NB Financial Health

Wednesday
November 25
2015

James Militzer

Microfinance in a Dangerous World

European Microfinance Week Tackles Some Weighty Topics

I flew from Detroit to Luxembourg last week to attend the 2015 European Microfinance Week, three days after the terrorist attacks in France shocked the world. It was clear from the start of the trip that something was amiss. My flight went through Paris, and the plane was eerily empty – barely a quarter of the seats appeared to be occupied. Throughout my stay, there were constant reminders of the state of fear that still grips the continent. Police barricades on the streets in Luxembourg City. Flowers and candles outside the French embassy. No less than four security checkpoints in the Amsterdam airport on the way home.

The sense of sorrow and unease extended to the conference as well, which started with a moment of silence for the victims of the attacks. But the event also brought a more hopeful note: a strong focus on how the microfinance industry and broader financial inclusion movement can lessen the tensions that drive global conflicts – and how they can help communities recover when natural or man-made disasters strike.

That focus carried over to the 6th European Microfinance Award, a 100,000 Euro prize that’s awarded annually as part of the week’s activities. The theme of this year’s contest proved to be grimly appropriate: “Excellence in Providing Financial Services in Post-disaster, Post-conflict Areas & Fragile States.” As Werner Hoyer, president of the European Investment Bank (a conference sponsor) put it, “It would be nice if we could say ‘post’ every time we say the word conflict, but as we were reminded on Friday, some conflicts are still here.” The finalists for the award were microfinance institutions (MFIs) that have done vital, even heroic work helping their communities deal with issues that ranged from the civil war in Syria and the aftermath of Typhoon Haiyan in the Philippines, to (in the case of this year’s award winner, Crédit Rural de Guinée) the Ebola outbreak in Guinea. You can learn more about each of the three finalists in the videos below.

The conference itself also included sessions that seemed pulled from recent headlines, including a panel that explored how microfinance can respond to the refugee crisis, one that examined how financial inclusion can increase resilience to natural disasters, and one on the role of financial services in conflict situations. I attended the first two of those discussions, among several others. As part of our coverage of the European Microfinance Week, here are a few takeaways from the session “Microfinance’s Response to the Refugee Crisis” – including a (slightly abridged) video recording of the panel.

Lebanon is currently home to over 1 million Syrian refugees – a situation that’s causing understandable tension. As Alia Farhat, a panelist from Al Majmoua, a Lebanese non-profit MFI, put it, helping these refugees find income-generating activities is essential, if the country is to avoid a potential “social explosion” – and Europe may soon find itself in a similarly urgent situation. To that end, Farhat emphasized the importance of using microfinance to develop local micro small and medium enterprises (MSMEs) – not just to help refugees, but also to improve the living conditions of the communities that are hosting them. But her co-panelists, 
Jasmina Glisovic of the Council of Europe Development Bank and Resi Janssen of Cordaid, pointed out some obstacles to that proposition: finding MFIs able to reach refugees with adequate services – and getting them to focus on such a fraught issue (with such risky customers) without scaring off their investors.

 

Related Article: Banking on Refugees

 

In the discussion period that followed the presentations (which you can view in the video below), an audience member brought up an additional angle, saying that about half of Germany’s 1 million refugees are expected to open bank accounts. This new demand represents both an opportunity and a challenge for financial services providers, as they try to figure out how best to meet their needs – not least of which will be the demand for international money transfers. Another audience member added a point that seemed particularly important in reducing the flow of current and future refugees:

As the conference’s final plenary was concluding on Friday, I noticed some of the panelists huddled over their smartphones, engaged in tense conversation. They told me they were trying to verify the safety of colleagues in Mali, where reports had just come in of yet another terrorist attack. The only thing more disheartening than that news was the fact that in today’s world, it didn’t come as much of a surprise.

With so many complex and escalating global problems, from terrorism to climate change, it’s far from clear if microfinance, financial inclusion, or social business in general can make much of a difference. Indeed, there was plenty of discussion at the conference of the many obstacles that financial services providers face in responding to poor clients’ needs, even in the absence of extraordinary crises. But it’s encouraging to know that the industry is awake to the problems that are threatening our future, and focused on finding solutions. Whatever your views on microfinance as a development tool, or on the potential of social enterprise, you have to hope it will succeed.

We’ll continue our coverage of the conference in upcoming posts, which will touch upon the impact of microfinance in recovering from natural disasters, how digital finance can facilitate access to utility services in emerging markets, and the role of financial inclusion in the Sustainable Development Goals. So stay tuned.

 

Microfinance’s Response to the Refugee Crisis

 

 

The Finalists for the 2015 European Microfinance Award

 

 

 

 

Photo credit: Michel G.

James Militzer is the editor of NextBillion Financial Innovation.

 

Categories
Financial Inclusion
Tags
conferences, financial inclusion, financial products, financial services, lending, microcredit, microfinance, video