Paper

Capacity Building for Microfinance in Post-Tsunami Reconstruction

Maintaining effectiveness of MFIs in times of disaster
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This paper examines ways in which MFIs should respond in a post-disaster situation.

While an MFI wants to look after the needs of its clients in a post-disaster situation, it also wants to protect its identity as a long-term, professional financial intermediary. This Foundation for Development Corporation (FDC) project aimed to solve this dilemma by engaging microfinance clients and practitioners in tsunami-hit areas of India, Sri Lanka and Indonesia.

The research resulted in the development of training resources and a best practice manual. The FDC project also increased the capacity of microfinance providers to prepare for and respond to natural disasters. General lessons learned include:

  • Microfinance must assist clients in protecting their income and assets from the impact of crises;
  • Microfinance providers should give importance to risk-mitigating products such as microinsurance and savings;
  • Microfinance providers should restrict themselves to financial services, livelihood restoration and economic recovery, and not distribution of emergency relief;
  • Relieve agencies and microfinance providers should design interventions that contribute positively to livelihoods restoration.

About this Publication

By The Foundation for Development Cooperation
Published