Microfinance and social protection programmes in conflict areas
Microfinancing and social protection programmes have a commonality of purpose – the amelioration of the difficulties facing the most vulnerable in society, particularly women and children. They also have strong differences. One is more resilient being funded by government while the other is more fragile being dependent mostly on private capital. And there lies the potential for complementarity.
The current spate of conflicts in the country has posed formidable challenges to providers of microfinance services. We now have a situation in which microfinance institutions are forced to stay away from many places. Ironically, those are the places where their services are needed most. Some of these places include the areas disturbed by the Boko Haram terrorists and those threatened by kidnapping and armed robbery. The sad thing is that the number of places in this category is high and rising. We must therefore recognize the challenge – to restore and sustain the flow of microfinance service in these areas.
Efforts to canalize financial resources to the parched grounds, using microfinancing in Nigeria have come a long way. Twelve years after its transformation from a virtually unregulated and unattractive activity to a proper national empowerment policy, microfinancing has evolved from the preserve of Non-governmental Organizations (NGOs), and the pastime of some socially-minded people, to a vital and respectable member of the banking system. It has also transformed to become a choice occupation practiced by equally respectable members of the banking community. But sustainability and outreach are core evaluation criteria for the sector.
Since microfinancing and social protection policies have similar objectives, we should endeavour to exploit their complementarity in dealing with the scourge of poverty and resource gaps. These resource gaps arise naturally over time but have often been exacerbated by insurgencies, wars and other forms of dislocation, including poorly implemented management strategies. The economic liberalization policies, which swept through the world in the 1990s, played a part in the furtherance of these resource gaps among economic agents in many countries, including Nigeria. The policies of indigenisation, privatization and commercialization in Nigeria, especially the indigenisation policy, fall into this category. They inadvertently helped to set the tone for today’s inequality of incomes and opportunities in the country. It had the patriotic objective of transferring the “commanding heights of the Nigerian economy” to her citizens. However, its implementation in 1977, just a few years after the civil war when many citizens had hardly found their feet, meant that most people were excluded. It appeared that those who had military connection or who made some money around the war, had the upper hand.
It is a fact that these policies are swords with two equally sharp edges. If properly implemented, they help to resolve so many economic and social problems, including corruption, waste and inefficiency that characterise public services in developing countries. However, they could create worse problems if mismanaged along the line of implementation and could result in a furtherance of the mischief they aimed to solve.
The concentration of access to opportunities and privileges in a few hands is one of the downside effects of liberalization that leads to the concentration of wealth in a few privileged hands. Another equally unfortunate outcome that could follow privatisation is the transfer of quality public assets to new owners who may be incompetent, technically and or financially, resulting in a worsening of the mischief intended for resolution. Perhaps, the rapid growth of microfinancing as an instrument to reduce or obliterate wide resource gaps among people could be traced to this rising inequality. If we add those natural and evolving gaps to the fall-out of insurgency, we get the picture of a country in dire need of social intervention and protection programmes like those now in operation.
Conflicts have the effect of destroying the most important of rural communities’ assets – their social capital. Social capital is the bond of communal friendship that has its origins in the core fibre of the community. It is the trust of one by another and the feeling of a common destiny. The community associations, meetings and cultural linkages, all contribute to a strong social capital epitomized by a strong bond of genealogy. In place of this intra-community bond, conflict plants doubt, suspicion and mistrust.
Financial and economic capitals are usually among the first economic victims of conflicts while women and children usually take the first social hit. The rural economy rests very heavily on the economic activities of women, so hitting them means the rural economy is hit. Today, many economically active women, who supported large families, are either in IDP camps as refugees or unable to go to their farms because of insurgents rampaging under the pretext of herdsmen. This has further complicated the challenges of financing the economic activities of people in such areas, which are increasing by the day. I recently shared my research experience on the challenges facing people in Nassarawa and Taraba States where insurgents masquerading as armed robbers aredestabilizing the economic life of the state.There is an urgent need to fast track the efforts at curbing insecurity and rebuilding the capacity of the rural people. This is critical to boosting their reintegration and restoration.
One of the major coping mechanisms for people in this kind of dislocation is the use of land for farming but research shows that about 80 per cent of people in peri-urban areas have no title to the land they occupy. This is a defect in our system. Another coping strategy is through buying and selling or retail trading but many markets no longer open. In these circumstances people also prefer to save through physical assets, like animals and birds, rather than cash. The need to balance safety and liquidity becomes significant to them. This makes the availability of social amenities like water and energy very crucial.
According to research in some African countries, many poor families spend as much as 20 per cent of their incomes on the purchase of potable water. In particular, the residents of Luanda in Angola spend about 15 per cent of their income on the purchase of water. The situation may be worse in some rural areas in Nigeria, where there is neither income nor water to buy. Imagine the situation in many villages where there is no water because of drought, and the economic activities that generate income have been constrained by insecurity due to herdsmen attacks, kidnapping and armed robbery.
These threats constrain microfinance institutions from getting to the people that really need their services. This is why we need more social protection policies. Besides, our microfinance strategy has moved from being socially-driven to commercially-driven operations. For microfinance to get to the root of the rapidly declining economic conditions of the people and at the quantum needed, it must go beyond the pastime or hobby of some socially-minded people. Commercial microfinance is therefore the way to go but there are issues. The profit motive is at the centre of commercial microfinancing and profitable lending is not an important feature of war zones. So how do we ensure that microfinancing continues to function in these areas of conflict, which ironically are in greater need of support than non-conflict areas? This should be our current thinking point. For starters let us bring in the social protection element to troubled spots while microfinance recoils to restart.
Publicly-funded microfinance programmes in Nigeriafailed in most instances or became channels for defrauding the state. The hope of getting the public sector to contribute to the canalization of financial resources to the poor maylie in the effective implementation of some of the empowerment programmes, including N-Power and the School Feeding initiative. Let us drive them with a sense of mission, equity and integrity. They mayhold the key to a change we crave.
Emeka Osuji