Resilience building

The resilience of MSMEs must be developed in anticipation of disasters, and not solely helped along after a shock has occurred. Suitable investment should be encouraged in advance, and there are interventions which can help to build an appropriate investment climate for this. Ensuring an adequate investment climate requires policymakers to be aware of the importance and role that MSMEs have in local economic dynamics, which can facilitate the design of relocation and recovery programmes that support livelihood recovery. Legal and regulatory frameworks that effectively address issues such as insecurity of tenure, informality, land use planning and building codes, can in turn encourage MSMEs' investments in disaster risk management (DRM) and market diversification. Direct interventions for building resilience of MSMEs before disasters can draw on the support of business associations and community groups to design and communicate DRM strategies, as well as help MSMEs be less dependent on local markets by diversifying their supply and customer base.312 Having social protection systems in place can help decrease the possibility of individual shocks, while having in place systems that can give rapid assistance after disasters. Box 11 below shows how the Philippines provides financial assistance to MSMEs following a disaster.

Box 30. Philippine disaster risk reduction and management act

As a result of casualties and damages caused by Typhoon Ketsana, locally known as Tropical Storm Ondoy, in 2009, the Republic Act (R.A.) No. 10121 was created. Known as the Philippine Disaster Risk Reduction and Management Act of 2010, this serves as the legal and institutional basis for the country’s framework in dealing with natural and human-induced hazards and providing a more efficient structure and response mechanism for communities and organizations. R.A. 10121 provides a multi-sectoral, inter-agency approach to disaster risk management. It encourages participation from the private sector, local government units (LGUs), non-governmental organizations (NGOs), civil society organizations (CSOs), community members, and volunteers in disaster management. It aims to strengthen the community’s ability to maintain basic functions and recover from disasters by shifting its focus from disaster response to disaster risk reduction. Through the DRRM Act, MSMEs and communities gain financial assistance through the creation of a calamity fund dedicated to disaster risk reduction or mitigation, prevention, and preparedness activities for the potential occurrence of disasters and not only for response, relief, and rehabilitation efforts.2 This provision allows LGUs to utilize 70 per cent of the total calamity fund on risk-reduction activities and 30 per cent on quick response measures. In return, MSMEs reduce their vulnerabilities, strengthen their resilience to ensure the health and safety of the employees, build client confidence, and minimize economic losses. MSMEs are uniquely positioned to promote economic recovery as a result of their existing relationships with the communities in which they operate, and their vested interest in contributing to rapid and lasting recoveries.

Source: Republic of the Philippines, National Disaster Risk Reduction and Management Council, Office of Civil Defense


312 Antonis Skouloudis , Thomas Tsalis, Ioannis Nikolaou, Konstantinos Evangelinos and Walter Leal Filho Small & Medium-Sized Enterprises, Organizational Resilience Capacity and Flash Floods: Insights from a Literature Review.