Sustaining Microfinance in Post-Tsunami Asia (CGAP Brief)

Publication Date: Feb 2005
Published by: Consultative Group to Assist the Poor (CGAP)

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How can microfinance institutions be effective in post-tsunami assistance efforts?

This document contains guidelines to help microfinance institutions (MFIs) provide the appropriate range of emergency and longer-term assistance to their clients, while helping both MFIs and donors ensure that the ultimate mission of the MFI – to be a sustainable provider of financial services – is not compromised.

The document outlines the following key principles for microfinance:

• Maintain a commitment to sustainable operations: MFIs should work with dedicated agencies and donors that specialize in emergency relief rather than providing relief directly;
• Customize solutions according to clients’ needs: MFI staff should have the training to assess the situation and the authority to make on-the-spot decisions;
• Be realistic about the MFIs role: They should consider when they could contribute best in disaster response and avoid embarking on activities beyond their capacity and mission.

The paper provides guidelines for MFIs in the areas of:

• Relief efforts;
• Managing client savings;
• Rescheduling loans;
• Reconstruction loans;
• Managing micro-insurance claims.

It provides the following guidelines for donors:

• Be responsive to the local context;
• Ensure separation between relief and microfinance;
• Stick to microfinance good practices;
• Avoid setting disbursement targets.