We are delighted to share a brief progress update from our Climate Resilient Microfinance project in Bangladesh which is due to finish next year.

The Climate Resilient Microfinance (CRM) project is tackling the serious issues within the microfinance sector, finding ways to protect investments from climate challenges and to make loans work better for women, to enable communities to build stronger, more climate-resilient futures. Our approach covers everything from improving how loans are given out, to providing training, helping with income generation opportunities and linking communities to government safety net programs to avoid people being trapped in a debt cycle if the worst happens. 

Earlier this year two members of the ITL project team went out to Bangladesh for a monitoring and evaluation visit. They share their reflections from this trip in the video below.

Project Impact

We are already seeing lots of positive signs of the impact the project is having -  

  • Increased community ownership: A community food bank was set up to minimise stresses on borrowers during tough times like disasters. It has been amazing to see how everyone has pitched in to make it a success, with households contributing rice to the bank. This not only ensures food security but also builds a sense of community ownership. In fact, this initiative is now being owned and operated so efficiently by the local community, that we have been able to reduce the amount of money allocated to supporting this activity for the final year by 50%, allowing these funds to be re-invested in other areas 

  • Increased household incomes and increased loan recovery rates:  Community members have learned new skills around climate resilient agriculture and livestock rearing that are helping them earn more money for their households and reducing the risks of livelihoods being completely destroyed by recurrent shocks. As well as the positive benefits directly for these families, microfinance institutions are also reporting that On-Time Recovery (OTR) rate on loans is increasing day by day.   

  • Initiating broader change: One of the key things we wanted to achieve from this project was to initiate broader change in the microfinance sector. We are already seeing signs of this in the project region, as other microfinance institutions in Rowmari, who have traditionally completely overlooked factors such as household exposure to climate risk and gender equality, are voluntarily changing their lending practices, based on the example from this project. For example, microfinance institutions in the region are now providing advisory support to lenders about the utilisation of loans in income-generating activities, before the loans are granted - a practice which is very new for them. Additionally, Bank Asia now accepts women as guarantors for loans – something which previously hadn’t been allowed. 

Challenges and Changes

We had originally intended to roll out a digital app called Prepare that helps communities prepare for floods and other disasters. However through the course of the project it was clear that making the app fully functional would require significant time and ongoing management costs, which did not make sense given the remaining project timeframe. As such we have decided to drop this part of the project and reinvest the project budget previously allocated for this activity and for the food bank, to national-level dissemination activity involving microfinance institutions, the Government, financial institutions, various ministries, NGOs and academics. This advocacy activity will help the findings of our pilot reach a wider platform and initiate broader change in the sector.