MICROFINANCE MATTERS - Rebuilding Lives with More than Microfinance: The SEEDS Experience

With more than 30,000 people dead and 500,000 people displaced, rebuilding lives is a key challenge for any microfinance organisation working in Sri Lanka in the wake of the tsunami in the Indian Ocean. Sarvodaya Economic Enterprise Development Services, or SEEDS, the largest non-government microfinance institution in Sri Lanka, has begun to assist its clients to do just that in the weeks since the tsunami devastated the country.

SEEDS is the economic development arm of the Sarvodaya movement, the largest social development organisation in the non-government sector in Sri Lanka. It has a wide network in 23 of the 25 Districts of the country, with the participation of more than 3,400 village societies and over 600,000 members. SEEDS provides microfinance, enterprise development and vocational training services to these village societies, supporting them to deliver their own microfinance services. SEEDS’ mission is to eradicate poverty by promoting economic empowerment for a sustainable livelihood. Thus SEEDS is well experienced and positioned to assist in rebuilding after the tsunami.

The tsunami not only destroyed lives, it destroyed livelihoods. It tore income earners away from their families and stole fishing boats, weighing scales, motorcycles, shops. It frightened away tourists and discouraged people from eating fish. Customers no longer have money to spend. For those whose industries are still viable, absence of insurance means they cannot replace the resources they require for earning a living. For industries that are no longer profitable, new skills are needed as well as new resources.

To date, SEEDS has been engaged in ensuring clients’ survival and meeting their basic needs. We have used our extensive on the ground networks to identify needs and the needy and match them with providers. We have assisted our clients access food, shelter and cooking items.

Despite the massive amount of funding generously donated by the global community, it is not feasible to give the affected people all the resources and capital they require to restart their lives and enterprises. In the instances where this has occurred, survivors do not have control over their selection (generally based on the worst affected). Microfinance provides people the opportunity to access capital and purchase resources, under their own control and of their own choosing.

While SEEDS microfinance is at the core of SEEDS’ rehabilitation program, our research so far has identified many other related needs to be addressed. Working with our parent organisation, Sarvodaya, SEEDS will use its experience and outreach to assist at least 20,000 families who have been affected by the tsunami. SEEDS has designed a comprehensive rehabilitation program to assist those affected by the tsunami. The program is predominantly funded by Oxfam Netherlands (Novib).

Our program has begun with Participatory Rural Assessment, asking villagers to tell us who has been most affected, what assistance is required, and what issues are most pressing. This information is fed into participatory planning for village development, where SEEDS works with village leaders to design an appropriate program to rebuild the village and its people. These programs are based on microfinance, offering credit facilities at a concessionary rate and with relaxed terms and conditions according to the needs of our clients. Additional support mechanisms include:

access to a counseling program and workshops to motivate people to begin rebuilding their lives where they have not already done so and to restore the cohesiveness of the villagers, especially where people are living in various refugee camps and the homes of relatives;
income earning capability assessment – assisting people to identify what their best income earning opportunities are in the current circumstances;
technical training, to teach new skills to those who are unskilled, or who are no longer able to use their previous skills;
entrepreneurial development – assessing the current market situation, revising previous business plans and writing new ones; providing linkages to new markets and suppliers;
environmental improvement program to provide resources and training for the affected to rebuild their gardens with income earning crops such as vegetables and coconuts;
community health improvement program to provide resources for basic sanitation and education on sanitation in conditions of living with large numbers of people.

Mr. Lakshman is a 32 year old SEEDS client and member of the Pereliya Sarvodaya Shramadana Society in Galle District. He is thesole income earner for his immediate family consisting of his wife and three children, as well as for his parents and unmarried sister and brother.

Mr. Lakshman earned his living by deep-sea fishing and drying his catch to make Maldive fish. It was a successful business – he had been planning to expand his enterprise to employ four others. SEEDS had previously lent Mr. Lakshman Rs. 130,000 to purchase a motorcycle and other resources to carry on his business.

On the 26th of December 2004, the tsunami killed Mr. Lakshman’s baby and brother. It also took away his house, all his belongings, the little furniture he had, the equipment he used for his business and his motorcycle.

Within two hours of the disaster, the SEEDS Field Officer came to see Mr. Lakshman and his family and offered them clothes, dry rations and attended to their other needs. The SEEDS Officer has continued to provide Mr. Lakshman and his family with dry rations every week.

SEEDS has planned to lend Mr. Lakshman the capital required to buy a new Maldive fish-drying machine to enable him to restart his livelihood.

The disaster has created many challenges. To date, one key challenge has been the destruction of documentation – some societies have lost all records of savings and loans of their clients. This challenge was solved by group discussion, where all members gathered and as a group shared the savings amongst themselves with a priority on rebuilding lives.

The future challenges identified by our staff are holistic ones – rebuilding lives in general, including accessing education for the children is a key concern. The psychological affects of the disaster are also cause for concern. Our Loans Appraisal Officer in Galle often finds herself in discussions with distraught clients, crying in the desperation of their situation. But the key challenge from a microfinance perspective, is finding and developing markets for enterprises to be able to prosper. Without a market, clients will be unable to earn an income to support their families, let alone repay their loans.

Microfinance is key in rebuilding lives and restoring normalcy in the affected areas, especially given the reality that not everyone will receive everything they need to restore their lives through donations. However, microfinance is only the centrepiece of the solution; significant assistance in addition to microfinance is required to support our clients through the process of rebuilding their lives.

Report from the Field