Tsunami Files #8: Small Loans, Big Rewards

Mrs. Valarmathy purchased this autorickshaw with a micro-credit loan. Photo: Simon Chambers

It was a beautiful sunny afternoon in Thirumalpuram village in north-eastern Sri Lanka.  About thirty women and men and children from the village greeted me as I arrived with several staff from the Organization for Eelam Refugee Relief (OfERR).  OfERR staff have been working with the residents of Thirumalpuram since 2008 as part of the response to the 2004 tsunami.

“Other organizations provided land and built houses,” explained Mrs. Gowry, the OfERR staff member who was translating for me.  “OfERR came in 2008 and helped to cement the structure of the civil society.”  When OfERR began to work in Thirumalpuram, they started a series of Self-Help Groups (SHGs) of 10-20 people who met together, put money into savings, and then loaned that money out to members of the group.  OfERR seeded these groups with two initial pots of 50,000 rupees (about $500) as well as a cow and a calf per member of the groups.

Initial loans were small and focused on income generation.  One woman started a grocery shop.  Another used her loan to cultivate a rice paddy to provide food and income for her family.  These ‘micro-credit’ loans were repaid along with 2% interest.  Group members also save 50 rupees per month, and many have now saved over 2000 rupees.
The SHGs are now on their third round of loans, and have enabled families to borrow larger sums for expanding their income.  Mrs. Valarmathy used her savings and a loan in the third round to purchase an autorickshaw.  Her husband now drives ten children to school each day, earning over 10,000 rupees a month through this endeavor.

Micro-credit has been used after the tsunami by OfERR and other PWRDF partners to enable those affected by the disaster to rebuild their lives and livelihoods.

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