Microfinance and Postconflict Reconstruction

Since its inception in the 1970s, modern microfinance has emerged as a strategy to reduce vulnerability of the poor and promote microenterprise. This work proposes that microfinance plays an additional role: a tool for reconstructing financial services in post-conflict communities. The Democratic Republic of Congo (DRC)'s financial services system was greatly disrupted by years of conflicts that ended in 2003. In the post-conflict DRC, the provision of financial services has shown improvement, and an important share of this improvement can be attributed to microfinance. The central question becomes whether microfinance is an effective tool for post-conflict reconstruction of financial services. Using financial data from the DRC and surveys; this work found that, in post-conflict communities, microfinance - as a mode of financial services provision - is active, agile, and is a better tool than traditional financial services in terms of outreach,financial performance, and reconstruction; at least in the early interim post-conflict phases. Microfinance should therefore be considered as a tool for post-conflict reconstruction of financial services in post-conflict communities.