Contextual Analysis
Kenya was, at best, at a crossroads, and, at worst, on the verge of civil war in the aftermath of the bitterly contested, deeply divisive and generally highly politicized presidential elections held in December 2007. The unprecedented   post-election violence exposed deeply rooted ethnic, regional, social and economic cleavages within the Kenyan society. It ruptured the social fabric of the society. It also divided populations by undermining interpersonal, familial and communal trust, weakening the norms and values that underpin cooperation and collective action for the common good, besides threatening to destroy the nation’s social capital.
The post-election violence had far-reaching effects on different dimensions of the microfinance industry ranging from portfolio at risk, escalation of costs to loss of income and opportunities.
Kenya’s economic and business landscape dramatically changed owing to the violence. Many small and micro-enterprises were adversely affected by the violence and members of the Association of Microfinance Institutions – Kenya (AMFI-K) estimated a portfolio loss of Kshs. 25 billion. This clearly shows that client, liquidity and financial exposures in the industry were put in a major disadvantage. Specifically, there was relocation of staff, breakdown in the group-guarantee systems, displacement of customers and destruction of premises.
Adverse effects
The post-election violence had far-reaching effects on different dimensions of the microfinance industry.  Institutions with deep penetration in the rural areas and low-income urban dwellings were the most adversely affected by the violence.  Microfinance institutions  (MFIs) operating at the epicentres  of the skirmishes, notably part of Rift Valley, Western, Nyanza and Nairobi’s Kibera and Mathare slums bore the greatest brunt  of the mayhem.  Parts of the then Coast Province were also adversely affected.   The effects included disintegration of loan guarantee systems and group cohesion.  The image of the industry was also dented, when some of the institutions were perceived to be pro-government, especially those that had dealt with the youth and women funds prior to the elections.  The effect of the violence on the staff of MFIs was multidimensional.  While some of them  lost property, others suffered psychological trauma  associated with physical threats, harassment, intimidation and the burden of housing large numbers of displaced relatives.  Ethnically-driven tension was also noted among the MFIs’ staff.  In respect to the customers, the effects included displacement, loss of livelihoods, death as well as rupture of group cohesion.  In a nutshell, the violence, conflict and insecurity posed a serious threat to the sustainable operations of MFIs.

Around the corner
This year’s   general elections are scheduled to be held on 8th August 2017. Voters will elect the President and his deputy, Members of Parliament (Senate and National Assembly) and devolved government members (county governors and ward representatives).
With that in mind, MFIs should be sensitive to the potential impact of their actions in zones of conflict and the way their activities are carried out so as not to contribute to the  triggering of  new conflict  or exacerbating existing conflicts and tensions because of the elections. This task is enormous and requires a multiplicity of skills and leveraging of competencies across the Kenyan society.
However, there is no doubt that MFIs can make a positive contribution to peace -building in Kenya.  This is not only because they  were adversely  affected by the post-election violence and experienced violence and tension at their workplace, in surrounding communities, through clients and along supply chains, but also because MFIs inherently possess the potency to be a force of peace and non-violent change.  The bitter experience of the post-election violence demonstrated the inextricable link between MFIs and peace, and reinforces the need to make them (and the private sector in general) critical actors in peace-building in Kenya.  The MFIs and security (peace) are linked in many ways, most obviously because violence and conflict infringe on the efficient and effective operation of the microfinance industry. By the same token, thriving markets and human security go hand in hand, and reinforce each other.
For MFIs to provide security to their staff, clients and assets, peace is of utmost necessity.  There are different ways in which MFIs can contribute towards a just and sustainable peace- building initiative in Kenya by strengthening the capacity of their staff and clients to manage conflicts in their own areas. To be effective in peace building, MFIs also require the following skills: understanding, conflict and peace, conflict-sensitive development, early warning and conflict prevention, post trauma healing, inter-cultural tolerance and alternative dispute resolution mechanisms.

Opportunities for peace building by MFIs
Because of their unique positioning where they are addressing economic empowerment of the poor, opportunities that MFIs can use to promote peace are:

Solidarity groups
By and large, the microfinance model facilitates access of financial services to the poor in our community. Since the target group lacks conventional collateral, microfinance opens a window through which they use social collateral. In that regard, members of a group guarantee one another in a bit to access credit. Generally, they form groups of twenty to thirty members. The members should know one another well so as to cultivate trust. They should also be willing and able to guarantee one another. The field officers of MFIs educate these groups on the types of leaders to elect for their respective groups so that they can function well. In most instances, those elected as leaders are   people who have some influence in the community. Every week or month, a field officer of an MFI meets with these groups. On average, a field officer meets 600 clients per month in a structured way for the normal finance business. These clients are met in their groups. Field officers are in a unique position because the groups look up to them and they trust them. During the group meetings, field officers can pass on peace messages to the group members. These officers would therefore be very ideal ambassadors of peace at the group level and to a larger extent, the community.
Group leaders
MFIs ensure the smooth running of the groups by training the group leaders. These leaders in turn ensure that the group is obeying their constitution and that the loans are repaid as per the requirements. The frequency of the leaders’ training sessions varies from one MFI to another. The group leaders are people with some influence in the community. They can therefore be used as ambassadors of peace in their respective communities. They can also be trained as peace builders and encouraged to pass the message of peace in their communities. This is an enormous opportunity to build peace. These leaders can also be challenged to come up with community initiatives to protect one another if violence erupts.

Relationship with the church
Some of the MFIs are owned by Christian institutions or have a Christian foundation. The role of the church in peace building and conflict resolution cannot be underestimated. These MFIs are in a very strategic position to deliver the peace messages because the clients already trust
them. They can also use the resources available in their mother churches to pass on the peace message. The Catholic Justice and Peace Commission is a good example of such body that would be useful for MFIs especially those affiliated to the Catholic Church.

Respect in the Community
Nearly all MFIs enjoy a lot of respect in the community. They work very closely with the local administration all the way from the regional commissioners, to the chiefs and sub chiefs on the ground. This respect is such that even at the height of the campaign periods, MFIs are able  to run  their businesses smoothly . This is an opportunity in itself where the MFI can work with the local administration in the peace building process.

Microfinance is a labour intensive activity where field officers interact with their clients on a daily basis. The current outreach of microfinance institutions is such that within a month, more than half a million people will have had contact with an MFI officer at least for an hour. If each of these clients was given a positive peace message, millions of Kenyans can be reached within a short period of time.  Given the model of   these institutions, no extra effort would be required to mobilize these people since they are already conducting business as groups. The hundreds of officers who are out in the field every day would just need to add the peace message as part of their regular communication to their clients.

Partnering with other institutions
MFIs can also partner with institutions which are already involved in peace building and conflict resolution such as religious  and government institutions,  NGOs already specializing in peace building, village elders, opinion leaders in the community and to a lesser extent,  politicians. By partnering with these institutions the MFIs do not have to re-invent the wheel. They can use the resources already available to pass on the same message to their target group.

Client resilience
The typical MFI client  is  able  to succeed  against  great  odds and  rarely  gives  up, irrespective  of  how  hard  the  times he or  she is facing  might be. This provides an enormous opportunity for the MFIs to   leverage   on   such resilience    in their peace building   initiatives.
Addressing the problem of youth unemployment
The high rate of unemployment among the youth means that they are often idle and could easily be used to disrupt peace. MFIs can address this challenge by   making   deliberate effort to create programmes addressing youth unemployment in order    to inculcate a sense of responsibility in them and ultimately, financial independence.

Peace is often taken for granted. It starts at the interpersonal level and it requires a bottom – up approach since it is not only a process, but also the sum total of all gestures of good will. To this end, individual actions count to a very large extent.  The infamous 2007/8   post election   violence made it apparent that everyone is vulnerable to the devastating and disruptive effects of violence and conflict.  The  potential  of  the    microfinance industry  in   facilitating  conflict  resolution  in  Kenya  can  therefore   be  tapped  to  prevent  the likelihood  of   peace  being  disrupted . Finally, we can never build durable peace unless we successfully break the often reinforcing cycle of poverty and violence by getting people (particularly the youth) out of the poverty trap.
Without peace there can be no progress or prosperity!
The writer is the programmes manager, membership and capacity building of the Association of Microfinance Institutions (Kenya). Email: