Market Research for Microfinance in War-Affected Areas

Publication Date: Jan 2004
Published by: Concern worldwide
Document Type: Paper (PDF)

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The Tools for Market Research and Product Concept Development are one of the outputs of an action research project by Concern Worldwide and the Springfield Centre for Business in Development, funded by The Enterprise Development and Innovation Fund of the United Kingdom's Department for International Development. The three-year project, begun in January 2000, comprised two phases. In the first phase of one year, qualitative field research on the demand-side of microfinance in war-affected contexts was completed in Angola, Cambodia, Mozambique and Rwanda. In the second phase, the research results were used to design a new MFI in Rwanda offering innovative microfinance products.

The Tools for Market Research and Product Concept Development were initially devised to guide the development of these new products in Rwanda.

There has been a history of unsuccessful microfinance interventions in war-affected contexts, characterised
by rapid start up, disbursement of a large volume of loans, high levels of default, limited capacity for loan
recovery and organisational collapse within a few years. The cause is all too often traced back to underfunded
and hurried design and planning, based on inaccurate preconceptions.

These Market Research and Product Concept Development Tools provide a straightforward summary framework for collecting in-depth and accurate market information in a timely and cost-effective manner. The tools are also not designed for use immediately after and during armed conflict.

The tools are intended for microfinance practitioners who wish to develop from scratch one of the new breed of microfinance organisations operating in harsh conditions but nonetheless seeking to become profitable in
the long term. They are not for the organisation planning a short-term ‘credit project’ as part of relief
operations; the cost of the research in terms of time and personnel would be too great.