banyan Global, a company that provides consulting services in the areas of microfinance, enterprise development, financial sector and health sector development. She has been engaged in microfinance and enterprise development since 1994, primarily working in areas affected by conflicts and natural disasters. She has designed training programs and provided technical assistance to agencies providing financial services to the poor. She is co-author of a trainer's guide (ILO/UNHCR), which aims to expand the capacity of non-bank financial institutions to deliver microfinance services in areas affected by conflicts. Mayada hold a Master's degree in International Affairs and a BS in Business.

Geetha Nagarajan, Research Coordinator

Geetha is an independent consultant and an adjunct professor at the American University. She has been involved in research, teaching and consulting related to microfinance since the mid-1980s. She wrote the first comprehensive paper on Microfinance and Natural Disasters in 1998 for USAID, and has conducted several workshops in Latin America for IADB. She has evaluated disaster management mechanisms used by MFIs in the wake of floods in Bangladesh, Mozambique, Honduras and Poland. She is co-author of a trainer's guide (ILO/UNHCR), which aims to expand the capacity of NGOs and other non-bank financial institutions to deliver microfinance services in areas affected by conflicts. Geetha holds a Ph. D. in economics.

Nina Nayar, Country Team Leader (Sri Lanka)

Nina served as the Asia Regional Coordinator for Women's World Banking (WWB) from 1991-1997. From 1997 to 1999 she served as CEO at the South Asia Network of Microfinance Initiatives (SANMFI). During her work with SANMFI, Nina researched the impact of floods in the microfinance sector in Bangladesh for the purpose of influencing microfinance practitioners and donor agencies. Since 1999 Nina has served as an independent consultant in over 25 countries, working with donor agencies and international NGOs. During 1999 to 2000 Nina worked in Cambodia focusing on developing microfinance policies and practices in post-conflict situations. Nina holds a Master's degree in Regional Studies.

Caroline Tsilikounas

Caroline has worked in microfinance since 1994, mostly in post-conflict situations. She started an MFI working specifically in war-affected areas of Croatia. She is co-author of a trainer's guide (ILO/UNHCR), which aims to expand the capacity of non-bank financial institutions to deliver microfinance services in areas affected by conflict. Caroline holds a business degree from a French business university and a Master's in International Affairs from Columbia University. She is the President of the Board of the Microfinance Center for Central, Eastern Europe and the NIS. She is also a Microsave certified trainer.