A report released today by DFID, World Vision UK and VisionFund International has revealed that an innovative market-based approach was central in building resilience to the El Nino climate shock that impacted East Africa throughout 2016 and early 2017. These findings are critical as climate change continues to impact the world’s most vulnerable communities.
The project evaluation has revealed that microfinance loans were central to enabling families to reduce the use of negative coping strategies such as taking children out of school, reducing food consumption and sending family members away for labor in order to sustain their livelihoods.
This project supported 14,500 families, with 72% of women borrowers in rural areas of Kenya, Malawi and Zambia dealing with the severe effects of droughts and floods caused by last year’s very strong El Nino. Funds helped clients to avoid extreme poverty by quickly re-establishing their farming businesses and diversifying income to help bridge the gap between planting seasons.
Using loans on average of little more than GBP 100, the project prevented thousands of families from falling into extreme poverty because of droughts and floods. Funded by the Department for International Development (DFID) using an innovative returnable grant of GBP 2 million, the Recovery Lending project was launched in February 2016 after growing evidence predicted strong weather patterns would have a devastating effect for the 2015/16 agricultural seasons in East and Southern Africa.
Increasingly poor communities rely on microfinance to fund their farming operations and sustain the lives of their families. Studies have shown that the supply of microfinance reduces sharply after disasters. This negatively impacts livelihoods, food production and the economic health of rural communities. The results of VisionFund’s work have proven that maintaining the supply of credit benefits these families, communities and the microfinance institutions making the loans.