12897: Fw: Fonkoze E-newsletter #16: Building Economic Democracy in Haiti (fwd)

[Bob Corbett <corbetre@webster.edu>]

From: Max Blanchet <MaxBlanchet@worldnet.att.net>


> 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 IS NOT A COOPERATIVE; IT PROTECTS DEPOSITOR
> SAVINGS
>
> This article explains the difference between Fonkoze
> and the cooperatives in Haiti, some of which are
> currently failing, bringing down with them an
> estimated $200 million of savings. It also explains
> the extensive measures Fonkoze takes to protect
> borrower savings.
>
> 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 IS NOT A COOPERATIVE; IT PROTECTS DEPOSITOR
> SAVINGS
>
> Recently in Haiti there has been much news about
> scandalous cooperatives paying 10 - 15% interest per
> month to entice depositors, and then closing their
> doors or disappearing with depositor's money. Many
> accounts estimate that $200 million in depositor
> savings has been lost in Haiti (Approximately 5% of
> Haiti's Year 2000 GDP!). This money is not primarily
> from the coffers of the wealthy, but from the pockets
> of Haiti's poor.
>
> To begin, Fonkoze would like to express its deepest
> regret for the many people who lost their savings.
> This is a tragedy - as serious for the poor as
> crop-devastating hurricanes or the loss of massive
> numbers of jobs. In addition to the loss of a lifetime
> of savings, many poor people may lose their faith in
> institutions, particularly financial institutions.
>
> Fonkoze would also like to express regret for the
> legitimate cooperatives, banks, and other financial
> institutions whose reputations may have been wrongly
> damaged by this fiasco.
>
> How is Fonkoze different from a cooperative?
>
> The primary difference is that, although Fonkoze has
> over US$ 2.5 million in deposits from over 25,000
> clients, Fonkoze DOES NOT LEND FROM DEPOSITOR'S FUNDS.
> Cooperatives take depositor savings, and lend that
> money to others (or pay it out in exorbitant interest
> rates that resemble pyramid schemes, as was the case
> recently). Fonkoze, on the other hand, keeps depositor
> savings on reserve in accounts in Haiti and insured
> accounts in the United States. Thus, with Fonkoze,
> depositor savings is protected.
>
> The decision to put depositor savings on reserve was a
> conscious one by Fonkoze management. Currently,
> Fonkoze is a Foundation under Haitian law. So, Fonkoze
> management felt that it was not fiscally responsible
> to lend out deposits without the regulation and
> oversight of Haiti's Central Bank.
>
> The funds that Fonkoze lends out come from a loan fund
> raised internationally from solidarity lenders. The
> size of that loan fund exceeds the size of Fonkoze's
> outstanding loan balance in Haiti by enough to allow
> for sufficient reserves.
>
> Another difference is that Fonkoze does not pay
> unsustainable interest rates on savings. Fonkoze pays
> 2.5% per year on regular savings accounts in Haitian
> Gourdes, a rate comparable to commercial bank rates in
> Haiti.
>
> Finally, Fonkoze is privileged to have governance from
> its own board in Haiti, made up of people elected by
> its membership of borrowers. It also receives
> excellent guidance and advice from the board of
> Fonkoze USA, which represents US investors and
> requires Fonkoze to have an annual external audit. In
> addition, Fonkoze has a competent and honest
> management team, dedicated to serving the poor, not
> exploiting the poor.
>
> Recently, Fonkoze has submitted an application for
> fully-regulated commercial bank status to Haiti's
> Central Bank for the purpose of serving even greater
> numbers of Haiti's poor. This application requires
> that Fonkoze undergo more extensive external scrutiny
> than it currently does. However, knowing that its
> financial accountability is strong, Fonkoze is
> undaunted.
>
> Our hope is that, together with other sound financial
> institutions in Haiti, Fonkoze can restore the
> confidence of the Haitian poor in financial
> institutions.
>
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> __________________________________________________
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