A construction worker smoothes the wet concrete on the single step leading into Mimose Clerjeau's new home.
Before the earthquake, the 53-year-old Haitian woman lived in a straw house. "This is much nicer," says Clerjeau, smiling as she surveys the simple two-room concrete house with a corrugated steel roof.
For over two months, construction workers toiled away to build the new house, which will provide a cool oasis from the blistering heat outside for her and a few of her six children who still live with her. It is a starkly clean, sturdy structure in a cluster of scattered tents and shacks.
Like hundreds of thousands of others, Clerjeau lost her flimsy house in the Jan. 12 earthquake. But unlike many others, she had financial support. The small businesswoman benefitted from a test project by Fonkoze, the self-described bank for Haiti's poor and the country's largest microfinance institution.
In a country plagued by disasters — the 7.0-magnitude earthquake, a cholera epidemic and political violence in 2010 alone — the institution wanted to provide the poor with some measure of stability by offering them catastrophic risk insurance. (Life insurance is already offered.) Partners in the venture include Swiss Re, CaribRM, Mercy Corps, Inter-American Development Bank’s Multilateral Investment Fund, the UK Department for International Development, and Guy Carpenter and Company.
When the quake hit Haiti, Fonkoze was about a month away from offering micro-insurance, says CEO Anne Hastings, with a laugh and shake of the head.
"So using donor funding, we effectively did a test of this product. We just assumed everyone on Jan. 12 had micro-insurance against this kind of catastrophe," Hastings told CBC at Fonkoze's Port-au-Prince headquarters.
Fonkoze decided to act as though all 45,000 clients with loans had catastrophe insurance. Of those, 19,000 were determined to be victims of the quake and benefitted. Fonkoze eliminated their debt, gave them 5,000 gourdes (about $125 US) for emergency needs, and gave them an opportunity to be eligible, upon approval, for a new loan.
To ensure the insurance operated as insurance, and not a handout, a retroactive fee of two per cent was levied on the loan. This, Hastings says, made sure clients "understood this type of insurance would not come free."
Clerjeau, a client and a so-called chief or leader of an area support group network, was one of the beneficiaries. Her remaining debt for her snowcone and tobacco business was eliminated and Fonkoze is helping her build the sturdy new concrete home.
Far more than a bank
Clerjeau's local branch, located in Kabare, about 40 kilometres north of Port-au-Prince, is one of 43 branches throughout the country, which shares Hispaniola island with the Dominican Republic. Fonkoze, which has 220,000 savers across Haiti, has made a concerted effort to build branches in rural locations and make the bank's services accessible to those living in rural remote locations.
"We go to them so they don't have to come to us," says Hastings. Credit agents hop on motorcycles every day, driving up to two hours where groups of clients meet, she says.
For a loan of 4,000 gourdes, or $100 US, a lender would pay about 800 gourdes in interest, or about 20 per cent. Unlike other microlenders, Fonkoze doesn't charge interest on repaid capital, Hastings stresses. The delinquency rate is less than five per cent, and the default rate is less than two per cent, though recent numbers are a bit skewed due to the new insurance program.
Hastings bristles at the word microcredit. She says hers is a microfinance institution, offering small loans starting at $25, but it's far more than that. While microcredit agencies focus solely on loans, microfinance offers a wider range of financial services, including remittances and savings accounts.
'I told him I'd never heard of a bank that taught people how to read and write.'—Anne Hastings, Fonkoze CEO
"We want to be clear that all financial tools are necessary for the poor in the same way they are for the rich, sometimes more necessary for the poor," says Hastings.
In reality, Fonkoze — founded in 1994, thanks in part to a large chunk of seed money from ROCHAD, a federation of Haitian organizations in Montreal — is much more than a bank. When Father Joseph Philippe, a Haitian priest, recruited Hastings to help with his vision of creating "a bank that the poor could call their own," a full-service bank was only half of the equation.
"At the same time, he wanted to teach people how to read and write and he wanted to teach them business skills," says Hastings.
"I told him I'd never heard of a bank that taught people how to read and write. And he said, 'Well, we have to do that because women entrepreneurs are illiterate and they don't know whether they're making a profit or not making a profit.'"
Not only does Fonkoze teach literacy courses, but also a slew of other subjects: children's rights, environmental protection, agricultural sustainability, sexual and reproductive health and, ever since the cholera epidemic began killing residents in October, the treatment and prevention of cholera.
"So we use micro-finance as a platform to deliver all the other services that need to go hand-in-hand with financial services if you are going to be successful in making your way out of poverty," said Hastings.
A promise to the clients
Fonkoze makes a promise to clients who stick with the institution for five years and attend the classes that at the end of the five years, they will:
- Have food on the table every day.
- Have all their children in school.
- Know how to read and write.
- Have a house with a cement floor, tin roof and a latrine.
- Have assets, like savings or a house, that will be accumulating.
It's a promise Clerjeau is proud of being on her way to accomplishing. "I love Fonkoze," she gushes. "Fonkoze has done a lot of good things for me."
Four of her children, several of whom are now in their 20s, went to school and she's working to get two others in, she says.
"Fonkoze has taught me how to save money," she says in Haitian Creole, through a translator. "They taught me a lot about business. They taught me that if I'm making 10 gourdes, I should save two gourdes and eat with the eight gourdes so that I can save money."
'[Women] are the backbone of the Haitian economy.'—Anne Hastings, Fonkoze CEO
Much talk of post-quake Haiti has centred around a single, catchy phrase: Building Back Better. And it is without a doubt, a necessity. Haiti ranks the poorest in the Western hemisphere, with a GDP per capita of about $1,300, less than half of that of the second-poorest country in the hemisphere, Nicaragua. Illiteracy rates hover around 50 per cent.
A key part of that rebuilding, experts say, must focus on livelihoods and the creation of sustainable jobs — particularly among women.
A recent special report released for the 2010 meeting of the Clinton Global Initiative by the Innovations quarterly journal said, "Every strategy for rebuilding Haiti today must include women as part of the solution." And microfinance needs to be a part of that, the report argues, stating that 62 per cent of Haitian women work, a higher percentage than in any other society in the world except Lesotho.
Yet, most women are in the so-called informal sector — small businesses such as selling wares at markets, home-based businesses and petty trade. This is where micro-financing can help the most.
Many of Fonkoze's programs focus on women. "They are the backbone of the Haitian economy. And they're also the doorway into the family unit so it's critical that we target those women if we want to have an impact on poverty," says Hastings.
At Fonkoze's branch in Kabare, dozens of women sit on stiff benches inside the building and spill out into the grounds inside a thick concrete fence, lounging with baskets of fruit and other wares as they wait to use the bank's services or see a credit agent.
Located on the town's main street, the vibrant orange and purple painted on the building (Fonkoze's signature colours) pop on an otherwise monotone street. A banner draped across the town's main road announces the institution's presence.
In a stark room at the back of the bank, Layette Bibiane, a Fonkoze credit agent, sits at a small wooden desk, sifting through papers and meeting with clients. Today's appointment book lists 30 clients.
"Some of them sell charcoal. Some of them sell oil. Some of them sell sugar. It varies," says Bibiane in Haitian Creole through a translator.
Asked if she feels like Fonkoze makes an impact, Bibiane energetically repeats "Anpil, anpil, anpil,…," the Creole word for "a lot," over and over again until the words fade into a grin.
Not everyone is as enthusiastic or optimistic about microfinance's ability to lift the poor from poverty.
A Bangladeshi economist, Dr. Muhammad Yunus, is credited with establishing the microcredit movement several decades ago and received a Nobel Peace Prize in 2006 for his work.
But Milford Bateman, author of "Why Doesn't Microfinance Work?" argues microcredit only offers an "illusion of poverty reduction."
He argues microenterprises overcrowd the community, thereby causing income levels to drop. And he argues, the institutes de-industrialize local economies by focusing efforts on the tiniest and simplest businesses, not the small and medium enterprises needed to move an economy forward.
It's an idea Hastings agrees with, especially in a country where the unemployment rate hovered above 80 per cent before the earthquake.
"I think it's the missing middle: this small and medium sector that, in most countries, is the engine to job creation. So I think the micro-finance sector needs to address how are we going to invest in those small and medium enterprises, not because we're trying to go upstream but because we absolutely have to find a way to create jobs in this economy."
But for Clerjeau, all the proof she needs is in her move from a straw to a concrete home. She has big plans for the small, grey concrete structure, including plans to paint. One bedroom will become a shared bedroom and the other a living room, she states proudly.
She might even get electricity someday. But some of those big plans will have to wait. "I'm focusing on my savings," she says.