Climate Change Is Destroying Poor People's Lives—Here Is How We Can Help

When financial institutions pull back from regions affected by natural disasters, this adds to devastation for the people trying to cope with the aftermath. In the wake of rising population, inadequate infrastructure and an overwhelming reliance on agriculture as the main income source in fragile African communities, it comes as no surprise that aid alone cannot provide a sustainable solution to increasing climate volatility and more regular disasters.

But what if there's another way to mitigate against the worst possible outcomes of these horrific, but all the more frequent weather-related disasters?

We know that climate change will continue to affect the most vulnerable communities, so finding innovative approaches and interventions during natural disasters should be considered a priority by the financial community.

Through 'recovery lending', the provision of small loans following disasters to help people restart economically productive activities, we at VisionFund International and World Vision have delivered a successful micro-financing model where the impact of the intervention has been externally evaluated.

Insights have revealed that our clients, with help, were able to once again earn an income by using the funds to restore their livelihoods by replacing business assets/stock that were damaged, or restart their farming activities with new seeds, fertilizer or replacement livestock.

Recovery lending is a targeted response to the harsh reality that most microfinance institutions and banks tend to shrink their lending to the communities most affected by disasters; just when credit is needed most to rebuild futures and put recovery plans in place quickly.

Malawi drought
Bags of sorghum are distributed as aid at a school in the village of Malikopo, which lies in one of the areas most affected by drought, on September 9, 2016 in Chikwawa, Malawi. Drought associated with the El Nino weather pattern has created famine throughout Southern Africa. Andrew Renneisen/Getty Images

The Recovery Lending project has successfully shown that a quick injection of lending can enable viable small businesses to get back on their feet sooner than would otherwise be possible, with fewer repayment problems than normal.

These small businesses then purchase goods and materials from, and sell in to, the local community; thereby helping to kick-start the local economy.

The prompt restarting of economic activity means microfinance institutions can then lend with growing confidence to businesses and families who need to be re-established, creating a virtuous circle.

Taking the case of Alice from the rural Mposa region in Malawi as an example: Alice took a recovery loan from VisionFund in 2016 following three failed maize harvests, at a time of critical need when food for her family was running out fast.

Alice's community had been reeling from drought and in the face of failing crops, she took a loan of US $70 (£52), which was duly invested in vegetable production. The loan enabled her to buy fertilizer and fuel from local suppliers, which were used in a communal pump to irrigate the gardens.

The vegetable crop succeeded, and she sold the vegetables at the local village market. The loan allowed her and her family, small-scale farmers, to get back on their feet, continue their business, and recover from the weather-related shock they had experienced without resorting to selling off the family's goats or having her husband move to the city to look for work.

Many of our clients have stories similar to Alice's, where the restored income has meant families are able to keep children in school and pay for healthcare.

Building momentum for change

This kind of recovery lending approach was first formalized by VisionFund in 2013 as a response to the 2013 Typhoon Haiyan in the Philippines, which left millions of people homeless, injured and without means to support their families.

VisionFund made around 5,000 small loans to support families' recovery from one of the strongest storms ever recorded.

Then, with the help of the Department for International Development (DFiD) in late-2015—which provided £2 million of returnable funds on a one-off basis—VisionFund was able to provide 'recovery lending' support to at least 14,500 families in the poorest of rural communities in Kenya, Malawi and Zambia in the wake of the droughts and floods resulting from the strong 2015/2016 "El Niño" weather effect.

The 2015 / 2016 project has proven hugely successful, demonstrating rapid recovery for clients, without burdening them with debts they can't afford. Independent evaluation showed positive effects on livelihoods, but also reduction in the negative coping strategies the poor are often forced into in these situations.That is, it keeps food on the table, children in school and families together.

It is time for us to consider along with other aid agencies and disaster response organizations how this could work on a much larger scale so that we can help millions of people recover better from natural disasters.

Stewart McCulloch is the Global Insurance Director at VisionFund International