The role of microfinance post trauma: the case of Syria

• Published in: Journal of sustainable finance & investment Vol. 11; no. 3; pp. 276 - 290
• Main Author: Osman, Omar Sheikh
• Format: Journal Article
• Language: English
• Published: Taylor & Francis 03.07.2021
• Subjects: 2 (Methodology and Policy); European Investment Bank "EIB"; Microfinance "MF"; Microfinance Institutions Syria "MFI-S"; Small and Medium Enterprises "SMEs"; Syrian Pound "SP"
• ISSN: 2043-0795; 2043-0809
• DOI: 10.1080/20430795.2020.1753433

Microfinance emerged in the 1970s as a strategy to reduce the vulnerability of the poor and to promote microenterprise. The literature showed that microfinance plays a vital role as a tool for reconstruction in post-conflict communities and this urged the researcher to study the extent to which microfinance can be used as an effective tool for post-trauma reconstruction. The methodology was based on obtaining primary data by raising questions in structured interviews with the officers of microfinance institutions in Syria and obtaining secondary data from their financial reports. The study was conducted at four institutions engaged in microfinance which together represent the population. The descriptive analysis of the data gathered to demonstrate the real role these institutions played. The main conclusions were: The European Investment Bank played a prominent role in supporting microfinance institutions in Syria beside to small and medium enterprises; the distribution of microfinance institutions in Syria did not cover the whole of the country; microfinance institutions make finance accessible to women and encourage them to participate in the economy particularly in rural areas; the typical loan-level microfinance institutions provide is considered inconsequential for financing working capital to entrepreneurs; microfinance institutions charge interest on a monthly basis, the rate amounting on average is around 18-24 per cent annually, even though their main role is assisting in promoting the economy; loans financed by all of the microfinance institutions covered most economic activities; microfinance in alignment with Islamic principles was not accessible.