24144: Minsky: (article) MICROFINANCE INITIATIVES FLOURISH IN HAITI (Washington Times) (fwd)

[Bob Corbett <corbetre@webster.edu>]

From: Tequila Minsky <tminsky@ix.netcom.com>

>
> -----------------------------------------------------------
> MICROFINANCE INITIATIVES FLOURISH IN HAITI
> By Reed Lindsay
> THE WASHINGTON TIMES
> -----------------------------------------------------------
> Despite political conflict that led to the ouster of elected President
> Jean-Bertrand Aristide last February and the freezing of international
> aid, microfinance initiatives flourish in Haiti.
>
>
>
>     None has been as successful as Fonkoze, Haiti's leading
> microfinance institution, which gives loans to more than 25,000 street
> vendors and other small-business owners, 98 percent of them women, at
> a default rate of less than 2 percent.
>
>
>
>     Fonkoze's growth has been part of a worldwide boom in microfinance
> in the past decade, leading the United Nations to declare 2005 the
> "International Year of Microcredit."
>
>
>
>     Microcredits are defined as small loans to people, and
> microfinance refers to a range of financial services, including
> microcredit, savings accounts, money transfers and insurance targeted
> at low-income clients. The United Nations Development Program (UNDP)
> says the number of poor people with access to microcredit more than
> tripled from 1997 to 2001, rising from 7.6 million to 26.8 million.
>
>
>
>     Now, with international aid flowing once again toward an interim
> government that has the blessing of the United States and the backing
> of more than 7,000 U.N. peacekeeping soldiers and police officers, aid
> organizations are looking to microfinancing as a key to rebuilding
> this devastated nation.
>
>
>
>     But at Fonkoze -- an acronym for Fondasyon Kole Zepol, or
> Shoulder-to-Shoulder Foundation, whose sound also means "make cause,"
> or "common cause" -- the prevailing mood is one of caution, not
> optimism. Anne Hastings, director of Fonkoze, says she would be the
> first to warn of the limits of microfinance, especially in Haiti, a
> country beset by staggering poverty and crippling natural disasters.
>
>
>
>     "We're really reaching primarily the upper half of those who are
> in poverty," Mrs. Hastings said. "For the poorest of the poor, which
> is a majority in Haiti, we now know that microcredit alone is not the
> solution. Instead, it ends up being a burden."
>
>
>
>     -Struggling to survive-
>
>
>
>     Even as political violence rages on in Port-au-Prince and the
> economy plummets, business is brisk at Solange Derose's open-air
> market stall in the tree-lined town of Thomonde, in the heart of
> Haiti's parched Central Plateau region.
>
>
>
>     "Things are great today," says Miss Derose, 45, as she scoops rice
> from her cluttered table of bars of soap, tomato paste, dried fish,
> bouillon cubes, salt and cooking oil, as a customer waits in the shade
> of the stall's thatched banana-leaf and stick roof. "I don't know how
> much I'm making, but it's more than I used to."
>
>
>
>     Miss Derose says she is grateful for a small loan she received
> from Fonkoze, which allowed her to expand her inventory and buy a
> donkey to transport her products from home to the market at a cheaper
> price.
>
>
>
>     But in Haiti, people with even modest resources like Miss Derose
> are the exception.
>
>
>
>     Down a dirt and rock road from the market, Rene Jacob stacks a
> 4-foot sack of charcoal against a tiny faded green wood-plank house.
> Mr. Jacob, 40, a wiry man with soft eyes and a gentle demeanor, says
> he makes the charcoal by cutting down branches from the seven trees
> that are spread around the small piece of property that his family has
> rented for 30 years at the edge of Thomonde.
>
>
>
>     Mr. Jacob says he can sell the charcoal for $2.70, but has to wait
> for the branches to grow back before he can make more. Asked how he
> survives, he dashes behind the house and returns with a plastic gallon
> jug containing a red liquid.
>
>
>
>     "This is my hope for tomorrow," he says with an earnest smile.
> "This gallon of alcohol is my whole life. When I see my wife, my baby,
> my mother are hungry, I must sell this alcohol to get money so we can
> survive. ... I do this because I have nothing else to do."
>
>
>
>     Mr. Jacob buys kleren, a home-brewed alcohol made from sugar cane,
> mixes it with a concoction made from roots he has scavenged and sells
> glass flasks of the finished product to men who believe it is an
> aphrodisiac. He can make up to $1.35 if he sells a whole gallon, he
> said, but he rarely does so in one day. His 8-year-old daughter
> recently was sent home from school because he did not have $8 to pay
> for her three months of tuition, a common burden of the poor in Haiti,
> where public education is underfunded and most students go to private
> schools.
>
>
>
>     He says he usually makes enough to buy medicine for his mother,
> who has tuberculosis, or to provide one meal a day of rice or corn to
> the seven members of his family who are crammed into his house.
> Sometimes, friends give them something to eat if profits from his
> alcohol sales are slim.
>
>
>
>     Mr. Jacob has heard of Fonkoze, but is not interested in applying
> for the $ 81 startup loan because he fears going into debt.
>
>
>
>     -Not for everyone-
>
>
>
>     "The last thing you want to do is make a poor person even poorer
> by giving them a loan they can't pay back," said Lauren Mitten of
> Development Alternatives Inc., a private contractor that runs a
> microfinance project in Haiti for the U.S. Agency for International
> Development (USAID).
>
>
>
>     "There are lots of microfinance institutions trying to reach the
> same people with the same products. But no one is reaching the extreme
> poor."
>
>
>
>     Under a law passed by the U.S. Congress in 2003, USAID must ensure
> that 50 percent of the money it provides in microfinance is targeted
> to the "very poor," defined as those living on less than $1 a day or
> the bottom 50 percent of all those living under the poverty line in
> that country.
>
>
>
>     But some analysts say the problem is not that microcredits are not
> reaching the extreme poor, but that they are ill-suited for them.
>
>
>
>     "The poor are not homogenous," said Rabeya Yasmin, who has
> pioneered a program based on grants targeted to the most poor for
> BRAC, formerly known as the Bangladesh Rural Advancement Committee,
> which lends money to nearly 4 million women in Bangladesh, making it
> one of the largest microfinance institutions in the world.
>
>
>
>     "Microfinance has been incredibly successful at poverty reduction
> among moderately poor groups. But the extreme poor have been
> neglected, and it's high time we start treating them differently.
> Until now, they have been absolutely hidden from view."
>
>
>
>     Mrs. Yasmin is at the forefront of a growing number of
> microfinance analysts who believe that giving cash loans of any size
> to the most poor can be counterproductive. Extreme poverty has varying
> definitions, but it often is used to refer to people who live on the
> equivalent of less than one U.S. dollar a day. In Haiti, 65 percent of
> the population fit this definition, the UNDP says.
>
>
>
>     Instead of loaning money, BRAC's ultra-poor program provides
> beneficiaries with a mixture of handouts, productive assets -- often
> farm animals -- and training, in the hope that after two years, they
> will be able to join the institution's regular microcredit program.
>
>
>
>     Mrs. Yasmin visited Haiti at the request of Mrs. Hastings in
> November, and Fonkoze hopes to match the grant-based program,
> beginning in the Central Plateau, with the help of Zanmi Lasante, the
> Haitian branch of the Boston-based health-care organization Partners
> in Health.
>
>
>
>     -Plenty to be done-
>
>
>
>     Fonkoze and Zanmi Lasante have their work cut out for them.
>
>
>
>     Far from the violence of Port-au-Prince, the more than
> half-million people who live on the Central Plateau trudge through the
> same grinding poverty as their parents and grandparents did. Some say
> conditions have grown even worse as arable land has shrunk because of
> deforestation and the 1956 flooding of farmland to build a dam that
> provides electricity to Port-au-Prince.
>
>
>
>     Many families survive by growing subsistence crops in the dry,
> rocky soil typical in many parts of Haiti, where massive deforestation
> has left the land barren, creating conditions for floods and
> mudslides. International aid organizations provide services that in
> many developing nations would be expected to come from the government,
> whose presence in the region is negligible.
>
>
>
>     With almost no public spending on health care, Zanmi Lasante alone
> treats more than 1,000 patients a day.
>
>
>
>     Roads in the region are deeply rutted and often impassable after
> heavy rains. Telephone communication ranges from sparse to
> nonexistent, and Hinche, the provincial capital, has had less than a
> month of electricity in the past two years.
>
>
>
>     The former military, which had been disbanded by Mr. Aristide, has
> defied the police and U.N. peacekeepers and acts as the de facto law
> enforcement in the region.
>
>
>
>     "Some donors are uncertain about this project, because Haiti
> doesn't have a stable government and it has a failing economy and
> there's too much insecurity," Mrs. Hastings said.
>
>
>
>     "But I say this is exactly the place to test what we're trying to
> do. If we can do it here in Haiti, here in the Central Plateau, we can
> do it anywhere."
>
>
> -----------------------------------------------------------
> This article was mailed from World Peace Herald
> (http://www.wpherald.com/storyview.php?StoryID=20050125-102219-3719r)
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