What’s War Got to Do With This?
In cases where a randomized controlled trial could be considered unethical, natural experiments can occasionally provide an alternative research design. The natural geography of North Kivu, including a mountain range and a large river, has allowed the Allied Democratic Forces of Uganda access to Beni, while largely preventing a complete spillover of violence to Butembo. This in turn creates an environment for a natural experiment, where conflict is the variable of interest. Looking at microfinance services in both towns for variation cause by the presence of conflict, the argument is made that financial service uptake does not actually decrease—in fact, in the informal sector, it slightly increases. In addition, impacts to portfolio at risk, and portfolio size, are seen only in the formal sector in a conflict-affected context. Portfolio at risk rises by about 10%, and overall portfolio values drop by about $200,000, on average, but this is only found in the formal sector, while the informal sector continues to operate. Qualitative evidence confirms this and suggests a delay in the impacts felt to portfolios given the nature and timing of credit products and conflict events.