For MFIs, the future is ‘go green,’ or ‘go broke’

Friday, October 23, 2015

Northeast Brazil boasts some of the world’s most beautiful beaches, ribbons of white sand tracing a region known as “a terra da felicidade” — the land of happiness; but venture inland and a harsh, semi-arid landscape with some of the country’s worst poverty emerges.

Geographer Friedrich W. Freise, in a survey of the region, painted a bleak picture: “The principle disintegrating agent is solar heat, which is operative many hours daily from a cloudless sky. The cracking and splintering effect … is great, and the surface is therefore widely strewn with sand and dust.”

Freise made these observations in 1938 and he commented — rather hopelessly — on the prospects for reforestation to restore natural watersheds. “There is strong evidence that man is utterly powerless here,” he wrote.

But today, “green growth” advocates are trying to prove Freise wrong, and they’re relying in part on a tool he could not have referenced in 1938: microfinance.

Microloans are a vital tool for farmers and rural entrepreneurs to upgrade their businesses or invest in the next growing season. But what happens to microfinance models when the next growing season never materializes? Or the one after that? Microfinance institutions can help answer those questions and can offer a key bridge to climate change adaptation and mitigation strategies. And, according to some researchers, they better, if microlenders — and their clients — are going to weather the climate change era.


Source: Devex (link opens in a new window)

climate change, microfinance