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UNITED NATIONS CAPITAL DEVELOPMENT FUND Microfinance |
Issue 9 / February 2005 |
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Sri Lankan MFI Janashakti Rebuilds after the Tsunami
Report from the FieldBy Elizabeth Lynch, Women’s World Banking As the end of January 2005, more than 36,000 people were dead or missing and more than half a million people were displaced in Sri Lanka’s worst natural disaster; orphaned children were most vulnerable. Hambantota, located in southern Sri Lanka, suffered the second highest death toll. The microfinance institution Women’s Development Federation of Hambantota (Janashakti) was hard hit by the December 26 tsunami. The management of the grassroots microfinance institution made the grim discovery in the wake of the disaster that it had lost five full-time staff and 13 volunteers. Greater still was the number of clients missing: of the over 32,000 members, approximately 1,000 are dead or missing. Infrastructure damage was also extensive: there was major damage suffered in 20 of 72 Janashakti bank societies (JBS), and minor damage in an additional 23 JBS. The immediate reaction to the devastation by Janashakti’s management was to join the relief work that began in earnest all over the country. Needs were immense and the devastation in the low-lying areas of this coastal district was widespread. As they got more information that allowed them to better assess the situation, the decision was made to focus Janashakti’s efforts on rehabilitation of its members’ businesses and not on direct relief work. Ms. S. P. Sriyani Mangalika, the General Manager, explained the decision: “Many NGOs in the area were providing immediate relief. We knew we needed to focus on income generation and rebuilding. We needed to help these women rebuild their livelihoods.” The members were at first resistant to Janashakti’s decision; there was an expectation that Janashakti would join the many other local and international agencies providing relief services. The institution communicated quickly to all of its members that it was to their long-term benefit for the institution to maintain its function as a financial institution. “Once we explained why the institution had made the decision” Ms. Sabapathi Kavirathne Nishanthi Priyangika, Janashakti’s Training Manager and Deputy General Manager said, “most members agreed that they needed the long-term support that Janashakti could provide.” But continuing to offer financial services was not an easy task, with the loss of life, and more than half the institution’s JBS’ suffering damage. To address human losses, Janashakti segmented the clients according to whether the borrower died, the primary income earner died, the borrower or primary income earner is permanently disabled, the business assets are totally or partially lost, the house is fully or partially lost, and whether the market for the business is severely or partially affected. In cases where the borrower died, a loan write-off was conducted and aid was given to the family. In cases where there was minimum impact, no adjustments were made and situations in between were treated appropriately. Janashakti’s manual Management Information System had no back-up files and was particularly susceptible. Two branches lost nearly all of their paper records. Staff members of these JBS’ are working to rebuild the information lost, including working with members to collect information about their accounts and histories with the institution. If using head office records, client records and audit records does not show results, Janashakti has been advised by the Bangladeshi microfinance institution ASA to “trust the client.” Janashakti auditors believe that this is a sound approach. Despite some members’ disagreement with Janashakti’s focus on financial rather than on relief services, repayment and savings rates remain strong in most areas. While the disaster affected everyone, some were more affected than others. In those areas that were not affected by the tsunami, loan repayment rates are high. Some funding has been received from international donors that will alleviate some of the pressure that the inevitable write offs from the affected areas have placed on the loan portfolio. Janashakti has designed a system that allows it to respond to particular member needs and circumstances while maintaining its integrity as an MFI. Janashakti is also taking care to support its staff as they continue to serve their clients during this difficult period of rehabilitation. Janashakti places great faith in its staff to be ambassadors of the institution and to carry the message of hope to its members. Many of the staff suffered losses similar to those of their clients. To support them, Janashakti has provided them with counseling as well as financial support. One of the senior managers who lost 44 members of her extended family, when asked how she can be helped, said, “Janashakti has set up a fund to support its members. Allow Janashakti to take care of us. Please support the fund. This will also ensure more accountability for the support you give.” The trauma of the tsunami is deep and broad in this southern district of Sri Lanka. Janashakti management says there is an immediate as well as long-term need to attend to the less visible but equally paralyzing damage done to the people’s will to survive, spirit of entrepreneurship and sense of hope - these are intangible assets of the poor that were stolen from them by a tragedy of this magnitude. There is a need to deal with continuing fears and haunting anxiety. Many citizens will not be ready to take new loans or to build their businesses for some time to come. But Janashakti’s long standing presence in the community and its knowledge of the need for long-term support for its members ensures its role in helping the people of Hambantota become a dynamic, thriving community once again. To make a contribution to Janashakti and the tsunami rehabilitation effort, please visit: http://www.wdf.lk
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