Mitigating Risks

Since NETZ and its partners target particularly very vulnerable families, measures of risk mitigation are introduced which ensure that the targeted families do not lose their productive capital and income sources when facing natural disasters or situations of distress. In NETZ’s experience, such protective measures do not only guarantee on a technical level that the families will not fall back into extreme poverty when unforeseen events occur, but also provide an important psychological assurance and sense of stability for them, which ultimately impacts their motivation and achievements within the project.

An important component in this regard is the introduction of individual savings. The project participants save small amounts on a weekly basis (typically between 5 and 20 EUR-Cents per week) which are deposited in group bank accounts. In situations of emergency or distress they can draw on these reserves and are not forced to sell their productive assets. Similarly, group members practice the traditional Bengali custom of mushti chal (“handful of rice”) where small amounts of rice are set aside every day to gradually build up substantial reserves (see picture below). These reserves are used for group members who have not been able to increase their income to a sustainable level. As a further risk mitigation measure, a security fund is installed which provides compensation for the participants in case of loss of their assets due to animal diseases or natural disasters.

In Bangladesh, where natural disasters such as floods are a common occurrence, it is of utmost importance to focus on disaster preparedness in the affected areas. This is also an integral part of the risk mitigation strategy of the project and emphasized in trainings on group level.