What happens to a financial institution that serves the poor when more than a million refugees are displaced and competing with your clients for scarce resources?

For Al Majmoua in Lebanon, the answer was not to hide behind walls or hold more closely to their client base. It was to embrace. They extended financial services to Syrian refugees and their surrounding host communities, with a particular focus on looking for new ways to support women and youth. For instance, the institution set up three “safe spaces” to offer entrepreneurial training, job counseling, apprentice opportunities, and other services to help women and youth support their families and build financial stability.

When crisis strikes, whether it is the result of a natural disaster or political unrest, what can financial institutions that serve low-income clients do to support their clients and the community? What financial and non-financial services do clients need? What resources do microfinance institutions need to help the most clients? To find these answers, Women’s World Banking began research in 2014, with support from the Citi Foundation, interviewing eight network institutions that had suffered floods, a typhoon, an earthquake or political unrest. The range of services varied:

Financial

  • extension of loan grace periods or loan restructuring
  • bridge loans
  • expedited insurance payments

Non-financial

  • gathering and distributing relief packages (food staples, water, clothing)
  • child care during rebuilding
  • emotional support

Best practices emerged including preparation (including access to capital for clients), organized deployment of staff and aid, and effective partnerships. For example, Negros Women for Tomorrow Foundation (NWTF) in the Philippines has a natural disaster protocol in place which made it easier to respond with typhoon Yolanda (otherwise known as Haiyan) hit in November 2013. Every year, the institution sets aside budget for natural disasters. It also has developed partnerships with the private sector and NGOs that has made it easier to get clients back on their feet post-disaster. In Pakistan, Kashf Foundation has a flood relief strategy following the 2010 flood that left 20 million Pakistanis homeless. They identified the disaster zones and have branches in these areas to ensure service and response.

As in any emergency, insurance can play a critical role yet is often unavailable or inaccessible to the poor. This is one gap that was easily identified: limited and expensive insurance. There is an opportunity to include the private sector if we can make products that are sustainable for financial institutions, insurance providers and clients. There is also a need for loan facilities that could provide financial institutions with the capital necessary to restructure existing loans or offer new low-interest rebuilding loans after a crisis. This however, is only the beginning.

Citi-Webinar-Social-Media-GraphicWe invite you to join a webinar on this topic that we are presenting Thursday, May 21 to further unpack the challenges facing financial institutions seeking to serve their clients through crises. Our partner institution Al Majmoua in Lebanon will present its experience supporting clients through the ongoing Syrian political crisis and talk about the ways in which they are supporting their communities and the implications on their operations of providing ongoing support when disasters are not a one-time occurrence.  We hope you will join us for this fascinating discussion and encourage you to ask questions to engage with our guests

 

This research and blog series is presented with support from a grant from the Citi Foundation.