Post-Conflict Microfinance Research Summary

Publication Date: 2002
Published by: Post Conflict Microfinance Project
Document Type: Paper

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How should a microfinace program be designed to suit the post-conflict requirements?

This paper summarizes the methodology, findings and implications of a research on post conflict microfinance in Angola, Mozambique and Rwanda. It highlights the the post conflict environment characterics:

• Civilian upheaval,
• Disrespect for rule and law,
• Macro economic turbulence,
• Destruction of financial infrastructure,
• Uncertain political situation.

These factors hamper development of the microfinance market. In such situations households adopt complex coping mechanisms to protect against risks and cope with losses:

• Modifying consumption: e.g. consuming forest products instead of rice in Cambodia,
• Drawing in assets: e.g. selling physical assets and relying on richer relatives,
• Raising income through petty trading which provide low risk, low investment and quick returns,
• Personal finance intermediations e.g. loans from friends, relatives and rotating savings and credit associations (ROSCA).

The paper states that in post conflict situation, there is a demand for microfinance, which must be tailored to the situation to achieve best results:

• Introduce appropriate products,
• Adopt a market-based approach,
• Separate microfinance from relief and rehabilitation activities,
• Adopt a long term strategy,
• Make long term flexible donors' funds available.