Ecuador 2016 Open data

Response Plan after earthquake in Ecuador

Summary

For the reactivation of MFI’s operations to mitigate earthquake’s impact

An earthquake of 7.8 degrees on the Richter scale occurred in Ecuador, with serious consequences on the west coast. Thousands of microentrepreneurs,have loss family members, homes and bussines. For the microfinance institutions (MFIs) active in the area, the damage has also been huge. This project aims to help MFIs to reactivate its operations while mitigating the impact of the earthquake.

Goals

  • MFIs supported with a disaster’s recovery plan

Background

On 16 April, an earthquake of 7.8 degrees on the Richter scale occurred in Ecuador, with serious consequences on the west coast. The affected areas have a high percentage of poverty. Thousands of microentrepreneurs,have loss homes (many of them part of their economic activity) and some markets are destroyed or have been looted after the disaster leaving thousands microentrepreneurs without merchandise to continue their economic activities.
For the microfinance institutions active in the area, the damage has also been huge. Some of them, lost staff members; most of them lost several offices in the area. In addition is expected that the delinquency rates will increase and the withdrawal of deposits too. This will generate them serious liquidity problems since they won’t be able to repay financiers (national and international).

One of our clients, ESPOIR, has been badly damaged since 45% of their portfolio (50% of its clients) and 30% of its staff are in the affected areas.

Initial situation

Red de Financieras de Desarrollo (RFD) is a network of Ecuadorian MFIs, established in 2000; as a non-profit organization. RFD’s work, focuses on facilitating the access to microfinance services to the most vulnerable rural people.
RFD works with a total of 50 member institutions (among which include: Credit Unions , NGO of Microfinance, Banks specialized in Microfinance, Local Networks), serving 1,250,000 micro entrepreneurs and small producers nationwide. This represents about 55% of existing micro entrepreneurs in Ecuador.

Goals

The success of MFIs in post-disaster situations is determined by its ability to adapt its products to the changing needs of its clients. Disaster Response’s Plans are crucial but not easy to achieve, since the MFI self is traumatized by the disaster.
By running this project togheter with the Red de Financieras de Desarrollo (RFD), we will support one MFI (Cordaid’s badly affected client) to finalize its plan and this experience will be shared with at least other 10 MFIs members of the network.

Goals

  • MFIs supported with a disaster’s recovery plan

Target group

10 MFIs active in the affected area will benefit of this project

Project plan

Together with the RFD , we are running a project aimed to:
-Design a strategy that enables affected MFIs in the area, to reactivate its lending and borrowing operations with its partners and customers, while mitigating the impact created by the earthquake.
In order to run this project, a highly experienced consultant has been contacted (will be hired by the RFD). The consultant will support only ESPOIR (for the coming 10 weeks) but the results and lessons learned will be shared with all members of the network (especially with other 2 badly affected Cooperatives active in the area).
The specific objectives of the project are:
– Design and systematize at least one institutional plan post-earthquake recovery and disaster response manual. These 2 documents will guide the actions of the IMF in the post-earthquake phase. – Implement the recovery plan institutional post-earthquake of ESPOIR as a pilot (monitored by the consultant)
– Prepare and publish a guide to develop a ‘Recovery Plan after Disaster’ which will be presented and discussed with all affected members of the network (10 local MFIs) in a workshop

Sustainability

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