Community Resilience to Disasters through Micro-Loan Supported Risk Management Funds

Community Resilience to Disasters through Micro-Loan Supported Risk Management Funds
A family head removing available construction materials from flood affected house in Temurmalik district, March 2012, Photo taken by REACT Rapid Response Team

Tajikistan constantly experiences disasters. In many cases, these disasters affect a relatively small number of households. However, the high rate of rural poverty together with limited local government resources, mean even small disasters have correspondingly large impacts on community lives and livelihoods. Tajik households are often affected by largely avoidable disasters, where the lack of funds to manage the hazards is a significant contributory factor to the occurrence of these disasters.


  • 3 microloan institutions capitalized on the one hand give favorable loans to lenders and on the other hand use the majority of the loan income to capitalize a District-level Disaster Risk Reduction Fund.
  • 93,000 people are expected to be covered by the Disaster Risk Reduction Funds.
  • US$ 6,563, that were allocated by the local Council to clean a channel, saved an estimated US$ 1,500,000, by preventing damage from a recent mud flow.

Recognizing the inability of local governments and local populations to assemble sufficient funding for local risk management, UNDP in Tajikistan developed a mechanism where income from micro-loans are used to fund community-managed risk management funds. To initiate this effort, UNDP capitalized three micro-loan institutions, working in Kulyab, Khamadoni, Ayni and Hissar Districts, to make loans through the institutions’ normal lending process. These loans focus on improving local economic development and the resilience of beneficiary households. The loans issued cover different sectors such as agriculture, gardening, private entrepreneurship, livestock and many more.

In September 2012, Mrs. Dustova Ghunchagul, a 56 year old resident of Mirzoali Vaysov Jamoat of Vose district has received a loan from UNDP supported MLI in Kulyab district in the amount of US $ 6000. “Due to comparatively low interest rates received from MLI “Rushdi Vose” I was able to repair my tractor and my son is busy cultivating agricultural lands for private farmers. This is helping us both, my son earning more and I am fully able to pay back my loans”, says Mrs. Ghunchagul. She also procured a small brick producing machine for the production of cement bricks for the market.

20% of the net loan income remains with the micro-loan institutions for their management and operational use. The remaining 80% capitalizes a District-level Disaster Risk Reduction Fund. Total funding for risk reduction and response ranges from US$ 100,000 to US$ 125,000 per District. A total of 93,000 people are expected to be covered by the four Disaster Risk Reduction Funds. To make risk management more effective Disaster Risk Reduction Administrative Councils at the district level were put in charge to administer the Disaster Risk Reduction Funds.

On 30 March 2013 heavy rains and hail led to mudflows that heavily affected Yangiyul, Chubek, Choilobkamar and Tughul villages, Hamadoni District. Ninety-eight houses were destroyed, over 600 hectares of agricultural land was severely affected and more than 300 livestock perished. The local Disaster Risk Reduction Administrative Council quickly met and allocated $US 2,900 from the Disaster Risk Reduction Fund for 2,200 liters of fuel to be used by locally available heavy equipment to clear drainage channels, reducing the impact of the mud flows and facilitating recovery.

But a more significant aspect of the mud flows was the damage not done. The local Council had allocated US$ 6,653 to the village of Hayoti Nav to clear and upgrade 1.5 km of a mud flow diversion channel in late 2012. While flows affected neighboring villages, the cleared channel moved flows through Hayoti Nav with no damage. Broadly speaking, the cleaning of the channel contributed to protecting 250 households, valued at $US 1,250,000, and 330 hectares of agricultural land, valued at $US 330,000, a significant return on investment. “We never believed that US$ 6,563 could save $ US 1,500,000 until the recent disaster happened”, said Mr. Jumakhon Kholmadov, Chairman of the Jamoat Chubek.

The use of profits from micro-loans is a new approach to funding local disaster risk management. These funds are derived from the communities which benefit from the resulting risk management efforts. The local generation and management of these funds, if done in a transparent manner, should ensure that real and immediate relief and risk reduction needs are met at the community level without bureaucratic delays. While microloan-funded risk management will never be sufficient to address major disasters or capital-intensive risk reduction, the funds can address small-scale disaster relief needs and support local risk reduction. Based on pilot phase results UNDP is considering an expansion of microloan disaster risk management funding to other parts of Tajikistan.

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