Thousands of Bangladeshi environmental refugees migrate to Dhaka every year as a result of climate change. Photo: uncultured (flickr)

Big cities are likely to strain under the weight of "environmental refugees" as climate change takes effect, according to a recent story in The New York Times. The story looks at the capital city of Bangladesh where three million people came from rural areas hit by natural disasters.

Dhaka is the last resort for people like Mukhles Rahman, who have lost their homes in floods and other natural disasters. “We are trying to find another place to go, because all the land back home is dissolving,” Mukhles said to the Times, “But there aren’t jobs in other cities or villages.” However, Dhaka's already scarce resources like water, electricity and waste disposal are being stretched by the influx of environmental refugees. Like Mukhles, half of Dhaka's 12 million residents already live in slums that lack basic sanitation and drinking water.

Experts say that climate change is likely to cause more severe and frequent storms over the coming years, says the New York Times. Which means that that that even more people will become environmental refugees.

October's comment of the month comes from James in Portland, Oregon. James commented on our story Poverty Isn't Always Ugly. He reminds us that poverty rears its ugly head in many forms — not just monetarily. For his efforts, we will make a $25 donation to a project of his choice on Global Giving.

There are definitely a few issues to consider and discuss relating poverty. In reading Muhammad Yunus' book "Creating a World Without Poverty". He felt, and I agree, that the definition of poverty isn't going to be the same from country to country. For Bangladesh the Grameen Bank developed there own definition of poverty for their internal purposes and to measure impact over time.

Many organization attempt to place a dollar amount of income/day to determine poverty, we've heard the $2.00 per day used frequently. Income isn't a solid method because it doesn't factor variables outside of money. Location and access to natural resources for instance are variables that change the need for money, or an individuals dependence upon it.

Bottom line, I think it's important to realize that poverty can't be defined the same way in every community we visit. Poverty includes physical need and extends into the mindset of individuals and how they view the world around them. It's also important to be culturally sensitive when working with people around the world. Sure, we have it pretty good here in the U.S. but we have problems too. We shouldn't seek to cookie cut our cultural values everywhere we go.

Keep writing in and share your though-provoking comments for a chance to win $25 towards the well-deserving charity of your choice!

* Lest anyone think $25 is not a lot, consider these figures from our affiliate Mercy Corps: $25 delivers clean, safe drinking water to 50 people in one of eastern Congo's sprawling displacement camps. $25 provides seeds to farmers in cyclone-devastated areas of Myanmar to plant five acres of rice. $25 gives traumatized children in Darfur 12 weeks of activities and psychological care to help them heal.

A Mercy Corps small business loan helped Najeeba expand her successful baby cradle business in Kabul, Afghanistan. Photo: Cassandra Nelson/Mercy Corps

Over the past decade, Mercy Corps’ microfinance services have lent more than $1.5 billion, reaching more than one million people. Twelve Microfinance Institutions (MFIs) founded and supported by Mercy Corps operate all over the world, with 270,000 active clients — 65 percent of them are women. To better serve those excluded from formal financial services, Mercy Corps is working with these MFIs to develop and offer savings, remittances, and micro-insurance services as well.

I recently sat down with Zhanna Zhakupova and Jim Anderson who were in town for a microfinance conference hosted by Mercy Corps, to find out more about Mercy Corps microfinance programs and how the global economic crisis is impacting microfinance loans. Zhanna is the Executive Director of the Asian Credit Fund (ACF), headquartered in Almaty, Kazakhstan. Jim is Mercy Corps’ Financial Services Manager and works from UlaanBaatar, the capital city of Mongolia. Together, they have experience working in countries as diverse as Uzbekistan, Vietnam, Japan, Bosnia, Poland and Afghanistan.

Haley Dillan: Jim, tell me a little bit about Mercy Corps’ use of Microfinance.

Jim Anderson: Microfinance is an integral part of what we’re [Mercy Corps] doing as an agency. Mercy Corps works with a group of well-established MFIs to complement other programming. All these MFIs provide loans to individuals and small businesses, and in Mongolia and Indonesia our MFI affiliates also offer deposits. Many support agriculture and offer consumer loans for purposes like tuition payments and health care costs. A micro-loan can range from $65 to a Guatemalan woman raising chickens or piglets, to $7,000 for a Kazakh businessperson.

Microfinance is a great tool because, when managed correctly, it is sustainable. Projects can be established and continue on a sustainable basis: they don’t require ongoing injections of donor money. As the NGO, you create the legacy, and then it often continues independantly.

Haley: Why are the majority of loans extended to women?

Jim: Typically, women are the more common borrowers. From a broad source of statistics, women are more reliable borrowers. They invest their business profits to support the family — educating, feeding, housing, and providing health care for their children. As of this June, Kompanion in Kyrgyzstan had over 91,000 clients, of whom 98 percent were women. What’s the percentage for Asian Credit Fund, Zhanna?

Zhanna Zhakupova: About 93 percent of ACF loans are to women.

Jim: Yes, and the XacBank in Mongolia has over 63,000 clients, and women comprise about 55 percent of that. However, in certain countries, it’s not always clear that just because the borrower is a woman, she’s the one in charge of the money. In Afghanistan, for example, a female borrower may just give the loan money to her husband, and it’s hard to track that.

Zhanna: Also, men are less interested in small loans. When they think about business, they think about “big.” And after the global economic crisis, group lending has grown significantly, and women dominate group lending. Men are more reluctant to join groups.

Haley: What other impacts has the global economic crisis had on microfinance? Have you changed your lending criteria? Has it affected the ability for applicants to repay their loans?

Zhanna: As I mentioned, our portfolio has shifted towards group lending since 2008. So, yes, the global economic crisis definitely caused a shift in our lending. In Kazakhstan, the crisis has been quite severe. The GDP growth was averaging about 8 percent annually since 2000, from oil and mineral resources. A pretty strong middle class had emerged, especially in the two largest cities Almaty and Astana. The economic crisis really affected this middle class; the crisis led to a sharp decline in real estate and that hit a lot of people. It seemed like everyone had loans that were secured by real estate… and when the real estate bubble burst, MFI loans were under water.

The banks stopped lending, because real estate was the key piece of collateral for most people, and it has continued to fall in value. No one had sufficient assets to meet tougher bank requirements, and so couldn’t qualify for loans after the global economic crisis. Lenders accumulated loan repayments, but refused to relend that money, sitting on it instead of pumping it back into the economy. No liquidity — no lending — no economic development — falling living standards.

In the rural areas, lending was completely frozen. When I recently visited rural areas served by ACF, every village asked us to open a branch. Small loans were in big demand but no one was lending. Now, Asian Credit Fund has about $1 million dollars in group loans, with the average loan size at around $500 per person.

Haley: What's the difference between non-profit and for-profit microlending? Does Mercy Corps work with for-profit lenders?

Jim: Actually, microlending is for-profit in most areas of the world, particularly Latin America and Central Asia. Non-profit lenders are more often located in places like India and Bangladesh. So most of Mercy Corps' microfinance work is with for-profit MFIs, many of which source funding from for-profit socially responsible investors (SRIs).

If these SRI lenders were to calculate the true risk of the loans they’re extending to MFIs, the interest rate would be so unmanageably high — possibly 60 or 70 percent in places like Tajikistan or Afghanistan. But the individuals who invest with SRIs are willing to forgo a certain amount of return because they want to encourage social improvements by lending to developing countries. As a result, SRIs can lend to MFIs at affordable interest rates.

In order to help MFIs attract capital to expand and serve more clients, Mercy Corps utilizes various sources of investment, including equity and debt, typically with SRIs.

Haley: Is there an idea or sentiment that you are taking away from the conference?

Jim: At the conference participants included a diverse group of organizations, culturally, geographically and in terms of business models, yet we all face similar challenges and issues, and it’s great that we have an opportunity to come together and talk about that.

Zhanna: Yes, everyone was talking about development, and long-term goals.

Bangladesh is facing a severe health epidemic due to high amounts of arsenic in the ground water found in wells which are the primary source of drinking water. Photo: Shawn (flickr)

"The largest mass poisoning in history," according to the World Health Organization, is in Bangladesh, where there's arsenic in the groundwater used by more than half of the population.

Arsenic is a colorless and odorless element that can occur naturally in soil. Excessive and long-term exposure can cause various cancers and skin abnormalities. Bangladesh has the highest levels of naturally occurring arsenic in groundwater in the world, reports Al Jazeera. But this wasn't discovered until the mid-90s, after humanitarian agencies dug a lot of wells to prevent locals from drinking water from dirty ponds.

More than 70 percent of the population in Bangladesh live in rural areas and get drinking water from wells.

With more than 30 years of exposure, Bangladeshis are now facing health problems that include skin lesions, lung cancer, heart disease and kidney failure. But these conditions are often undetected because arsenic poisoning isn't always physically visible. Only 30 percent of Bangladeshis have access to basic health care, so the actual measure of the impact arsenic poisoning is likely under-reported. Even without an accurate measure, the WHO considers the scale of the health epidemic even larger than the 1986 nuclear meltdown at Chernobyl, which led to more than 100,000 people being diagnosed with fatal cancers.

The Bangladeshi government and development agencies are investing in water filter systems and trying to spread the word about the dangers of drinking from the groundwater wells. But getting rural communities to stop using their primary source for cool, clean-looking water is easier said than done, reports Al Jazeera. Installing household water filtration systems is not affordable for most villagers. Boiling water is still an option, but it's extremely difficult to change daily practices of people who already have limited resources and are unable to see and understand the effects on their health.

The following trailer from the documentary Arsenic: The Largest Mass Poisoning in History shows the devastating effects of Bangladesh's poisoned groundwater.

The Brooks World Poverty Institute is holding a conference in Dhaka, Bangladesh about adapting cities to climate change. But it's not what they're talking about that's revolutionary, it's who's doing the talking.

Studies, papers, and articles are released everyday discussing the effect of climate change on the world's poorest. Journalists, politicians, academics, bloggers, everyone seems to have an opinion on how, why, and what to do. The only people whose voices aren't being heard seem to be the people most affected.

Well the academics are stepping down from their ivory towers to the streets of Bangladesh. Climate change seems like an appropriate topic for the capital of a country where predictions of rising sea levels put 55 percent of the Bangladesh population at risk. Medical News Today reports Professor David Hulme, Associate Director of BWPI as saying:

"Our engagement with poor people from the outset means that their knowledge and their preferences will help shape the projects designed to improve their lives. In the past, poverty researchers have been guilty of exploring solutions that they believe will work for the poor, rather than listening to what poor people really want."

One project to be discussed at the conference, which is co-sponsored by a Bangladeshi NGO, is a barge for traders in Dhaka's market to use during flood season.

This is the first of an annual conference on poverty that will be hosted by various developing countries. Although discussing city plans with citizens seems like a no brainer, the conference is being hailed as "groundbreaking" for discussing poverty and climate change with the poor. Let's hope the experts won't be afraid to get their feet wet and their hands dirty, and the academics and "the people" continue their conversation.

A group of gypsies on a street corner in Dhaka. Photo: A@Dhaka (flickr)

Photo: Sun Pictures / Lakshman (flickr)

Ever heard of a 13-year-old bank manager?

It’s not an uncommon sight at the Children’s Development Bank (CDB), a unique initiative by the Delhi-based NGO Butterflies that helps street children help themselves. CDB, founded in Delhi in 2001, offers street and working children the opportunity to invest in a different lifestyle.

Fear of theft and lack of future planning have often led working children to spend what little they earn on short-term pleasures, such as cigarettes or cinema tickets. By providing a safe place to hold money, however, CDB encourages them to start a savings habit.

CDB is particularly innovative in the way it is run. It works as a cooperative, in which children are both the owners and decision makers. Rules, membership standards and loan criteria are set by members who are all between the ages of eight and 18. The idea is for kids to "put money aside for themselves without worry that it will be lost or stolen, save for things that they need or want, such as clothes, (and) plan to improve themselves, by saving for education and training."

CDB now boasts more than 8,250 members and operates in 12 locations, including branches in Afghanistan, Bangladesh, Nepal and Sri Lanka.

Microfinance has worked in the developing world, but will it work here? Photo: PetroleumJelliffe (flickr)

A few weeks ago microfinance pioneer Professor Muhammad Yunus was in Queens, New York. No, he wasn’t soliciting funding or international support for his Bangladesh-based microlending institution. He was cutting the ribbon on the brand new Grameen Bank America building.

Thousands of miles away from the original Grameen Bank, the American version will function much like its Bangladeshi counterpart: loaning to groups of women rather than individuals. Like the women who first participated in Yunus’ innovative banking scheme, American borrowers will convene at one member’s house to collect weekly dues. This type of group-lending model increases accountability, since defaulting on your loan affects your peers' access to credit as well as your own.

The Grameen Bank targets women because they're more reliable borrowers. To date, Grameen America has loaned upwards of $250,000 dollars to more than 100 women who are using their $500 to $3,000 loans to establish or expand businesses ranging from floral arranging to house cleaning.

But Yunus has some skeptics to win over. Many question whether the Grameen model will resonate with Americans. Microfinance expert Saiful Islam says "Bangladeshis, Indians, Latinos will follow it, but I don’t know about others." In 1985, a similar program started by Yunus in rural Arkansas at the request of then-Governor Bill Clinton failed due to mistrust among participants, according to Shorebank's Mary Houghton, who helped advise the microfinance experiment in Arkansas.

It does seem somewhat of a strange fit: banking targeted to empower the poorest of the poor in one of the most prosperous countries in the world?

The United States does have its fair share of people living in poverty, however. Immigrants in particular have a hard time accessing credit and are more likely to use predatory lending agencies that charge steep interest rates. What's more, the Center for Financial Services and Innovation, reports that approximately 40 million American households are considered underbanked.

Also, contrary to public perception, microcredit is not aimed at the poorest of the poor. "It’s actually supposed to help those below a certain poverty line who are looking for self-employment as a route out of poverty," says Raj Desai of the Brookings Institution.

In that case, the U.S.-based bank may run into trouble. Approximately 1 out of every 11 Americans work for themselves, while about 1 in 4 in Bangladesh are self-employed.

Yunus will need time to prove that the American model can be successful. It may be that American women need more than greater financial access to climb out of poverty. But Yunus' large following and wide array of awards — including a Nobel Peace Prize — suggest he has a fighting chance.