THE people who are hit hard in areas, especially along the coast, that are prone to natural disasters such as cyclones and flooding often resort to traditional moneylenders, microcredit institutions and some money-lending non-governmental organisations for money at high interest in their efforts to get back to normal life, but only to be pushed further into the vicious circle of debt. New Age in a report published on Saturday referred to one such man of Kuakata in Patuakhali who lost his house, goat farm and everything that he had to Cyclone Sidr when it pounded the south-eastern coast of Bangladesh on November 15, 2007. Like thousand others in the district and also in Barguna and Jhalakati, he borrowed money from microcredit institutions to rebuild his house and buy other articles. But about 11 years and a half later, the man, who received Tk 5,000 in emergency help from the government that time, is still trapped in debt, in a much worse condition, as he had to sell a half of his land for his failure to run the family of five after repaying the weekly instalments to four microcredit institutions and is yet short of coming clear of the loans.
Cases of other people like him are similar. Yet they resort to moneylenders, microcredit institutions and money-lending non-governmental organisations. Even at normal times, the landless and small-time farmers borrow money from such individuals and institutions to buy seeds and to till and irrigate the cropland. They borrow money from the moneylenders, who are the biggest source, at 24 per cent interest and from microcredit institutions and non-governmental organisations, which are the second biggest source, at 15 per cent interest. Studies show that 7 per cent of such people were forced to either sell or mortgage their assets to repay the loans in 2016–2016 and 5 per cent of the borrowers reduced their food consumption. A study of the International Institute for Environment and Development and London-based Kingston University, which was released in March, shows that the affected families spent $3 billion in the 2016 financial year on post-disaster reconstruction. The study says that the average disaster-related expenditure was Tk 5,509 a family while the government spent Tk 3,092 and donors spent only Tk 168 on a household. The haplessness of the people in the disaster-prone areas are said to have resulted from no access of these people to formal banking system loans. Some isolated efforts involving soft loans are reported to have been there but they all failed to come to be of any significant help and they ceased to exist.
Although the disaster management department says that the government stands by such people as long as they need, the reality suggests something else, which forces vulnerable and marginalised people to resort to informal financing at high interest. The government, in such a situation, must afford these people an easy access to financing in the formal sector, at least at and around the time of natural disasters, so that they can get back to normal life and do not go down further deep into poverty. The government at the same time must also discipline the traditional and non-governmental money lending system.
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