TRANSFERRING RISK THROUGH MICROINSURANCE,MICROCREDIT AND LIVELIHOOD RELIEF

All India Disaster Mitigation InstituteJune 2006

Experience Learning Series ##

Best Practice Case Studies

Mehul Pandya and Tara Mitchellwith

Aprana Shah

With special thanks to ProVention Consortium:Eva von Oelreich, Margaret Arnold, David Peppiatt and Yasemin Aysan

TABLE OF GRAPHICS

Table 1.1.1.1 GSDMA – Basic Institutional Information 2Table 1.1.1.2 General Information on Insurance Programme 3Table 1.1.1.3 Districtwise Distributions list of Houses insured as

of August 2003 3Table 1.1.2.1 Product Description 4Table 1.2.1 Geographical allocation of houses to be insured 5Table 1.2.2.1 Method of Risk Sharing for the Rajkot District 6Table 1.6.1 SWOT Analysis of GSDMA Microinsurance 10

Table 2.1.1.1 SEWA – Basic Institutional Information 12Table 2.1.1.2 General Information on Kheda Association 12Figure 2.1.1 Organisational Structure 13Table 2.1.1.3 Chronology of Significant Events 14Table 2.1.2.1 Product Description 14Table 2.2.1.1 Characteristics of market 16Table 2.3.3.1 Details of loans given 17Table 2.4.1 Objectives of stakeholders 18Table 2.6.1.1 Issues and Corrective Actions Take 19Table 2.6.1.2 Results – Kheda Objectives 19Table 2.8.1 SWOT Analysis of Kheda Association Microcredit 26

Figure 3.1.1 Livelihood Relief as Stabiliser 28Table 3.1.1.1 AIDMI-Basic Institutional Information 29Table 3.1.1.2 General Information on LRF 30Figure 3.1.1.1 Districtwise Distribution of Livelihood Relief 30Table 3.1.1.3 Chronology of Significant Events 31Table 3.2.1.1 Covered Livelihood Activities 32Figure 3.2.1.1 Demographic Distribution of Livelihood Relief 32Figure 3.4.1 LRFs Process Cycle 34Table 3.8.1 SWOT Analysis of LRF 44

Annexe 1 Information on India – Political Map of India 45Annexe 2 Information on Gujarat – Political Map of Gujarat 46Annexe 3 Comparative Analysis 47

FOREWORD

Disasters are the major constraints for poor people in comingout of poverty. Reduction of disaster losses is an urgent policychallenge for the global community as the majority of all disastersoccurs in developing nations1 . Poor people's lives and livelihoodwithin those nations is the soft target of disaster.

Loss in lives and livelihood as a result of disasters have beenincreasing. Various dynamics associated with globalisation areresponsible for this increase in the frequency and magnitude ofdisaster occurrence. On one hand, climate change is increasingthe frequency of disasters; poverty resulting from local andinternational policy factors on the other hand are increasing poorpeoples’ vulnerability to disasters. The right to life anddevelopment for poor people at risk is not fulfilled simply becausethey do not have access to services like health care, educationand, significantly, finance.

Access to financial resources is the most importantprerequisite to undertake necessary measures like safe housing tostrengthen their safety. Many people affected by disasters go intofurther poverty because they lack financing for starting theirlivelihood again-let alone insurance coverage for their few, butimportant, assets. This is an absolute failure of the market toensure financial and insurance services for poor and vulnerablepeople. This poses two important policy challenges: (a) incentivefor profit based market institutions to meet financial andinsurance requirements of the vulnerable in the context ofincreased disaster and (b) incentive for the non-profit sectoroperating financial programme to adopt financing and insuranceas a tool for disaster reduction.

All India Disaster Mitigation Institute (AIDMI) has presenteda few powerfully humane stories in this publication showing howa 'people centered' finance and insurance system can work for thepeople affected by both natural disaster and political violence.This publication also provides transferable policy lessons notonly for India but also the larger part of South Asia and beyond.

1 Annual economic losses associated with such disasters averaged US$ 75.5billion in the 1960s, US$ 138.4 billion in the 1970s, US$ 213.9 billion in the1980s and US$ 659.9 billion in the 1990s. The majority of these losses areconcentrated in the developed world and fail to adequately capture theimpact of the disaster on the poor who often bear the greatest cost interms of lives and livelihoods, and rebuilding their shattered communitiesand infrastructure. Today, 85 percent of the people exposed toearthquakes, tropical cyclones, floods and droughts live in countrieshaving either medium or low human development [UNDP]

The actions that this document recommended do not requirea fresh policy basis; rather they can easily be installed within theexisting microfinance practices in South Asia.

The timing of this publication from AIDMI also hasparticular significance for three reasons: (a) nations across theglobe are now developing their national priorities for disasterreduction under the Hyogo Framework for action 2005-2015adopted in the World Conference on Disaster Reduction in Japan2005; (b) UN has declared 2005 as year of microfinance; andfinally c). the global community is heavily engaged in tsunamirecovery in some of the 11 countries hit by the tsunami inDecember 2004. I believe this publication will contribute in thesearch for policy options and technical solution to the disasterproblem. I hope that these lessons generate renewed interestamong the government and international aid community intsunami reconstruction and rehabilitation so that communitiesare more resilient when the next disaster strikes.

Finally, I congratulate my best friend Mihir Bhatt and hisever inventing colleagues at AIDMI for their continuousinnovation and research on disaster reduction.

Khurshid AlamInternational Tsunami Program Coordinator,International Emergencies Team - ActionAid InternationalUnited KingdomApril 2005

ABBREVIATIONS

ADB Asian Development BankAIDMI All India Disaster Mitigation InstituteAIDMI-AMA AIDMI-AMA Joint Centre for Disaster Risk

ManagementAJWS American Jewish World ServiceAMA Ahmedabad Management AssociationARRS Action Review and Research ServicesBPL Below Poverty LineBPP Building Peace and ProtectionBRP Bhuj Reconstruction ProjectCAAN Children Action Advocacy NetworkCCISB Chamber of Commerce and Industry for Small

BusinessesDFID Department for International DevelopmentEFSN Emergency Food Security NetworkEHU Emergency Health UnitEU European UnionFIR First Investigation ReportGIF Director of InsuranceGSDMA Gujarat State Disaster Management AuthorityIFRC International Federation for Red Cross and Red

Crescent SocietiesIRC Islamic Relief CommitteeJICRC Japan International Centre for the Rights of the

ChildLR Learning ResourcesLRF Livelihood Relief FundNGO non-governmental organisationOR Organisational ResourcesSEWA Self Employed Women’s AssociationSFSP Standard Fire and Special PerilsSRC Sphere Resource CentreSWOT Strengths Weaknesses Opportunities ThreatsTAC Tariff Advisory CommitteeTDO Taluka Development OfficerUSAID United States Agency for International

DevelopmentWSP Water Security Programme

Poor communities can not rely upon credit, insurance or relief solely. To be effective, risk transferstrategies need to converge all of them with mitigation at grass roots level.

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TRANSFERRING RISK THROUGH MICROINSURANCE –A CASE STUDY OF THE GUJARAT STATE DISASTER

MANAGEMENT AUTHORITY (GSDMA)

1.1 INTRODUCTION

All members of society face risks in their daily lives.Individuals work hard to establish productive lives forthemselves, but there is always the fear that their security andtheir assets could be taken away by an unexpected event.Insurance helps to take away this fear as it allows people toprepare for the future and increases their security giving thempeace of mind. Insurance helps people to be self-reliant andresilient so that when a loss does occur, they can recover withoutseeking outside help. It makes them independent.

Despite the important benefits of insurance, a largeproportion of society does not have any insurance and so are veryvulnerable to risk. The vulnerability of the poor, which is alreadyvery high, is increased by this fact. As a result of this, when a lossoccurs, they are completely dependent on external aid in order torecover. The resources of governments and relief agencies are notinfinite and when a serious disaster occurs they are put under atremendous strain. The provision of insurance services to the poorcould help to relieve this strain by enabling them to be lessdependent upon relief. This would mean that resources couldthen be directed towards areas that cannot be covered byinsurance.

The Gujarat State DisasterManagement Authority (GSDMA)was established in 2001 after theearthquake that took place on January26th of that year. As a result of thisearthquake, nearly 11 lakhs(1,100,000) houses were damaged ordestroyed. The GSDMA introduced areconstruction programme to helpindividuals rebuild their homes. Inline with their objective of long-termdisaster management planning, theyhave designed a compulsory housinginsurance scheme for thosebeneficiaries whose houses have beencompletely reconstructed. This casestudy gives details of this scheme inorder to demonstrate the importanceof insurance for risk transfer.

On January 26th 2001,Gujarat experienced amassive earthquake.The total loss to bothpublic and privateproperty was about Rs.15,000 crores.

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1. Institutional Summary

Table 1.1.1.1 GSDMA – Basic Institutional Information

Institution GSDMA

Institutional Type State level Government organisation responsible for handlingnatural calamities

Registration Charitable institution

Institutional 1. To provide relief to the people for the loss incurred due toObjective/mission natural calamity and to undertake rehabilitation and

reconstruction as social and economic activities.2. To make efforts to minimise the impact of natural calamities

through precautionary programmes and schemes.3. To analyse and study the reasons of natural calamities and to

suggest the remedies to avoid or minimise the effects of suchnatural calamites.

4. To make the best use of the funds, grants, donations,assistance received from the Government of India and otherforeign countries or from any other institutions/persons forprevention of such natural calamities or for handling the after-effects; to obtain loans and make proper use of the fundsreceived by the Authority.

Main Activities • Undertaking social and economic activities for rehabilitationand resettlement of the affected people that would includenew housing, infrastructure, economic rehabilitation, socialrehabilitation and other related programmes.

• Preparing programmes and plans to mitigate losses onaccount of disasters as a strategy for Long-term DisasterPreparedness.

• Undertaking research and study regarding causes for lossesas a result of natural disasters and suggesting remedialmeasures for minimising the same.

• Obtaining funds for rehabilitation and resettlement, andensuring optimum utilisation of these funds obtained in theform of grant, aid, assistance or loan from Government ofGujarat, Government of India, World Bank and ADB, USAID,DFID, IFRC, Donors, NGOs and from financial institutions,public and private trusts or any other organisations.

• Managing the Gujarat Earthquake Rehabilitation andReconstruction Fund.

• Acting as a nodal agency and coordinating various issuesrelating to the deserving victims, out of the funds, eitherdirectly or through a common fund, created for these purposesin any other feasible mode.

• Providing or arranging financial assistance, so as to achievethe objects of the Society.

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• Raising money through financial instruments, bonds,deposits or such other manner as may be permissible underthe provisions of societies Registration Act, 1860 and theBombay Public Trust Act, 1950.

• Developing an approach, a philosophy, policy guidelines andaction plan and other relevant aspects for meeting out disasterof any kind, management, administration, investment and re-investment of funds out of sale proceeds received from the saleof land, buildings, equipments, furniture, fixtures, debris orany other things or articles or infrastructures.

• Acting as a nodal agency and coordinating various issuesrelated to the maintenance of hygienic living conditions,welfare of victims, environmental maintenance and such otherwelfare measures, as may be assigned to the deservingauthority.

• Doing all other acts and things conducive to the attainment ofthe above objects in the most possible manner, which isrelevant to fulfil the objects of the Society.

Year commenced 2001

Table 1.1.1.2 General Information on Insurance Programme

GSDMA Insurance

Type Long-term, standard fire and special perils (SFSP) housinginsurance.

Year scheme started 2001

Target market Those individuals affected by the earthquake who receivedhousing assistance from GSDMA.

Urban/rural Both

Table 1.1.1.3 Districtwise Distributions list of Houses insured as of August 2003

Sr. Name of Number ofNo. Districts houses insured

1 Ahmedabad 1429

2 Amreli 152

3 Anand 13

4 Banaskantha 1925

5 Bharuch 760

6 Bhavnagar 239

7 Gandhinagar 5

8 Jamnagar 15667

9 Junagadh 244

10 Kheda 39

Sr. Name of Number ofNo. Districts houses insured

11 Kutch 125263

12 Mehsana 3

13 Patan 5454

14 Porbandar 2838

15 Rajkot 37089

16 Sabarkantha 1

17 Surat 114

18 Surendranagar 23700

19 Vadodara 12

TOTAL 2,14,947

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The GSDMA was formed after theearthquake that occurred on January 26, 2001.This earthquake registered 6.9 on the Richterscale and its epicentre was in the district ofKutch. The GSDMA was formed in order tocarry out rescue, relief, rehabilitation andreconstruction in the wake of the earthquake.As a result of the earthquake, nearly 11 lakhs(1,100,000) houses were damaged ordestroyed. A survey was carried out on thedamaged houses and houses were put intofive categories from G-1 to G-5. Houses thathad minor damage were categorised as G-1and houses that required reconstruction were

given the category of G-5. It is an objective of GSDMA, not simplyto help individuals to recover from the effects of disaster but alsoto reduce their vulnerability to future disasters. With this objectivein mind, the GSDMA introduced a mandatory housing insurancescheme for all houses that were reconstructed (i.e. G-5 houses).

2. Product Description

Table 1.1.2.1 Product Description

Coverage Rs. 1,00,000. 14 types of disaster arecovered: 1. Fire, 2. Explosion/implosion, 3. Impact by any rail/roadvehicle or animal by direct contact, 4.Aircraft or other aerial and/or spacedevices and/or articles dropped fromit, 5. Bursting and/or overflowing ofwater tanks, apparatus and pipes, 6.Missile testing operations, 7. Leakagefrom automatic sprinklersinstallations, 8. Bush fire, 9. Riots,stroke, malicious, 10. Lightening, 11.Storm, cyclone, typhoon, tempest,hurricane, tornado, flood andinundation, 12. Subsidence andlandslide including rockslide, 13.Earthquake, fire and shock cover, 14.Terrorism.

Eligibility requirements Mandatory for all reconstructedhouses.

Premium Rs. 360 including 8% service tax. Thisis the minimum legal premium, asfixed by the Tariff Advisory Committee(TAC) of India.

Duration 10 years

Out of 11 lakhs housesdamaged in theearthquake, hardly 5 to10 percentage houseswere insured under anyscheme.

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1.2 PRODUCT DEVELOPMENT

On behalf of GSDMA, the Director of Insurance (GIF), invitedexpressions of interest from different insurance companies whowere willing to take part in this housing insurance programme.These companies would underwrite the policy on a co-insurancebasis. The share of the government insurance fund would be 45%of the coverage and the other 55% would be provided by theinsurance companies. The following six companies submittedquotations: IFFCO-TOKIO General Insurance Company, NationalInsurance Company, New India Insurance Company, OrientalInsurance Company, Reliance General Insurance Company andUnited India Insurance Company. Reliance General InsuranceCompany subsequently decided not to participate in theprogramme and so the work was distributed among theremaining five companies. Each company has been assignedapproximately forty thousand houses to be insured. Thegeographical breakdown can be seen in Table 1.2.1 below.

Table 1.2.1 Geographical allocation of houses to be insured

Sr. No. Company Allotted Area

1. United Insurance Co. Rajkot district.

2. National Insurance Co. Patan, Rapar, Mundra, Mandvi(Kutch), Bhavnagar, Porbandar,Banaskantha, Ahmedabad,Amreli and Surat.

3. New India Surendranagar and JamnagarInsurance Co. district.

4. Oriental Insurance Co. Bhachau taluka, Kutch district.

5. IFFCO-TOKIO Kutch district except Mundra,General Insurance Co. Mandvi, Rapar and

Bhachau talukas.

1. Delivery ChannelsPolicies are issued on a village basis but

individual policies are also issued to theowners whose houses were previously coveredby insurance. GSDMA acts as an intermediarybetween the insurance companies and thebeneficiaries. The insurance companies start bycontacting Mamlatdars (revenue officers) andTaluka Development Officers (TDOs) of therelevant areas. Mamlatdars are contacted forhouses in urban areas and TDOs for houses inrural areas. When a house has been fullyreconstructed, the Mamlatdar/TDO deducts thepremium amount from the third instalment

Issuing insurance policywas not enough,GSDMA organisedmass-housing insuranceawareness programmeto explain details.

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before releasing it to the beneficiary.When a large number of premiumshave been collected (e.g. 100), a listof beneficiaries, all necessary detailsand the premium amount are sent tothe relevant insurance company.

The group insurance policy isissued to the Mamlatdar/TDO by theinsurance company. Individualpolicies for the beneficiaries are alsosent to the Mamlatdar/TDO whothen passes them on to thebeneficiaries. Individuals may godirectly to the insurance company tosubmit a claim in the case of a loss.However, in a situation where anatural disaster has occurred, and a

large number of houses are affected, then the Mamlatdar/TDO cansubmit a group claim so that transaction costs are minimised.

2. Costing and PricingThe cost of the premium is Rs. 360. It is a one time payment

that gives the beneficiary coverage of up to Rs. 1,00,000 for aperiod of ten years. The coverage of the houses has been dividedup among the different insurance companies on a geographicalbasis (Table 1.2.1). Some regions are more vulnerable to disasterthan others and so to reduce the risk to individual companies amethod of risk sharing has been devised. For each area that hasbeen allocated to a particular insurance company, that companybecomes the lead insurer and the other four companies, as well asGIF, become co-insurers. The lead company has a share of 35% inthe premium, the other four companies have a share of 5% eachand the remaining 45% is the share of GIF. Table 1.2.2.1 gives anexample of how the share is divided up in the district of Rajkot.

Table 1.2.2.1 Method of Risk Sharing for the Rajkot District

35%

5%

45%

5%

5% 5%

United Insurance Co.

National Insurance Co.

Oriental Insurance Co.

New India Insurance Co.

IFFCO-TOKIO Insurance Co.

GIF

GSDMA ensured thateach newly constructedhouse becomesearthquake resistantwithout lossing anopportunity ofproviding livelihood tothe local technicians.

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1.3 IMPLEMENTATION

One of the strengths of this programme is the fact that itsimplementation is so straightforward. There is a standardinsurance package that is compulsory for all beneficiaries.Collection of the premium is simple as it is deducted from thefinal instalment of housing assistance to the beneficiary. GSDMAhas a role as facilitator. It is the intermediary between thebeneficiaries and the insurance companies.

As the premium is automatically deducted from the finalpayment of housing assistance, the beneficiaries, although theyare aware that they have insurance, may not fully understandwhat this involves, as they did not make a conscious decision totake out an insurance policy. The key to the success of theprogramme, therefore, is in creating the necessary awarenessamong the beneficiaries of what the insurance covers and how tomake a claim in the case of a loss. After the insurance companyhas received the premium and the necessary details, they willissue individual policies, which are given to the beneficiaries. Asthe insurance cover is for a period of ten years, the policy is givenin a plastic jacket in order to keep it safe. This information iswritten in layman's language in Gujarati in order to make itaccessible to the general public.

In addition, GSDMA has taken a number of initiatives inorder to create awareness of housing insurance among thecommunity. Five thousand posters have been printed by GSDMAregarding housing insurance. These posters have beendisplayed at a women's fair (mela), at governmentoffices, gram panchayat (village council) buildings,schools and other public places. Fifty thousandpamphlets have also been printed anddistributed to villagers through NGOs orthrough government officers. Another meansof creating awareness among the communityis through Gram Sabhas (village meetings).GSDMA has coordinated with variousdepartments to ensure that housinginsurance should become an agenda of GramSabha. This issue has been discussed invarious Gram Sabhas in various districts. Thedistribution of individual policies at a publicfunction or meeting is also a way ofincreasing awareness. Senior levelgovernment officers are invited to attend suchmeetings and speak about the importance ofinsurance in the presence of the villagers andthen the individual policies are distributed.

Information packetsdistributed tostakeholders andbeneficiaries onGSDMA Insurance.

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1.4 RESULTS

1. Beneficiaries' PerspectiveFrom the point of view of the beneficiary, this programme

provides an effective and straightforward means of accessing ahousing insurance programme. With one payment, the houseowner acquires a comprehensive insurance policy that covers tenyears. As the premium is automatically deducted from theirhousing assistance, there are no transaction costs for thebeneficiary. They are provided with a copy of the policy, so theycan make a claim on their own if necessary. Because there is alsoa group policy for the village, however, in the case of a largenumber of individuals being affected, a group claim will besubmitted. The only disadvantage of the scheme to the beneficiaryis the fact that it is compulsory, so each individual must take outinsurance whether or not they wish to do so. In the majority ofcases, left to their own devices, individual beneficiaries would nottake out insurance. This is mainly due to a lack of awareness ofthe importance and the benefits of insurance. In this case, the factthat the scheme is compulsory may in fact be an advantage as itprovides the beneficiaries with a level of security for the futurethat they would not ordinarily have.

2. Government's PerspectiveThis insurance scheme reduces the vulnerability of the

communities to disaster and lessens their reliance upongovernment support in the wake of a disaster. From the point ofview of the government, this scheme is an effective means of risktransfer and means that, should disaster strike again, thebeneficiaries would be able to reconstruct their housesindependently, allowing government funds to be put to otheruses. As the government is not directly providing insurance to the

beneficiaries, but rather acting as alink to the insurance companies, timeand resources are saved.

3. Insurance Companies'Perspective

This insurance scheme givesinsurance companies access to alarge market, while simultaneouslyallowing them to spread the risk ofproviding insurance to vulnerableindividuals. As a standard,comprehensive insurance package isoffered and policies are issued, andclaims can be processed, on a groupbasis, transaction costs are greatlyreduced and bureaucracy isminimised.

GSDMA’s housinginsurance programmedemonstrator risktransfer betweencommunities as well asinsurance companies.

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4. Plans for the Future• Continuing to create

awareness aboutinsurance.

• A study on awareness ofinsurance found that priorto the earthquake only 5%of those surveyed knewabout insurance whileafter the earthquake 67%were aware of insuranceservices. GSDMA ismaking a conscious effortto increase awareness, notonly among G-5 houseowners but also those ofcategory G-1 to G-4 andthose whose houses wereunaffected by the earthquake.

• Research into the reasons why individuals do not take outinsurance.

• A lack of awareness is one of the reasons for not takingout insurance. Even among those who are aware,however, most do not have an insurance policy. A studyis being carried out to discover the reasons why so manyindividuals do not take out insurance. This study couldmake it easier to design appropriate insurance policiesand to ensure that the benefits of insurance areadequately explained to the general public.

1.5 SUMMARY OF LESSONS LEARNED

• Insurance helps individuals to become self-reliant, is aneffective means of risk transfer and, with an appropriatelydesigned policy, is a service that can be made available toall members of society.

• The government has a key role to play as an intermediarybetween insurance companies and the communities.

• One of the major obstacles to spreading insurancecoverage within the communities is a lack of awareness ofinsurance services. As the profit margin on this scheme isvery low for the insurance companies, they are not willingto spend more promoting it. There is a potential role forNGOs, however, to spread awareness among the public.

• Even individuals who are at a high risk can be insured ifan effective means of risk sharing can be designed.

GSDMA’s housinginsurance programmeis an extremely positivestep towards cost-effective mass risktransfer practice. Itshows how policy leveldesigns couldcontribute to futurevulnerability reduction.

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The GSDMA housing beneficiaries are protected for next 10 years against the most frequenthazards in Gujarat.

1.6 SWOT ANALYSIS OF GSDMA MICROINSURANCE

Table 1.6.1 SWOT Analysis of GSDMA Microinsurance

STRENGTHS of the programme

• Simple method of premium collection.

• Group and individual policies.

• Single premium payment gives coverage for 10 years.

• Risk sharing between insurance companies.

• Policy given in plastic jacket with information on making claims.

WEAKNESSES of the programme

• Insurance is compulsory and so beneficiaries have no choice but to take it.

• Standard insurance package does not cater to different individuals.

OPPORTUNITIES of the programme

• Creating awareness among public of importance of insurance.

• Extending programme to cover G-1 to G-4 houses and houses that were unaffected bythe earthquake.

THREATS to the programme

• Ability to answer all claims fully, in a timely manner, in case of large-scale disaster.

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TRANSFERRING RISK THROUGH MICROCREDIT –A CASE STUDY OF THE KHEDA ASSOCIATION

2.1 INTRODUCTION

Financial services are essential to the well functioning of anythriving economy. All individuals have times in their lives whenthey need to save money. They may need a larger sum of moneyfor a special occasion, such as a wedding or funeral, to pay fortheir children's education, to provide for themselves in old age, toinvest in their business or in case of an emergency in the future.Access to credit facilities, such as banks or professional loanagencies, is equally important. Entrepreneurs may have goodbusiness ideas but they cannot act upon them if they do not haveaccess to capital.

The poor are often ignored when it comes to the area offinancial services. It is a common misconception that the poor areunable to save and that they are unreliable borrowers. Because ofthis, commercial banks are often unwilling to provide financialservices to the poor. This is particularly unfortunate as access tothese services could greatly help to reduce the vulnerability ofthese individuals by encouraging savings, which could be used intimes of crisis, and by reducing their reliance upon moneylenderswho charge high rates of interest.

Microfinance programmes have emerged in response to theneed of the poor for financial services. The Kheda Association isan example of an organisation engaged in this type of activity. Itis a federation of groups engaged in savings and small creditschemes. Through the establishment of savings groups in thevillages and the distribution of small loans, Kheda Associationhelps their members to reduce their vulnerability and improvetheir standard of living.

In February 2002, communal riotsbroke out in Gujarat resulting in a largeamount of damage to people and property.Many of Kheda Association's members wereaffected by these riots and lost their homes.With the help of money donated by the AllIndia Disaster Mitigation Institute, KhedaAssociation was able to give loans to theaffected women, free of interest, to helpthem to rebuild their homes and restart theirlives. This case study gives details of thisprogramme in order to demonstrate howmicrocredit can be an effective means of risktransfer in times of disaster.

Kheda, a small town ofSouth Gujarat suffereda massive loss due tocommunal riots in 2002.

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1. Institutional Summary

Table 2.1.1.1 SEWA – Basic Institutional Information

Institution SEWA

Institutional Type Trade Union of Women Workers in the Informal Sector

Registration Trade Union

Institutional 1. Full Employment - this should ensure income security,Objective/mission work security, food security and social security.

2. Self-reliance - economic and decision-making ability.

Main Activities • Organising women in the informal sector.• Need based and demand-driven activities.• Childcare, healthcare, water, all issues affecting employment.

Year commenced 1972

Total Institution 700,000Members

Table 2.1.1.2 General Information on Kheda Association

Kheda Association

Type of organisation Federation of groups, registered under the Trust and Society Act.

Year commenced 1995

Activities • Motivating and promoting the poor self-employed women tosave money in groups.

• Formation of groups in the villages.• Providing financial services, like credit, to the groups in the

villages.• Training and building the managerial and technical capacity of

group members, leaders, spearhead team leaders and ExecutiveCommittee for the local management of the entire programme.

• Linking and strengthening the economic activities of the groupslike weaving, nursery raising, vegetable growing etc.

• Demand-based activities like water campaign and running lifeeducation school (Jeevanshala).

Target market SEWA members i.e. women workers in the informal sector.

Total number of 3,848loans given

Total amount of Rs. 18,638,113money lent

Total amount of Rs. 7,306,745money outstanding

Geographical Kheda and Anand districtscoverage

Urban/rural 100% ruralbreakdown

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Kheda Association is a federation of groups engaged insavings and small credits in association with SEWA. Their systemis one of group lending. Groups are organised at the village level.They collect regular savings from members and the group, as awhole, opens an account with SEWA Bank. Each member of thegroup contributes the same amount to the group savings. In thisway, no group member has a disproportionate amount of powerand the interest is divided equally between members. Individualmembers can also borrow money. They apply to the group for aloan. Once all of the individual loans have been decided, thegroup applies to the Association for a group loan. TheAssociation in turn borrows the money from SEWA Bank.

Figure 2.1.1 Organisational Structure

Based on the pastexperience of itsmembers, KhedaAssociation designed arefined cost-effectiveoperation to reach outthe most needy.

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Table 2.1.1.3 Chronology of Significant Events

Year Event

1989 SEWA started organising saving and credit groups in the villages.

1994 Due to heavy rainfall most of the members' houses collapsed and they wereunable to get employment for almost two months. The proposed DistrictAssociation decided to provide food grains worth between Rs. 300 and 600 toaffected members as an interest free loan. After six months, the members hadrepaid the full amount of the loan in small installments.

1995 The District Association was registered.

1995 Special Housing Loan was given to 394 affected group members.

1998 The District Association undertook the activity of group insurance for SEWAmembers.

1999 The District Association supported the below-poverty line (BPL) members inconstructing the houses under Government Sardar Awas Yojna (housing schemefor low income families). A total of 534 houses were constructed, and thewomen's names were added to the house title.

2000 The District Association helped women vegetable growers to form groups andcreated links with the vegetable shop in Ahmedabad managed by "Gujarat StateWomen's SEWA Co-operative Federation Ltd."

2002 The District Association signed a contract with Gujarat Water Supply Board forrepairing the water hand pumps in the villages under SEWA's water campaign activity.

2002 Kheda and Anand Districts were affected by Communal Riots. With the supportof the All India Disaster Mitigation Institute, the District Association gaveinterest free loans to 431 affected members for repairing their houses.

2002 The District Association linked the Integrated Social Protection Scheme withthe existing and new saving groups where individual members are savingtowards membership fees, insurance premium and employment security fundwhich will lead to the sustainability of members and the Association.

2. Product Description

Table 2.1.2.1 Product Description

Size of loans to Smallest: Rs. 500; Largest: Rs. 20,000; Average: Rs. 8,000individuals

Size of loans to groups Average: Rs. 25,000; Largest: Rs. 100,000.

Period of repayment 36 monthly installments with interest. Some loans can beseasonal, e.g. for agriculture. In this case, smaller payments aremade every month and then larger payments are made duringthe season.

Method of repayment Monthly meetings are held at the village level where the leaderscollect payments. These leaders then give these payments toKheda Association, who in turn repay SEWA bank.

Rate of interest SEWA bank - 18%, Kheda Association - 21%, Groups - 24%.

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Eligibility requirements • Must be a member of a group and making regular savings.for loan for an individual • Must attend meetings regularly.

• If she has taken a loan in the past, then prior repaymentswill be taken into consideration.

• The purpose of the loan will be assessed - if the purposehelps to improve the woman's livelihood and build assets inthe woman's name, this will be considered.

Eligibility requirements • Must have regular meetings.for loan for group • Must have a good record system.

• Leaders should have taken trainings.

Penalties for default • The association does not impose a penalty on the groups inthe case of default. The credit rating of the group will bedamaged, however, which could prevent them from getting aloan in the future.

• At the group level, penalties vary from group to group, aseach group has its own by-laws. Some may charge moreinterest or there may be group pressure to repay in time.Some groups also have penalties if individuals do not saveregularly, such as a charge of 50 paise.

Purposes of loan • Repayment of old debts. (interest charged on these debts at10% per month)

• Starting small businesses.• Redemption of mortgaged agricultural land.• Agricultural inputs - seed, fertilizers, etc.• Housing - new/repaired.• Medical loans.• Educational loans.

3. Loans to Riot-affected Members

There is a long history of communal riots in thestate of Gujarat. The most recent incident occurred inFebruary 2002 and a large amount of damage wasdone. Many of SEWA's members were affected. Theirhouses were destroyed and they were forced tomigrate to other areas and to go to relief camps. Inorder to help these women to recover, KhedaAssociation needed to expand its activities. Toenable them to do this, AIDMI donated Rs. 2,155,000to Kheda Association to be used to give loans tomembers to help them to recover from the effects ofthe riots and rebuild their houses.

Vulnerable populationssuch as women,children and the elderlyare most effected andleast protected indisasters like riots.

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2.2 MARKET RESEARCH

1. Market Definition/SegmentationKheda's market for this programme is made up of members

of SEWA (i.e. women working in the informal sector) who wereaffected by the communal riots.

Table 2.2.1.1 Characteristics of market

Characteristics Breakdown

Religion All different religions.

Age Between 20 and 60 years of age.Average: 35.

Economic background Vast majority are landless labourersinvolved in tobacco agriculture andtobacco processing. Only 10% aresmall and marginal farmers. Also,some handloom weavers.

Family size 7-8 family members.

Occupation of husbands Mostly tobacco agriculture andtobacco processing.

2. Market Research ProcessAfter the riots occurred, SEWA was working in

seven relief camps where most of their membershad sought safety. Each camp contained between2,000 and 10,000 people. SEWA carried out 4activities there: (i) they established a childcareprogramme, (ii) they carried out health-relatedactivities, (iii) they helped with the provision offood and (iv) they coordinated with government toensure that their members would remain on thegovernment list and receive the correctcompensation. When consulted, the women wereunanimous in that they wanted to return to theirnative villages but that they would not becausethey were afraid and their houses had beendestroyed. SEWA carried out a survey on 431members and on the basis of this, they decided howto best allocate the loans.

3. Competitive AnalysisBecause of the tense environment after the

riots, SEWA found that not many organisationswere able to work directly with the communities.As a result of this, SEWA members had no otheroptions other than obtaining loans through KhedaAssociation.

As riots displaced manyfamilies, damageassessment becamechallenging and timeconsuming for theKheda Association.

17

2.3 PROGRAMME DESIGN

1. Product DevelopmentKheda Association was already a veteran in the

field of microcredit and savings prior to the riots.They carried out a survey on the riot-affectedmembers in order to get an accurate assessment oftheir needs. Based on this survey, they decided howmuch to lend to each member. Ordinarily, loans toindividuals are charged at a rate of interest of 24%.However, as these members had been affected by theriots and so were not able to earn a livelihood, theloans were given interest free. Many of the womenwere members of SEWA but were not members ofvillage savings groups. New Kheda Associationgroups had to be established in a number of villages and newleaders chosen, in order for the loans to be given.

2. Delivery ChannelsAs the survey was carried out in the relief camps, the women

were aware of the availability of loans from the Association. Loanrepayments are collected on a monthly basis. The individualmembers pay them to the group leaders at monthly meetings. Theleaders, in turn, repay Kheda Association.

3. Costing and Pricing

Table 2.3.3.1 Details of loans given

Initial amount of fund Rs. 2,155,000

Size of loans given Between Rs. 3,000 and Rs. 7,000

Number of loans given 431

Amount of money repaid Rs. 1,200,000

Number of loans repaid Repayment period is still ongoing.

Rate of interest Loans given to riot-affected memberswere free of interest.

Have costs been covered? The Association is bearing the costs.

As the repayment period is still ongoing, none of the loanshave yet been repaid in full. However, over 50% of the money lenthas already been repaid. The loans have been given to the riot-affected members free of interest, and so the administrative costsmust be borne by the Association. Ordinarily, the Associationmust repay the amount borrowed to SEWA Bank with interest. Asthe initial fund for this programme was given by AIDMI, however,and not borrowed from SEWA Bank, the amount repaid can be re-lent to village groups at the normal amount of interest, but theAssociation will not have to pay interest and so some of the costscan be recovered in this way.

Riot-affected victimsused microcredit forhousing reconstruction,livelihood generationand education for theirchildren.

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2.4 IMPLEMENTATION

Table 2.4.1 Objectives of stakeholders

Kheda AIDMI BorrowersTo help riot-affectedmembers to repair theirhouses, in order to restarttheir livelihood activitiesand begin to recover

Enablingthe recoveryof thoseaffected bydisaster.

To repair theirhouses

To restore peace,integration and security.

To regain employment

To return to theirnative place.

As a result of the riots, many individuals lost their homesand their livelihoods and had to migrate from their native villagesand go to relief camps. Although they had a strong desire toreturn home, they could not because their houses had beendestroyed and they were afraid. Shelter is crucial to livelihood andwithout a place to live, these women were unable to earn a living.

The primary objective of the loans was for housereconstruction; however, loans were also used for livelihood-relatedactivities, meeting daily needs and a mixture of all of these purposes.

2.5 INSTITUTIONAL IMPACT

1. Human ResourcesKheda Association has a team dedicated to savings and credit

activities. They visit their groups at least once a month to give adviceand monitor activities. With the establishment of the new groups togive loans to riot-affected women, the team had to help with runningmeetings and give trainings on various administrative issues, such ashow to write the minutes of a meeting, keep accounts etc.

2. Operations and SystemsKheda Association's operations are conducted

systematically. Individuals fill in applications for loans, whichare then given to the groups. Once the group has approved theloans, they fill in an application for a group loan, which is sent tothe Association, who reviews the applications and makesdecisions on the allocation of loans. Documentation of activitiesalso takes place in the form of loan assessment documents, andpre-checking forms detailing background, cost, feasibility, etc.

3. Feedback MechanismsThe village groups meet once a month and any issues that the

members have can be brought up then. The group leaders can thencommunicate these issues back to Kheda Association. Once every sixmonths, a leaders' meeting is called. A general discussion is heldwhere they can express what they want, how they feel, and raiseissues relating to employment or any problems facing their members.

All the microcreditprogrammebeneficiaries felt thatthe support was timelyand indiscriminated.

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2.6 RESULTS

1. Operating Results

Table 2.6.1.1 Issues and Corrective Actions Taken

Issues Corrective Actions

Members were not in thevillages. They were scatteredaround the area in relief campsand were difficult to find.

It was difficult to identifywho were the most needy, riot- affected victims.

Determining the size of loanto be given to each member, asthey needed to reach all theaffected people.

Some members who came intothe survey were not part ofsavings groups.

The team spent time movingaround in order to find themembers.

Took time and energy of team.Carried out survey.

Examined the situation of eachindividual, took into accountbenefits received fromgovernment and relief campsand assessed the size of loanrequired in order to really helpthe member.

Formed new groups in villagesand found leaders for thesegroups.

In general, repayment of loans has been good. Only a verysmall percentage of those who received the loan have disappearedwithout making repayments. Some have difficulty makingrepayments every month but most have been able to pay regularly.The repayment rate has been approximately 87%. In general, thosewho were members of savings groups prior to the riots are betterat making repayments than those who were not. When membershave trouble repaying their loans the reasons are generally relatedto problems with employment. In this situation, the Associationtries to create linkages for the women to help them to improvetheir employment opportunities.

Table 2.6.1.2 Results – Kheda Objectives

Objective Result observedTo help riot-affected membersto repair their houses, in orderto restart their livelihoodactivities and begin to recover.

To restore peace, integrationand security.

Most members have rebuilttheir houses and have startedworking again.

The regular meetings bringwomen from differentcommunities together on oneplatform, which helps torestore peace and integration.

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In general, loans have been used to rebuildor repair the houses that were damaged in theriots. This has allowed the women to return totheir native places, to restart their livelihoodactivities and to increase security in their lives.This has not been the case for all of the women,however. Some women repaired their housesbut they are still afraid to return to theirvillages. Others have returned but have saidthat they feel that, because they were affected bythe riots, they are not being treated equally interms of being called for agricultural work andso they are not getting enough employment.There are still many demands from savingsgroups for more loans, which have yet to be met.

2. Members' perspectivesA workshop for some of the riot-affected women, who

received loans from Kheda Association was held on April 14th2004. The women were asked a number of questions relating tothe success of the programme. Their response is given below.

Q 1. To what extent do you think this Microcredit programhas achieved success?

Success rating of Micro-credit program by Trainees

60-70%6%

70-80%18%

90-100%9%

Can't say36% 80-90%

31%

Q 2. Do you think that this Microcredit Programme ShouldContinue for the next 3-5 years? (n=33)

33

00

10

20

30

40

Yes No

Yes

No

Jahedaben Sajitbhai,received microcredit.She worked hard,recovered and repaidthe loan within 6months.

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Q 3. Did the loan reach the trainees at right time?

Sr. Trainees' Trainees TraineesNo. Opinion (In Number) (Percentage)

1 Yes 33 100

2 No 0 0

Total 33 100

Q 4. Do you believe that the Microcredit program shouldcontinue for the next 3-5 years?

Trainees' Opinions to continue Micro-credit program for Next 3-5 years

Yes

100%

No

0%

Q 5. Does this financial assistance meet your requirements?

Financial Assistance Meeting their Requirement

Yes36%

No64%

Q 6. Was the loan amount enough?Sufficiency of Loan Amount

No94%

Yes6%

Yes

No

22

Microcredit Case Studies:

The following pages contain few case studies of individual women who received loansthrough the Kheda Association and who participated in the workshop.

Rabiyaben Mahebub Hussain Khalifa:

Age: 38 Yrs., Village: Ode, Block: Umreth, District: Anand.

Rabiyaben has received education up to 7th Standard. She has four children: twoboys (aged 14 and 8) and two girls (aged 18 and 10). Her husband manages a hair-cutting salon.

For ten years, Rabiyaben has been a member of SEWA, for the last five years she hasbeen working as a Leader (Agewan) in a Saving Group and for the past year she has beenworking in an administration group (Sanchalan Mandal). Before becoming involved withSEWA, she was working at home. Her children are left in a children house (Ghodiya Ghar)for the day. She currently handles four groups (Mandals) of SEWA in a village. The namesof the groups are - "Akashganga", "Ashthana", "Mira", and "Dashama".

In the riots, her family lost their shop and their house. Her children weretraumatised by the violence of the riots. For a year and a half, they lived outside theirvillage - in a relief camp situated in Bhalej, in her father's house and in a relative's house.After this, they started their new life in a new place that they rented, but they could notafford that expense, as they did not have a livelihood, so they moved again to theirprevious house. Rabiyaben received two loans - one from SEWA for Rs. 10,000 (withinterest) and one from Kheda Association scheme for Rs. 7000 without interest. At first,her husband did not like her activities with SEWA but he realized the great benefits ofthe loan programmes he became more supportive. Rabiyaben is thankful to the KhedaAssociation and SEWA for providing her with these loans and giving her theopportunity to enable her family again.

"Now I know the importance of saving and insurance and that's why in my fourgroups, I prepare every member for insurance and saving activities. In my group (mandal)I cover 200 women. I also got opportunity to work in a survey of this programme. I amsatisfied with this programme's activities. It has been a nice experience."

Salmaben Iqbalbhai Vora:

Age: 35 Yrs., Village: Pandol, Taluka (Block): Anand.

Salmaben lives with her husband and five children in this village. Her 19-year-oldson is going to ITI for education. One son appeared for S.S.C. examination in March 2003.Prior to the riots, she helped her husband to run a flourmill. They had a small and a bigflour machine in their mill along with a rice separator machine. They were earning Rs.7000/-. On 4th April 2002, at 10:00 pm, riots started in their village. After escaping fromtheir village they were under constant assessment from loitering people. The roads wereoften blocked with throngs of people attempting to flee. Her mother-in-law and father-in-law were injured while fleeing the village.

During the riots, their house in Pandol was destroyed. They lived in Petlad reliefcamp for 15 days. After that, they lived in Anand in a rented house. They paid Rs. 1000/-

23

rent. Due to uncertain income, they could not afford the rent and hence decided to goback to their village and started living in their damaged house. After a period of time, theIslamic Relief Committee (IRC) provided them with a door and cement to repair theirhouse. During this time, they had no source of livelihood. They were surviving on grainprovided in the relief camp and some assistance from relatives.

When the women of SEWA approached Salmaben she was already aware of theactivities of the organisation. SEWA provided them with a loan of Rs. 3000/-. Due touncertainty of income, she did not take a further loan. Family requirements, educationalexpenses of the children and the operation of a daughter resulted in irregular repaymentof loan installments. After the riots, the Islamic Relief Committee (IRC) provided themwith a handcart, which they are using for earning by way of selling plastic items. Theyhave joined the Kheda SEWA Association with the expectation of financial aid.

Kherunben Rafikmahammad Saiyad

Age: 40 Yrs., Village: Ode, Taluka (Block): Anand.

Kherunben - along with her husband, 3 daughters, 3 sons, mother-in-law andfather-in-law - lived contently in the village of Ode. Before the riots they had a big andwell-maintained house, 3 buffalos, 4 goats, 3 bulls, 2 motorcycles and 3 scooters. Afterthe riots broke out on March 1st 2002, they were forced to leave the village at 8:00 pm.They lived in Sureli village camp for 3 months. After this, they went to Nutannagarcamp for 2 months. Then they went to Anand, living on rent and grocery and utensilsprovided by Sopariwala. They were also able to get some relief after seeking assistancefrom their local mosque. They lived this way for a year and half.

Before the riots, Kherunben took a receipt of Rs. 5/- from SEWA on her father-in-law's pressure. At that time, she and her mother-in-law were not aware of the activities ofthis association. One and half years after the riots, despite her husband's refusal, shereturned to Ode. The impact of the riots was still seen in the village. One of her buffaloswas found and she purchased another using the loan amount. Kherunben beganemployment through casual labour and earned Rs. 25/- a day.

4 months after the riots, the Association women found Kherunben and her twodaughters in Amina Manzil, Anand and informed them that they were granted a loan ofRs. 7000/- each. The women collected information from the Association aboutrepayment of the loan, which contained Rs. 400/- installment and Rs. 20/- in a savingsaccount.

Rukshanabanu Mahmadshah Diwan

Age: 30 Yrs., Village: Vadod, District: Anand.

Rukshanabanu earns a living through sewing work. Her husband drives an autorickshaw that he rents. They have three children: one girl who is 14 and two boys whoare 11 and eight.

On March 1st 2002, riots broke out in her village. At that time her children were inschool and she and her husband were very worried. The atmosphere in the village was

24

very dangerous so all members of the village moved to another village named Hadgud.Her family stayed there for three months. During the riots, her house was destroyed.After coming back to the village they built a small house on their land. They got relieffrom the government and from SEWA and through that she and her family were able torestart their everyday lives again.

Rukshanabanu has been a member of SEWA for one year. She is a member of"Imamsha Dada" saving group. She received a loan of Rs. 7000 without interest. She doessewing work using a sewing machine but sometimes she does not get enough of this typeof work and so she does some hand sewing. Some months she does not earn enoughmoney and so, in those months she is unable to submit an installment.

Mumtazben Salimsha Diwan

Age: 30 Yrs., Village: Vadod, District: Anand.

Mumtazben has received education up to the 7th Standard. She has two children:one boy, Sadam, who is 14 and studying in 7th Standard and one girl, Shahin, who is 11and studying in 4th Standard. Her husband handles a hand lorry of fruits in the village.

Her family will never forget the riots of Friday, April 2nd 2002. She and her familyfled their village and migrated to Hadgud village. During the riots her house was badlydestroyed. For three months, the family lived at Hadgud village in a relief camp and withrelatives. They could not stay there longer than that, however, and moved back to theirvillage Badod.

For three years, she has been working with SEWA organisation in a saving group.She handles a saving group of 21 members named "Balamsa Bawa". Through herinsurance policy she received Rs. 11,000/-. From Kheda Association, she got a loan of Rs.7000/- without interest. From this 7000 loan, she was able to start her livelihood again.Currently, she is able to satisfy her family's need and submit loan repayments, now thelast instalment of Rs.1000/- remains.

Shaberaben Sattarbhai Vora

Age: 42 Yrs., Village: Pandoli, Taluka (Block): Anand.

Shaberaben was living in Pandoli with her husband, five daughters and a son. Herhusband was a vegetable vendor and was also doing farm labour work and was earningRs. 1200/- every month. After the riots broke out, they were forced to leave the village atnight. They escaped through the farms and reached Petlad in the morning. For twomonths they lived in camps and their relatives' house. When they returned to theirvillage they found their house destroyed and no source of livelihood. IRC provided themgalvanised iron sheets (for roofing), cement and blankets. The Association womenapproached her in the village and informed her that she had been granted a loan of Rs.3000/-. Using this loan she purchased vegetables to start her old livelihood again andher husband also started farm labour work. They collectively earn Rs. 40/- a day. Theyrepay Rs. 10/- a day and in that way, they have repaid the major part of the loan. Aftershe repays her loan she wishes to take out an additional loan of Rs. 10000/- to purchasea buffalo.

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3. Plans for the Future

Strengthening Village groupsNow that new village groups have been established, and the

women have started to recover, the Kheda Association can focuson strengthening the groups. More loans can be issued in thefuture according to the demands of the groups.

Creating linkagesBy creating linkages between the village groups and

marketing organisations and government schemes, KhedaAssociation can significantly increase the impact that the loanshave on their members.

2.7 SUMMARY OF LESSONS LEARNED

• Shelter is crucial to livelihood. By receiving loans toreconstruct their houses, members were able to start earningagain and so start recovering.

• Kheda Association should work more towards organisingindividuals into groups and unions. Groups should beenabled so that they can respond to future disasters.

• Group meetings help to bring members from both religiouscommunities together, helping to increase cooperation andpeace.

• Thorough documentation of activities and workshops canhelp learning for the future and effective planning.

Mumtazben YasinshaDivan, fixed an irongrill for securitypurpose immediately inanticipation of anotherattack and repairedother shelter relateddamages later.

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2.8 SWOT ANALYSIS OF KHEDA ASSOCIATION MICROCREDIT

Table 2.8.1 SWOT Analysis of Kheda Association Microcredit

STRENGTHS of the programme

• Capital

• Planning, implementation and awareness in the hierarchy of the organisation.

• Because Kheda Association is an association of women, the members have faith andconfidence in each other.

• Willpower of the members.

• Members have increased capacity to deal with emergencies in future

• The members are the strength of the Association

WEAKNESSES of the programme

• Could not provide enough relief and not all requirements were met.

• Because livelihood activities were disrupted, the effect of the loan was limited.

• Many members used loan to meet day-to-day expenditures, so could not use it forhousing reconstruction.

• In comparison with the total number of members in the Association, only a fewbeneficiaries were covered through this programme.

• The Association did not have enough capital of their own.

• There is no counselling available after man-made disasters.

OPPORTUNITIES of the programme

• Money repaid can be used to provide more loans and reach more members.

• Collaboration with other sister concerns of SEWA e.g. insurance, healthcare.

• Increase membership

• Build better partnerships with government e.g. scheme for housing for BPL families.

• Once they get livelihood, there is an improved opportunity for complete recovery, forboth the Association and the women.

• Increase level of faith and confidence among members.

• Improving social security among members.

THREATS to the programme

• Loan default.

• Future disaster could result in Association being unable to move forward.

• Lack of proper documentation and records.

• Change in government policy/regulations.

• Non-uniform treatment of members, e.g. riot-affected women were given loan as reliefand were not charged interest whereas other members are charged interest on theirloans.

27

TRANSFERRING RISK THROUGH LIVELIHOOD RELIEF –A CASE STUDY OF THE LIVELIHOOD RELIEF FUND

3.1 INTRODUCTION

A sustainable livelihood refers to a living that is adequate forthe satisfaction of the basic needs of life and thus secure againstunanticipated shocks and stresses. Having the opportunity toearn a living, and the feeling of security associated with this, arethings that many people take for granted. Many of the world'spoor, however, live in situations of extreme vulnerability andtheir livelihood security is constantly threatened.

After a disaster occurs, people's lives are turned upsidedown. They may have lost their home and their assets, not tomention their loved ones. Communities are disrupted, normalsupport systems are gone and it can be extremely difficult,sometimes impossible, for individuals to put their lives backtogether without help.

Wealthier individuals are able to rely on insurance orsavings to help them to recover. The poorest members of societyoften do not have these safety nets to fall back on, however, andthey may be unable to start working again because they have nomeans of replacing their assets. Victims of disaster are stillcapable individuals but they find themselves in a situation wherethey have nowhere to go. Livelihood relief gives victims a start,something they can build on, so that they can begin the longprocess of rebuilding their lives without having to depend onexternal help.

Other kinds of relief after disaster are important but theireffects are only temporary. Livelihood relief is different because ithelps the beneficiary to become self-sufficient and to no longerrely upon relief. People need to be able to earn a living in order tohave their dignity and independence. If individuals have anopportunity to earn a living then they can acquire the other basicneeds necessary for survival, without havingto depend on external help. Livelihood securityhelps individuals to reduce risks and toachieve water, food and shelter security.

Those living below the poverty line areparticularly vulnerable to disaster. An event,which may not have a major effect on manysectors of society, can have extremelydamaging effects on the poor, reducing theireconomic level even further. If the poor havelost the assets necessary for earning a living,they may end up trapped in a circle of debt anddependency, where their living standardscontinue to decline.

If victims have anopportunity to earn aliving then they canacquire the other basicnecessities for survival,without depend uponexternal support forlonger periods of time.

3

28

In this situation, livelihood relief can act as a stabilizer.Figure 3.1.1, above, depicts this process. By helping individuals tostart earning again, livelihood relief can prevent the furtherdecline of living standards and, when combined with capacitybuilding and access to markets, can help individuals to regaintheir pre-disaster level of income. With the aid of additionalassistance and access to financial services, such as microcreditand insurance, some beneficiaries can even reach a highereconomic level than they had before the disaster and escape thetrap of poverty, thereby reducing their vulnerability to futureshocks.

The Livelihood Relief Fund (LRF), an activity centre of theAll India Disaster Mitigation Institute (AIDMI), exists to helpindividuals who have been affected by disaster and who areunable to recommence their livelihood activities. It provides themwith livelihood support by replacing the assets that have beenlost and so helps them to get back on their feet.

This case study aims to give details of LRF's activities and toshow how livelihood relief can be an effective means of reducingvulnerability and risk.

Figure 3.1.1 LivelihoodRelief as Stabiliser

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1. Institutional Summary

Table 3.1.1.1 AIDMI – Basic Institutional Information

Institution All India Disaster Mitigation Institute

Institution Type Action Research and Action Planning Organisation

Registration Charitable Trust

Institutional objective/ To reduce disaster risk of vulnerable communities by promoting

mission mitigation efforts, through learning and action.

Vision Create a safer world through combined disaster mitigationefforts of various humanitarian stakeholders.

Focus Promoting adoption and practice of disaster mitigationthrough:

• Partnership with the poorest within disaster vulnerablecommunities

• Integrating water, food, habitat and livelihood security

• Capacity building of multiple humanitarian stakeholders

• Synergy between traditional and modern risk reductionstrategies

• Capturing and disseminating lessons and innovative ideas

• Promoting use of humanitarian standards in disasterresponse

• Providing timely and targeted relief in a sustainablemanner.

Main Activity Centres Action Review and Research Services (ARRS), AIDMI-AMAJoint Research Centre for Disaster Risk Management (AIDMI-AMA), Bhuj Reconstruction Project (BRP), Building Peace andProtection (BPP), Emergency Food Security Network (EFSN),Emergency Health Unit (EHU), Learning Resources (LR),Livelihood Relief Fund (LRF), Organisational Resources (OR),Sphere Resource Centre (SRC), Water Security Programme (WSP)

Year established 1987-89

Year registered 1995

The Livelihood Relief Fund (LRF) is an activity centre withinthe All India Disaster Mitigation Institute (AIDMI). It wasestablished in 1998 after the Kandla cyclone. Its goal is to reachout to those who have been affected by disaster and who have losttheir means of earning a living. After the 2001 earthquake and the2002 riots, the demand for LRF's services greatly increased andLRF expanded its activities to meet this demand.

30

Figure 3.1.1.1 Districtwise Distribution of Livelihood Relief

Districtwise Distribution of Livelihood ReliefTotal Number of Beneficiaries : 10633

Kutch 2153 (20%)

Ahmedabad 1846 (17%)

Gandhinagar3 (0%)

Panchmahal 25 (0%)

Patan / Banaskantha 4519 (43%)

Sabarkantha 163 (2%)

Surendranagar 1924 (18%)

As on April 10, 2004

Table 3.1.1.2 General Information on LRF

Livelihood Relief Fund

Origin Established in the year 1998 after the Kandla Cyclone

Aim To build livelihood security and reduce economic risks throughsustainable long term recovery in India

Focus • The poor affected by disasters• Vulnerable among the poor• Special focus on working women and scheduled castes and

tribes• Preference given to home-based workers, daily wage earners,

small farmers and landless labourers.

No. of team members 7

Partners American Jewish World Service (AJWS), Children ActionAdvocacy Network (CAAN), Department for InternationalDevelopment (DFID), European Union (EU), Japan InternationalCentre for the Rights of the Child (JICRC), KanagawaKAR -Sahayog Project, CARE India, Royal Netherlands Embassy,Shapla Neer

Beneficiaries Covered 10,633

Districts Covered Ahmedabad, Banaskantha, Gandhinagar, Kutch, Patan,Panchamahal, Sabarkantha, Surendranagar.

Disasters Covered Cyclone, Drought, Earthquake, Riots, Squall.

Other Activities Two National Courses on Livelihood Relief after Earthquake areongoing. Database of LRF beneficiaries. Monitoring andsecondary needs assessment.

31

The assistance receivedby the beneficiariesvaries and is tailormade so as to cater tothe needs of individual.

Table 3.1.1.3 Chronology of Significant Events

Year Event

1998 LRF established following the Kandla Cyclone

2001 Systematic process cycle introduced

2001 Relief given to earthquake victims

2002 Relief given to victims of riots and squall

2002 National course on livelihood relief after earthquake held

2003 National course on livelihood relief after earthquake held

2003 Secondary infusion initiated

2004 Reached 10,000 beneficiaries

2004 Launch of CCISB

2. Product DescriptionLRF is not a standardised relief package. It provides

demand-driven relief. The assistance received by beneficiariesvaries and is tailor-made to cater to the needs of individuals. LRFaims to reach the poorest and most vulnerable members of societysuch as women, dalits and tribals, home-based workers and dailywage earners. In the majority of cases, beneficiaries receivematerials to help them to restart the livelihood activity that theywere involved in before the disaster.

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3.2 MARKET RESEARCH

1. Market Definition/SegmentationLRF targets the poorest and most vulnerable members of

society, who have been affected by disaster. It is active in bothrural and urban areas. The livelihood activities covered by LRFare detailed in table 3.2.1.1.

Table 3.2.1.1 Covered Livelihood Activities

Urban Communities

Activity Examples of relief given

Small business owners Cabins for grocery, confectioneries,snacks, etc.

Small vendors Hand carts, vegetables, fruits, plasticutensils, etc.

Home based workers Sewing machines, clothes, 'Bandhani'weaving materials, etc.

Landless labourers Plumber, carpenter and barber kits.

Rural Communities

Activity Examples of relief given

Handloom weavers Handloom weaving machines, yarn, etc.

Fishermen Fishing nets, etc.

Gum collecting women Water bags, hand gloves, caps,goggles, shoes, etc.

Salt workers Reconstructed broken salt pans, etc.

Farmers Seeds, fertilizers, equipment, etc.

Water Harvesting Check dam, irrigation well,Structures community tanks, roofrainwater harvesting structures.

Animal Husbandry Fodder for cattle, etc.

2. Market Research ProcessAfter a disaster occurs, the LRF team

visits the area to identify the victims of thedisaster. The LRF team creates awarenessamong the victims, so that they know thatLRF exists and that they can apply for relief.Awareness of the work that LRF doesspreads by word of mouth among thevictims. Individuals or groups who havelost their livelihood, as a result of thedisaster, submit an application form forrelief. The demands for the type ofassistance required comes directly from the

Figure 3.2.1.1DemographicDistribution ofLivelihood Relief

Demographic Distribution of LRF Recipiants Total Number of Benificiaries as of April 10, 2004:

10,633

4024, 38%

335, 3%

1790, 17%

4484,42%

Families

Children

Female

Male

33

victims themselves. The needs of each individual are differentand are treated as such. As the skills and physical ability ofindividuals differ greatly, so does the form of relief given. LRFdoes not tell the victims what activity they should carry out inorder to earn a living; it is the individuals who decide whichlivelihood is the most appropriate for them and they are the bestjudges of their own aptitudes. In this way, although LRF may notcarry out market surveys, its services are tailor-made to caterexactly to the specific needs of its beneficiaries.

3. Competitive AnalysisThere are a number of other organisations that provide

livelihood relief in some of the same areas as LRF. Theseorganisations are different, however, as they do not provide thesame kind of demand-driven relief that LRF provides. Theydistribute certain livelihood tools to the community but they donot take into account what the victims were doing before disasterand what they need to best help them to recover. LRF takes carenot to give relief to individuals who have already receivedassistance from another organisation. It has happened onoccasion, however, that beneficiaries receive relief from anotherorganisation after having received relief from LRF.

3.3 PROGRAMME DESIGN

1. Product DevelopmentLRF has always provided demand-driven relief. Their

process has developed over the years, however, and has becomemore systematised. The application form has been improved andis now longer. Detailed information is required about the victim,their previous work, their previous level of earning, their currentactivity and current income, the benefit that they will receive fromthe relief, and the work and level of earning of family members. Aphoto of the victim is now also required.

2. Delivery Channels and PartnershipsLRF collects three quotations for

relief material before deciding whichsupplier to purchase it from. Thebeneficiaries are involved in the selectionof materials to ensure that they are of goodquality and appropriate to their needs.LRF has some regular suppliers for certainitems and they already have thequotations for these items. Thesequotations are revised after a certainperiod of time or if the prices increase. Ifan application is received for an item thathas not been purchased before, then theymust search for a new supplier.

Livelihood support isone of the mostsustainable forms ofrelief as it helps thebeneficiary to becomeself-sufficient througheconomic recovery.

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3.4 IMPLEMENTATION

The Livelihood Relief Fund has been distributing livelihoodrelief since its inception in 1998. Once a disaster occurs, the firststep is to identify the victims and assess who is in greatest need ofhelp. Individuals or groups who have lost their livelihood as aresult of the disaster submit an application form for relief.Applications are assessed on the basis of the applicant's needs.Certain criteria must be fulfilled. The person must be poor, theymust be a victim of disaster, their livelihood must have beenaffected and they must not have received any other form of relief.

LRF aims to reach those who have been most affected bydisaster. A number of criteria have been designed to help in theselection of a beneficiary.

1. The impact of the disaster on the victim's livelihood. Thisincludes information about the type of livelihood activity,the extent of the damage, difficulties faced in livelihoodrestoration, amount of money required and future benefitsin case livelihood support is provided.

2. The victim's past livelihood details. This includessupporting documents such as photographs of damagedlivelihood activity, place or tools and a copy of the firstinvestigation report (FIR).

3. The livelihood stoppage interval and income loss sincethe livelihood disruption. This includes annualcalculations of earnings during normal periods.

4. The feasibility of livelihood support in terms of success.

5. Economic assessment and estimation. This includesdetails of livelihoodactivity, types of toolsused and market pricefor the same.

During itsoperations, LRFexperienced that smallbusinesses andindividual occupationsget frequently bypassed,as the majority oflivelihood reliefprovided after anydisaster is group basedand rural in nature.Many institutions do notsupport individual

Figure 3.4.1.LRFs Process Cycle

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livelihood activities for thefollowing reasons: operationalcosts are higher, it requires anetwork of field level teams withspecialised skills to be spreadacross the disaster affectedregion, it is more difficult tomeasure the impact ofinterventions and monitor therecovery of victims spreadacross a wide geographical areaand it has been believed thatsupport to group livelihoodactivity is more sustainable thanindividual support.

During its variousassessments, LRF's fieldassessment teams have realisedthat small and marginalisedindividual occupations are less likely to speak up and speak outand hence more likely to be neglected repeatedly. Individualoccupations located in isolated areas are less capable of economicrecovery on their own compared to group occupations. LRF alsolearned that small individual businesses form an integral part ofthe local market economy of any disaster-affected region.

LRF has faced these challenges in providing individuallivelihood support through the effective design of its operations,hard work and the commitment of the LRF team.

In their first project after the earthquake, AIDMI’s donorsspecified that the relief be distributed through a Trust, such as alocal organisation in an affected village. However, livelihoodrelief is generally distributed directly to the beneficiary by LRF. Ifthere are a number of beneficiaries in an area, then the relief isdistributed to all the beneficiaries at the same time. A guest isinvited to attend the distribution. This provides a witness thatproves that the relief has been distributed as well as increasesawareness of LRF's work. If there are only one or twobeneficiaries, then the relief is distributed directly to them when itis being purchased from the supplier.

LRF adopts a long-term approach to the relief process. Thereis ongoing monitoring and evaluation to ensure that the relieffund is properly used and that it has had a positive impact on thebeneficiary. There is also a secondary need assessment toevaluate if the relief has been sufficient or if more assistance isnecessary.

More than men, womenvalue any interventionthat can help themspeed up theireconomic recovery.

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3.5 INSTITUTIONAL IMPACT

1. Human ResourcesThe LRF team is made up of seven members. Together they

look after the processing of applications, the assessment ofapplications, the selection of relief materials, the distribution ofrelief and evaluation and monitoring. The team member whocarries out the assessment is the one who decides whether or notthe relief should be allocated. The team is trained in the correctmethods of assessment. They know what to ask, what to look forand how to interact with the community.

2. Operations and SystemsLRF has a very structured system and a formal way of

processing applications and distributing relief that has developedover the years, as their activities have expanded. They have astandardised application and assessment form that must be filledin. LRF also has a database of its beneficiaries containing allrelevant information that can be accessed easily.

3. Feedback MechanismsUntil recently, the feedback mechanism has been informal,

coming through the LRF team who are working in the field. Asystem for monitoring has now been developed along with astandardised form to be filled in. In Ahmedabad andSabarkantha, a secondary need assessment and infusion hasbegun for beneficiaries who were victims of riots. A fewindividuals have already received the secondary infusion andmore will receive it in the future. A number of studies have alsobeen carried out to determine the impact and the effectiveness oflivelihood relief.

4. MarketingAwareness about LRF's activities is created through the field

staff who visit affected areas and individuals, after a disasteroccurs. Knowledge of the services provided by LRF spreadsthroughout the communities by word of mouth.

Small business andindividual occupationsare affected most indisasters. Supportingthem individually isfound to be moreeffective and easy tomonitor also.

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3.6 RESULTS

1. Operating Results

Livelihood relief is not a short-term solution. The idea is togive individuals a boost so that they can become independent.Livelihood security can help the beneficiaries to achieve food,water and shelter security themselves, without the help ofexternal agencies.

After a disaster occurs, and individuals lose theirlivelihood assets, they are trapped in a situation where they areunable to support themselves. They often have no savings andno access to credit. They still have daily expenses because theirfamilies' basic needs must be satisfied, but they have noincome. Many borrow from moneylenders in order to meet theirdaily needs. They end up in debt and if, finally, they are able tostart earning again, a large proportion of their meager earningsgo to the moneylender. LRF helps individuals to get out of thissituation. By replacing the assets that have been lost, they helpindividuals to get back on their feet and start earning quickerwithout the burden of high interest.

Overall, livelihood relief has had a very positive effect onthe beneficiaries. It helps them to become independent andreduces their vulnerability. It gives them the boost that theyneed to get back on the path to recovery. After a disaster,individuals become even more vulnerable than they were beforeand there is a danger that their standard of living will continue todecline. Livelihood relief can prevent this from happening andinitiate the recovery process. Although of great help, receivinglivelihood relief is not a guarantee that beneficiaries will return totheir pre-disaster level of income.

Many of LRF's beneficiaries have been affected by communalriots. One of the outcomes of these riots is that the existing socialnetworks and supply chains have broken down. This limits theimpact of livelihood relief, because beneficiaries find it difficult toget raw materials or to find customers and so, the process ishalted.

Another problem faced by beneficiaries, when trying toaccess raw materials, is the presence of corruption amongofficials, who do not give them access to good quality materialsunless they offer them bribes, which they cannot afford.

An important requirement for successful business and long-term development is a good infrastructure. It links markets andmakes business practices more efficient. It is the role ofgovernment to provide this infrastructure. It is also the role ofgovernment to provide education and adequate healthcare

Timely livelihood reliefcan preventbeneficiaries fromgetting into debt andcan help them torecover from disaster.

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services to all members of society.These factors greatly affect the abilityof individuals to carry out theirlivelihood activities. Withoutgovernment support, LRF's practicesare not as effective as they could be.

Although LRF's individualapproach is one of the factors thatmakes its work so effective, it is also aweakness because it is time-consumingand means that less beneficiaries canbe reached. Giving tailor-made reliefon a one-to-one basis requires moretime and resources than administeringa standard relief package. It is,

however, the best way to meet the exact needs of the beneficiaries.

A substantial amount of time can pass between the time ofthe disaster, the stage when the victim applies for livelihood reliefand when they actually receive the relief. During this time,individuals must borrow money in order to survive. As a result ofthis, any money they earn after they receive livelihood relief goesback to the moneylender instead of into their business.

In the majority of cases, however, livelihood relief providesan invaluable support to the beneficiaries. It allows them to startearning again and to support their families. It also helps them torecover mentally from the shock of disaster and to retain theirdignity and independence. Shri Dhirubhai, an LRF beneficiary,said, "our livelihood equipment is like our two hands. If someonetakes our livelihood we feel we are handless. LRF has given usour hands and now we feel that there is someone who takes careof victims like us."

The aim of LRF is to build livelihood security and reduceeconomic risks through sustainable long-term recovery in India.Development requires more than just relief after disaster; itrequires a long-term focus on developing an environment that isconducive to growth. Livelihood is the key to survival and canensure access to other necessities such as food, water and shelteras well as giving people access to better healthcare, educationand a higher standard of living. The relationship is circular,however, and without the initial access to education, healthcareand capital, it can be difficult to earn a living. In order to reallyreduce the vulnerability of LRF's beneficiaries to future shocks,efforts have to be made to promote long-term development in thearea. For the businesses of these individuals to really thrive, theyneed access to financial services, training, an adequateinfrastructure and markets.

Though the livelihoodrelief has a one to oneapproach it indirectlyfulfill and cater to theneed of the otherfamily members also.

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Livelihood Relief Fund Case Studies:

The following pages contain case studies of individuals who have received relief fromLRF.

Shri Abdulkabir Allauddin Sheikh

Beharampura, Ahmedabad.

Shri Abdulkabir Allauddin Sheikh lives in the slum area of S.T. Staff Quarters,Beharamapura. He earns his living by selling fruit for the past 15 years. He lives with hiswife and two small children. He used to earn Rs. 100 to Rs. 200 per day before the riots.His wife Salmaben also used to contribute to the earning of the family by stitchingclothes and thereby earning Rs. 50 to Rs. 60 per day.

The February 2002 riots destroyed the house of Abdulbhai and Salmaben. The slumarea in which he lived was attacked by the mob and Abdulbhai's house was looted. Theplace where Abdulbhai kept his hand lorry and fruits was also looted during the riots.Salmaben's sewing machine was also stolen. He recalls the incidence and said, "duringthose days the security of the family was the first priority, then everything else." Thefamily ran with whatever clothes they wore and became homeless. He was reallydisappointed with the situation and was worried about his family. For the first sixmonths after the riots the family stayed at a relative's place. Then, he managed to getsome capital and started selling fruits in a rented lorry. He had to pay Rs. 5 per day asrent for the lorry, Rs. 600 as house rent and also fulfill the family requirements like foodand clothes.

Abdulbhai came to know about the activities that AIDMI carried out for the riot-affected victims. He applied for funds to restore his lost livelihood. The LRF assessed hisapplication and provided him with a hand lorry (with roof), weighing scales and fruits.He now earns Rs. 80 to Rs. 90 per day and is happy on receiving the relief. Previously hehad to pay rent for the hand lorry but now he saves that amount and can fulfill thefamily requirements, can pay the house rent and can also purchase fruits for the nextday. Salmaben says "we had never dreamt that any organisation will provide us withrelief."

Amitaben Jitrendrakumar Dataniya

Vagharivas, Premdarwaja, Ahmedabad.

Amitaben has a small family. She lives with her husband and two small children inthe area of Premdarwaja. The income of her family before the riots was very low andcame from Amitaben's stitching work and her husband's autorickshaw driving. Theincome from rickshaw driving was very unreliable because some days he got therickshaw on rent and some days he didn't. Amitaben used to do the stitching workthrough a middleman who brought old clothes, which she then stitched and repaired.These clothes were later given back to the middleman to be sold again, who paid her Rs.1 to Rs. 2 per piece.

The area where she lives is situated in the walled city. It is a Muslim dominatedarea that was seriously affected by the riots. She left the area after it was attacked. She

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and her family had to spend seven months in a relief camp. They got in touch withAIDMI in the relief camp and applied for the livelihood relief. She received a sewingmachine. In the current situation, making a living through stitching has become moredifficult. This is because the middleman who used to purchase and sell the clothes findsit risky to give the clothes to her or to other women in the community. He thinks that if ariot would hit the area again, they would leave the clothes and he would loose thematerial. So, at the moment, Amitaben is doing occasional stitching work for herneighbours. Her income has dropped by half; previously she used to earn Rs. 50 per dayand now she earns Rs. 20-25 per day.

Receiving livelihood relief has helped her to start her earning cycle again and shesays that the relief has been really good for her and her family. There are somelimitations in the environment, however, that prevent her from gaining the level ofincome that she used to have before the riots. She is ready to work more but an unstablemarket, their physical insecurity, sickness of family members and poverty are obstacles tothe livelihood recovery process. She is still trying hard to improve her family conditionby putting in more and more effort. Livelihood security has made the difference in her lifebut while human insecurity exists she cannot see a secure future ahead.

"The livelihood relief I had received cannot be measured in terms of money becausenow it is the main source of income for my family."

Nafisbhai Ahmed, Chotubhai Maniyar

Suleman Roza Ni Chali, Nutan Mill, Saraspur, Ahmedabad.

Nafisbhai is relatively one of the most affluent receivers of livelihood relief. Histhree sons, two daughters, father, wife and his younger brother were enjoying their livesbefore the riots in 2002. Nafisbhai's family were the first manufacturers of acrylic banglesin Gujarat. He had a big workshop in the same area of Saraspur where he wasmanufacturing bangles on a large scale with 30-35 workers under him. His children weregoing to private school for education. His suppliers had trust in him and were providingmaterial on credit of one month. His buyers also were free to pay him at theirconvenience.

The February 2002 riots separated his family for a few days and left them in therelief camp because of a mistake in administration. There were months of fear andfrustration. Hopes of a bright future and a progressive life were shattered. His childrenlost their educational term and had to start their studies again in a municipal school.Then he managed to get livelihood relief from two organisations that had provided himwith two machines to manufacture acrylic bangles. But still he didn't have raw materialto start his business. He had applied for loans, asked his suppliers for help but trust waslost, markets were affected and thus his business was uncertain.

The LRF team of AIDMI met him in a relief camp and it took three months to processhis application. It got sanctioned and he received raw material for bangles. The materialwas very little in terms of quantity, when compared to the business he had before theriots, but it showed him the light of hope to start his work again. He faced manyproblems when starting from scratch. No supplier was ready to give material on creditbut he was determined. He borrowed money from relatives and purchased raw material

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in cash, turned that material into beautiful bangles and today he has left the days ofmisery behind him. He has kept his workplace on rent of Rs. 800. Even though he hastwo brothers and two workers only at the workplace and the business scale has reduced,he is in a position to manage the family and fulfill their basic needs. "Just give me a yearand wait; I will achieve everything that I had lost again. My children will again study inprivate school and I will start my own workshop again," Nafisbhai was confident insaying this.

Laxmiben Ratilal Dataniya

Vagharivas, Premdarwaja, Ahmedabad.

Laxmiben, her husband, and their son, were affected by the February riots. Herhusband had worked with a textile mill and after its closure she had to sell heliumballoons in different areas and thus earn their living. The family resides in the PremDarwaja area of the old city, struggling with daily problems which a poor family usuallyfaces. Her husband is suffering from a chest problem and cannot work very frequently.The basic income of the family comes from selling the balloons around the city. Herhusband contributes to the earning of the family by working as a daily wage worker.

During the riots they had to run to save their lives and thus lost their balloon handlorry. They had taken shelter at Surya Puja Trust, a temple near their locality and wereshifted into a relief camp. When they visited the area after the riots they realised themagnitude of their loss of house, household items and livelihood tools. They were on theroad with nothing. Their son who used to work at a workshop that was at a distance hadalso left the job.

The family was in a great crisis with no hope of recovery. Laxmiben came to knowabout the LRF of AIDMI from other beneficiaries of the same area who were assisted byAIDMI and thus she applied for the livelihood relief. After receiving the help they hadstarted their business again. The business is not up to the mark because of thecompetition in the market and the fact that the best place to sell balloons has been takenby a network of other sellers. Fear and insecurity inhibits her going to certain areas forwork. Despite these challenges, the livelihood relief has given an opportunity to thefamily to restart their livelihood cycle and currently they are earning around Rs. 100 perday. She cannot use the hand lorry during summer because of excessive heat and at thattime she works as a domestic worker cleaning dishes in other houses.

"I was involved in the process of livelihood relief selection and that is the biggestadvantage for me. I received what I had applied for. It has really given me confidence andsupport to start work again", says Laxmiben pointing out her hand lorry.

2. Plans for the Future

The Chamber of Commerce and Industry for SmallBusinesses (CCISB)

The Chamber of Commerce and Industry for SmallBusinesses (CCISB) was launched in Bhuj on February 18, 2004 bythe earthquake-affected local slum community. The CCISB aims atproviding business development services to its members and at

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building a local economic development infrastructure. The CCISBwill help support networks for small business to develop in thearea. It will aid the sharing of information and provide informaltraining. As a group, the disaster-affected community will have astronger voice than they would individually and will have moreinfluence when dealing with external organisations. This supportsystem and business links will increase their capacity towithstand disasters in the future.

Insurance for beneficiariesLRF works with individuals in areas that are prone to

disaster. The greatest threat to LRF's work is the risk that anotherdisaster will occur and that the beneficiaries will again lose theirassets and have no means by which to replace them. One way ofmitigating against this risk is to provide the beneficiaries withinsurance so that in the future, should anything happen, theywould be able to replace their assets themselves. A demandsurvey for insurance coverage has been carried out and anintegrated insurance scheme has been developed and is availablefor all LRF recipients.

3.7 SUMMARY OF LESSONS LEARNED*

• Livelihood relief helps to build economic security and toreduce vulnerability to future disasters.

Lamp lighting on thefirst Annual meeting ofChamber of Commerceand Industry for SmallBusinesses.

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The affectedcommunities decide ontheir own whichlivelihood is the mostappropriate for them,as they are the bestjudge of their ownaptitudes.

• Timely livelihood relief can prevent individuals from gettinginto debt and can help them to recover from disaster.

• Although more time-consuming than delivering a standardrelief package, demand-driven relief caters to individuals'needs and is the most appropriate form of assistance.

• The effectiveness of livelihood relief depends on externalfactors and whether or not the environment is conducive tothe success of certain livelihood activities.

• In order to ensure long-term development, beneficiaries needaccess to financial services, training and markets.

*For more on this topic see: AIDMI. (2005). Strategies and Partnerships forLivelihood Recovery in Disaster Prone Areas. Ahmedabad: AIDMI.

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3.8 SWOT ANALYSIS OF LRF

Table 3.8.1 provides an analysis of the strengths, weaknesses, opportunities, andthreats of and to the Livelihood Relief Fund.

Table 3.8.1 SWOT Analysis of LRF

STRENGTHS of the programme

• Long term and community based approach

• Demand-driven, tailor-made livelihood relief for men and women

• A systematic process cycle

• Eight districts and five disasters covered

• Capacity of the team

• Monitoring and secondary need assessment of the riot beneficiaries

• Internal and external funds

• Various impact studies conducted by external agencies and interns

WEAKNESSES of the program

• Time of relief that reaches to the beneficiary

• Lacks monitoring of livelihood assistance in rural areas

• No track on per unit cost of application and labor hours taken

• Collection of local fund not being carried out

• Lack of follow-up proposals to funding agencies

OPPORTUNITIES of the program

• Increase team to help meet project deadlines

• Scope for further capitalisation

• Microcredit or Microfinance through revolving fund

• Insurance

• Setting up of livelihood units and linkage with markets

• Train the different livelihood groups and link them with government schemes

THREATS to the program

• Donor funding runs out

• Effect of disaster down the line

• LRF's own selection criteria may exclude certain individuals

• Other organisations carrying out livelihood activity

• Factors in local environment affecting livelihood that are out of LRF's control

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National Political and Macro Economic Indicators1

GDP Growth Rate 7.60%

Population 1,065,070,607

Population Growth Rate 1.44%

Surface Area 3,287,590 sq km

GDP/Capita $2,900

Inflation 3.80%

Infant Mortality (per 1000 live births) 57.92

Sex Ratio 1.05 males/female

% Living Under Poverty Line 25%

Life Expectancy 63.99 years

Access to Safe Water 84%

Literacy Rate 59.50%

1 Sources: The CIA World Factbook; UNDP; IMF

INFORMATION ON INDIA – POLITICAL MAP OF INDIA

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Demographics and Information Regarding the State of Gujarat2

Capital Gandhinagar

Area 196,024 sq/km

Population (1997) 41,309,582

Principle Languages Gujarati

Urbanisation Ratio (1991) 34.49%

Literacy Rate 61%

Per Capita State Income (1997) Rs. 16251

Number of Districts 19

INFORMATION ON GUJARAT – POLITICAL MAP OF GUJARAT

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2 Sources: www.economywatch.com

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COMPARATIVE ANALYSIS

Issues

SEWA

AIDMI

GSDMA

GeographicalCoverage

Kheda andAnanddistricts.

Ahmedabad,Banaskantha,Gandhinagar,Kutch, Patan,Panchamahal,Sabarkantha,Surendranagar.

Ahmedabad,Amreli,Anand,Banaskantha,Bharuch,Bhavnagar,Gandhinagar,Jamnagar,Junagadh,Kheda, Kutch,Mehsana,Patan,Porbandar,Rajkot,Sabarkantha,Surat,Surendranagar,Vadodara.

Type ofInstitution

Tradeunion ofwomenworkers intheinformalsector.

Actionresearchand actionplanningorganisation.

Governmentorganisationresponsibleforhandlingnaturalcalamities.

Activitycoveredby casestudy

Microcredit

Livelihoodrelief

Insurance

TargetMarket

SEWAmemberswho wereaffected bythe riots.

The poorandvulnerablewho havelost theirlivelihoodassets duetodisaster.

Thoseindividualsaffected bytheearthquakewhoreceivedhousingassistancetoreconstructtheirhouses.

No. ofBene-ficiaries

431

10,633

2,14,947

Securitytargeted

ShelterandLivelihood

Livelihood

Shelter

Impact

Beneficiariescan returnto nativeplace andrestartlivelihood.

Beneficiariescan restarttheirlivelihoodactivities.

Beneficiaries’homes areprotectedagainstfutureloss.

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Though India has the widest range and most valuable depth of experience in mitigation disaster risks,the lessons are seldom available from one community or one organisation to another, from one relief effortto the next or one disaster to another. The Experience Learning Series, published in Hindi, Gujarati andEnglish, values grassroots experience and tries to capture it for practice, policy and research purposes.

1. The June 1998 Cyclone and the Government ofGujarat: A Report Card by Corporate Gujarat (inGujarati). DMI

2. Awareness Generation for Disaster Preparedness (inGujarati). DMI with IGNOU and Duryog Nivaran

3. Minimum Standards in Disaster Response:The Sphere Project (in Gujarati). DMI with Oxfam(India) Trust and Indian Red Cross Society, Gujarat

4. Relief from Malaria Epidemic: VulnerableCommunity Perspectives (in Gujarati). DMI

5. Four Stages After Disaster: Essential Relief Supply atthe time of Disaster (in Gujarati). DMI with WesternIndia Forum for Panchayati Raj

6. Agenda for Drought Relief 2001: Community BasedAction Review of Drought Relief 2000 in Gujarat (inEnglish). DMI

7. Agenda for Drought Relief 2001: Community BasedAction Review of Drought Relief 2002 in Gujarat (inGujarati). DMI

8. Agenda for Drought Relief 2001: Community BasedAction Review of Drought Relief 2002 in Gujarat (inHindi). DMI

9. Community Based Disaster Mitigation: Based on theExperiences of Involving Local Communities in DisasterMitigation (in Gujarati). DMI with UNDP

10. Importance of Women’s Role in Disaster Mitigation:Based on the Experiences of Involving Women inDisaster Mitigation (in Gujarati). DMI with UNDP

11. Drought? Try Capturing The Rain (in Gujarati).DMI with CSE

12. Rebuilding Houses and Hope: Most commonly askedquestions on rehabilitation packages of Government ofGujarat and their experience based answers (in Gujarati).DMI with UNDP

13. Tools for Hazard and Capacity Assessment:Experienced-Based Easy Explanations on How toPrepare Against Disasters by Using Hazard andCapacity Assessment Tools (in Gujarati). DMIwith UNDP

14. Livelihood Security and Vulnerability Reduction:South Asian Experiences of Duryog Nivaran (inGujarati). DMI with ITDG, South Asia

15. Victims’ Voices: An effort to know comprehensiveopinions of affected communities on the relief activitiesafter the 2001 earthquake (in Gujarati). DMI

16. Small Towns, Big Disasters: An effort to know copingcapacity of Nagarpalika by preparing a report card bythe residents of earthquake affected Nagarpalikas ofGujarat (in Gujarati). DMI with UPP

17. School Preparedness against Disasters: Combiningthe teachers educational and earthquake relatedexperiences to develop understanding of disastermitigation (in Gujarati). . DMI with JICRC

18. Disaster and Vulnerability: SEWA's Response to theEarthquake in Gujarat (in English). DMI with SEWA

19. Institutionalising Mitigation: Disaster MitigationInstitute's Annual Report: April 2001–March 2002 (inEnglish). DMI

20. Urban Development and Disaster Mitigation:DMI's Bhuj Reconstruction Project (in English). DMI

21. Two years after the Earthquake: Comprehensiveassessment of the rescue, relief and rehabilitationactivities after the 2001 earthquake and lessons for longterm preparedness (in Gujarati). DMI

22. Impact of the Earthquake on the Children: Thecurrent situation of earthquake affected children, in theirown words (in Gujarati). DMI with JICRC

23. Planning Guidelines for Schools: Planning guidelinesfor safer schools and education against disaster, on thebasis of January, 2001 earthquake (in Gujarati). DMIwith JICRC

24. After the Earthquake: Comprehensive assessment ofthe rescue, relief and rehabilitation activities after the2001 earthquake and lessons for long term preparedness(in Hindi). DMI

25. Action Learning for Disaster Risk Mitigation:Annual Report (2002-03) (in English). DMI

26. Where are Safe Cities? Experiences of RiskMitigation (in Gujarati). DMI with Care (India)

26. Learning at Disaster Mitigation Institute (inEnglish). DMI

27. Participatory Urban Food and Nutrition SecurityAssessment Process (in English). DMI with FAO ofthe UN

28. Learning from Sustainable Recovery: Annual Report(2003–04) (in English). DMI

29. Participatory Urban Food and Nutrition SecurityAssessment Process (in Gujarati). DMI with FAO ofthe UN

30. Strategies and Partnerships for Livelihood Recoveryin Disaster Prone Areas (in English). AIDMI with EU

31. Moving towards Water Security: Structures, Tools,and Processes for Drought Prone Areas (in English).AIDMI with EU

32. Beyond Relief: Review of a “Human Securities” approachto the Gujarat Earthquake (in English). AIDMI with EU

33. Community Damage Assessment and DemandAnalysis (in English). AIDMI with EU

34. Reducing Risk: Learning from the Community? (inEnglish). AIDMI with EU

35. Jeevika: Lessons from Kutch for Kashmir (inEnglish). AIDMI with IFAD

36. The Application of Microfinance for Disaster RiskReduction in Tsunami Recovery (in English).AIDMI

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