Recovery from the Tsunami Disaster: Poverty Reduction and Sustainable Development through Microfinance

Identifying "opportunities for impact" in Tsunami recovery projects
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This paper discusses opportunities for microfinance to aid the poor in recovering from the effects of the Tsunami disaster.

A research was carried out with the following methodology:

  • A team of microfinance experts studied the effects of the tsunami in the four worst affected countries: Indonesia, India, Sri Lanka and Thailand;
  • They assessed conditions facing the poor and the effects of the disaster on the provision of microfinance;
  • The team also helped develop response plans of regional microfinance institutions (MFIs).

The team found that:

  • MFIs and non-governmental organizations (NGOs) were prepared to step up their microcredit activities in the affected areas but needed support;
  • Many MFIs had feasible projects that could be implemented if the resources were made available;
  • There existed an opportunity for microfinance to reach its full potential as a tsunami-response approach and to develop capacity and knowledge for responding to future regional disasters.

The paper then presents a detailed report on the following in the four selected countries:

  • Conditions of the poor;
  • Conditions of microfinance;
  • Opportunities for impact;
  • The approach to be followed.

The team recommended that:

  • More than half the funds required should be provided as interest free-or low-interest loans to the MFIs;
  • At least 50% or more of this would be repaid and made available for deployment for other disaster response or other microfinance or development programs in the future.

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