From debt cycle to self-resilience: A Story from the small village of Datinakhali

In Datinakhali, Bangladesh, a cooperative savings fund is helping local women diversify their livelihoods to adapt to climate change. This is the tenth of the ‘Voices from the Frontline (Phase-II)’ stories by ICCCAD and GRP.

Datinakhali, a village from the Buri Goalini Union of Shyamnagar Upazila from the Satkhira District in Bangladesh, is at the forefront of the climate crisis due to its precarious geographical location which places it at the edge of the Sundarbans. Rising sea levels, due to climate change, leaves the residents of Datinakhali constantly dealing with extreme weather events.

Climate crisis leading to debt cycle

From cyclones to river erosions and flash floods, the frequency of extreme events hitting the village has increased. The drastic increase has reached a point where the residents are not able to recover from one event, before they get struck by another. As a result, the residents are left with little to no long-term assets to help plan for the future. This forces the community members to look for short-term means to support them through an extreme event, and being forced to seek out loan sharks who are the only source of financial support at a short notice for them in a period of urgency. This, more often than not, leads the villagers to being trapped in a vicious cycle of debt. As a result of falling prey to loan sharks after every disaster and all their income going towards paying their debts and subsistence,the community members are consequently left with little to no scope to conjure any savings. Hence the community is stuck in a rut of having no means to improve their standard of living.

To support such communities and help build their resilience, the organization World Vision came up with the idea of training people for diversification of livelihoods and helping them set up a committee with a savings fund from which they could take microloans in times of need without having to pay a high interest.

Photo Credit: Vaskar Mondol

The Samabay Samiti, a vehicle of savings

Thus, World Vision started the Samabay Samiti, a cooperative fund committee comprised of 8 groups, each of which had 20 – 25 female members. These groups would meet every week, with each member adding a minimum of 50 to 250 BDT (Approx. 50 to 2.5 USD) to the fund. The saved amount would then be loaned out at the end of every month. The committee operated on a few strict rules which included; only the group members being allowed to borrow from the fund, and the maximum amount of a loan for a member could not exceed three times the amount saved by that person that month. The interest rate upon payment back is 50 taka per month per 1000 taka with each individual getting 3 months to pay back the loan. Those with debts to pay back would often ask relatives for assistance in case of an extenuating circumstance. At the end of the year, all the remaining funds are distributed amongst the members according to their savings, and the cycle begins again the following year. Another part of the initiative by World Vision included training the members to capacitate and motivate them to start their own businesses.

Swapna and her story of achieving self-resilience

Having grown up in the village of Datinakhali and experiencing climate impacts on her community and its livelihoods, 25-years-old Swapna Parvin is now a small business owner. She and her family struggled to make ends meet until the World Vision initiative helped her improve her conditions.

Swapna was among the 186 members of the committee World Vision formed. Not only did they achieve self-reliance through building their own savings, but also by establishing alternative income sources. For example, Swapna now has a small business where she sells beauty cosmetic and hygiene products for women. Her supply comes from Shyamnagar. She spends all her days going door to door to sell her products, and to reach specific individuals from her ward to sell her products to. She struggled at the initial phase of her business. She only had enough capital to buy 3000 – 4000 BDT worth of products which would only last her for two days at most. Now that she has established her business, she can build up a sufficient stock with her profits, and stock her products for more than a week. Upon being asked why she chose the cosmetics business, Swapna answered “this is very profitable due to high demand. For every 1000 Taka worth of product I sell I make a profit of 600 – 700 Taka. I also struck a deal with my supplier to return any product that doesn’t get sold so I don’t have any loss in this business.”

Her earnings from the cosmetic business help her add 10000 – 12000 BDT to her savings every month, enabling her to contribute to the household savings too. Apart from this, being part of the cooperative committee also helped Swapna receive an additional 5000 – 6000 BDT if she can save around 10000 BDT. As a result of these, Swapna has been empowered to build a house for her family and even save up in the form of gold for her children.

With Swapna and many others reaping benefits from the cooperative committee and proving it to be a success, the committee initiative is now going through an expansion. Swapna, who is also part of the managing committee, plays an integral role in its expansion. The number of groups being formed are now as high as 20 to 30, with new members being recruited and completing the required government registration. BRAC, an NGO with a strong microcredit programme, has also agreed to collaborate with Samabay Samiti on a trial basis to provide microcredit to the members. The managing committee is aiming to start the loaning process within the next couple of months with hopes to help Swapna and other members secure a brighter future.

“Before the training with World Vision, I used to be scared to talk to anyone. Like how I am talking to you now. Their help has made it possible for me to get the confidence to talk and work with people, not to mention to earn and contribute to the household”, said Swapna. “I feel much happier now being able to do something for my children. I would like to open my own cosmetic shop someday and also set up a small poultry farm with my husband.”

Interviewers’ perspective

This initiative by World Vision is an excellent one, not only because it helped individuals like Swapna Parvin take charge of their lives and make it better but also due to the fact that the way it works it is fully reliant on community action and ownership. This is why the Samabay Samiti is not only continuing but also expanding.

About the interviewers

Vaskar Mondal is a Community Facilitator at Caritas.

Mahzabeen Mahfuz is a Research Officer at the International Centre for Climate Change and Development (ICCCAD).

Towrin Zaman Raya is a Research Associate at the International Centre for Climate Change and Development (ICCCAD).