Action Research on Microfinance in Post-Conflict Situations

The author states that in post conflict (PC) environment, unsustained and expensive microfinance (MF) often fail due to clash of cultures as well as contradictory objectives of humanitarian relief and MF. This paper aims to provide insight into the reasons why MF activities suffer from high delinquency rates, chronic inefficiencies and unsustainability in the post conflict country and also research methodologies to create viable MF options. Some tips given in the paper on researching for viable MF option are:

• Keep interviews short;
• Keep the research period short;
• Think carefully about the sample;
• Employ a good assistant;
• Understand the local Language correctly;
• Do not mention the conflict.

Several advantages of carrying out the research at the local market:

• Judging the ability to repay easily;
• Arranging promotional drives conveniently;
• Understanding collateral designing in the right context.

Some of the caveats for MF providers while researching in a local market are:

• Some of the poorest do not make it to the market;
• The market does not give the full picture of the borrower;
• It does not reveal the complexity of factors affecting MF demands;
• It does not provide a forum of understanding the desired attributes of a financial product.