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9642: Fonkoze e-newsletter #6: Building a democratic economy in Haiti (fwd)

From: Fonkoze News <fonkoze1@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.

In this e-newsletter you will find an article


This article includes quotes from two of the most
valuable new additions to the Fonkoze team in Haiti.

To subscribe or unsubscribe to this newsletter, please
click on the “subscribe” link on our website at:

We will have our 2000 Annual Report and an updated
progress chart posted by next week, and we hope you
will take the time to visit the website and download
the annual report. Thanks to Tom Jacobson for all of
his work on the website!

If you would like to learn how you can support
Fonkoze, to join our regular mailing list, to receive
other information about Fonkoze, or to comment on this
newsletter, please contact:

Fonkoze USA
PO Box 53144
Washington, DC 20009
(202) 667-1277


Fonkoze already has more than 8,000 active
micro-credit borrowers. This is a great achievement in
Haiti’s difficult operating environment, but Fonkoze
is not satisfied. We want to offer our services to
many more of Haiti’s poor!

In addition to ongoing efforts to access more capital
and build the loan fund, Fonkoze is working hard to
improve the productivity of its lending operations. 

Improving productivity means offering our services to
more clients without increasing operating costs.
Fonkoze’s primary operating expense category is
employee salaries. So, improving productivity means
dramatically increasing the number of clients served
without increasing the number of employees.

The key productivity statistics to follow are “number
of clients per credit officer” and “loan portfolio
quality”. A credit officer is someone who manages
loans for Fonkoze’s clients. Credit officers schedule
meetings for clients to reimburse their loans, help
collect delinquent loans, and work with clients to
make certain they are able to repay on time. 

As of last year, credit officers averaged
approximately 200 clients per credit officer. Fonkoze
has the ambitious goal of averaging 500 clients per
credit officer in the next three years and improving
portfolio quality at the same time. This means that
Fonkoze could serve more than twice as many “ti
machann” for the same operating costs! 

Fonkoze has always organized clients into groups of
five ti machann. The members of each group select each
other, knowing that if one member does not repay her
loan, the others will have to reimburse the loan for
her. They know that their futures depend on each

The key to improving productivity is to organize the
ti machann solidarity groups of five women into
“centers” of 6 – 8 groups as the Grameen Bank in
Bangladesh has discovered. Mr. Salam is a senior
manager at the Grameen Bank of Bangladesh who has
joined Fonkoze for a period of 10 months. He has
worked for the Grameen Bank for 19 years as a student
of Professor Mohammed Yunus, the founder of the
Grameen Bank (the first pioneer of micro-credit
lending). Mr. Salam explains the importance of the
center meetings:

“If there is no social network of the poor people
within the village, they are not encouraged to
mobilize more savings and also they are not thinking
about their futures. The center meeting is the most
important place for motivating them to be more
conscious of their future. Fonkoze credit agents can
best perform their responsibilities through these

Clients will meet together in these centers to make
their repayments and to make deposits in their savings
accounts. In the new system, clients will reimburse
the late payments of their solidarity group partners
on the spot, each time a reimbursement is due! This
means fewer delinquent loans. It also means that
credit officers no longer need to visit each group
individually, so they can handle many more clients
than ever before without increased delinquency!
Fonkoze’s financial health will improve, and our
services will expand.

Fonkoze is putting in place an excellent, new training
system for its credit officers to ensure that they put
these new lending techniques into practice. With
insight from Fonkoze’s partners mentioned below, this
training program and improved productivity will become
a reality in Fonkoze’s 18 offices throughout Haiti.

To motivate the credit officers, Fonkoze has installed
an incentive system that offers credit officer bonuses
based on the following criteria:

First, portfolio quality – lower delinquency and
default ratios equalmore money for credit officers. If
a minimum standard for portfolio quality is not met,
the credit officer forfeits the possibility of any

Second, outstanding loan balance – a higher
outstanding loan balance equals more money for credit

Third, number of new members – the more new clients a
credit officer can bring on board, the more money for
the credit officer.

By balancing these three objectives, credit officers
have an incentive to help Fonkoze more efficiently
serve the poor, as Rob Barger, Fonkoze’s Director of
Human Resources points out:

“For a long time, Fonkoze has counted on the
initiative and self-motivation of its employees to do
their jobs well. However, as the institutions grows
and we begin to think more long-term, there is a
greater need for transparent periodic evaluations of
employee performance. In reference to our credit
agents, we are combining the implementation of the new
incentive system with a sort of continuing education
seminar where our more successful and experienced
credit agents share their own best practices with
newer credit agents.”

Fonkoze intends to improve productivity and serve many
more of Haiti’s poor with the grateful acceptance of
help from several of its partners – Concern Worldwide,
MicroStart, and the Grameen Foundation USA. These
valuable institutional partners are working with Rob
and Mr. Salam to improve credit officer productivity
in the Mibale pilot office. They will also assist Rob
in spreading the changes throughout all of Fonkoze’s

This productivity improvement program is another
example of how Fonkoze constantly seeks to learn and
to improve administrative efficiency to make every
dollar of income lift more families out of poverty!

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