Tuesday, 25 October 2011

What happens with loan repayments when a natural disaster occurs?

© CARE/Ami Vitale

I am currently in Cambodia where months of heavy rainfall have resulted in the worst flooding in a decade. This has left at least 247 people dead and damaged more than 390,000 hectares of agricultural land, including more than 10% of the country’s rice harvest. The floods have affected 1.2 million people across the country, but particularly those living along the Mekong River. Around 34,000 households have been evacuated to higher ground, and many roads, schools and homes have suffered damage.

Since early 2011 lendwithcare has been partnering with a local microfinance organisation, Cambodia Community Savings Federation (CCSF), which provides loans and other financial services to microentrepreneurs in the north-western provinces of Battambang and Banteay Meanchey, near the border with Thailand. While not as badly affected as other parts of Cambodia, many villages in the province remain isolated and under water. In some parts, cattle have been put in pens on small man made islands of earth, surrounded by flood waters. Many farmers have lost their entire rice crop as their farms have turned into lakes. In these situations, what happens to loan repayments?