Relief Program

On April 25, 2015, a 7.8 magnitude earthquake struck Nepal. The initial earthquake was followed by many aftershocks, including one with a magnitude of 7.3 on May 12, 2015. The initial shock and aftershock caused severe damage in 31 of 75 districts in Nepal. Among the affected districts, 14 in the central and western regions with a total population of 5.4 million were most severely affected. 



The overall damage in all the affected districts include 8,790 deaths and over 22,300 injured. Nearly 500,000 houses were destroyed and 250,000 damaged. Other losses include collapses or damage of government buildings, health facilities, schools, and heritage sites. The earthquake affected eight million of the country’s total population of 26 million. 

The total value of disaster effects, including direct damage and indirect losses, is estimated at Nrs. 706 billion. The most affected sector, housing and settlements, sustained about 50 per cent of the total destruction; followed by production decline at about 25 per cent and tourism at 11 per cent. 

© National Planning Commission. The Government of Nepal. 2015.
Nepal Earthquake 2015: Post Disaster Needs Assessment. Vol. A: Key Findings. Kathmandu. 


Rural households in affected districts suffered not only physical damage like collapsed houses, but also damage on their farmland and livestock. As rural households depend on farming and livestock as their main income sources, the earthquake’s damage had considerable impact on their income-generating capacity. The total damage for all affected districts for crops, livestock and irrigation was estimated at Nrs. 28.3 billion, according to the National Planning Commission (2015).


The Project

To accelerate livelihood restoration and enhance disaster resilience for future earthquakes, the Agriculture Development Bank approved the Disaster Risk Reduction and Livelihood Restoration for Earthquake-affected Communities project in October 2015. The project was to provide livelihood restoration microcredit to at least 12,500 affected households in three districts, namely Dhading, Nuwakot and Rasuwa. The project also supported the affected communities’ capacity development, including disaster-resilient house construction training, and community-based disaster risk management training. The project allocation approximately Nrs. seven million to livelihood restoration credit, and Nrs. 1.9 million to capacity development. 

The project was initiated on January 8, 2016. The main objectives of the project were to provide quick financial assistance to affected households to 1) revive microenterprises, 2) restore livestock, agricultural and other livelihood activities, and 3) cover essential expenses during the rehabilitation period. 


The Impact

A survey was conducted on 700 beneficiaries selected from 15,7000 livelihood restoration microcredit borrowers. The sampling tried to ensure the proportional representation of borrowers by ethnicity, gender and borrowers’ types of income-generating activities. 

The survey also included 175 households who are non-Small Farmers  Agriculture Cooperatives Ltd. (SFACLs) members and non-beneficiaries, who were equally affected by the earthquake. The survey was conducted in eight SFACLs, five of which were in Dhading District, two in Nuwakot, and one in Rasuwa. By gender, 66 per cent were female and 34 per cent were male.

Of the beneficiaries, 75 per cent reinvested in agriculture and livestock activities, while 25 per cent reinvested in microenterprises. Among the surveyed non-beneficiaries, 83 per cent  reinvested in agriculture and livestock, and 17 per cent invested in microenterprises. 

The affected households mobilized resources from various  sources, such as their own savings, loans from formal financial institutions, loans from friends and relatives, and grants from governments and NGOs. The surveyed beneficiaries received an average of Nrs. 103,000, while non-beneficiaries secured an average of Nrs. 71,000. The difference  is largely due to the ability of SFACLs to give greater financial access to the households most affected by the 2015 earthquakes. 

The survey also found that the net revenue from the income-generating activities between March 2017 and February 2018 was Nrs. 84,000 for beneficiaries and Nrs. 39,000 for non-beneficiaries. And whereas 23 per cent of beneficiaries had an average net income above Nrs. 100,000, only six per cent of non-beneficiaries could say the same.

Source: ADB. Impact Study of Microcredit Component of Disaster Risk Reduction and
Livelihood Restoration for Earthquake-Affected Communities Project (Grant 9180-NEP). 


Effectiveness of Livelihood Restoration 

Among the surveyed households’ income-generating activities, microenterprises are the most gainful in terms of annual net income for both beneficiary and non-beneficiary groups. Agriculture and livestock generate significantly lower income than microenterprises. Net incomes from beneficiaries microenterprises are significantly higher than net incomes from non-beneficiaries’ microenterprises. 

Source: ADB. Impact Study of Microcredit Component of Disaster Risk Reduction and
Livelihood Restoration for Earthquake-Affected Communities Project (Grant 9180-NEP). 



Access to finance is critical to support poor and low-income households. However, access to finance is even more needed during emergencies. After a major disaster like the 2015 earthquakes, the income-generating capacity of affected households become severely impaired due to damage to farmland, livestock and other productive assets. In other words, affected households need immediate access to financial services to maintain their livelihoods.



By Manish Mahato
July 25, 2019