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a359: Fonkoze e-newsletter #8: Building Economic Democracy in Haiti(fwd)
From: Fonkoze News <email@example.com>
Greetings from Fonkoze, Haitiís 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
Haitiís organized poor.
In this e-newsletter you will find an article
HOW DO FONKOZEíS CLIENTS PERCEIVE THEIR BUSINESS?
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HOW DO FONKOZEíS CLIENTS PERCEIVE THEIR BUSINESS?
(article translated from Creole, all monetary figures
translated into US dollars)
Fonkoze management has been working recently to
encourage some of its more successful micro-credit
clients to transition into the business development
program. In the business development program, these
experienced merchants have access to more capital,
more technical assistance, and more concentrated
development of their business.
The major challenge to transitioning these clients is
basically that clients are not accustomed to viewing
their businesses as isolated entities that can be
developed! This results from two realities:
1) Clients mix their businesses with household
consumption needs and other household economic
2) Clients have difficulty doing complex calculations
We conducted interviews with two Fonkoze clients in
the Tombe Gateau office, and with the Director of
Fonkozeís Business Skills Training program to
understand these issues better. The two clients have
successfully progressed through Fonkozeís credit with
education program and are now on their third loan
cycles. Their names have been changed to protect their
[First, let us introduce the two clients we
interviewed. It is clear even from this brief
dialogue, that they are both intelligent, experienced
retail business managers.]
Fonkoze: Good evening, Madanm Sadrak, how are you?
Mme Sadrak: Not too bad.
F: I understand that you are on your third credit with
Fonkoze. What is the name of your group?
MS: Yes, I am on my third credit. My groupís name is
Leve pou Kris (Rise for Christ).
F: What is your business?
MS: I have a variety store. In the store, I sell basic
products for daily life like sodas, candles,
notebooks, etc. I also have a wholesale store where I
sell sugar, rice, etc.
[Both the variety and the wholesale store are located
at Mme. Sadrakís home.]
F: How long have you been doing commerce? How did you
get started in commerce?
MS: Iíve been doing commerce for about 12 years. To
start, I borrowed $200 from my brother-in-law. Then,
about four years ago, my husband built the variety
store for me.
F: Mme. Ytilien, this is an article we are doing for a
journal in the United States. May I ask you some
questions about your commerce? What is your commerce?
MY: I sell house wares like plastics, cooking pots,
F: How long have you been in commerce?
MY: Iíve been doing commerce for about 15 years.
F: How did you get started in commerce?
MY: My mother gave me a little money and told me to do
commerce with it.
F: If you donít mind my asking, how much did she give
MY: (Laughs) $20.
F: But you didnít spend the money your mother gave
MY: No, of course not. I invested to build up my
commerce for the future. Also, I only have one child,
so I didnít have a lot of immediate consumption needs.
[Blending Many Economic Activities
As we begin to explore their businesses in more depth,
we find that it is extremely difficult for these
clients to separate the income and expenses from their
business from other household activities. Just like
sole proprietors in the U.S., they mix many income and
F: Why do you borrow money from Fonkoze?
MS: All the time you have more money in your commerce,
the better it is for you.
F: How is it better for you?
MS: When I can buy more goods, I can make more profit.
Also, if I have extra money, I can take some out when
you have a sick child, or another problem. For
example, I might take some money out one day, but I
know I have to repay Fonkoze. When its time to repay,
I might sell some sweet potatoes from my garden to get
the money I need. Commerce isnít my only source of
income. I have agriculture too.
F: But, if you can borrow interest free from your
family, why do you want to borrow from Fonkoze where
you pay interest?
MS: You know, you canít borrow from family all the
time. You go to a person once, but you canít go to the
same person twice. They have their own needs.
F: [To Mme. Ytilienís husband] Ytilien, do you work
together with Mme. Ytilien in the business?
Ytilien: No, I do my own business. But, we often
manage our money together. We talk about how to use
our money. For example, if her business is doing well,
we might invest a little extra in it. Or, if mine is
doing well, we do the same for my business.
[Madanm Sadrak and Mme. Ytilienís comments are
affirmed by academic literature on the subject:
ďThe role of credit [for households in rural Bolivia]
varies with many factors, including time/season, the
composition of activities, their long-term household
goals, and the lending methodology that they are
using. Some roles of credit included (a) to reduce
risk or restock after emergencies; (b) to even out
lumpy income flows for household purchases; (c) to
diversify activities; (d) to store wealth; (e) to
invest in capital; (f) to add value to a product by
producing it at a different time.Ē
(Lee, Nansi. ďScratching Where it Itches: What
Bolivian Microlending Programs can Learn about Rural
Household Strategies from Participants.Ē International
Rural Development Planning Paper. University of
Guelph, Ontario, Canada.)
Challenges of Calculations
The challenges of long-term calculations can be even
more daunting when seeking to work with clients to
bring their business to the next level. Fonkozeís
director of business skills training comments:
ďIf you just walk up to a vendor on the street and ask
her how much profit she is likely to make this year,
she canít answer you. But, she knows the answer. You
just have to guide her to it. Because these people are
doing all the calculations in their head, they canít
multiply by a number much higher than 3 or 4. So to
figure out her yearly profit you would have to ask her
a string of questions, like: How much money do you
make a week? Multiply that by four. Thatís how much
you make a month. Now, multiply that by three. OK,
thatís how much you make in a quarter. Now, multiply
that by four. Thatís how much profit you can expect to
make a year.Ē
This was confirmed in our interview:]
F: How much has your business grown since your husband
built the variety store?
MS: I canít answer that question. Sometimes I take
money out of the business to pay for a sick child, or
some other need I have at home.
F: You said earlier that when you borrow from Fonkoze,
you invest the money and make a profit. But, you also
have to pay interest to Fonkoze. Is the profit you
make from borrowing the money greater than the
interest you pay?
MS: I canít answer that. Like I said, sometimes I take
money out of the business or put money back in.
F: Mme. Ytilien, how much is your business worth now?
MY: [Mme. Ytilien looks at her husband] I donít know.
Itís grown a little.
[However, when clients are guided through the
calculation, they easily come up with accurate
F: Ytilien or Mme. Ytilien, what is the value of all
of Mme. Ytilienís merchandise today?
Y: I would say her business is worth about $400 now.
F: So, you started with $20, and now your business is
worth $400. Your business has grown twenty-fold - I
would say thatís a lot.
F: Mme. Sadrak, letís try our earlier question this
way. How much interest do you pay to Fonkoze?
MS: Well, before, for example, I borrowed $60 for 3
months, and I paid $1 per month interest.
F: OK, now if I gave you $60 today, and told you to
invest it in your commerce, how much money would you
have in three months on average?
MS: I might have $68 in three months.
F: So, with a $60 loan, you make $8 of return, but you
only pay $3 in interest. Thatís $5 for you.
MS: Yes. Thatís right.
F: Mme. Ytilien, I asked Mme. Sadrak this question
earlier, but if you invest $300 in your business
today, how much will you have in three months?
MY: If I invest $60 today, I might have $72 or so in
[To conclude, Fonkoze loans help many clients to
expand their businesses, and gain income and asset
security for their families. This is one of the key
objectives of any micro-credit program. Another
Fonkoze objective is to help create jobs and business
leaders. If a select few Fonkoze micro-credit
borrowers are to achieve this objective, Fonkoze must
work with them to isolate and grow individual business
entities, and improve calculation skills for long-term
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