Developing a Conflict-Sensitive Microfinance Model for Darfur

While aid agencies are beginning to explore potential economic recovery in Darfur, there is a lack of information about Darfur’s financial sector, including local market economics, factor markets, and long-term development needs of the region. Tufts/FIC’s livelihood research is regularly cited by others as the only rigorous and independent field research being conducted. This limited perspective, aggravated by poor media coverage of Darfur, has contributed to an uninformed and distorted image of conflict levels, economic activity, and the potential for economic recovery.

To address this gap, Tufts/FIC commissioned a microfinance assessment undertaken as part of the joint UNDP-IOM-Tufts project earlier this year. That document, “Championing the Coping Economy: An Assessment of the Microfinance Market in Darfur: Gaps and Opportunities,” reviews the financial sector of Sudan and Darfur, and assesses the potential for microfinance as a tool for economic recovery in Darfur. It provides an in-depth review of Darfur’s supply and demand markets for microfinance and a set of recommendations for ways forward.

A second paper complements the Microfinance Assessment by focusing on how microfinance and other development approaches can support the livelihoods of poor, low-income, and conflict-affected (both displaced and non-displaced) people in Darfur. The paper includes ways to ensure that microfinance services and other livelihood interventions be made more conflict-sensitive and more environmentally-sensitive. Since the intensification of the conflict in 2003, Darfur’s fragile ecosystem has undergone serious environmental degradation caused by urbanization, displacement, and violent conflict. The two reports will be used to underpin UNDP’s Economic Recovery Program regarding its support for microfinance in Darfur.