Zeng, Meng, 2013, Impact Evaluation of the Small Loan Component of IFRC/RCSC Livelihood Recovery Project In Sichuan, Impact evaluation, International Federation of Red Cross and Red Crescent Societies, Geneva.

2.3 Direct actions in communities

2.3.5 Micro finance

Recommendation: 18. Find innovative ways to increase the potential of small loans, such as encouraging borrowers to share what they receive for the development of local cooperatives. By doing so, borrowers may enhance and share their income with their community, narrowing the likelihood of large individual losses at the same time. Consider options such as stocking rice or other commodities to form a form of saving safety net for community members where this may be appropriate. That is, not all savings needs to be in the form of money, especially when working with the poorest.

References: Zeng, Meng, 2013, Impact Evaluation of the Small Loan Component of IFRC/RCSC Livelihood Recovery Project In Sichuan, Impact evaluation, International Federation of Red Cross and Red Crescent Societies, Geneva.

Evidence sample: Within the IFRC’s project in Sichuan, the evaluation identified a creative practice of loan use through cooperative development. Some of the loan borrowers joined village cooperatives to develop their products and improve market power (even though their business - walnut trees and kiwi fruit trees - had not started to make profit because the trees had not borne fruit yet when the evaluation was written). The labour was shared among the members, so that a larger plantation could be achieved. The questionnaire survey and the farmer small group discussions both showed that the loan beneficiaries were very excited about the development of their cooperatives: all the cooperative members and the village leaders were quite confident about their promising future. It is recommended that such cooperative practices be encouraged among new loan borrowers in the future.

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2.3 Direct actions in communities

2.3.5 Micro finance

Recommendation: 19. Provide training follow-up services and analyse the training or technical support on micro finance that beneficiaries need for success.

Reference: Zeng, Meng, 2013, Impact Evaluation of the Small Loan Component of IFRC/RCSC Livelihood Recovery Project In Sichuan, Impact evaluation, International Federation of Red Cross and Red Crescent Societies, Geneva.

Evidence sample: The evaluation covered training and small loans on earthquake-affected families in China, who were extremely poor and vulnerable, especially after being relocated and losing land. These families could not obtain loans from the bank because the bank did not consider charitable assistance in their financial operations. Therefore, the families would not have had start-up funds to do any business if it were not for the project’s small loans.  In some cases training follow-up and small loan beneficiary monitoring had not been conducted thoroughly. In general, to ensure income increase, constant monitoring of the beneficiary families needs to be done to identify their new development needs. Based on these needs, the project team needs to provide the beneficiary families with technical support accordingly. The evaluation data shows that the project team did monitor the families, but focused more on finding out the changes and improvements that the beneficiaries had made after the loans.

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2.3 Direct actions in communities

2.3.5 Micro finance

Recommendation: 23. Provide guidelines clearly defining the loan repayment mechanisms, setting the most suitable amount and length of loans for different types and scale of businesses. Ensure that all stakeholders are well aware of the guidelines and how they apply to the different types of recipients.

Reference: Zeng, Meng, 2013, Impact Evaluation of the Small Loan Component of IFRC/RCSC Livelihood Recovery Project In Sichuan, Impact evaluation, International Federation of Red Cross and Red Crescent Societies, Geneva.

Evidence sample: The evaluation noted that, in some cases, loans were not sufficiently large and/or the loans were not adequate or needed longer repayment periods. The evaluation team noted that it might better if the loan mechanisms address the needs of different types of businesses while clearly identifying the loan conditions in line with actual needs.