Participation, Empowerment and Networks How people cooperate in restoration: Role of microfinance and its impact. Pornprapa Sakulsaeng 食料生産管理学

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食料生産管理学 Participation, Empowerment and Networks How people cooperate in restoration: Role of microfinance and its impact Pornprapa Sakulsaeng 1

Contents Introduction Concept of microfinance Microfinance development in Thailand The Microfinance strategy for livelihood recovery in post-tsunami Microfinance impact on participation and empowering affected-people in post tsunami Expanding Microfinance networks Conclusion and recommendation 2

Introduction The 26 December tsunami devastated Thailand's entire Andaman coast strip. Housing and public infrastructure were destroyed. Due to this serious situation, affected communities have faced of instability in reconstructed society and resettlement. Costal resources prices were falling, high costs and lack of modern equipment. Women lack of education and access to financial services because financial services could not serve to the poor depression of natural resources and natural disaster also put the affected people into poverty and vulnerability livelihood. 3

Poverty and vulnerability Poverty measures the human capacities that lack of access to consumption smoothing mechanisms and lack of social protection. Vulnerability concerns to risk or shock from uncertain situation that caused to future poverty Source: Donal & Marcos, 2005 4

Microfinance approach To provide the opportunities to the disadvantaged, microfinance approach are now considered as a useful tool to raise people out of poverty. Governments have delivered microfinance activities for rural people through microfinance institutions and grass-roots organizations. Microfinance services provide low interest rate loan, less or requiring no collateral, and plus income generating activity. It can pay important role in order to increase the productivity and improve their revenues 5

Concept of microfinance Microfinance is the provision of financial services including deposit, loan, money transfer and insurance. Microfinance services serve poor and lowincome people both male and female. Microfinance providers are ranges from formal financial institutions through informal sources. Microfinance is different in each country, Thailand has many types of microfinance and provide different amount of financial services to clients. 6

Microfinance sources and clients Microfinance sources Formal sector is chartered by the government and banking regulation ( central bank, rural development bank, cooperative) Semi-formal sector is operated under particular laws and regulation (registered self-help group, CBO) Informal sector operates outside the structure of government regulation (non-registered self-help group, money lender) Microfinance clients Direct targeting (agriculture sector, fishery sector) Indirect targeting (self-help group, women s group, saving group) 7

Microfinance products and services Minimalist approach Integrated approach Financial intermediation (Credit, Saving,Insurance) Social intermediation (Group formation, Leadership training, Cooperative training ) Enterprise development (Marketing, Production training) Social services (Education, Health and nutrition, Literacy training) 8 Source: Ledgerwood,1999

Microfinance institutions (MFIs) Grameen bank Bank Rakyat Indonesia The Bank for Agriculture and Agriculture Cooperative of Thailand (BAAC) 9

Microfinance Development in Thailand Microfinance in Thailand is largely a government sponsored activity in agricultural loans through microfinance institution (MFIs.) Implementation of microfinance's program with people s participation by allocation budget to grassroots level. Minimalist approach Integrated approach MFIs Farm credit -Misusing loan -Lack of management of farm credit -Insecurity -Education -Occupation training -Brain storming - Financial management MFIs Microfinance program Agricultural and non agricultural activity 10

Development of microfinance sectors ~ 1960s 1970s 1980s 1990s BAAC Formal sector Banking system for rural financial Cooperatives financial service to members extend Semi-formal sector Registered-self help group Support local people occupation and strengthen their community Microfinance with people s participation Informal sector Moneylender Dominant in remote areas Non-registered Self-help groups Capacity building by local people themselves 2000s~ Credit programs (By government banks) Gov. allocated budget for all village in over country Extending loan for nonagricultural activity Promote -BAAC (Bank of Agriculture and Agricultural Cooperative) 11 -All Microfinance institutions and programs are still continuing their works till the present

Study objectives To find out the role of microfinance in livelihood recovery from the tsunamidisaster To identify the ways to reduce donors dependency and strengthen selfdependency To investigate the people s opinion and microfinance network in tsunami effected areas. 12

Study areas Phang Nga Krabi 13

Methodology of Study Data collection Primary data was collected in field surveys by using structured questionnaire and focus group discussions during 2009-2010. Previous survey (2006) will be used as based line data. Secondary data consists of literature review on concept of microfinance and microfinance in Thailand. Data analysis Descriptive statistics: frequency, mean and percentage use for describing the basic features. 14

Findings 15

People s occupation in pre and post tsunami Occupation Before tsunami After tsunami in 2006 After tsunami in 2010 Unit : percentage Direction of Occupation (Pre and Post tsunami) 1. Fishery 78.8 61.4 59.6 Decreasing 2. Agriculture 9.1 6.8 2.6 Decreasing 4. petty trade, shop 9.1 18.2 16.7 Increasing 5.hireling/employed job 3.0 13.6 15.4 Increasing 6. other 5.7 - Total 100 100 100 Source: Field survey, 2006 (129 Samples) and 2010 (137 samples) 16

Post -tsunami disaster Occupation changed Loss of fishing gears Decreasing in fish products New house reconstruction far from the sea Women s batik group Community-based store Canoe tourism group Village Home stay Fish Processing Group 17

Microfinance in tsunami affected areas Fishers have to find a source of fund to re-start households activities Affected villager had hardly gain access to any institutional banking. The revolving fund program (community-based revolving fund) is one of the most effective microfinance strategies to provide livelihood activity to affected-people. 18

What is a revolving fund? The revolving fund is a group of people or organization reserve of money (the fund) to provide microfinance service for their community or group (UNDP,2002). Fund was managed and controlled by group members to design the needs of community. Working with group can reduce risk better than individual and the authority comes from local local leaders with moral authority. Their repayment will continuously be a source of revolving fund for future operation which will not be returned to the donors. 19

Revolving fund structure Funds from donors Deposit fund to Village Bank Account Credit approval by village committee 20,000 baht (500 USD)/ household Committee Individual Account (Member account) Within 24 month Repayment Occupation Investment and emergency needs 20

Self help group Each business activity form their own self help group Self help group s system Member Member self-help groups are increasing. Group share benefit, provide occupation for member and lend credit with low interest rate to borrower than money lender s system. Member Group s capital Loans, dividends Member Repayment, saving 21

22

Strengthen community by microfinance approach Emergency aid 1. Loan for repairing boats and fishing gears self-dependency by microfinance 1. Revolving fund for investment in main/ supplement occupation 2. Women s group 3. Community-based store 4. Asset installment 5. Crab bank project 6. Growing mushroom 7. Canoe tourism activity 8. Rising catfish in cage 23

Revolving fund support people s occupations Money will be released from the fund to provide micro businesses a low or no interest revolving loan to restart livelihoods. Revolving funds successfully promoted the accumulate capital and expand business activities. Internal fund among member build trust between the people of group and the community Women have increased in social and economic well-being through participation in revolving fund credit scheme to create group activity. People come join group meeting contributed to robust relationship and respect in the community. 24

Development of community-based empowerment in post tsunami 1 st step 2 nd step 3 rd step government, NGOs and donors Training center or demonstration farms Cooperative or marketing outlets Preparing for community development Developing occupation skill Providing followup services Forming group (self-help group) Literacy Saving and fund formation Activity which can earn income as soon as possible Enlarging products and services Increasing wage 2005 2010 25

Households income in pre and post tsunami 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% less than 5,000 5,001-10, 000 10,001-20,000 more than20,000 2006 33.7% 47.9% 9.1% 9.3% 2010 19.7% 46.0% 27.7% 6.6% Monthly income after tsunami in 2006 and 2010 26

People s participation in microfinance Statements Rank 1. Meeting/voting 1 2. Participation in training course/work shop 2 3. Establishing group (gather people) for revolving fund activity 4. Solving the problem 4 5. Recommend for group development 5 6. Communication with staff of agency who provided microfinance program 7.Invited neighbors come to involve in microfinance program 7 3 6 8. Outdoor visit for training/observing 8 27

Expanding Microfinance networks Increase number of community-based organizations (CBOs) or self help group and create financial network and sharing skill and knowledge. between local organization Setting up CBO center and gathering CBO members. Asking greater loan amount from financial institutions for managing CBO networks. expand community-based infrastructure i.e. core facilities, health centre, academic linking. CBO CBO CBO CBO CBO center CBO CBO Loan Financial institutions 28

Conclusion and recommendation Microfinance strategy in tsunami affected areas with financial service and self help groups shared the best practices, lessons learned, and other resources to support collaboration. Microfinance strategy with local themselves management will be in the forefront of policy formation in local communities. Community members will be effectively organized to assure that decisions affecting their lives are made in collaboration. Microfinance networking system will be minimize influence of outsiders. Coastal affected-communities have increased in social and economic wellbeing through participation in microfinance strategy. Conclusion 29

Conclusion and recommendation Recommendation Develop strategies to advance microfinance approach Encourage local traditional and indigenous knowledge Learning new technology Training on accounting and financial system Seeking international partners Increasing government support A number of major policy issues concerns the need of local communities Monitoring and evaluation activities are needs to consider the financial support 30