PDF_logo Approaches of MFIs to Disasters and Climate Change Adaptation in Bangladesh

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Approaches of MFIs to Disasters and Climate Change Adaptation in Bangladesh

Paper No:49

Author:Mahfuz Kabir, Shuddhasattwa Rafiq, S. M. Kalbin Salema and Henry Scheyvens



Bangladesh is highly vulnerable to climate-induced disasters. Poor and vulnerable people living in the country’s many disaster-prone areas are systematically excluded from access to the formal banking systems. Microfinance Institutions (MFIs) provide the opportunity of financial inclusion for these people. This paper reveals that MFIs provide credit, savings and insurance products that contribute to livelihood development, though further effort could be made to align these products with climate change adaptation needs. Some of the MFIs have separate disaster management funds, which they draw on to assist their member households when disaster strikes. Some of them offer disaster-related non-financial services, like post-disaster relief and rehabilitation programmes. This paper argues however, that there is potential for MFIs to develop their products and services further to more effectively promote climate change adaptation, such as further involvement in disaster mitigation and preparedness, introducing products tailored to needs, increasing loan size and availability, introducing low-cost insurance schemes such as index-based crop and livestock insurance, “greening” their operations, and offering small and medium enterprise loans and non-credit support. Supportive regulations should also be developed. Further research in the form of experimental design of microfinance combining financial and non-financial services to address risks and vulnerabilities of climate change could provide additional knowledge on how to move forward.

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