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

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.