Microcredit in Post-Conflict, Conflict, Natural Disaster, and Other Difficult Settings

This paper was commissioned by the Microcredit Summit Campaign in 2006.The paper focuses on responses of microfinance institutions (MFIs) in coping with the losses that their clients face when human conflicts, disasters of nature, and other crises strike. The paper discusses:

• Themes that include restarting operations, preserving staff security, adjusting collection methods, etc.
• The ways by which MFIs have provided humanitarian aid to clients hardest hit in:
  • Human conflicts (e.g. Bosnia and Herzegovina, Afghanistan);
  • Natural calamities (e.g. Hurricane Mitch in Honduras, earthquakes in El Salvador);
  • Difficult settings such as those of drought, wildfire, and disease.

The paper describes the efforts of the 'Help Eliminate Poverty' (H.E.L.P) to illustrate the challenges that microcredit NGOs face when turbulence surrounds them.The paper surveys the extent of conflict and natural disasters in recent years and:

• Attempts to categorize them;
• Illustrates the complexities in managing MFIs under difficult conditions;
• Identifies microcredit programs that vary in terms of the success of their efforts.

The paper recommends that:

• MFIs which operate in areas of ongoing conflicts should form a crisis network for exchanging experiences and sharing best practices;
• There should be more research on the complexities of managing MFIs in times of conflict and catastrophe.

The paper concludes that:

• MFIs hold much promise in lessening the impact of crises;
• Microcredit can diminish the devastation, and accelerate the processes of recovery;
• In times to come, microcredit can fully empower impoverished families around the world.