Paper
Microfinance Post-Tsunami
Framework to evaluate post-tsunami financing
This paper analyzes the first two years of Cordaid's experience in rebuilding post-2004 tsunami livelihoods in Indonesia, Sri Lanka, and India. Cordaid's credit implementation program operated on the following guidelines:
- Relief and rehabilitation phase should precede credit entry;
- Credit requires long-term engagement with the borrower and timeliness is important;
- Framework of livelihood restoration should focus on income generation and job creation.
Cordaid's experience yields lessons that may serve as guidelines for future post-disaster reconstruction of livelihoods. They include:
- Timeliness of credit builds on the pulse of relief activities;
- Synergy between emergency and entrepreneurship sectors is vital for effective delivery of relief and reconstruction interventions;
- Credit timing should ensure that target borrowers are ready to take loans;
- Loan vehicle selection is critical;
- Value of an external portfolio should be weighed against companies' capacity to revive on their own.
Finally, there is a no hard and fast rule in designing an appropriate post-disaster credit program. Common sense plays a crucial role, along with a keen analysis of the environment in developing such a program.
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