inancial services for the poor can be powerfultools to fight poverty and enhance community

resilience. Access to financial services such as credit,savings and even insurance, can help poor people totake control of their financial lives. When goodpractices are utilized, access to financial services canempower people to make better decisions aboutinvesting in alternative or supplementary livelihoods,education for their children and themselves, improvinghealth care for their families and protecting themselvesfrom crises such as illness, death, and natural disasters.It puts power into the hands of poor households sothat they can move from a hand to mouth subsistenceexistence to planning for the future.

Microfinance is the fuel that encourages theentrepreneurial activities of the poor to start-up new,or expand existing business ventures, to dare, to risk,to use their imagination in pursuit of the mostworthwhile of dreams – the advancement of oneself,their family and their community.

In September 2005 the Sustainable Coastal LivelihoodsProgram began training activities to establish micro-

finance revolving funds in the communitiesto provide the needed capital for community membersto restart and diversify their livelihoods.

There were three phases of initial training:Techniques of microfinance/revolving fundsformationBusiness PlanningCredit and loan management and accounting

Subsequently, due to community demand trainingsessions were expanded to include:

Business FinanceMarketingEntrepreneurship

Under the terms of the revolvingfund, low-interest loans werereleased to tsunami affectedmicro-entrepreneurs. As loanswere repaid, more capital becameavailable for additional micro-enterprises to borrow from,ensuring the availability of loansto a larger number of tsunami-affected families.

Microfinance will only reach itspotential if it can be financiallysustainable and integratedinto a country’s mainstreamfinancial system. Donor fundsare recognized as start-upsubsidies designed to get afledgling financial institution tothe point where it can tapprivate funding sources, such asmember deposits.

Post-Tsunami Sustainable Coastal Livelihoods Project

Theme Paper

FIntegrated duck/fish/vegetable farm

Yellow gingcrfarming

Mussel culture

Teaming up to Restart and Diversify Livelihoodsin the Post-disaster Context

Microfinance and Micro-enterprise:Microfinance and Micro-enterprise:

wo years on, USAID’s CoastalLivelihoods initiative to

introduce revolving funds in fiverural villages in Ranong ProvinceThailand has benefited the lives of416 families. Since the first loanwas disbursed in November of 2005over 7.8 million baht ($~240,000USD) has been used to restart anddiversify livelihoods.

What started as a simple, informalrevolving fund model managed bya small village microfinancecommittee and based upon “socialcapital” has now grown into a truefinancial institution of the people,with recognized legal status.

The communities have outgrownthe social collateral model where agroup of peers guarantee repaymentof each others loans. As the savingscomponents of the microfinanceinstitutions have grown, members

wanted a more secure financialvehicle for their accumulatedfunds. They now need a moresophisticated financial institutionthat can provide communitymembers with such vehiclesas home and automobileloans, insurance, funds to supportthe elderly and infirm, andcommunity sponsored events andtrainings.

In Thailand, the next step in thegrowth process for a successfulvillage micro-finance institution isto become what is know as aCooperative Credit Union. As anapproved cooperative credit union,the institution becomes a memberof the Credit Union Leagueof Thailand (CULT). Membersof CULT are recognized asformal, legally protected lending

Post-Tsunami Sustainable Coastal Livelihoods Project2

T

From Little Things Big Things Grow

institutions allied with over 1,300similar Credit Unions serving 1.3million people and backed by over10 billion baht in assets.

The required documentation andreviews were completed and as ofSeptember 2007, Ban Kamphuanhas been accepted as an AssociateCredit Union!

The community of Ban Kamphuanis understandably proud of thesuccess of their micro-financeinstitution and its transition into acooperative credit union. Thepayback rate for their revolvingfund is nearly 100 %. Thisillustrates that by providingconvenient and secure access tofinancial services to the poor, agroup previously excluded fromaffordable sources of credit andsavings options, microfinanceprograms such as theirsdemonstrate that the poor are verycredit worthy: a lesson for banksand development agencies alike.

Post-Tsunami Sustainable Coastal Livelihoods Project 3

However, not all rural villagemicrofinance institutions haveexperienced the same level ofsuccess. Ban Kamphuan has beena model for good practices withtheir revolving fund because earlyin the process they recognized theimportance of the following criticalfactors for success.

Select a strong leader for themicro-finance institution thatis well respected and trustedby the whole community forhis/her honesty, integrity andwillingness to put the welfareof the community above theirown

Provide effective trainingin revolving fund forma-tion, accounting, businessmanagement/planning, andentrepreneurship

Create a set of by-laws thatare simple, easy to understandand fair

Implement a sound andpractical monitoring and financialaccounting system

The rising tide raises all ships

Create a strong sense ofcommunity that emphasizes theimportance of working together.Community members recognizethat helping others and workingwith a common sense of purposebenefits all members of thecommunity

Training on Business Accounting

ver 65 % of the loanrecipients in this predominantly

Muslim region are women. Thisis a significant figure as womenfeature prominently among theworking poor and provide a vitalleadership role in both the familyand community.

Microfinance is especiallybeneficial for them and thecommunity by:

Providing them with greaterand more diverse incomeopportunities that help themto better perform their leadershiproles as brokers of the health,nutritional and educationalstatus of other householdmembers

Enhancing their self-confidenceand status within the family

Post-Tsunami Sustainable Coastal Livelihoods Project4

The Importance of the Role of Women in RuralMicrofinance Institutions

unit as independent producersand providers of valuable cashresources to the householdeconomy

Increasing women’s employment inindependent micro-enterprisesthat improve the productivityof women’s income generatingactivities and helps diversifyfamily income sources

It has been our experience thatwomen are eager to adapt to analternative livelihood whenpresented with the benefits of thenew endeavor. They are willing toundertake training and worktogether with other women of thecommunity to both produce andmarket their products.

O

he Sustainable CoastalLivelihoods Project’s

approach to linking microfinancewith micro-enterprise begins withthe agreement from the revolvingfunds to financially support onlythose activities that meet thefollowing criteria:

1) Business plan is financiallyfeasible

2) Proven and simple technology

3) Low environmental impacts

4) Socially appropriate given localculture and work preferences

The actual development of newlivelihood practices is guided by thefollowing process:

Investigate the existing marketenvironment to uncover potentialgaps, weaknesses or vacanciesthat will allow for theintroduction of a new product orservice for business profit orcommunity benefit

Identify a business opportunityor livelihood idea that appearsto satisfy the four criteria listedabove

Identify village members withpotential interest

Prepare business plan thataddresses:✓ Production techniques and

production cycle✓ Costs for production, distribution

and marketing✓ Availability of materials and

inputs✓ Location and size of markets✓ Product price

Post-Tsunami Sustainable Coastal Livelihoods Project 5

✓ Environmental considerations✓ Social and cultural suitability✓ Availability of technical

assistance✓ Plan for training interested

entrepreneurs (includingstudy tour if needed)

Set up production site andequipment including demonstrationplan of production techniques

Mentor local entrepreneursthrough at least one successful

Linking Micro-finance with Livelihoods Development

(both technically and financially)business cycle

Monitor and provide advice asneeded and as production continues

Require grant recipients to bemembers of and borrow fromthe revolving funds for ongoingoperational expenses

T

he linking of micro-financewith micro-enterprise support

necessitated a two-prong approach:

1. Focus on restarting livelihoodsby utilizing the loans to promotethe development and growth ofexisting livelihoods. Supportingincome generating activitiesin which the community alreadyhas existing experience is aquicker way to “jump start” acommunity’s financial engine. Thisapproach takes into considerationthat starting new livelihoods is veryrisky and failure rates can be high.Further exacerbating the problemof introducing alternativelivelihoods options is the fact thatwe are working in a post-disastercontext where the infrastructure,markets and psychological well-being of the community membershas been greatly stressed.

Post-Tsunami Sustainable Coastal Livelihoods Project6

2. Focus on diversifying livelihoodsand illustrating the Project’stransition from relief to rebuilding.A key aspect of one of the project’sobjectives is to utilize this tragicdisaster as impetus to “build backbetter”. In order to build thefinancial resiliency of a community,livelihoods must be diversified.Over-reliance on a single ecologicalresource or livelihood increasesthe vulnerability of a communityto a variety of hazards bothnatural and man-made.

Therefore, the communities wereintroduced to a variety ofalternative or supplementarylivelihoods options that weredeemed to be culturally, financiallyand ecologically appropriate.These innovative efforts required agreat deal more time, assistance andtraining from the extensiondepartment than the first approach.Additionally, as expected theabandonment/ failure rate of thesenew ventures was also higher thanthose of the established practices.

The Approach

he Sustainable CoastalLivelihoods Project and the

Village Revolving funds groupshave worked together to providefunding and technical support to awide range of diverse alternativeincome generating activities:

AgricultureYellow Ginger FarmingIntegrate duck/fish/farm agricultureRubber Plant nurseryGoat and Cow RearingBatik manufactureMuslim Headscarf ProductionOrnamental Bead productionJuice shopCoffee ShopAquacultureCatfish HatcheryGrouper Cage CultureGreen Mussel Culture

SeaweedFrog culture

Each of the above activities hasrequired Sustainable CoastalLivelihoods Project field site staffto provide significant educationalsupport through extension andtraining. Additionally, field staffshave endeavored to build localtechnical capacity through creatinglinkages with the Departmentof Livestocks (DOL) andFisheries (DOF) and a varietyof other governmental and non-governmental training providers.

Examples of Alternative LivelihoodsActivities Supported by Micro-Finance Efforts

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T

Post-Tsunami Sustainable Coastal Livelihoods Project 7

USAID’s Post-Tsunami Sustainable CoastalLivelihoods Program

USAID’s Post-Tsunami Sustainable CoastalLivelihoods Program

Overview of Project

When the tsunami of December 2004 struck Thailand’s Andaman coast it carriedaway not only the lives of over 5000 people but it also washed away the livelihoodsfor tens of thousands left behind. The disaster devastated the local economy bydestroying fishing boats, engines and gear. The huge wave also took in its wake, homes,public buildings, and coastal infrastructure, including roads and bridges. The tsunamihad its greatest impacts on rural coastal communities, many of which were alreadypoor and economically vulnerable with limited livelihood options. Recovery isespecially difficult in these poor communities because many of those that survived lostthe capacity to practice their livelihoods.

The USAID Regional Development Mission/Asia responded with the Post-TsunamiSustainable Coastal Livelihoods (SCL) demonstration project that helps coastalcommunities of Southern Thailand rehabilitate livelihoods, become more resilientto future natural disasters, and adopt livelihood practices that use natural resourcesmore sustainably. Instead of just building back the way it was, this project strivesto build it back better.

The project has a 30 month time horizon, with an end date of September 30, 2007.It is implemented in a partnership with the Coastal Resources Center of the Universityof Rhode Island, the Asia Institute for Technology (AIT), University of Hawaii,Coca-Cola Thailand, Asian Disaster Preparedness Center, and other local partners.

It is a model project, meaning that knowledge and lessons learned from what isdeveloped and put in practice can be used in other at-risk coastal communities inThailand or other countries in the Asia region.

Five tsunami-affected villages in Ranong Province were selected for the demonstrationinitiative. Located within Laem Son National Park, these villages have a populationof 5,000 and are dependent on fishing and agriculture for their livelihoods. Therelatively small, compact area makes it suitable for modeling an integrated approach tocoastal disaster rehabilitation.

The SCL project seeks to build coastal community resilience with a focus on rebuildingthe economic basis of livelihoods rather than on physical reconstruction, and on givingcoastal people the skills and resources for self-recovery. Key elements of resilience includebuilding livelihood opportunities that do not degrade the natural environment, protectingecosystems, reducing vulnerability to natural hazards, and strengthening local governance.Project interventions combine ICM and hazard management frameworks.

USAID Post-Tsunami Sustainable CoastalLivelihoods Project

USAID Post-Tsunami Sustainable CoastalLivelihoods Project

Theme Papers

This paper is one of a series of elemental theme papers from USAID’s (SCL) Sustainable CoastalLivelihoods Project. USAID SCL Theme Papers are intended to provide an overview of ourexperiences, lessons learned and approach to rebuilding and rehabilitating communities ina post-disaster context. Each paper will address an issue that has been undertaken in the course ofour efforts to assist in the rehabilitation process and the building of Coastal Community Resilience.

The papers will be based loosely upon the five main elements of the SCL Project:

1. Build a common vision for action.The project works closely with local government authorities and community leadersto build local ownership and establish a common vision for rehabilitation. Theproject’s activities are accomplished by community efforts and collaboration.

2. Reestablish and diversify environmentally sustainable livelihoods.Microfinance, livelihood training, demonstration of new livelihood practices,small grants, and cash-for-work are strategies to reestablish and diversify livelihoods.

3. Natural Resources Management and Environmental StewardshipTrainings and extension activities are focused on enhancing the capacity oflocal communities to better manage their ecological environment. Specific activities includetraining modules on solid waste management, monitoring and rehabilitation of coastalhabitats such as coral reefs, beaches, mangroves and sea grass beds, and the developmentof marine park co-management plans.

4. Enhance community readiness and resilience to hazards.(CBDM)The project builds readiness and resilience to natural hazards in communities throughmapping of areas at risk to inundation, delineation of evacuation routes, training, villagedisaster management planning, evacuation drills, and First Aid training.

5. Share experience and best practices.Regional learning workshops and study tours are convened to share lessons learnedwith others in tsunami rehabilitation, disaster preparedness and issues associated withcommunity resilience.

Each paper provides a summary description of the Project’s approach to particular issues or the abovereferenced cross cutting elements. The description represents a summary of the lessons learned by theProject and illustrates the approaches utilized to overcome specific obstacles encountered throughout thematuration cycle of the program.

While providing a useful overview of Project activities to our regional partner institutions, SCLtheme papers are primarily intended for our Global partners in development, disaster preparednessand community resilience. The Papers aim to raise awareness of the Project’s activities, accomplishmentsand lessons learned and to pique the interest of individuals and organizations to seek more informationso as to contribute towards the ongoing discussion about strategic direction in disaster preparednessand community resilience.