Paper
Emerging Microfinance Solutions for Response and Recovery in the Case of Natural Hazards
Considering innovative solutions to build an efficient recovery process
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6 pages
This paper discusses roles that MFIs can play in extreme risk management (ERM).
Serious floods affected many densely populated areas in Romania in July 2008. The government’s lack of experience in managing extreme risk events and budgetary restrictions called for the introduction of new financing schemes based on public private partnerships and the use of microfinance products created specifically for natural hazards. The paper states that MFIs should be:
- Efficient in disasters, disaster response and recovery;
- Informed on the consequences of natural hazards at client, institution and sector levels;
- Able to provide products and services that respond directly to clients needs in the aftermath of extreme events;
- Develop new products and services, and inform their clients about the type of loans and services available during periods of extreme risk.
The paper states that identifying the optimal lending program is a difficult task and is closely related to the global recovery process. It recommends the use of innovative microfinance solutions for ERM in Romania and other emerging countries.
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