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Africa Region Working Paper Series No. 54 Microfinance
Institutions’ Response in Conflict Environments: Abstract Minimizing the constraint of sustainable access to finance through the services extended by micro finance institutions has increasingly enabled poor entrepreneurs to improve their source of revenue and reduce their economic vulnerability over the years. The experiences of the Savings and Micro Credit Program in Eritrea, the Palestine for Credit and Development in the West Bank and Gaza, and Micro Crédit National S.A. in Haiti demonstrate that micro finance institutions with positive performance records could play an important role during and post conflict periods. Through their services, microfinance institutions are called to assist the most disadvantaged sector jump-start the economy and to facilitate the resumption and reconstruction of local business activities. In responding, the institutions featured here exacted the same disciplined practices that served as the foundation for their success under normal environments: commercial practices, streamlined operations, incentives for timely loan repayments, and financial sustainability. As they implemented decisions to operate under conflict
environments, it became clear to them that their institutional development
and progress toward self-sufficiency had to be delayed and exposed to
continued high risk and unforeseen challenges as conflict issues remained
unresolved. They recognized that their continued operations were contingent
upon their ability to: respond in a flexible manner to rapidly changing
political and economic situations and subsequent difficulties faced by
their clients; obtain committed support from their management, staff,
Board of Directors, and development partners so a balance could be struck
between the impact of the microfinance program on the country’s
development agenda and the institution’s commercial operations;
and receive assurances on the availability of financial support to cover
conflict-related increases in operational expenditures and ongoing institutional
capacity building requirements. Full text of paper. (176KB, In Adobe Acrobat format. Requires Acrobat PDF viewer) |
