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Re: Small Loans, Big Trouble, Dec. 3

The following is an official response to the article located here

To the editor:

Re: Small Loans, Big Trouble, Dec. 3

In looking at efforts to help Haiti’s poor overcome poverty, Jennifer Wells raised important concerns for the microfinance industry to confront. But she missed some of the most important ways Fonkoze, Haiti’s largest microfinance institution, is meeting these challenges. To help Haiti’s poor overcome poverty, it is essential not only to protect families from excessive debt but also to meet their needs with solutions that work.

Fonkoze respects the decision of Rosita, and others, not to take a microfinance loan. There are many families in Haiti for whom microfinance is not useful; either because they are too poor or because they have not yet developed a business for which credit will be helpful.  That’s why we offer a non-microcredit program designed for the ultra-poor called Chemen Lavi Miyó, or Pathway to a Better Life. Participants build a business, gain the confidence and skills they need to succeed, and receive benefits that get their children in school, food on the table, and an adequate roof over their heads.

Fonkoze has always been an organization focused at alleviating rural poverty in Haiti. The model of solidarity lending works best for clients in rural areas, so over time we have decreased our lending in urban areas like Port-au-Prince. Responsible lending to the poor is a powerful tool that can change lives like Mona Remy’s but is also complex and requires a profound commitment from individual microfinance institutions, governments, and stakeholders.

Microfinance institutions around the world, including those in Haiti, are wise to learn from the situation in the Indian State of Andhra Pradesh. We strongly agree that, as the article points out, Haiti needs a credit bureau to monitor client indebtedness. Until one is established, however, Fonkoze has tirelessly committed itself to client protection, including protecting clients from over indebtedness..

Fonkoze is on the steering committee of The Smart Campaign, an international committee leading the fight for client protection principles in microfinance. Recognizing our clients could become over-indebted after the earthquake, Fonkoze developed an innovative tool to ensure that clients were ready to take on a new loan. This tool was given an innovation award which called it a model approach.

Fonkoze is committed to developing the right solutions to the needs of clients no matter where they may be in their struggle out of poverty.  Recognizing that microfinance is the right tool for many but not for all, and then delivering solutions that meet the needs of all of Haiti’s poor, is the way we are building a sustainable economy in Haiti.

Anne Hastings

Member, International Steering Committee of The Smart Campaign

CEO, Fonkoze Financial Services