The
surety of a better life, brought forth by loan from a MFI for an economically
backward rural household, is usually guaranteed, when mixed with the enterprise
and hard work of a budding entrepreneurial woman. But even best-laid plans sometimes
face severe obstacles in the form of natural disasters like flood, drought or cyclone.
The impact of a natural disaster, however, is rarely the same across households
even in the same locality. Natural disasters impact the finances of poor
households in a harsh manner, even more so in the case of a borrower’s family,
who has been working hard to uplift the household to a stronger financial
situation.
While
all households are affected by a flood or a devastating cyclone, the one that
has borrowed MFI money and is working towards a goal, is often more severely
impacted because the stakes are higher for them than a family with no loan to
see through or take care of a business.
The
first and most tangible effect of a disaster is the household’s inability to generate
income while surviving the disaster. This is simply because under such circumstances
or even during the aftermath, it is difficult, and sometimes even impossible,
to get in touch with customers.
There
are also chances of a reduced demand for the product or service the entrepreneur
offers. Destruction of trading stock is another body blow, replacement for
which could be unavailable due to the existing conditions and even due to lack
of funds. Disasters usually lead to increased expenditure for most households
due to higher prices of essential commodities like food and fuel, owing to a disruption
in the demand-supply chain. Finances are also affected due to injuries or
sickness of the entrepreneur or someone in the family could have suffered due
to the disaster, besides undergoing destruction or damage to assets like tools
of the trade, a workshop, or a shop.
We
have noticed that while most poor households make adjustments to cope
economically after a natural disaster, those running businesses with loan from
MFIs, suffer more because they usually have more to lose, in terms of not just assets
and capital but also confidence and energy.
However, even under these circumstances, what
surprises us is the intention of repayment of loans that the suffering
entrepreneur has borrowed from us. As a token of appreciation from Village
Financial Services, we make it our priority to support our borrowers who has
suffered loss of productive assets leading to a long-term impact on the ability
of the entrepreneur to generate income.
