Microcredit in Post-Conflict Situation :
Experience of Women for Women International

Certainly, informal savings and lending groups existed before the advent of globalization and institutionalized development. Yet, the fact that the UN has named 2005 as the International Year of Microcredit, shows that the international community acknowledges the potency of effective lending, finance and entrepreneurial skills programs in helping to improve the quality of life for many of the world's most vulnerable people.

Credit has an especially important role to play in regions that are recovering from conflict. Providing credit provision is also especially challenging in these situations. During the post-conflict period of reconstruction, obstacles include high unemployment, weakened financial institutions, lack of startup capital, inadequate food supply and an uncertain political climate. Pre-conflict poverty is often exacerbated by the devastation of social support networks that existed before the war.

These circumstances can be especially hard on women. War widows are frequently forced to become primary household providers. Many of the women who survive are victims of violence that was either a tool or collateral consequence of the conflict. In addition to rebuilding their country, they must also deal with the residual trauma of rape and torture.

Members of WWI working hard at shoemaking using their loans

While microcredit is not a silver bullet, it can jump-start economic activity. It can give conflict survivors some tools to help re-build their economic lives and household security, and play an important role for refugees and internally displaced persons, women especially, who have little access to formal sector economic activities.

Women for Women International (WWI) believes that establishing a means to earn a sustainable living is an important part of the process of becoming a fully active citizen. The organization was founded in 1993 to help women overcome the horrors of war and civil strife in ways that help them rebuild their lives, families and communities. Through a tiered program that begins with direct financial and emotional support, WWI fosters awareness and understanding of women's rights; offers vocational and business skills training; and provides access to income-generation support and affordable microcredit loans that together help women restart their lives in ways that are independent, productive and secure.
WWI works with women at the grassroots to develop sustainable income-generating activities that will help them move from crisis to self-sufficiency.

WWI operates in Bosnia and Herzegovina, Rwanda, Democratic Republic of the Congo, Kosovo, Nigeria, Colombia, Afghanistan, and Iraq, working with the most socially excluded women whose needs are not otherwise being met. It has assisted more than 33,000 women, distributing nearly US $18 million in direct aid and microcredit loans.

In Bosnia and Herzegovina and Afghanistan, Women for Women International operates microcredit programs based on the Grameen Bank model of lending. The microcredit program provides women with small loans requiring no collateral to start or expand an incomegenerating opportunity. To date, the program has maintained a 98% repayment rate.

WWI-Bosnia ad Herzegovina (BiH) disbursed its first loans in April 1997. As of March 2005, 7,223 women have received 15,307 loans for a value of approximately US $22.5 million. Currently, there are 3,338 women active borrowers and the loan portfolio is worth approximately US $2.2 million. Many of WWI-BiH's clients are graduates of WWI's multi-phase program of rights awareness education, vocational skills training and income generation support.

WWI-BiH employs a peer group lending methodology, whereby borrowers form groups of five and serve as guarantors for each other's loans. This is the only collateral that is required. As active loan clients, the women receive peer group and business management training during regular meetings with their loan officers, to ensure that they are able to effectively manage their businesses and repay the loans.

Initial loans sizes are between US $300-$750 per woman and are repaid monthly over a period of 6-12 months. As the women's businesses grow and their business management skills improve, the women qualify for still larger loans that may be repaid over longer periods of time. Most of the loans are for agri-business (65%) and trade (15%), as well as for services (11%) and production (9%).

Women for Women International- Afghanistan (WWI-Afghanistan) began serving Afghan women in October 2002. In July 2004, the microcredit program distributed its first 187 loans, totaling US $34,210. WWI-Afghanistan is currently the only microfinance organization in Afghanistan working exclusively with women. As of March 2005, approximately US $200,000 in loan funds had been disbursed to a total of 1,600 clients.

Similar to WWI-BiH, WWI-Afghanistan uses a solidarity group lending methodology, offering short term loans for start-up and expansion, working capital and small fixed assets to eligible clients in services, retail/trade, agri-business, and production sectors. This methodology has been adapted to fit the needs of the local community. Based on Islamic lending laws, WWIAfghanistan has instituted a fee schedule to pay for services performed by the organization in servicing the loan, instead of charging interest. Because of Afghan women's limited mobility and property rights, a male signatory is taken on loan contracts to facilitate the process when necessary.

The average loan size in Afghanistan is approximately US $170. The loan terms are for ten months with bi-weekly payments. To date, all of the clients reside in the semi-rural areas around Kabul. Many of the loans go to clients who are starting or expanding agri-businesses or cultivating and selling vegetables.

In countries where WWI does not provide microcredit loans, income-generation support is tailored to fit the local economy. Participants can sell products they have made at WWI's online Virtual Bazaar and other international venues or at cooperative stores managed by program graduates. Women are also encouraged to form cooperatives with other program participants to start local businesses. WWI provides participants with advanced business skills training, as well as help with writing effective business plans.

Women for Women International believes that economic stability is the foundation, which can lead to broader political and social participation for socially excluded women survivors of war. Microcredit loans and other income generation support will continue to be important tools for women in post-conflict situations, as they recover from the horrors of war and rebuild their lives, families, and communities.