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Reparations and Microfinance Schemes

Armstrong, Andrea
June 4, 2015

Source: (2006) In Pablo De Greiff, ed., The Handbook of Reparations. Oxford, New York, USA: Oxford University Press. Pp. 676-698.

“Allocating reparations benefits to victims of civil rights abuses with a lasting effect on their well-being is a tremendous challenge. By converting benefit payments into shares and beneficiaries into shareholders of microfinance institutions (MFIs), the former victims turn into active partners of aid and owners of local institutions. In many countries, indigenous savings and credit associations are the only civil society insitiutions that have survived the breakdown of society. They represent the social capital for the reconstruction of local financial institutions. In other countries, such institutions have to be newly built. In either case, experienced international NGOs may be instrumental in building, or reconstructing, MFIs owned by recipients of reparations payments. Part of the funding in a reparations program may thus be allocated directly to the victims-turned-shareholders, and the other part to institution-building. Based on satisfactory performance of the MFI, the share capital may be augmented by donor grants and bank borrowings to increase the volume of loans to the user-owners for income-generating activities. In terms of sustainable impact, there is no alternative to institution-building.” (excerpt)


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