SPECIAL REPORT: On Microbusiness Support in Conflict Zones, a Discussion at European Microfinance Week

Major David Beskow of the US Military Academy told a crowd at European Microfinance Week, about distributing microgrants in eastern Baghdad, Iraq, largely to women shop-owners for refrigeration, generators or inventory. Funded by the Iraqi government and the US Army’s Commander’s Emergency Response Program, each grant ranged in size from USD 500 to USD 5,000. Although no repayment was required, each beneficiary business was documented through photos and other means before disbursal and after one and six months, in the presence of local police.

The internal audit manager of the First Microfinance Institution Syria, Adeeb Sharaf, reported that the conflict in Syria has resulted in reduced client income and reduced lending in some regions. However, all branches of the institution, which is affiliated with Switzerland’s Aga Khan Development Network, remain open.

Michael Knaute, the CEO of the Oxus Development Network, which is controlled by French NGO ACTED, argued that selecting the right regions to serve is critical in a conflict zone. He stated that of more than 20 microfinance institutions (MFIs) that existed in Afghanistan five years ago, only five remain. Rather than success depending on institutional characteristics such as non-profit versus commercial status, all of the surviving MFIs are in the relatively stable regions of the country: Kabul and northern Afghanistan.

Asked whether borrowers in conflict zones are more likely to re-locate and thus default, Mr Knaute replied that city-dwellers are less likely to move than those in rural areas and that many microfinance borrowers are simply too poor to move. In contrast, the owners of small and medium-sized enterprises are more likely have the connections and money to leave the country and thus default on their obligations.

Bart de Bruyne, a consultant based in Germany, cited the example of an MFI in Mali that served rural areas of that country at the time of its coup in 2012. When many of its clients relocated to the city of Bamako, the MFI survived by opening its first branch there, from which it was able to continue serving the same customers.

This article is one of a series covering the proceedings of European Microfinance Week, which was organized by the 130-member, nonprofit European Microfinance Platform (e-MFP) in Luxembourg from November 12 to November 14. MicroCapital reported on the sessions onsite under a sponsorship from e-MFP.

Additional Resources

MicroCapital Universe profile on Oxus

More coverage of European Microfinance Week and the Action Groups of the European Microfinance Platform (e-MFP)

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