The long path to recoveryThe government urgently needs contingency credit for humanitarian or livelihood support when disaster occurs
Around 8 million survivors of the massive earthquake that struck Nepal in April 2015 are still struggling to rebuild their lives. In fact, new research shows that incomes of some quake survivors are only half of what they earned before the disaster, and nearly half of them haven’t started rebuilding their homes.
This is largely due to a lack of support systems to help households restore livelihoods, revive and diversify incomes, and rebuild their houses. Microcredit can be a useful support, but microcredit alone is not enough. Skills training, business development services, and marketing support are also needed to expedite recovery and restore incomes. There is also an urgent need to develop financing instruments such as disaster insurance ahead of future disasters.
The need for more concerted action is pressing, as the new research demonstrates. It is based on interviews conducted last year with 5,430 members of Small Farmers Cooperatives in the earthquake-affected Dhading, Nuwakot and Rasuwa districts.
The interviews were part of the Disaster Risk Reduction and Livelihood Restoration for Earthquake-Affected Communities Project, which has provided approximately Rs50,000 in livelihood restoration microcredit per household to 15,000 earthquake-affected families. It is supported by the Asian Development Bank (ADB) and financed by the Japan Fund for Poverty Reduction (JFPR).
The houses of nearly all those interviewed were either destroyed or damaged. Many households lost livestock and animals, food grains and crops, which significantly reduced their incomes. We found that each affected household in the three districts lost an average of Rs752,900 in terms of house value, livestock, grain and crops, as well as other property. Damage to houses was by far the biggest loss.
As of November 2017, all surveyed households had received government compensation averaging Rs75,000, including Rs15,000 in immediate relief, Rs10,000 for winter clothing, and Rs50,000 for house reconstruction. Other agencies such as international non-government organisations delivered in-kind support worth Rs14,700 on average to each affected household.
Lack of necessary resources
Nearly half (48 percent) of the surveyed households had not started rebuilding their houses, while just 25 percent had completed construction. A lack of masons trained in disaster-resilient construction methods is the main reason for the slow rebuilding. It was also found that affected households are unwilling to rebuild their houses in the original location, preferring more convenient spots such as main roads or district headquarters. However, building in these areas costs more than the households can afford.
Microcredit provided under the ADB/JFPR Project was invested in various income-generating activities including goat farming, buffalo raising, vegetable farming and small businesses. These investments generated household incomes of Rs4,000, Rs6,000 and Rs5,000 per month in Dhading, Nuwakot and Rasuwa, respectively.
Still, income levels at affected households remain considerably lower than before the earthquake. The income gap is highest in Dhading at approximately Rs9,000 per month, followed by Nuwakot and Rasuwa with gaps of around Rs2,000.
Interviews with affected households that did not receive microcredit showed their monthly income was around Rs3,000. This indicates that microcredit helped households to recover faster than households that did not receive this support.
Resiliency helped, but contingency plans needed
Households adopted impressive coping skills, using limited resources to restart their livelihoods despite huge losses. While waiting for government compensation, affected households gathered funding from sources including friends and relatives to invest in income-earning activities such as goat farming. But for most, systemic and concerted support for livelihood restoration is lacking.
The most urgent priority is to rebuild dwellings. A lack of masons and labourers skilled in disaster-resilient construction is leaving many families without safe and secure living environments. Further support to meet these needs is highly recommended.
Households also need help to gain access to reliable and affordable finance. Financial support should be combined with relevant skills and business training in fields such as accounting, trading and marketing. Microcredit combined with training can diversify household income and reduce vulnerability to disasters.
We also need to remember that, unfortunately, disaster might strike again. Households need to be prepared for the financial shock. Disaster insurance can protect households after a disaster by ensuring they have enough funds to buy essential items and services like food, health and education.
There’s also an urgent need for budgetary reserve or contingency credit that the government can draw upon for humanitarian or livelihood support when disaster occurs. The government can put aside a certain portion of the budget for disaster contingency. International development partners, such as ADB, have disaster contingent credit facilities to fund such post-disaster financial needs.
Most importantly, the government and development partners should work in close coordination to deliver the most crucial support that households need to rebuild their houses and livelihoods.
Dhakal and Simkhada are independent consultants; Ozaki is a specialist at ADB’s South Asia Department