Case Study

Report of Feasibility Study for Microfinance Program Addressing to Tsunami-affected Community of Aceh Province (NAD) and Nias Islands

How can microfinance come to the aid of tsunami and earthquake-affected people?
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This document presents a feasibility study conducted by World Vision India Tsunami Response Team (WV - ITRT) on using microfinance to rehabilitate the tsunami-hit provinces of Aceh and Nias in Indonesia.

The study seeks to ensure that a microfinance initiative will be appropriate and create significant and sustainable impact.

The report describes the following aspects of the feasibility study:

  • Background;
  • Objectives;
  • Principles;
  • Methodoloy;
  • Data collection technique;
  • Location.

The study examines:

  • The general condition of the two districts;
  • The impact of tsunami and earthquake on the infra structure, nature, society, economy, and finance;
  • The role of donor agencies.

The study finds that:

  • The number of potential clients is too small for microfinance institutions (MFIs) to operate in a sustainable manner;
  • In the areas affected by the tsunami, there is a need for credit;
  • In the areas that are not affected, people want a variety of microinsurance services like savings, insurance and payment;
  • People are concerned about the accessibility and costs of financial services;
  • The regulation for microfinance operation is still in the process of being developed.

The report lists the following appropriate microfinance interventions:

  • Creating demand;
  • Developing outreach;
  • Accessing the market;
  • Promoting the system.

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