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7670: Haiti's Big Banks Find Small Business a Boon (fwd)
From: radman <email@example.com>
Haiti's Big Banks Find Small Business a Boon
by David Gonzalez New York Times Service
Wednesday, April 18, 2001
Loans to Self-Employed Prove Successful
PORT-AU-PRINCE, Haiti Fritz Gerald Piquion may one day get that corner
office at Sogebank, especially since his grandfather was one of the bank's
founders. But he is intent on making it on his merits, not because of his
For now, he has settled for the street corner as an office, making dozens
of small loans to the vendors who pack Haiti's streets selling just about
anything from pots and pans to shoes and food.
Mr. Piquion, 23, is among several dozen loan officers at Sogesol, a unit of
Societe Generale Haitienne de Banque SA, or Sogebank, Haiti's leading
commercial bank, that has expanded into microfinance as it courts the
self-employed who make up more than 80 percent of Haiti's work force.
The fact that someone with the connections of Mr. Piquion chose to work
with clients once shunned by banks indicates a huge shift in the lending
culture of Haiti. The country's banks are now beginning to realize the
untapped potential in financing small entrepreneurs.
"I truly believe that is where the money of Haiti is, with the people,"
said Mr. Piquion, who has a finance degree from Bryant College in Rhode
Island. "It's a reality check to sit in those chairs in the clients' home
and hear them tell you their problems and how this loan will help. I did
not expect this at all. I came from college very young and full of ideas.
Right now, I'm faced with reality."
Sogebank is not the first commercial bank to enter the field. It was
preceded by three other banks that built upon the success of smaller
lending programs pioneered by nongovernment organizations. Banks jumped in
when Haitian regulators removed the cap on interest rates in the mid-1990s.
"Sogebank's involvement is confirmation that banks can do microlending and
be profitable," said Robert Dressen, a consultant to the U.S. Agency for
International Development. "The informal sector is so big and plays such a
big part of the economy that the banks see it as something that they cannot
While the small vendors trying to eke out a living were long overlooked,
the fact that they have continued to set up their wares in Port-au-Prince's
jam-packed markets was a sign of hope and opportunity amid Haiti's economic
and political upheavals.
"So many people are unemployed in strict economic terms," said Fabrice
Bosom, a consultant with Accion International, a nonprofit network of
microlenders in the United States and Latin America that is advising
Sogebank. "When you are unemployed, you live out of opportunities, and
living out of opportunities is being an entrepreneur. These are people who
have survived the whole system collapsing. The fact they are standing shows
they know how to manage stuff."
The loans start at about $100 and can work their way up to $3,000 as long
as the borrower repays on time. Loan officers visit clients not only at the
markets but also at home to see how people live and what collateral they
may have. Most put up appliances, inventory or even their beds for loans,
since producing the necessary papers to prove home ownership would be
Most borrowers use the loans to buy merchandise, slowly expanding into new
products. For some, the result has been increased business and a better life.
"I can feed my family better and help them," said Ghiselaine Ynelus, who
sells wooden knickknacks in Port-au-Prince.
For the bankers, the hours are long and the work is difficult, but they are
given incentives to enlist more clients. Many of them see the job as a
stepping stone to more traditional banking jobs.
"This work is about character and the ability to communicate," said
Laurette Orelia, who has the most clients of any Sogesol banker. "You
should not be too nervous or reluctant to speak to somebody because they
are dirty. You have to speak to anybody."
Most of the loan officers are women.
"They tend to be good communicators and tend to be more observant," said
Valerie Kindt, a consultant with Accion. "We hire accountants. The problem
is, they tend to look only at the number and not at the client."
Pierre-Marie Boisson, chief economist at Sogebank, who steered the creation
of Sogesol, said that while donor-financed lending programs showed
potential, they did not have access to enough capital and were not vigilant
in making sure loans were repaid.
"We went into this to make a profit," he said. "When you get into this
business with a so-called social approach, borrowers become aware of this.
They believe you will have to understand them if they cannot pay, because
you are a social actor, and they will more easily default than with a
commercial institution. You have to consider them as clients the same way
as any commercial client."
Sogesol has yet to tally the success of its lending, but executives said it
was the fastest-growing division of the bank. They speak of ambitious plans
to expand from their current 700 clients to 10,000 by the end of 2002 and
into other financial services, including insurance.
By doing so, Mr. Boisson said, the bank sends a message to the business
community. "This is a revolution," he said. "By showing the rest of the
private sector we can do business with small people in the street, this is
a good sign of hope for the country. We can make money and be partners with