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COMMUNITY RESILIENCE
THROUGH MICROFINANCE
Project name:
44934-020 Regional: Building Community Resilience through Microfinance in Lagging Peri-Urban Settlements
Year of approval:
2019
Funding:
Urban Climate Change Resilience Trust Fund (UCCRTF)
Modality:
Grant, Guarantees
Department:
PSOD, PSFI
Sector:
Finance
Team :
Anshukant Taneja Genevieve Abel Melissa Escurel Joy Bailey Virinder Sharma
CHALLENGES
Climate change and natural disasters disproportionately impact the poor
Limited financing for construction of disaster-resilient housing
Microfinance Institutions (MFIs)
Unable to o er long-term loans of 3 to 4 years improving the living conditions of the urban poor
MFIs are funded by short-term loans from commercial banks, typically 1 to 2 years
MFIs’ inability to design, develop, and scale-up a long-term loan product
SOLUTION
MFIs’ limited capacity to help customers with the technical inputs for home-improvements
An innovative use of TA funds addresses the problem by
Providing
an additional first-loss guarantee on longer-term loans that commercial banks will extend to MFIs
On-lend for home improvement, water and sanitation end-uses
Extending
training, capacity building, and execution support for MFIs
Scale up their resources for delivering such loans to their micro-borrowers
NEXT STEPS
ADB is finalizing the terms of engagement with its technical partner
The first phase of the work will be taken up in the vulnerable peri-urban settlements in 3 Developing Member Countries (DMCs), and followed by additional coverage in other DMCs