MICROCAPITAL STORY: International Symposium on Microfinance as a Tool for Peacebuilding Discusses Rebuilding the Social and Economic Fabric in Post-Conflict Areas of Colombia through Microcredit

The International Symposium on Microfinance as a Tool for Peacebuilding discussed how microcredit could be used to rebuild the economy and promote growth in post-conflict areas of Colombia. According to this press release on the Symbiotics website, the symposium which was held in the city of Cali in Colombia was attended by nearly 2000 participants. Symbiotics is a microfinance information, consulting and services organization based in Switzerland. The symposium was sponsored by the Alvaralice Foundation, a Colombian non-profit established in 2003 and dedicated to promoting peace and economic growth in the country.

According to the release, the symposium highlighted various state projects, public-private partnerships and private projects funded by both domestic and foreign sources in Cambodia. This included the efforts of several Colombian NGOs and regulated financial institutions like WWB Colombia, Finamérica, Banco Caja Social and Bancamía. The International participants, who brought in a wealth of experience from other conflicted regions like Kosovo, Palestine, Sierra Leone and Cambodia, analyzed the measures to be adopted to succeed in tough conflicted areas. For a complete list of participants of the symposium refer to this previous MicroCapital story. The participants discussed the importance of microfinance as a means to economic stability, which in turn paves the way for social advancement and upward mobility. The discussions called for the need to accompany financial services with education, training and other forms of support to the poor to realize the goal of economic growth and advancement. No further information on the other forms of support is currently available. Speaking on the need for such supplemental programs to the poor, Guillermina Hernandez, the director of Merquemos Juntos, a community kitchen in the conflict-affected area of Barrancabermeja in Colombia said such programs ‘give [the poor] trust to become part of something in a place where people are constantly in danger, and [this] empowers them to follow their dreams’.

Political violence has been a feature of Colombian life since the 1940s with the country being ravaged by decades of civil conflict and drug trafficking. Colombia has one of the largest populations of concern to the United Nations High Commissioner for Refugees (UNHCR) with some 3 million people displaced by the fighting, both internally and abroad. As per a 2005 estimate by the World Bank, 65 percent of the nation’s population lives below poverty with nearly 80 percent of the rural population living in poverty. According to the principal U.S. agency to extend assistance to foreign countries, the US Agency for International Development (USAID), numerous rural municipalities in Colombia remain isolated by poor infrastructure and fragile institutions and thus remain prone to violence, illicit crop cultivation, forced displacement, and human rights abuses. Consequently, when it comes to financial services, many of the rural municipalities in Colombia are either completely lacking or have only the most rudimentary services.

The World Bank has identified inequality, poverty and violence as the main challenges faced by this South American nation in its efforts to promote peace and economic growth. Estimating the inequality in Colombia as one of the highest in Latin America, the World Bank estimates that the top 20 percent of the country’s population receives nearly 60 percent of the national income. As a poverty reduction strategy, microfinance is a priority sector for the International Finance Corporation (IFC), the private sector lending arm of the World Bank. However, the country’s ongoing political, social and economic conflict, which has lasted over 45 years, makes it hard for any endeavor, microfinance included, to be successful. In this regard, the release states that the conflicts have ‘severely damaged the country’s social tissue and broken trust between people’.

The panelists and other participants at the symposium stressed on the need for Colombia to improve its regulatory framework to make it more supportive of microfinance and the need to promote healthy competition among microfinance organizations. The need to facilitate easy entry of international support into the country was also discussed. Additionally, the discussions called for the need to ensure client protection standards are built in to Colombia’s microfinance sector. The participants concurred that microfinance could be an effective tool reasoning that as conflict ‘dies down people are eager to restart their lives and need financial services to help them do so’.

By Bharathi Ram, Research Assistant

Symbiotics: Release

United Nations High Commissioner for Refugees

US Agency for International Development

International Finance Corporation

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Nov 24, 2008: Symposium: Microfinance as a tool for Peacebuilding