Paper
Microfinance and Disaster Management
Exploring the role of microfinance in emergency relief situations
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14 pages
This paper explores the ways in which microfinance institutions (MFIs) can help their poor clients cope with the debilitating effects of natural disasters.The paper argues that:
- There are numerous opportunities for collaborations between MFIs and Disaster Management Agencies (DMAs) that go beyond emergency relief and reconstruction;
- Such collaboration would allow MFIs and DMAs to concentrate on their core competencies and leverage their particular expertise for the ultimate benefit of their clients - poor households that are particularly vulnerable to natural disasters.
The paper:
- Describes the effects of annual floods on the lives of the slum-communities of Phnom Penh, the capital of Cambodia;
- Discusses the economic impact of disasters on poor households and their coping mechanisms;
- Looks at the impact of natural disasters on MFIs as well as the role of MFIs in disaster relief;
- Highlights a range of financial products that MFIs can offer poor households to manage their finances through difficult times;
- Enunciates policies and strategies to help MFIs prepare for the impact of natural disasters.
The paper concludes that MFIs will be able to respond more effectively when a disaster strikes if they have worked through the issues, designed policies and products, and negotiated collaboration with DMAs, before disaster strikes rather than in the midst of it.
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