In late September 2000, an unusual and devastating flood caused by massive overflow from upstream occurred in the six districts of southwest part of Bangladesh. The flood caused colossal loss to the economy and adversely affected the livelihood of all sections of people in the region. The worst victims of the disaster were rural land-less asset-less, or peasants. The flood washed away and severely damaged the houses, most of which were made of sun-dried mud. Other possessions were sold. The flood also severely damaged the sanitation system. Most importantly, the income generating activities were suspended and the working capital of the poor families was lost.

To mitigate the losses and the other social and economic consequences of the flood, the Government of Bangladesh (GoB) in-cooperation with the Asian Development Bank (ADB) launched the Southwest Flood Damage Rehabilitation Project (SFDRP). The project is comprised of the following six components:

Part A : National and regional roads and Type A feeder roads
Part B : Rural Infrastructure
Part C : Railways
Part D : Water Management and Drainage Facilities
Part E : Socioeconomic Rehabilitation Fund
Part F : Agriculture

PKSF has been assigned to implement ‘Socioeconomic Rehabilitation Fund (SRF)’ with a view to recovering the flood damage through fast and more flexible microcredit services. The main focus of the project is village reconstruction, rehabilitation of housing, and on and off farm income generating activities.

The project seeks not only to restore the flood damage but also ameliorate the infrastructure as well as the socioeconomic status of the people of that region.

2000 Flood: Damage at a glance

The actual losses caused by the flood were un-predicable. It had been estimated that about 2 million people in 3,300 sq. km under six southwestern districts were severely affected. Over one million people were evacuated. A brief assessment of the damages is given below :

* District : Six severely affected
* Persons : 2-3 million affected, 1+ million evacuated
* Houses : 500,000 destroyed, 230,000 partially damaged
* Health centers : 66+
* Schools : 850+
* Growth centers : 35+
* Road : 600 km national and 680 km rural
* Embankments : 168 km, with 208 sluice gates and 863 drainage canals
* Bridge and culverts : 165 damaged
* Railway : 128 km, 7 bridges
* Fatalities : 42
* Crop areas : 154,000 ha
* Shrimp/fish farms : 103,000 ha

Objectives of PKSF Microcredit program under this project:

* Reconstruction/renovation of affected houses
* Installation of tube-well/latrine
* Rehabilitation of pre-flood microcredit activities
* Purchase of seeds, seeding and emergency medicine, etc.
* Recover other household losses

Operational Area and Funding:

Most of the southwest part of Bangladesh that includes the districts Meherpur, Chuadanga, Jhenaidah, Jessor, Magura and Sathkira was severely affected by the 2000 flood. Also parts of the district of Kustia were affected by the flood. SRF has been launched to rehabilitate the flood-affected microcredit borrowers of these districts.

The total fund of the project is US $10 million, out of which ADB has provided US $8 million and the rest from GoB.

Distress Loan has Helped Ms. Majeda Keep her
Daughters in School

Ms. Majeda Khatun has been a beneficiary of Rural Reconstruction Center (RRC) for 11 years. She became the mother of three children in a regular interval immediately after her marriage. As a wife of a small farmer, it was totally beyond her ability to ensure the minimum requirements of the children. In spite of her limited capacity, she tried hard to send her children to school. At one stage, she failed to retain her only son in school. But her two daughters were continuing in school. Then Ms Majeda joined in Banoful Mohilla Samity of RRC to generate more income for her family. With the microfinance services of RRC, she started weaving gumsha (towel). She used the margin from selling gumsha for the schooling of her two daughters. Under those circumstances, the unprecedented flood of 2000 caused her daughters to drop out from school as it swept away her weaving structures and her livestock. Moreover, the flood damaged the crops in the field. Mrs. Khatun was informed that there was a very flexible credit service to recover the losses caused by the flood. She received a loan and reinstalled the handloom, which ensured her an additional income. This loan helped her to keep her daughters in school. She also expressed that she would like to receive more of this soft financial service to install a tube-well to ensure safe water for her family.

KEY FINANCIAL ASPECTS

A. Mode of operation

At the inception, GOB has provided US $2 million to PKSF. PKSF then disbursed these funds to POs to distribute to their flood affected beneficiaries. Upon receiving disbursement certificates from POs, PKSF sends them to ADB to replenish the disbursed amount. The beneficiaries repay the received amount with 4.5% service charge within two years. They may repay the credit earlier if convenient. The POs repay the fund to PKSF in two years in six installments with a grace period of six months.

B. Rate of service charges

* GoB to ADB (grace period) 1%
* GoB to ADB (normal period) 1.5%
*GoB to PKSF Nil
* PKSF to PO 1.5%
(Declining Balance Method)

* PO to Beneficiaries 4.5%
(Nominal Rate in Flat Method)

C. Loan ceiling up to Tk. 3000

Progress of loan disbursement:

The Governing Body of PKSF has sanctioned a total project fund of Tk. 62,80,50,000 in two phases to 22 POs to rehabilitate the flood victims through soft microfinance services. Out of these 22 POs involved in implementing the project, a total of Tk. 24,26,50,000 had been disbursed to 21 POs by September 30, 2003. It has been observed through field visits that the beneficiaries are very enthusiastic to receive the credit. To meet high demand, PKSF has accelerated the credit disbursement to the beneficiaries.

The following POs are implementing the distress loan program

I was relieved

My daughter Shahina was in class nine. She was repeatedly asking me to buy a set of books of her new class. We could not purchase a set of books for her after the 2000 flood. Where to sleep? How to survive? These were our every day questions in post flood days. At that time I was also uncertain about the education of my daughter. Once, in a group meeting, we had been informed about the soft distress loan. The rate of service charge, number of installments and time span for repayment depicted it as a safe credit for us. I discussed this credit service with my husband. We decided to borrow the money to purchase a set of books for my Shahina, considering the greater interest of her life. My daughter has successfully passed the SSC exam. Now she is in HSC first year. I always recall the memories of those days and find that the disaster loan relieved me from the inability to purchase books for my Shahina. All the members of our group were also interested to receive this soft microcredit to restore flood damages.
[Ms. Shahina’s story about how she benefited from SRLP]

ADB Mission in project area

As part of the project monitoring program, a Mission of ADB led by Mr. Ahmed Faruk, Project Implementation Officer, SFDRP, visited one location of the project under Shathkira district severely affected by the ‘2000 flood’ on April 1, 2003. Mr. Akond Md. Rafiqul Islam, Assistant General Manager (Operation), PKSF, Mr. Lutfur Rahman, Assistant Manager, Md. Monir Hussain, Assistant Manager and Mr. Syed Estem Dadul Islam, Project Associate, PKSF accompanied the mission.

The mission visited the village ‘Sheyal Dangi’ under Shibpur Union of Shatkhira Sadar to meet and discuss with the members of Rangdhanu Mohila Shamity of Unnayan, a PO of PKSF implementing this rehabilitation loan program.

Ms. Taslima Khatun, group leader of Rangdhanu Mohila Samity informed the mission that there were 31 members of her group. Out of these 31 members only 19 had the opportunity to receive the loan. The other women were eagerly waiting to access this soft financial service.
In response to a query of Mr. A. Faruq of ADB, the group members reported that they had used the loan to repair/rebuild houses, reinstalling tube-well, and restoring damaged IGAs.

The ADB mission expressed its satisfaction at the implementation performance of the project.

We have restarted our laundry

Ms. Rebeka Begum is a rural woman with three children. Her husband was a security guard at a local industry in Jessore. This temporary work earned her husband only two and half thousand taka per month. It was becoming difficult for Rebeka to meet the growing family expenditures with this small income. To increase family income Rebeka joined Sharna Mohila Samity of Jagarani Chakra (JC) in 1999. At the same time her husband was also considering leaving the work in order to start a laundry. The major constraint was the funding to start the laundry. Rebeka discussed her husband’s intention to start a laundry in a group meeting. JC agreed promptly to assist her husband and advised her to receive credit. In consultation with her husband, Rebeka borrowed TK. 5000 and handed over the amount to him. From running the laundry they were earning TK. 4000 to TK. 5000 per month. But, the 2000 flood damaged their little laundry. They did not have enough money to reinstall it. At that crucial stage this soft microcredit facilitated them to restart their laundry.

An Unequal Race with Tide

It was a sunny day and I was drying boiled paddy in my yard. Suddenly, I was informed that a flood was coming from India. It was beyond my imagination that a flood might hit us as we had never faced such catastrophe. I vowed to finish drying the paddy. My husband and daughter repeatedly requested me to collect all transportable assets and necessary things in order to take shelter in a safe place. Having failed to convince me, they started walking towards the high school, more than two kilometers from our village. Within half an hour, I saw a flow of more than four feet of water coming towards our village. Immediately it snatched away my paddy and the water covered half of the height of my house. I took shelter on the rooftop and stayed there all night. The next morning, my husband rescued me and took me to the high school. I will never forget that day. We had to stay two months in a relief camp with inadequate food and clothing. We lost all our crops and livestock. Our mud made house was completely destroyed. In the post flood rehabilitation stage, distress loans were made available. We have rebuilt our house by using this soft microcredit. We are eagerly waiting to take more credit under this soft microcredit program, which will help us in recovering the losses.

[Ms. Amena Begum, wife of a peasant of a frontier village ‘Pukuria’ under Chougasa Thana of Jessore district, the worst affected village of 2000 flood.]

The Impact of Soft Microcredit

From the beginning of the project, PKSF has been trying to achieve the objectives of this soft microcredit program. To accelerate the pace of operation of the project and keep it on track, regular monitoring and supervision from PKSF is taking place. A recent study of five POs in Jessore region implementing SRF shows that almost all of the borrowers have used the financial services. It has been observed that the beneficiaries possess some basic housing requirements such as tube-wells, hygienic latrines, and kitchens. They did not have these items prior to the flood. This soft rehabilitation loan program has significant impact on keeping children of the flood victims in school. Some borrowers have used the credit for purchasing books and paying of school fees. This soft financial service has helped the farmers in post-flood agricultural activities. Some poor are still recovering from the damages caused by the flood. House repair, installation of tube-wells and construction of sanitary latrines are the major projects where the borrowers have used the credit. Some beneficiaries have crossed the boundary of this rehabilitation program. In those cases both POs and PKSF have taken immediate action to stop further occurrences of such event.