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Everyone in the world is grappling with climate change, but for those on the front lines, it’s a daily struggle for survival. In this episode, we travel to Bangladesh to speak with Nurul and Sita, two farmers who are fighting to protect their homes and livelihoods from relentless storms, flooding, and rising sea levels. Nurul and Sita are both dealing with climate change, but only one has the help of microfinance--and that’s made quite a difference.
How do people living in poverty prepare for, cope with, and adapt to climate shocks, and what role do financial services—like loans, savings and insurance—play in supporting them? Join us as we share findings from research by CGAP, MicroSave and Decodis to explore these questions and uncover the potential of inclusive finance in bringing hope, resilience, and lasting change to the communities hardest hit by our warming world.
This is Season 2, Episode 1 of CGAP's podcast, Inclusive Finance Frontiers.
Featured Voices
- Claudia McKay, Green and Resilient Outcomes Lead, CGAP
- Graham Wright, Founder and Group Managing Director, MicroSave
- Nurul, a farmer from Bangladesh
- Sita, a farmer from Bangladesh
This episode incorporates news reports from Global News, “Cyclone Remal leaves several dead across Bangladesh and India” and the Associated Press, “Hundreds of thousands without power in Bangladesh after cyclone causes severe flooding”.
Listen and subscribe for free on your favorite platform. To learn more, visit www.cgap.org. If you have any feedback, connect with us at podcast@cgap.org.
Special thanks to Peter Zetterli for helping shape this episode.
Transcript
Claudia McKay: Climate change affects households in profound ways. It's really not just about weathering a storm, it's coping with its lasting impacts. Households in Bangladesh struggled with prolonged flooding for weeks or even months after cyclone Amphan. And globally, we see that many people resort to short-term fixes, like skipping meals or pulling kids out of school just to get by. And that's survival, but in the long-term, it's going to lead to even greater vulnerability.
Lamis Daoud: Climate change… climate crisis… climate emergency. Whatever terminology you’ve heard or use yourself, there’s no question that the earth’s climate is getting warmer… and faster than ever.
According to the United Nations, the effects of climate change on developing nations mean more vector-borne diseases like malaria, and severe weather events like flooding in some areas, and drought and water scarcity in others.
Hello and welcome to this episode of inclusive finance frontiers: a podcast by CGAP. I’m your Lamis Daoud.
Right now, most of the funding and attention of climate action is focused on mitigation to reduce or prevent greenhouse gas emissions. Think solar or wind power buildouts. And while that work is critically important, it can really overshadow funding for long-term adaptation initiatives that are vital for communities who are on the front lines of the climate crisis. People who are already facing the adverse effects of climate change.
On the whole, adaptation projects that do exist are large projects… like investments in climate resilient infrastructure. But behind those images of climate disasters that you see on the news, there are real families and communities who are the least equipped to respond to climate change and yet need to cope with its consequences. How are communities on the front lines with limited access to resources adapting? And what role do financial services like loans, savings, and insurance play as part of this adaptation?
We wanted to find out... In order to do this, CGAP commissioned research to understand the realities of low-income households in the face of severe climate-related events.
Claudia McKay is a lead financial sector specialist at CGAP. She works on how inclusive financial services—like savings, loans, and insurance—can equip those in poverty, especially women, to build resilience against the challenges of climate change.
She told us about the goals of this research.
Claudia McKay: CGAP is working to build financial systems that support the climate resilience of people in poverty and our goal is that they not only survive climate shocks, but also see some of the new opportunities that climate change can present, such as participating in carbon markets. As we developed our work on climate, we realized that the global dialogue around climate action usually does not feature the voices of those most impacted. So CGAP commissioned Decodis and MSC to conduct research to really delve into the lives of lives in Nigeria, Bangladesh that are facing extreme climate events. The research focused on the real-life experiences of people in these countries and aims to look at the human stories behind climate challenges and try to understand the role that financial services may or may not be playing currently. These insights are really directly informing our work right now to create financial products and systems that work better for these communities.
Lamis Daoud: MicroSave consulting – or MSC– is one of the two companies that worked on this research. Together with Decodis, MSC met with families in affected areas to find out, firsthand, about what climate disasters these families experienced over the years… and how they managed to cope with the consequences.
Graham Wright is MSC’s group managing director. We spoke to him about what they found in Bangladesh through their conversations with households affected by severe climate events.
Graham Wright: Climate events are complex. In Bangladesh with the cyclone, you have several stages. First of all, the destruction caused by the winds and the tidal surge. Then you have the residual flooding that stays for up to two months or so on occasions. And then the longer-term salinization of the soil. In Bihar, drought was followed by torrential rainfall, which was then followed by drought again. And this means, as one farmer said to us, farming is now a big gamble.
The second key finding I think was the heartbreaking, relentless erosion of the revenue and asset base of affected households. These financial losses impair their ability to invest in appropriate housing or flood resilient shelters for livestock, to buy costly flood resilient seeds or to repay their debt obligation to formal and informal creditors on time.
Lamis Daoud: If these situations sound dire, it’s because they really are.
One farmer and daily worker they spoke to in Bangladesh talked about the climate events he’s been through… and some of the things he’s had to do to survive.
Nurul is 40 years old and supporting his family of eight, including his wife, their three sons and three daughters-in-law. Without any formal education, his life revolves around making ends meet on a daily basis, which has become much more difficult with the climate crisis.
He’s spent his years fishing, farming, raising livestock, and when storms come in and ruin his crops, he gets to work at a brick-making factory or operating milling machines. He told us about how he’s seen the weather change over the years.
Nurul (with voiceover): It increased. Everything increased. Heat is more now. Cold has decreased since previous times. It’s happening more. Previously, I have seen storms happening after every 3-5 years but now it happens every year once or twice. Damages like the crops have to be reaped every year.
Now, we can see that only half the crops can be reaped, the rest are damaged. This is happening because of insects, heavy rainfall, and entrance of salt water due to breaking down of dams.
Lamis Daoud: The effects are drastic, with increasing frequency.
Beyond the heavy toll on human lives, cyclones, flooding and rising riverbanks mean destroyed homes and devastated livelihoods… they also mean increased salinization, the process by which salt infiltrates agricultural land. Salinization not only threatens the drinking water supplies of people in coastal communities, but it also hinders crop growth.
Nurul: Dam breaks down every year. Last year, last to last year. Before that year also. Every year dam breaks down.
Houses fell apart. During floods you can see that the road breaks, salty water comes. Salty water. Every time it’s salty water. Salinity increased due to water logging, so we all village dwellers made a protective barrier in the sides of road and field, so that the water does not penetrate in.
Lamis Daoud: But handmade barriers are no match for mother nature…
Nurul: The salinity of the soil increased, and agricultural land was destroyed. Paddy is destroyed due to heavy rainfall every year.
Many problems come during rain. Every year when paddy is sown one storm occurs. Roads get destroyed. Again, when paddy is to be harvested, another flood occurs. Roads get destroyed. Many hardships are there.
The destruction is immense. Due to high tides, rain, the ground gets soft. We all again restore everything. After the flood occurred, insects attacked the paddy and destroyed it completely.
Lamis Daoud: Nurul told us that it’s become so difficult that he stopped rice farming altogether. When asked if there was anything that could be done, he seemed resigned to the fact that help would never come…
Restoring the land after storms often meant he had to turn to family members, ngos and loan sharks to survive another day. After years of struggling… the best decision he could make for his family was to quit farming.
But what if there were solutions to help him when he was in need?
Graham explained that different climate events, and the phases of those events, require different financial services. He broke them down into three distinct phases: coping… recovery… then adaptation, emphasizing the importance of access to financial services throughout each of these stages.
Graham Wright: During the coping stage, when flood waters remain high, rapid access to cash is essential for households to cope with climate impacts and protect their assets from distressed sale. Typically in this phase affected people need fresh water, food, animal fodder, and medical supplies. And the amounts required are not very large, but they are urgent. Easily accessible savings were typically the most valuable for households at this coping stage.
Similarly, informal borrowing from family and friends helped many people in the coping phase. In Bangladesh and India, immediately after the climate event, many affected people also borrowed from local moneylenders who could offer money faster than formal lenders without collateral or documentation, and in cash.
As for the adaptation stage, it often entails capital expenditure to raise and strengthen the housing, protect low-lying land, put in irrigation systems, build shrimp farms, et cetera. So lack of capital can often force people into maladaptive responses that will serve them poorly over time.
Lamis Daoud: Bangladesh is a country that’s extremely vulnerable to disasters and climate change, such as tropical cyclones, floods, drought and landslides. According to the 2023 global climate risk index, it’s ranked ninth on the list of the world’s most extreme disaster-risk prone countries. by 2050, Bangladesh will lose 17% of its territory due to rising sea levels, which will result in the loss of 30% of the country's agricultural land.
And like so many other places in the world, if you’re living in poverty and a disaster strikes, you find yourself in survival-mode, rather than looking ahead and planning for the future. Adaptation becomes a luxury.
Claudia explains how families there often deal with the coping phase of a disaster.
Claudia McKay: Climate change affects households in profound ways. It's really not just about weathering a storm, it's about coping with its lasting impacts. Households in Bangladesh struggled with prolonged flooding for weeks or even months after cyclone Amphan. And globally, we see that many people resort to short-term fixes, like skipping meals or pulling kids out of school just to get by. And that's survival, but in the long-term, it's going to lead to even greater vulnerability.
Lamis Daoud: So then… how can communities build resilience to climate-related events?
It takes multiple strategies, Claudia tells us. Principally, families need diversified incomes and access to cash… quickly, and when they need it most.
Claudia McKay: By diversifying income, families aren't putting all their eggs in one basket, which is crucial when unpredictable climate events can wipe out a single income stream at any moment.
And flexible financial services allow families to respond really swiftly to crises, whether it's by borrowing money to cover immediate needs or making sure that there is easy access to savings when they need it. We see that globally, women do play an important role in the resilience, not only of their households, but also their communities. [00:13:00] so we see that women savings groups play an important role in their community going well beyond financial transactions. And there are examples of savings groups mobilizing funds for critical needs, like food and medicine after a disaster, and also banding together to strengthen their collective bargaining power.
Lamis Daoud: Take the story of Sita… another smallholder farmer that MicroSave consulting and Decodis spoke with. Like Nurul, she built her life on farming in Bangladesh. Sita had some education, attending school but only until she could learn how to write her own name. And like Nurul, she and her husband work to support their multigenerational, extended family living under the same roof, often struggling to get by.
The fifty-six-year-old shared similar stories of cyclones, flooding and day-by-day survival after the storms.
Sita: Last year, our house entirely collapsed during the storm. Nothing remained. Can you believe it? The year before last, there was nothing left on our land; the water submerged everything!
The most pernicious of them all is the storms. But floods are also very disastrous. Last year, the flood spoiled everything here.
After Aila, we couldn’t grow anything on our land for two years consecutively. I used to wander from door to door for water. People would send me off and didn't let us collect even drinking water. So, I filled up big buckets with rainwater to drink.
Lamis Daoud: Women smallholder farmers like Sita make up almost 60 percent of the agricultural workforce in Bangladesh, according to the Bangladesh bureau of statistics. At the same time, we know that women smallholders tend to face unique challenges.
Claudia McKay: So it was really important to CGAP to make sure that women's voices were heard in this research. Since women are the backbone of rural economies where their work is vital, but undervalued. And usually, in addition, they're also managing household food security and contributing to community resources. But rural women really face unique challenges in adapting to climate change. Limiting gender norms mean that they don't get the same access to information and resources as men do. Globally, women only own about 15% of land, so it's really difficult for them to use that land as collateral and get the same financial backing that men do, which can hold them back in farming and in other income generating activities.
Lamis Daoud: And these challenges are more pronounced when trying to recover from a climate shock.
Sita: I suffered the most. It’s because men get paid more than women. They are male; they can go outside, have more power to work hard, and own their land. But I have to work on others' land. If he [my husband] gets 500 taka per day, I get paid 300 taka.
Lamis Daoud: What also sets the experiences of Sita and Nurul apart is that Sita hasn’t quit farming yet. Why? She says there isn’t other work she can do so she’s been finding ways to adapt.
In Bangladesh, women are more often customers of microfinance institutions and members of the many small local cooperatives that exist. And so they're able to borrow from these institutions more easily than men.
She has also been resorting to different farming solutions and learning about different farming practices.
Sita: Once ‘Aila’ made all the land salty. After that, we have to use sugar on land, or else the paddy gets fixed. And we used to grow cabbages. Now there are higher-quality seeds available. Better seeds. We get those from organizations. They provided us with seeds during the COVID period. People from different organizations are teaching us the proper way to cultivate. They provide it free for a year.
Lamis Daoud: But it hasn’t been the solution to everything. Loans play a major role in helping people prepare for and adapt to climate change, in addition to savings, insurance, remittances, and social protection payments. But if risks aren’t managed, access to loans can cause stress.
Sita: People coming from NGOs always tell us to do this or do that. Then the NGOs often lend money. We have had issues with NGOs regarding the money. We have a little earning and more expense. You have to pay back every penny. Whether you die or not, whether your parents die, still you have to pay for it.
Lamis Daoud: And even if farmers were able to tap into loans or even access better seeds, sugar to help with the soil salinity problem, more fertilizer for the crops… all of it is maladaptation. Short-term survival tactics that do not build resilience in the future. The crucial missing piece of this puzzle is any ability to plan for the long term. Graham explains.
Graham Wright: In many respects, the most typical long-term planning measure was migration of some or all of the household members away from affected areas. There is a clear need for locally led adaptation at scale. And to do this, we will probably need to deploy digital technologies to inform planning, assist with implementation, and facilitate the monitoring of these locally led adaptations. And also we will need to stretch the pitifully limited multilateral climate funds by using blended finance instruments to de-risk and crowd-in private capital. And I believe that there's an important role that MFIs can play both to facilitate locally led adaptation planning and also to deliver de-risked loans and indeed possibly insurance to these locally affected communities.
Lamis Daoud: Sita has a glimmer of hope for the future if that future includes access to better seeds, financial services, and information about climate resistant agriculture.
Sita: Yes, it is a good thing. It will be good. We may live a happy life, that’s all.
Lamis Daoud: Paired with concrete solutions for the future… that hope for a happy, sustainable life might actually be able to come to fruition. Claudia believes that inclusive finance is a necessary component to make it a reality.
Claudia McKay: We need to encourage more examples of locally led adaptation, looking at ways households and communities respond based on what they know and what they have. So for example, many people we spoke with in Bangladesh were very active in their savings groups, and these are already about more than money, and some go even further in playing a really important role in community adaptation [00:15:00] strategies. Pulling funds for collective resources like water pumps, sharing, farming advice, even helping each other negotiate better market prices are bargaining collectively. That's the kind of adaptation in action that we need to see and move towards.
Inclusive finance is not just a complement to climate strategies, it is a cornerstone. CGAP believes that inclusive finance is necessary to equip vulnerable populations to not only survive climate adversities, but to really adapt to them.
Lamis Daoud: The stories of Nurul and Sita remind us that without access to financial services, the path to adaptation is steep and uncertain. It’s up to global efforts—and innovation in inclusive finance—to ensure that vulnerable communities can survive and even thrive in the face of the climate crisis.
That’s the end of our podcast today. Thank you so much to our guests, Graham and Claudia, in addition to Nurul and Sita, who shared their important stories with us.
And of course, thank you, for joining us for this episode of inclusive finance frontiers, a podcast by CGAP. I’m your host, Lamis Daoud.
For more information on our work in inclusive finance, climate resilience and other topics, please visit our website at CGAP.org. And if you liked this episode, please share it with friends and colleagues so more people can hear how inclusive finance is transforming lives.