Lessons Learned from Implementing Microfinance in a Post-Tsunami Environment (Sri Lanka)

This presentation states that the tsunami affected livelihoods and microfinance activities in the following manner:

• In excess of 20,000 livelihoods were lost;
• Over 10,000 business units were affected;
• Around 27,000 microfinance clients were affected;
• Books and accounts were destroyed or damaged;
• Members who lost livelihoods were unable to repay loans.

The income recovery program implemented post-tsunami provided support in the form of:

• Cash transfers;
• Temporary employment;
• Economic activities.

According to the presentation:

• Pre-tsunami structural weaknesses of microfinance institutions (MFIs) have become more acute after the event;
• People who lost their assets may find grants more useful than loans;
• Actual demand for credit is not as high as some studies estimate;
• Credit lines with interest caps hardly reach the needy;
• It is too early to assess the effect of grant programs on the repayment culture.

The post tsunami challenges are:

• Quality standards of the external assistance;
• Better coordination amongst donors;
• Absorption of the money by the sector.