III. Microcredit impact and effectiveness in securing livelihoods. Analyses of recipients' data, problems and potentials in selected disaster impact areas
1. The Impact of AIDMI’s Microinsurance Scheme Afat Vimo in Disaster-Affected Areas: Case Studies from Gujarat
AIDMI’s microinsurance scheme Afat Vimo was established in 2004 and provides insurance for poor households against 19 risks, among them are natural risks such as storms, cyclones, floods as well as human-made risks such as riots. Presently, Afat Vimo exists in several districts of India. Two questions were addressed; first, what is the impact of Afat Vimo on beneficiaries, second, is Afat Vimo a successful tool in mitigating disasters for poor people? To analyze this, several Afat Vimo clients were interviewed using a case study approach in three slum communities in Ahmedabad, Bhuj and Kheda. In order to identify the impact of Afat Vimo people were surveyed who had been suffering from a disaster and had received an insurance claim for their damage. For all the people interviewed, Afat Vimo made a positive impact on their lives. The beneficiaries were able to recover from the disasters and could rebuild their own livelihoods. All of them were able to help themselves and did not need to depend on humanitarian aid provided by others. Afat Vimo was effective in preventing the beneficiaries from falling even deeper into poverty. However, insurance alone was not sufficient and also other forms of coping with risks were necessary to overcome the impact of a disaster. A huge challenge Afat Vimo has to face is that many beneficiaries are illiterate and do not understand the functioning of insurance schemes and why one should pay when nothing happens. Therefore, it is crucial to provide enough information about how insurance works. Afat Vimo is an important disaster mitigation tool but it can only protect people from a few disasters. Illness, one of the major risks for poor people is not insured. Nevertheless, all the people who were interviewed were convinced of the benefit of the insurance and were feeling safer since they had been carrying insurance.
2. The Impact of AIDMI's Microcredit Schemes - Case Studies about Beneficiaries in Bhuj, Ahmedabad and Kheda
One important target of the eight UN millennium development goals (MDG) is to reduce extreme poverty by 2015. Microcredit and microfinance in general are strategies to achieve this target. All India Disaster Mitigation Institute has several programs, which are based on microfinance elements. AIDMI's Revolving Fund in Bhuj and Kheda and Building Peace and Protection program in Ahmedabad provide small loans to poor people collateral-free and without interest rates. The loans aim at economic recovery and economic development and improving the beneficiaries' livelihood situation.
The report about the impacts of these AIDMI microcredit schemes is based on several case studies. The selected cases represent various communities in Bhuj, Ahmedabad and Kheda. The cities were affected by three different disasters - earthquakes, riots and floods. Nine case studies are included and discussed in the report. The following conclusions are reached: In general the microcredit schemes of AIDMI are an efficient and effective tool, not only to reduce poverty, but also to mitigate different kinds of disasters. The income and assets of all beneficiaries doubled or even tripled since they started participating. The beneficiaries mentioned an increase in social status and some of them started to send their children to school after beginning to get involved in the micro credit schemes. Most beneficiaries have no access to formal loans, apart from AIDMI's microcredit scheme. Even if they have access to other kinds of loans, the interest rates are generally very high (up to 50 percent). In combination with micro insurance, microcredit is highly sustainable, because the investment will not be lost again through a disaster.