Paper

Post-Conflict Microfinance: Assessment and Policy Notes for Iraq

Will microfinance operations work in Iraq?
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This paper explores the potential of microfinance in post-conflict economies, and specifically examines policy considerations for the case of Iraq. The paper:

  • Presents important conditions of the post-conflict economy. These include:
    • Human resource limitations;
    • Damaged economic mechanisms;
    • Security considerations that limit operations and raise costs.
  • Examines the critical requirements for successful microfinance operations that the Microenterprises Best Practices Project outlines. These include:
    • Tailor-made services for the local client population;
    • Lowering of costs;
    • Dependence on timely repayments;
    • Recovery of long-term costs.
  • Evaluates political stability, economic demand and population stability in the case of Iraq.
  • Addresses several other considerations, including matters of scale, government mechanisms and support, and gender and religious contexts.

The author concludes that:

  • The lack of political stability in Iraq is prohibitive for microfinance institutions (MFIs) in urban centers;
  • The civil police are often targets for insurgent activity and cannot offer protection to reconstruction efforts;
  • However, there is reason to be optimistic about microfinance working in Iraq, because the oil economy has strong demand and supply;
  • Microfinance in Iraq can stimulate the livelihoods of large number of people;
  • It can offer a foundation, both in terms of substance and of access to the local population;
  • Until civic peace begins, MFIs will face overwhelming barriers to success in Iraq.

About this Publication

By Desai, S.
Published