• Post conflict reconstruction

Post conflict reconstruction and aid

This field manual offers guidance to small grant program managers on supporting microfinance institutions (MFIs) in countries recovering from conflict or natural disaster through small, short-term grants. These guidelines aim to help practitioners, particularly those with limited experience in financial services determine if investment in microfinance is appropriate and outline options for supporting MFIs in post-crisis environments through grants and other forms of technical assistance.

It is argued that in a post-crisis setting, the support provided by grant programs in building the foundation for a healthy financial services sector can be critical. However, poorly targeted grants to institutions that have limited capacity to manage and implement such programs can seriously harm the sector’s development. In the years following a crisis, economic development programs and practitioners have found themselves struggling to counteract the legacy of poorly conceived or mismanaged microfinance projects initiated immediately after the crisis. The large funding levels and autonomy with which many post-crisis grant programs operate allows for the unique opportunity to expand the provision of financial services to the poor.

The four steps toward supporting microfinance through grants featured in this guide are:

• assess whether the essential environmental preconditions are in place. These are; minimum political stability, sufficient cash-based economic activity, and population stability 
  
• assess whether internal capacity is adequate in terms of sufficient qualified staff and availability of donor coordination for long-term funding 
  
• develop parameters for microfinance (MF) support based on project goals and constraints 
  
• check whether the existence of a capable partner institution- conduct an institutional assessment of MFIs
  

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