CGAP’s take on household resilience in Burkina Faso

Marie and Child

“A resilient household is able to find solutions to the various crises it encounters by making good choices in their income-generating activities. A non-resilient home fails to solve crises encountered.” — Marie, a 35-year old first wife of a polygamous family who lives in the Passoré province of Burkina Faso

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>>Authored by Barakah Ibisomi, Microcredit Summit Campaign Program Intern

Landlocked Burkina Faso is one of the poorest countries in the world with 44.6 percent of its population living on $1.25 or less per day. A recent CGAP publication draws on “resilience diaries” of 46 women in rural households in the northeastern zones of the country to determine how different financial services contribute to and affect household resilience.

Twenty-five women are members of village banks with the Reseau des Caisses Populaires du Burkina Faso (RCPB) while 21 are members of savings groups with the Office de Développement des Eglises Evangéliques (ODE). The seven-month project was conducted by Freedom from Hunger.

The diaries were used to understand the following:

  1. The strategies poor households employ to manage economic, environmental and health shocks that disrupt their financial lives.
  2. The roles formal, non formal and informal financial products play in improving household resiliency and building assets.

Freedom from Hunger Resilience Framework

Burkinabé households are highly influenced by their country’s seasonal and agricultural calendar as it determines how they make a living — specifically, how land is put to use, the degree to which households depend on livestock, and other non-agricultural sources of income. The time just before harvest in September is financially difficult, with income and savings at a low point and borrowing and expenses at a high point. There is a need for additional or specialized financial services to help households better manage the season.

The most common coping strategies used to respond to shocks are first using savings at home, then reducing food consumption, selling grain, selling small livestock, purchasing on credit and lastly, borrowing from a savings group. Borrowing from financial institutions, family and friends is less preferred. As resources become available to them, the women re-prioritize the way they manage any particular shock. For example, after harvest, more sell grain and fewer reduce food consumption, make purchases on credit or borrow from friends and family.

Very few households in Burkina Faso have access to formal financial services so the women’s use of formal financial products is very limited and their demand for it is widely unmet. When asked whether they had all the financial products and services they need, only 17 percent felt they had. There is a strong demand for additional financial products and services, with an emphasis on microcredit, savings products and agricultural-related grants. However, when they do have access, they use formal services to cover costs incurred from shocks. The most common formal products or services used are RCPB loans and remittance services.

The more commonly used non formal services are savings groups which are used to save money for purchasing livestock, paying health expenses, school fees and for food and income generating activity (IGA) expenses. For informal services, the women borrow from friends and family, make purchases on credit from local merchants and, as mentioned earlier, receive remittances often by hand-to-hand transporters. The women reported using non formal and informal financial services significantly more than formal financial services.

All these services help improve cash flow but it is difficult to determine the extent to which they are helpful in building resiliency.

Other key findings from the studied households:

  1. The most common shocks encountered by those studied were illness and injury, loss of livestock, death of family members and poor harvest, all These shocks affected both income-generation as well as food supplies. Other semi-regular shocks included droughts and famine, political crisis, and health threats.
  2. Women play a significant role in the household economy, but are limited byResilience Quote gender norms, time, and resources to pursue more profitable IGAs. The most common IGAs for the participants were the growth and sale of cash crops and petty commerce.
  3. Food insecurity dominates all of the households’ lives.

The concept of resilience is in itself a work-in-progress because of its novelty and multi dimensionality. The RM-TWG defines resilience as “the capacity that ensures adverse stressors and shocks do not have long-lasting adverse development consequences.”

Based on this definition of resilience, it is difficult to consider many of these households resilient because when shocks occur, they use negative coping mechanisms that increase food insecurity, such as reducing daily food consumption and selling grain stocks and livestock meant to be. These strategies solve an immediate problem but can have long-term, long-lasting adverse development consequences.


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The Campaign in 2014: Making Progress Toward Ending Extreme Poverty

Expokonool vendors being recognized in the closing ceremony for their hard work

At the 17th Microcredit Summit, Expokonool vendors were recognized in the closing ceremony for their hard work

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As we come to the end of the year, we reflect on 2014.

In 2014, we more than DOUBLED the number of Campaign Commitments, and in the past two years, 54 Commitments have been announced by 48 organizations, including AGFUND, the Food and Agriculture Organization (FAO) of the United Nations, the International Labour Organisation (ILO), BRAC, Grassroots Capital Management, Red Financiera Rural, Oikocredit, and Grameen Foundation. These organizations join a coalition to advance the industry toward helping 100 million families lift themselves out of extreme poverty.

With the first 5 installments of the Campaign’s new E-Workshop Series featuring Commitment-making organizations, more than 400 participants learned important practical lessons on innovations and tools that work to support those making the journey out of extreme poverty.

Organizations that made a Campaign Commitment are recognized on stage at the 17th Microcredit Summit in Mexico.

Organizations that made a Campaign Commitment were recognized on stage at the 17th Microcredit Summit in Mexico.

17th Microcredit Summit #17MCSummitIn September, 875 people from 60 countries joined us at the 17th Microcredit Summit in Mexico, including high-level dignitaries like Secretary of Economy Ildefonso Guajardo Villarreal, Yucatán Governor Rolando Zapata Bello, and Nobel laureate Muhammad Yunus. The agenda focused on the theme “Generation Next: Innovations in Microfinance.”

“The participation of global leaders in combating poverty. The cases that inspired partnership work in a joint effort to build a better future for generations.”
— a participant on what was best about the Summit

In the lead up to the Summit, the Campaign led 6 policy makers from Ghana, Mozambique, and Malawi on a 12 day intensive field visit to sites in Ethiopia and Mexico for a deep dive into successful strategies for implementing social protection and livelihood development programs. The policy makers developed innovation plans for implementing throughout 2015 the lessons learned from their trip on returning home.

Throughout the Summit, more than 160 presenters participated in 7 plenaries, 35 workshops, and 6 full-day trainings; the materials, including videos and presentations, can be viewed online. Together, we built a vision for the next generation of financial services that reach everyone and that provide even the poorest and most remote with the tools and resources they need to complete the journey to sustainable livelihoods.

To get an overview of the 17th Microcredit Summit and key topic areas discussed, you can read our article in the forthcoming winter edition of the Journal for Social Business to learn more about the financial and social services that are building pathways out of poverty.


In June, we launched Resilience: State of the Microcredit Summit Campaign Report, 2014. The report emphasizes the key role that actors in the financial ecosystem can play in helping end extreme poverty by promoting the frameworks, systems, partnerships and strategies that deliver the types of products and services that help build resilience.

In July, we published Integrated Health and Microfinance in India, Volume II with Freedom from Hunger and the Indian Institute of Public Health-Gandhinagar. It highlights the policy measures in the Indian microfinance sector since 2011, documents best practices towards integrating health and microfinance, and proposes an agenda for moving forward to expand access to healthcare.

We also launched a joint project in July called “Healthy Mothers, Healthy Babies: Partnering to improve maternal health in the Philippines” with Freedom from Hunger and CARD, the largest MFI in the Philippines. Together, we aim to improve health knowledge and promote behavior change for more than 600,000 women by December 2015 and strengthen “MFIs for Health,” a collaboration of health and microfinance practitioners in the Philippines.

Pregnant woman attending the first community health fair of “Healthy Mothers, Healthy Babies” program in the Philippines

Join us for a fantastic 2015!

Looking Back at 2014, the Year of Resilience

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>>By Larry Reed, Director, Microcredit Summit Campaign

Larry visits a CARD group in Tacloban

Larry visits a CARD group in Tacloban whose members are rebuilding with the help of CARD’s quick and appropriate response to the Typhoon Yolanda disaster.

I started 2014 in Tacloban, Philippines, where one of the worst storms of this century, Typhoon Yolanda (or Haiyan outside the Philippines), made landfall. I visited Tacloban 75 days after the Typhoon hit to see how the storm affected the lives of microfinance clients, and what role financial services could play in helping them get back on their feet.

In the Central Business District only a few shops had dared to reopen. The dangling power lines and intermittent electricity made regular operations a challenge.

When I traveled to the parts of town where people lived in poverty, I found something much worse. Yolanda struck these low lying areas the hardest, hit them first with her 100 mph winds and then with the storm surge that followed in her wake, uprooting everything that was not permanently attached to the ground and then carrying it out to sea as the waters receded.

Homes and everything in them had been taken away, so people rebuilt with scrap lumber and sheets of plastic. They established homes and businesses again, selling daily necessities from the side of their rebuilt houses.

A mix of charity and financial services played a key role in helping people get back on their feet. Aid organizations employed people to help clean their neighborhoods and the rest of the city, giving them daily cash wages.

Microfinance institutions like CARD and ASKI got back into the city as soon as they could, providing rice and medicines for their clients’ immediate needs, while also paying insurance claims, providing access to savings and issuing emergency rebuilding loans long before any commercial banks restarted operations.

I came away with great admiration for the strength and resilience developed by those that live with constant vulnerability and an appreciation that the role that fast and appropriate financial services, delivered with a human touch, can have in catalyzing that energy to rapidly rebuild destroyed neighborhoods.

In August of this year, I visited another great example of resilience, this one over a decade in the making. Several government ministries in Ethiopia banded together under the leadership of the Prime Minister to design a program that would build resiliency in the land and the people that regularly suffered from drought. International aid organizations united behind this plan that now covers over 5 million people.

With support from the MasterCard Foundation, the Campaign hosted a trip for government ministers and leaders of government anti-poverty programs from Ghana, Mozambique, and Malawi to visit this Productive Safety Net Program (PNSP) in Ethiopia.

Participants of the Innovations in Social Protection project

Participants of the Innovations in Social Protection project on a field visit in Ethiopia.

Under the PNSP, people living in poverty who are not able to work (the elderly, the disabled, and mothers with young children) receive regular cash payments in exchange for maintaining regular health checkups and keeping their children in school.

Those who can work participate in local public works programs decided on by the leadership of each village. These projects can include expanding school facilities and building health clinics; although, most of them involve work that improves the productive capacity of the land.

With technical support from NGOs with highly trained professional on staff, the villagers work together to build dams, retention ponds, irrigation channels and hillside terraces. They receive the payment for their work in accounts set up in local banks or microfinance institutions, which also provide loans to help them expand businesses that profit from the land’s increase productivity.

Those who started the program with the greatest poverty participate in an ultra-poor graduation programs that provides them with an asset transfer, a savings account, business training, mentoring, and access to credit.

We visited at the end of the rainy season, and we could easily see the transformation that the PNSP had brought to the land and its people. We looked down a valley filled with tall green plants, with every hillside terraced and water flowing into dams and ponds that would provide irrigation after the rains stopped. Land that used to struggle to provide one crop now provided two or three crops a year.

Almost a quarter of the people who had started with this public assistance program now no longer needed it. I tried to imagine what it must feel like for the men and women working together on the hillside, digging a retention pond together, to look down the hill and see every part of the valley filled with green plants that would provide food for their animals and income for their livelihoods and to know that, not only were they and their children better off, but their entire community was better off because of the work they had done.

In September, we helped to assemble almost 900 people from 60 different countries in Merida, Mexico, for the 17th Microcredit Summit. As we gathered in the land of the ancient Maya who envisaged a new world coming into being at this time, we imagined a world where all people have access to financial products and services they need to protect against vulnerability and invest in opportunity.

Opening Ceremony - Prof Yunus_453x604

“Poor people didn’t create poverty. It’s the system that created the poverty. And, if we want to end poverty, we have to change the system.”

Muhammad Yunus issued the challenge for the Summit in his opening talk. “Poor people didn’t create poverty. It’s the system that created the poverty,” he told us. “And, if we want to end poverty, we have to change the system.”

During our 5 plenary sessions and 40 workshops, we heard from innovative thinkers and doers who are working to change the system. We discussed ideas and formed partnerships to begin or expand innovative programs that link conditional cash transfers to savings groups; extend agricultural value chains to small scale producers; provide health education, financing, and services in group meetings of microfinance clients; and employ digital technology that delivers payments and other financial services at a fraction of the cost of moving cash.

Together we made Commitments for what we would do to help extend financial services to all and help speed the end of extreme poverty. Then we closed by celebrating the real heroes of this work: the men and women who employ these services in order to earn and save enough to provide for their families and build a better future for their children.

I just completed my last trip of the year to the Inclusive Finance India Summit and saw a different type of resilience on display. Microfinance institutions in India have been devastated by the Andhra Pradesh crisis, where rapid growth in lending led to over-borrowing, client defaults, and a harsh response from the state government that halted collection efforts.

The sector is now growing rapidly again, enough that a few observers are worried that there may be some areas of overheating in the state of Karnataka, where many MFIs have moved.

Almost all the delegates I spoke with expressed excitement about new regulations announced by the Reserve Bank of India, which create a category of Small Finance Bank that can take deposits and make loans. The regulations also create a new category of Payments Bank to allow for institutions that make money from payment transaction, rather than from intermediating savings and credit.

A local community health volunteer trained and supervised by Bandhan, an Indian MFI, meets with members of a local self-help group and their families. (Photo courtesy of Johnson & Johnson)

A local community health volunteer trained and supervised by Bandhan, an Indian MFI, meets with members of a local self-help group and their families. (Photo courtesy of Johnson & Johnson)

In a dinner session I had with leaders from MFIs, I heard a lot of discussion about how they might transform their operations under these new regulations to provide a broader ranges of services to their clients. It will be interesting to watch this period of creative destruction that will take place in India as MFIs, mobile phone operators, and banks all adapt to the new regulations. I was glad to hear in our dinner the creativity and passion of many leaders to use these new opportunities to expand the services they provide to those living in poverty.

And now, as the year comes to a close, so does news of another Super Typhoon hitting the Philippines. This time, people knew about the power of storm surges and moved to higher ground before the storm struck, resulting in a much lower loss of life.

But still, thousands of people will go back to where they lived and find their houses and businesses destroyed. The fortunate ones will find an officer of a microfinance institution waiting for them, asking them what they need to get back on their feet.

On behalf of everyone at the Microcredit Summit Campaign, thank you for taking an active role in this global movement to bring appropriate financial services to those who struggle against poverty and vulnerability. It is our great honor and privilege to be working with you as we join with others to help bring an end to extreme poverty in our towns, our countries and our world.

May you be filled this holiday season with joy as you share the love of your family and reflect on the new financial system that we are creating together.

Sincerely,

Larry Reed

A sneak peek of “Resilience: The State of the Microcredit Summit Campaign Report, 2014”

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Join us for the launch event of the 2014 State of the Campaign Report on Thursday, June 19 (3-5 PM) at Busboys and Poets on 14th Street. Click here to learn more. RSVP now!


CARD Bank member clients in Tacloban meet with CARD accounts officer 75 days after typhoon Yolanda tore through the Philippines, destroying homes, robbing businesses, and taking lives.

The Center meeting in Tacloban of member clients and the CARD accounts officer started promptly at 8:00 AM. The roll call, though, showed that this meeting was not the same as most of those that came before. One man attended to represent his wife, who had recently died. Several absent members had left the city and would not return for a while. A few had not yet moved back to the barangay from the evacuation center and, due to the limited transportation, had trouble getting to the meeting on time.

Seventy-five days after typhoon Yolanda tore through the Philippines, destroying homes, robbing businesses, and taking lives, CARD’s member clients at the Center meeting were not interested in talking about their savings or loan payments. They spoke of fleeing their homes as water rushed in, able only to grab their children as they fled with just the clothes on their backs. They talked of neighbors who thought that their stronger cement homes would protect them—neighbors who perished when the storm surge rose too fast for them to get out.

They recounted harrowing hours huddled on a hillside, shivering in the rain and hiding behind rocks, as the 300 kilometer-per-hour winds felled trees and turned debris into missiles. They shared the empty feeling of returning to their neighborhood eight hours later and finding everything gone, with massive tanker ships driven onto the land where their houses had stood. And so began their scramble to survive, to find shelter and food, and to hope that outsiders would bring help soon. “We need rice and water (and yams),” they wrote in large letters in English on one of the stranded ships for the international aid organizations to see. Below it they wrote in their own dialect, “Don’t put trash here, this is our neighborhood.”

For a few days, they survived in an abandoned cement home in their neighborhood that still had a few rooms standing until aid agencies reached them and told them where evacuation centers were set up, offering food and cash-for-work programs. Some moved to these centers, while others went to family living far enough away to not be so badly affected by the storm.

They worked together cleaning their city, removing debris and dead bodies from the streets so that emergency workers could do their jobs. And, they used the relief supplies and the money they earned to restart their businesses, knowing that they would need money to start rebuilding. Those with food shared with those who had little. Those with shelter provided housing for those with none.

All of the member clients mentioned their surprise that their accounts officer had looked for them and found them. He visited the evacuation centers and the homes of relatives to locate each client. He explained when the Center meetings would begin again and where they could get the emergency rice, sardines, and vaccines that CARD provided to help them survive until they could start providing for themselves again. To those who had lost a spouse or children, he reviewed the simplified process for making claims, reminding them that CARD would maintain its 1-3-5 day payment-processing system[1] once it could bring in cash to make the disbursements.

A CARD Bank client

Slowly, they began reestablishing their businesses, buying a few extra items at inflated prices to sell in their sari-sari stores[2]. They purchased rice seed to replant their fields because Yolanda hit just as the last crop had been harvested and set to dry. Many had started to rebuild their homes, while trying to run their business on the side. CARD also joined other microfinance organizations to provide teams of medical volunteers, nurses, doctors, and therapists to help clients with the physical and psychological traumas they sustained from the storm.

Today’s discussion at the Center meeting focused on the “calamity loans” that CARD offered to its clients who survived Yolanda. The accounts officer carefully explained the terms: 6- or 12-month repayment periods with a 1-month grace allowance, lower interest rate, and weekly payments. The women immediately probed for more details.

What if they did not have enough to make full payments at the end of the grace period?
Partial payments would be accepted.

Would they be required to maintain a savings balance with this loan?
No.

How much could they get?
Up to PHP 10,000 (Philippine pesos), or USD 220.

Could they use the loan for their businesses or was it only for rebuilding their homes?
They could use it for anything they needed to get back on their feet, including their businesses.

The women huddled together, calculating what they could afford and what they could do with the money. “We like this loan,” they told the accounts officer, “and most of us will take it. But we think you should call it a rebuilding loan rather than a calamity loan. We don’t want to be treated like victims.”[3]

Later that afternoon, a line of people filled the lobby of the CARD offices and continued out the door, doubling back on itself three or four times until it reached the street. People waited patiently to receive their calamity loans. The doors of the office officially closed at 2:00 PM, but the staff let all those still in line outside come inside. After 9:00 PM, the staff made the last disbursement for the day and then began to quickly total the sums and balance the books, hoping to finish and get home by 10:00 PM.

In the 2013 State of the Campaign Report, we wrote about the vulnerability of people living in poverty. Living with little margin, they often suffer most when the economy fails, war erupts, or disaster strikes. Yet this experience with calamity can build resilience, as CARD’s clients in Tacloban demonstrate so clearly. A few weeks after the most devastating storm to ever hit land, the people there are rebuilding, stocking up their store inventories, selling to and buying from their neighbors, and sharing what little they have with those still in need. They pool the relief that has made it to them, turning it into assets they can use to reconstruct their community.

This response to Typhoon Yolanda also shows the transformational impact that a financial institution can have when it focuses first on getting clients back on their feet, rather than concentrating on recoveries and write-offs. CARD was the first financial institution to bring cash back into Tacloban. By injecting a mix of capital and care, they helped give their clients the hope, energy, and resources to get moving again. And CARD was not alone in this. Microfinance institutions (MFIs) in other parts of the Philippines provided similar supportive programs that included loan moratoriums, food and medical aid, quick insurance payouts, and new capital for rebuilding. This type of assistance has sped the recovery of Tacloban, where every neighborhood is busy with people working to rebuild their homes and businesses, while also taking care of everyday tasks, like washing their clothes and cooking their food. They suffered unimaginable losses, but working together, they have found the strength to get back on their feet and start over.


Note: For the purpose of this report and the Summit’s 19-year fulfillment campaign, any mention of “microcredit” refers to programs that provide credit for self-employment and other financial and business services (including savings and technical assistance) to very poor persons

[1] CARD’s 1-3-5 payment policy is a pledge that guarantees payment for a claim within one day of the presentation of the required documentation, with payment provided no later than the fifth day from when a claim was filed.

[2] A sari-sari store, from the Tagalog word meaning “variety,” is a convenience store found in the Philippines.

[3] All interview excerpts and direct quotes not cited in the text are from interviews carried out by the Microcredit Summit Campaign.

Photo credits: Larry Reed for the Microcredit Summit Campaign