Microfinance in a post-conflict context is often described as a powerful tool to boost local economic
development and to support post-conflict rehabilitation assistance. However, little research has been undertaken
to look beyond microfinance’s economic benefits, at social mobilization, empowerment, stabilisation, peacebuilding
and solidarity, through social capital enhancement. This paper describes microfinance’s intangible
benefits, by reviewing the literature and exploring and synthesising lessons from conflicts in nine countries in
Asia and the Pacific, with emphasis on microfinance experiments in Afghanistan, Papua New Guinea
(Bougainville), Sri Lanka and Timor Leste. This paper demonstrates that microfinance promotes conflict
resolution, for example by empowering members to establish their own organisation. It encourages democratic
procedures that help people surmount conflicts, while providing a way to bring people together, focusing on
economic activities and cooperation rather than differences. Microfinance provided to different ethnic groups
can also contribute to social and political reconciliation, as it provides a forum for a unified voice for peace, with
people cooperating and working towards a shared future. Moreover, microfinance also encourages reintegration
of refugees and demobilised soldiers by providing finance to mixed groups linked by joint liability. Finally,
microfinance is also a tool to empower people by regaining trust and confidence in each other.
