12599: Fonkoze e-newsletter #15: Building Economic Democracy in Haiti (fwd)

[Bob Corbett <corbetre@webster.edu>]

From: Fonkoze News <fonkozenews@yahoo.com>

Greetings from Fonkoze, Haiti's Alternative Bank for
the Organized Poor. We seek to build the economic
foundations for democracy in Haiti by offering
essential financial and educational services to
Haiti's organized poor. Our particular focus is
providing these services to women and rural citizens.

In this e-newsletter, please find an article entitled:

FONKOZE INNOVATES NEW PRODUCTS TO SERVE THE POOR

This article discusses Fonkoze's new loan product,
designed to provide full financial services to Haiti's
smallest merchants. These women's businesses are
roughly defined as having only US$7 - US$28 of
capital.

To subscribe or unsubscribe to this newsletter, please
click the subscribe link on our website:
http://www.fonkoze.org

If you would like to learn how you can support
Fonkoze, to join our postal mailing list, or to
receive other information, please contact:

Fonkoze USA
PO Box 53144
Washington, DC  20009
(202) 667-1277
fonkozeusa@cs.com
______________________________________

FONKOZE INNOVATES NEW PRODUCTS TO SERVE THE POOR

Economic development cannot occur successfully when
only "the few" are included. To fulfill its mission of
building the economic foundations for democracy in
Haiti, Fonkoze is innovating new loan products to
serve merchants in their earliest stages of
development.

Imagine large manufacturers in the U.S., Japan or
Europe trying to sell their products when small
retailers had no access to credit for stocking
inventory! All levels of the value-chain would suffer,
including the end-consumer.

In a prior e-newsletter we discussed rural Haitians'
perceptions of the merchants in their area. This
survey research, conducted by Fonkoze and Concern
Worldwide, revealed that rural Haitians define
merchants in their area as "small", "medium" and
"large".

To repeat, the smallest merchants have the following
characteristics:

- sell merchandise from a small wooden tray or basket
- sell in small amounts (e.g. a few stock cubes, half
a gallon of kerosene, and produce from the garden)
- buy and sell in the same market
- women stated that capital ranges from US$7 - US$28;
men stated that capital ranges from US$55 - US$185

By targeting the poorest merchants, Fonkoze hopes to
remain with them from the beginnings of their business
through their development into successful and
sophisticated traders. Fonkoze also hopes to accompany
a new class of clients out of poverty.

Why is it important to design loan products that
specifically meet the needs of these smaller-scale
(and, generally, poorer) merchants?

1) As many of us may know from experience, too much
credit can be as harmful as a lack of credit;

2) These small merchants may not be able to meet
minimum savings and/or membership requirements of the
main-line credit program - most, for example, are too
poor to afford the minimum savings requirement of
approximately US$10.

So, Fonkoze has designed a loan product specifically
created to meet the needs of these small savers /
borrowers, and to bring them into the main-line
microfinance program.

The new product has the following features. We have
provided these specific details so you can understand
how Fonkoze's loan program functions "on the ground".

New Loan Product Features

1) Credit amounts (actual loans are given in Haitian
Gourdes):

     Loan 1: US$19
     Loan 2: US$28
     Loan 3: US$37

If all credits are reimbursed well, the clients can
enter into Fonkoze's primary credit with education
program.

2) Duration of credit: 1 month

3) Reimbursement: 2 times per month

4) Savings: US$1 to open the account

5) Training: 2 weeks

6) One-time Membership Fee: $1.85 per person

7) Required Savings: 10% of credit amount

8) Methodology: Group of 5 individuals

9) Interest Due: 3% per month (on Haitian Gourdes)

10) "Center": Special center composed of
small-borrowing groups

11) Identification of Qualified Individuals: Visit by
credit officers to observe the state of their home,
assets they have, ways they make a living

12) Conditions: The client must already be engaged in
commerce, or have the intention to start a small
business

13) Delinquency: Upon 2nd late payment, they will be
ineligible for further borrowing

14) Late penalties: 0.2% - 0.5% per day of principal
late fee

Thus, Fonkoze's loan product is designed to accompany
the poorest merchants out of poverty, while holding
them to disciplined standards of repayment.

Fonkoze credit, savings, and education services can
benefit even the poorest of Haiti's rural citizens if
products and services are designed to meet clients
where they are and take them where they want to go.
That is what it takes to build a well-functioning and
democratic economy.














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