Microfinance in postwar Afghanistan : towards a conflict-sensitive approach : a thesis presented in partial fulfillment of the requirements for the degree of Master of Philosophy in Development Studies at Massey University
It is well established that microfinance has become a key tool to reduce poverty in developing countries. Previously unable to gain access to credit and savings products from formal providers such as banks, poor people can now take small loans to support income-generating activities, or build up small savings accounts for important expenditures. These services are offered by microfinance providers (MFPs), semi-formal institutions which often have development as well as financial goals. Because poverty tends to be widespread in countries emerging from war, the provision of microfinance is being increasingly recognised as crucial to post-conflict economic reconstruction. Most writers on post-conflict microfinance (PCM) have outlined the considerable challenges which MFPs face in these unstable situations, and have offered valuable operational advice on how to meet those challenges. However, little has been written on how PCM has impacted upon the clients themselves, or whether it has assisted them to re-establish viable livelihoods. Secondly, even though postwar situations are unstable due to unresolved sources of tension, most PCM literature lacks a systematic treatment of how the microfinance could be 'conflict-sensitive'. 'Conflict sensitivity' can be defined as taking preventative measures to reduce the possibility that development intervention will exacerbate tensions, and implementing pro-active strategies to help build peace. This study constructs a conflict sensitive system whereby microfinance goes beyond its traditional role of poverty alleviation to that of conflict mitigation. Afghanistan serves as context within which the concepts of conflict-sensitive microfinance are explored. Since the defeat of the Taliban in 2001, much of Afghanistan has enjoyed a period of relative peace and reconstruction after 22 years of intrastate war. However, the country still faces a number of challenges which could contribute to renewed violence, including poverty, inter-ethnic tensions, weak local governance, and the largest opium sector in the world. This study examines what role the young microfinance sector is playing in addressing these issues and what impact it is having on Afhgan livelihoods and society. The sector's success in helping to alleviate poverty and build peace depends on the extent to which MFPs in Afghanistan expand their services, coordinate efforts among themselves, and collaborate with other development and government actors in holistic, conflict-sensitive interventions.