This presentation was given by Development Workshop's Director Allan Cain at a workshop on Microfinance in Post-War Countries and Conflict Situations in Boulder, Colorado.

1. Microfinance Training (MFT)
Boulder, Colorado
04 August 2004
Allan Cain
DEVELOPMENT WORKSHOP
Workshop on
Microfinance in Post-War Countries
and Conflict Situations
Allan Cain
Development Workshop – Angola
allan.dwang@angonet.org

2. War Economies
From Springfield Centre
Study (2002)

3. War & the Informal Market
• Migration from rural conflict zones to the relativly safe
urban areas happens early in conflict.
• Retailing in the informal sector market is the principal
“coping mechanism” for the urban poor migrants.
• The informal market is dominated by women, many of
them heads of households and a large portion of them
originally migrants to the city.
• Entry into the informal market economy is open to
anyone, regardless of their level of literacy or previous
experience.
• To succeed she needs to acquire business skills and
sufficient capital to build a sustainable micro-enterprise.

4. Frontline Marketing
Market places often develop where natural trade routes cross
frontlines or cease-fire lines. Both sides benefit by extracting taxes
or fees or percentage of goods from the entrepreneur traders.
Territory under
control of Red
Forces
Territory under
control of Blue
Forces
Blue Control
Point / tax
collection
Red Control
Point / tax
collection
No Man’s Land
RedFrontline
BlueFrontline
Trade Routes
Informal
Marketplace

5. Coping Mechanisms During Conflict
• Reliance upon humanitarian assistance is an early
coping mechanism for overall survival during conflict for
the internally displaced (IDPs).
• During conflict, trading (often of humanitarian
assistance) is an important survival strategy for IDPs
and usually the first entry point into the marketplace.
• In urban and peri-urban areas, the most common
characteristics of coping mechanisms are low risk, low
investment and quick return activities.
• Cultivating kinship, social and business linkages with
richer more stable, urban and peri-urban markets is
important for establishing businesses and for reducing
vulnerability.

6. Lessons from Sudan
• Problem that population that has become
accustomed to humanitarian relief may still perceive
credit as aid.
• Economy is still very fragile and market limited by
small number and variety of commodities.
• Instability of IDP clients who may decide to go back
to their areas of origin and default on loans.
• Laws for regulating Microfinance do not exist yet so
MFI unable to collateralize loans.
• Local economy often dominated by foreign exchange
MFI may be negatively impacted if forced to do
business in less stable national currency.
From: Lokule Yengi – SUMI – Sudan (2004)

7. 19
40
19
50
19
60
19
70
19
78
19
85
19
88
19
95
20
00
Luanda
Benguela
Huambo
Namibe
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
1 2 3 4 5 6 7 8 9
1940 1950 1960 1970 1978 1985 1988 1995 2000
War-Driven Urbanisation of
Angola
Liberation War Civil War 1 Civil War 2 Civil War 3
From a 2003 study carried out by Development Workshop on peri-urban tenure rights in Angola

8. Post-Conflict Coping Mechanisms
• As the security situation improves the use of land for
agricultural production becomes an increasingly
important coping mechanism.
• Exploitation of natural resources and household
labour are important survival strategies during and
after conflict.
• In rural areas people prefer to save in productive
assets in the immediate post conflict situation.
• Liquid assets are only useful and desirable to a
limited point. Liquidity incurs the risk of theft or loss
and therefore normally a balance is sought between
need for liquidity and safety.

9. IMPORTANCE OF INFORMAL EMPLOYMENT IN THE URBAN
ECONOMY
Self Employment
(informal)
43%
Unpaid Family (informal)
16%
Public Administration
10%
State Company
5%
Private Sector
19%
Other
1%
Business (informal)
6%
Self Employment (informal)
Unpaid Family (informal)
Business (informal)
Other
Public Administration
State Company
Private Sector
Importance of Informal Employment in the
Angolan Urban Economy
Source – Adauta 2001

10. Post-War Economic Exclusion
• Post-war reconstruction strategies often fail to build
on capacities and skills developed by the poor and
IDPs and continue to exclude them from participating
fully in the re-construction process.
• Rather than recognising the entrepreneurial creativity
of informal sector marketers, the poor have been
increasingly excluded from carrying out their business
in the streets and urban centres.
• Economic “liberalisation” of the 1990s has lead to the
concentration of wealth of a few built on privileged
access to bank credit and foreign exchange often at
concessional rates.

11. Informal Market for Services & Land
• 50% of Luanda’s families purchase their water
from informal sector sellers.
• 15% of the poorest families’ incomes goes to
purchase water.
• Informal water market amounts to over US$
35,000,000 per year.
• For the urban poor their investment in a
housing plot and subsequent construction of a
residence is the only means of accumulation
of wealth.
• 80% of the residents in the peri-urban districts
of Luanda have no clear legal title to the land
that they occupy, therefore no way of securing
their investment.

12. Access to Land RightsACCESS TO LAND
Informal Land
Occupation
17%
Informal Purchase
30%
Informal Rental
15%
Informal Inheritance
4%
Informal Family Transfer
9%
Other
3%
Informal House
Occupation
2%
Formal Family Transfer
1%
Formal Inheritance
1%
Formal Rental
2%
State Transfer
2%
Formal Purchase
14%
Existing Land Market - Angola
From a 2003 study carried out by Development
Workshop on peri-urban tenure rights in Luanda
and Huambo

13. Informal Microfinance Providers Post-Conflict
From Springfield Centre
Study (2002)

14. Springfield Model of Demand for Microfinance
in the Context of Decreasing Risk
From Springfield Centre
Study (2002)

15. Product Choice in Post-Conflict Environments
From Springfield Centre
Study (2002)

16. Socio-Economic Inclusion
Microfinance as a Strategy for Post-War Poverty Reduction