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In flood-prone Bangladesh, low-lying riverside communities permanently teeter on the brink of disaster. The Climate Resilient Microfinance project focuses on building up a new kind of flood defence. This project will overhaul microfinance products and processes to better protect borrowers in Bangladesh from climate threats, with a view to building knowledge that could transform the whole microfinance industry. As the project has only begun in recent months, we use this opportunity to share some thoughts from those involved in the project in various different ways on its potential to make a meaningful change to a much-needed issue.

"Bangladesh is the home of microfinance, it is where it started and today reaches 32 million people annually across the country. Over the years I have been fortunate to see a number of schemes managed by Christian Aid partners that have been built on community ownership, and there are many examples of the really positive impact microfinance has had in building resilience and livelihood security. Today microfinance is big business, it still focuses heavily on women and the rural economy, but has not responded enough to the increased vulnerability faced by the impact of climate change, the rigidity of microfinance has limited the ability of many to adapt. This has left borrowers vulnerable to climate shocks. When crops are devastated by floods or cyclones it leaves many trapped in debt, they have no choice but to seek new loans to repay old ones.  

This initiative is really exciting, it starts with the belief that microfinance when used well can be transformational. But it recognises the need for change, and the need for microfinance to be climate proofed so that borrowers can adapt their livelihoods to mitigate the impact of climate change. It also recognises that women are especially vulnerable when loans fail to deliver, and aims to ensure that women take control over this household asset. 

As this initiative develops we will be focusing heavily on gathering evidence to inform how microfinance can progress climate resilience and gender equality. The real impact will not only be with the communities that our partner is working with, but through the generated learning across the wider microfinance sector. This has potential to have significant impact, in microfinance institutions in Bangladesh and well beyond." 

Ray Hasan, Head of Asia, Middle East, Latin America and Global Programmes and ITL Team Member.

“We usually take loans and repay it accordingly through instalments. If any disaster happens, we cannot manage it. We borrow from other microfinance institutions and repay the previous one. This cycle is continuous, and we can’t help it! This project will help us to sustain our income generation schemes to cope with the challenges.” 

ITL Project community member 

"We are aiming for this pilot project to advocate with micro finance organisations. They need to encourage borrowers to invest their cash resources into sustainable income generating activities, so that they are able to repay their loans. The project has added a completely new dimension in microfinance programming and I am confident that will be a milestone!’’  

Md. Shamsuzzaman and Shuvo Roy, Christian Aid Bangladesh 

GUK microfinance