Conflict leaves loss and devastation in its wake. Refugees and displaced people often are or return to situations of fragile peace, where the socio–economic infrastructure is badly damaged, and where they have difficulty reintegrating into their communities. Such environments can easily become breeding grounds for further conflict.

Given the right opportunities, however, refugees and displaced people can make a vital contribution to rebuilding peace in their countries. The human capacity to survive and adapt to changing environments can give rise to new forms of creativity. Refugees and displaced people do not need to be treated as passive recipients of humanitarian assistance. With the right tools, they have the skills and resources to contribute to their own development. People with an entrepreneurial spirit can create employment for themselves and for others.

Humanitarian organizations are often the first to provide protection and assistance to populations affected by conflict. In many cases they do not remain in a country long enough to rebuild the social and economic infrastructure, but they can play a catalytic role. Microfinance is one way in which they can provide direct assistance in the short–term. Development agencies can then assume responsibility for building on these foundations.

Since microfinance aims at both a short–term and a long–term impact, it offers a suitable field for cooperation between humanitarian and development organizations. In the past, these two sets of organizations have operated in somewhat separate realms, often to the unintended detriment of the populations they are trying to serve. By cooperating in microfinance, and working together with the government of the country concerned and local civil society, they have the potential to change this.

In a joint research project, ILO and UNHCR have found that despite all the lessons learned, there is still an inadequate exchange of information and experience between humanitarian and development organizations. Sound practices have been implemented in some parts of the world, but there is much scope to widen the spread of these practices.

ILO and UNHCR have decided to jointly focus on ensuring increased access to microfinance for communities affected by conflict and reinforcing the skills and knowledge of humanitarian and development actors in working closer together for the benefit of affected communities. For this purpose, UNHCR and ILO have developed a training manual on "Introduction to Micro–finance in conflict–affected communities".

The following are some of the key messages of this training

• UNHCR and its partners can promote durable solutions for refugees through their socio–economic empowerment. Under certain conditions and as part of other interventions, micro finance can contribute to achieving this objective by enhancing the capacity of refugees and hosting population to generate income.



• Micro finance aims at offering continuous access to financial services for micro entrepreneurs and low income people who can be economically active. It offers a variety of products such as credit and savings.



• However, micro finance requires certain conditions to operate, such as minimum stability, a minimum cash economy, a demand for financial services and sufficient economic activities.



• A pre–requisite for the implementation of micro finance is the presence of an organisation with proven skills and expertise in that field and a clear separation from social welfare activities.



• In situations where the conditions are not conducive to promoting micro finance and where no expertise is available, UNHCR and partners are advised to focus on other interventions aimed at promoting the generation of income. However, those interventions also require a specific set of expertise to ensure a positive impact on communities.



• Building sustainable financial services also goes beyond the commitment of relief agencies. It therefore requires humanitarian relief partners to partner with development actors that have long term commitment.