Some Post Cyclone Sidr Update: Will the Micro-Credit Installment -Collection Non-Interest Loan Plan Really Stand Up?

TWO THREE long weeks have passed since Cyclone Sidr roared ashore in Bangladesh and killed at least 3400+ people, injured many more, and devastated land, businesses, and futures. Many people have documented the profound losses, experiences, reflection, need for massive relief-fundraising now & better coordination of relief and such fundraising, and in the future, extensive reconstruction efforts. The United Bangladesh Appeal have launched the Sidr Victims' Compensation fund for survivors along with other donors' appeals. Nonetheless the Bangladeshi English media and blogosphere continue to have fewer reports on relief, but these few continue to report higher than expected damage estimates, disparities in relief distribution & recovery including safe water, requests for more donor funds by the CA, and also new loans given to a big micro-credit NGO to expand its activities, while at the request of the CA and Army Chief, key microcredit-NGOs announced suspension of installment collections.

Speaking of survivors: what about compensation, cancellation of micro-credit debt for Sidr's dead victims, and repayment pressures on struggling survivors???? More conflicting stories have appeared since I first posted this story at the end of November. As my long title shows, the stor(ies) still are unclear. At first, the media reported that some NGO staff members had been pressurizing borrowers for interest-loan payment. These borrowers had survived Cyclone Sidr, but lost their businesses-capital-customers and could not make repayments.

On 4 Dec, the media reported that the CA had met with a group of multi-lateral donors to request $1 billion for long-term reconstruction of shelters, embankments, and coastal areas. The donors urged best practices from other rehabilitation efforts and the need for more shelters, but also voiced their concerns, “that the caretaker government needs to be more careful because of its short tenure, especially as the donors feel the project would compel the government to make some tough decisions.”

Then starting from 5 December onwards, the CA and Army Chief have asked NGOs to tell their field staff to end the pressure and to forego payments at least until March and one newspaper opined that the NGOs should take these actions upon themselves, too. The CA and Army Chief also asked the Bangladesh Bank to consider waiving agriculture loan payments and disburse approved loans. Have the micro-credit field staff gotten these messages?

As of that previous week, no. As I wrote before, on Nov 26 the Caretaker government had asked NGOs not to demand loan repayments right now from cyclone survivors. Nonetheless, in a Daily Star article, Bilkis Begum would like her tk 80,000 microcredit debt cancelled because she feels like repayment is at least one year away. Md. Yunus of Grameen Bank explains why such debts cannot be cancelled, but that GB would offer 'interest free loans' tk 10,000 towards rebuilding account holders' houses, more time to pay off their debts and offers of new loans, e.g, more debt.

Then on 27 Nov 07, the Daily Star reported that micro-credit NGOs may have to cancel tk 600 cr (tk six billion) loans because of rules that if borrowers died, then their debts must be canceled. According to this article "In 12 south and south-western districts, some Tk 1,159 crore in loan remains outstanding with 15 lakh people, with 42 microcredit organisations operating in the region."Over 1227+ borrowers have died leaving the NGOs with many debts to cancel. These NGOs included Grameen Bank, BRAC, ASA, organizations affiliated with PKSF, and other smaller organizations.

Another official commented, "Although the microcredit providers are not going to make an announcement of the write-off right now, they might finally write the loans off since the small borrowers lost most of their houses, businesses, and other assets". Other officials indicated that they did not want to announce any more plans because people who could repay their loans would try to have them canceled, but they had advise their staff to 'suspend' their collection efforts from cyclone affected borrowers for the time being.

These debt cancellations will impact the micro-credit sector, but to what extent will only be seen over time. Critics have noted that many NGOs have used micro-credit operations as money makers among their other activities. Last year, as New Age noted about a World Bank report most NGOs survive and run their programs on micro-credit interest and not local donations (for bn version or full report) . Others have complained that although national offices made announcements about suspension of collection, often this message failed to trickle down to field staff who were under pressure from higher levels to collect loans.

Finally, this past week of 1-7 Dec 07, the national NGO offices gave their post Sidr plans. Grameen Bank announced suspension of installment payments for Cyclone Sidr survivors until end of June 2008 and interest free ‘realisable’ loans, and other interest free loans for rebuilding houses, livelihoods (which still increase debts), and cancellation of debts and return of savings to families of debtors who perished in Cyclone Sidr. ASA and PKSF announced similar packages. More recently BRAC announced that it would write off loans of tk 100 crore, discontinue installment collection until March, and provide loans to recover economic livelihoods. Interestingly, a few days earlier, BRAC announced a new $55m unsecured loan of seven years to expand taka microfinance from a consortium of international lenders . There have been no reports on what the smaller micro-credit NGOs will do about their loan write-offs for borrowers who died in Cyclone Sidr and/or borrowers-survivors who may be unable to service their loans given the lost of their businesses, dwellings, and customers. Or their viability: since most small NGOs have depended on loan repayments to fund their activities how they will continue to fund their programmes?

Nonetheless, by all accounts of the devastation in the coastal region, many surviving borrowers may never be able to recover much less with the micro-credit debt burden and pressurization on the survivors' backs. One author noted recently that in some areas so much food had come that some younger workers sold the excess food to meet other living needs and did not want to work in reconstruction. Further, his respondents’ “experience pertaining to default in payment of installment was not pleasant.” From this, readers-activists might ask: could surviving micro-credit debtors have to sell relief food-materials to make payments now and/or when installment collections resume?

Some previous micro-credit researchers has noted that often times women loan recipients skimped on food and household expenses to make their payment, e.g. eating their installments. Will the additional loans & debt to stimulate economic recovery be enough, especially if customers have no funds to make purchases from micro-credit businesses? What will happen to the borrowers and NGOs once the no- installment period passes and their debts-service have continued to accumulate through the interest free loans? This is how NGOs have padded their repayment rates—by giving more loans to pay off old loans and/or borrowers have taken multiple loans and/or borrowed from smaller micro-credit NGOs to pay off debts to larger NGOs. How long can borrowers--especially women borrowers-- and small NGOs in cyclone stricken areas survive these payment patterns?

So what is/are the real situations throughout the Cyclone Sidr area in regard to micro-credit installments and relief; for NGOs & survivors-borrowers?

note: this is a revision-update of a 28 Nov 07 post

cross-posted in Drishtipat

Post Cyclone Relief: Coordination & Donations to All Flood Affected & Give Food That People Can Eat Now

It's been one week since Cyclone Sidr roared ashore on the coast of Bangladesh. The latest official toll is 3,032 and many more injured-missing.

Relief efforts are underway and millions of dollars of relief pledged, but not yet cash-supplies in hand for the Bangladeshi government, charities, aid agencies, much less for the flood affected people. USA Navy ships approach and/or even docked. One big problem as detailed by reports from BBC, CNN, and other media sources has been uneven coordination of relief efforts and getting relief materials to people who need it including people are not near district offices or received media attention or 'connections'.

Relief efforts are particularly important for women and children excluded from the community, without male partners, and/or ultra poor-geographically isolated. In a series of posts, on 22 November post, Naima Chowdhury writes how traffickers (including local police) are preying on young female orphans who have lost their parents.

Or some cyclone affected women and children are socially excluded from their communities: sex workers. In a repeated update to my earlier post re the sex workers in Mongla, we are reminded that some people affected by this Cyclone and might not be helped by their community and relief agencies. In a 21 Nov 07 post, aid worker, Naima Chowdhury, reported that although the women had advance notice of the Cyclone, local people refused them shelter and aid because of their work. Action Aid has given them chira (puffed rice and dal), but need more aid to continue. The women and their children are facing hard times because they have fewer customers from low activity at the port, she notes, "These women are incredibly poor and also face exclusion from the rest of the community."


As discussed by Sujan, in Dhaka, some people want to do something, but do not know what to collect and how to get it to agencies for distributions. On the one hand, some flood affected people need warm clothes, but on the other hand, how and where will they receive the clothes collected by students in Dhaka? Or will Shawn ever get to distribute his blankets?

Another very important issue is the actual content of relief packets (also a problem in earlier flood relief efforts): some people have received bags of rice and lentils, but have NO pots to cook in or fire to cook with AND no good water. Hence, the demand for food that the people can eat now.

Even during good times, Bangladeshis also survive on a system of loans--from micro-credit NGOs, banks, money-lenders, store credit, and even family members who are paid back when funds come in and/or are squeezed out family [rice] budgets. Many people also have ongoing loans from micro-credit NGOs for their small businesses and loans from banks & money-lenders for replanting their crops already washed away by two summer floods. As before and during post floods, many micro-credit agents demanded payments for interest from flood affected people. What will happen with the micro-credit & hurricane affected people who lost their livestock, business goods, and crops? Demands from banks, money lenders, and business people? According to DhakaShoshor and citing an Amader Shomoy article (Bn) conflicting accounts have developed over whether certain NGOs have continued their collections and/or extent of their relief efforts and the sources of these allegations.

Updated information 26 Nov 07, the Caretaker government has asked NGOs not to demand loan repayments right now from cyclone survivors. Nonetheless, in a Daily Star article, Bilkis Begum would like her tk 80,000 microcredit debt cancelled because she feels like repayment is at least one year away. Md. Yunus of Grameen Bank explains why such debts cannot be cancelled, but that GB would offer 'interest free loans' tk 10,000 towards rebuilding account holders' houses, more time to pay off their debts and offers of new loans, e.g, more debt.

Post disaster recovery has both short and long term needs and activities. Already affected people are starting to rebuild, but what are their needs now and later? Donations on the ground and in the pipeline will help with the short-run needs, such as food, water, and shelter. At the same time donations are also needed for the long-term recovery of very poor people who have lost everything. This includes their destroyed crops almost ready for harvest after post summer floods replanting & loans, in their fish ponds, shrimp farming (3rd largest export earner) & business livelihoods, rebuilding of the infrastructures, and such structures such as much needed cyclone shelters. Many of the over 3000 shelters were unusable, overcrowded, or simply not available. As earlier noted by Rezwan, some of the post recovery funds-donations should be directed towards building more shelters.

Such disasters take a very big emotional toll on relief workers, readers, and people who care. Some people might feel a sense of disaster & donor fatigue, especially after the Indonesia Tsunami in 2004, Hurricane Katrina in 2005, and now Cyclone Sidr in 2007 (among others in the Gulf, Pakistan, and even more coming ashore in the Philippines) . BTW, Bangladesh donated $1 million in aid to the USA in response to Katrina!

Even if they know about Bangladesh and its location, others might feel that Bangladesh is an ongoing disaster with floods, political upheavals, and cyclones. I might have thought that, too, except for my stays and work in Bangladesh with resilient people who somehow bounce back and would still give their last grain of rice to a visitor. The problem is that many people on the coast have not a single grain of rice, a cooking pot, fire, or water.

I will leave for later my comments on the gendered nature of disasters and my analyses on patterns of aid, development, population growth that have resulted in large populations living in areas prone to cyclones, flooding, and earthquakes and dependent on export earnings and foreign aid. Or people living in high cost areas prone to regular wildfires or hurricanes (my home insurance rates are still higher from certain Atlantic-Gulf Coast hurricanes and I live far inland).

Hence, the people of Bangladesh and various relief agencies still need your donations. Places to donate can be found in earlier posts, or a convenient listing for people in the USA can be found on the website: www.helpthemsurvive.org This website, generated by an expat's USA company's programmers-staff (M2SYS Technology), lists links for some donors, news updates, and how you can raise awareness in your own community.

As Abdul Kargbo writes on why everyone should care, "Compassion Does not Recognize State Boundaries."