One of the last of the Marigo credit centers I got to know was the one in Nan Kajou. Most of the centers we serve are much farther from the office than it is, but few are as hard to reach. A motorcycle can only get you within a 90-minute hike, and that hike involves crossing one branch of the main river that divides Marigo from Peredo to the east at least seven times. In the dry season, you can skip across most of the crossings, jumping from one rock to another. At other times of the year, you wade in swiftly flowing water that’s anything from ankle- to waist-deep.

None of that, however, would have kept me from getting to the center early on. When I arrived last March, I made the least accessible centers my highest priority, if only to show the credit agents I supervise that I was ready to go wherever our work takes us. The problem is that we go to Nan Kajou on Monday mornings, and as long as I was struggling to get home to Kaglo every weekend, I could never get back to Marigo on time. Since the earthquake, however, I’ve been spending my weekends here, so I’ve been there more than once.

The center has an interesting history. It was opened a short distance from an older center that was failing. The original center’s members either dropped out of our credit program or simply stopped paying. A few of the borrowers who remained agreed to walk a little farther up the mountain, away from the river, to the center’s current location, where there were several women who wanted to join Fonkoze.

It flourished. On March 1st 2008, it had six groups with 26 members. They had credit worth 173,000 gourds, and the delinquency rate was, precisely, zero. Not a gourd was late.

By a year later, the picture had changed quite a bit. Haiti, and the area along the river that passes near Nan Kajou in particular, had been wrecked by the successive tropical storms that struck in the fall of 2008. Fonkoze had managed, by December, to eliminate the interest due on the debt the women in places like Nan Kajou were carrying and to get them new interest-free loans as well. The portfolio there thus grew substantially. The women had loans worth over 275,000 gourds, but their delinquency rate was still less than 1%.

On March 1st of this year, the delinquency rate there was back to zero, but that says very little about the state of the center. Four women there currently have Fonkoze loans totaling 35,000 gourds. What happened?

To begin an answer, we should look at the data from September 2009, halfway between March of last year and March of this. By September 1st 2009, we had 12 loans in the center. That’s not because we had found new borrowers. It’s because the borrowers we had were struggling to repay their hurricane loans at different speeds. The center’s solidarity groups started to splinter as some group members finished with their hurricane loans and returned to regular interest-bearing ones while others struggled to repay their hurricane loans. The center’s delinquency rate had increased to almost 36%.

The delinquency was almost equally divided between hurricane loans and normal loans. The delinquent normal loans belonged to members who had refused the interest-free loans and elected to remain in normal credit. This they had done because they had finished paying their last loans before the hurricane. They had no balances they needed to face. By choosing the regular program, they could get larger loans and an extra month before their first repayment. It didn’t work, as their inability to repay the loans shows.

The delinquent hurricane loans simply reflected the difficulty of the position the women were in. Their businesses were still alive, but had been reduced because they had been worth more than the capital the women borrowed from Fonkoze. Their other sources of income had been hit as well. They wer forced to do more with less, and it wasn’t easy.

Despite the women’s best efforts, we wrote off the remaining balances on seven loans, about 43,000 gourds. From late 2009 through January of this year, the center seemed to be dying. Though reimbursements continued to trickle in, fewer and fewer women were coming to meetings. We needed a fuller sense of what was going so terribly wrong.

So I went to the center and started talking to women. The first thing I needed to know was why so many of them were leaving credit. Despite the write-offs, they were continuing to repay their loans, but when they successfully repaid their hurricane loans, they were deciding not to take new ones. This was surprising to us, because we had assumed that it was the opportunity to get new credit that was motivating borrowers to repay these loans.

Almost none of the borrowers in Nan Kajou have their businesses there. There’s just not enough population. Most of them sell produce in Jakmèl and Port au Prince. And though they live in a productive agricultural region, they do not buy their produce near home. They would have no way of getting large amounts of local produce to market. They don’t have enough pack animals, and motorized vehicles can’t get anywhere near where they live. So the women hike down to the market in Peredo on Tuesday mornings, make their purchases there, and then take them to the cities on Wednesday.

When the storms swept through in 2008, their newly purchased merchandise was waiting in storage in Peredo. Everything that floodwaters left them rotted where it was because transportation was cut off. It was a total loss. They took the hurricane loans because they didn’t want to be in debt, but twelve months of paying them back ate into the businesses the loans were intended to restore. By the end of the year, the women were finding it harder to make a profit. So they decided to finish paying off their debt and shut down their businesses. They stopped coming to the center because they didn’t intend to continue with us.

That began to change when we let those whom we had written off know that we would give them another chance as soon as they finished repaying what they owed. Normally, getting yourself written off makes you ineligible for future loans, but Fonkoze has taken the position that hurricane loans are a special case. We recognize that these loans, though they seemed like a sensible way to help women make their own way out of debt and have worked reasonably well for the vast majority of borrowers who received them, have been anything but easy.

Then there was the earthquake. It burdened the women with new expenses that they have to meet. Their homes need repair. They and their loved ones lost clothes, furniture, and other necessities they must replace. The exodus out of Port au Prince and Jakmèl left them with more mouths to feed.

And it made business more difficult as well. The declining city populations have hurt sales, as has the distribution of food aid. Prices of local produce in market towns like Peredo have increased as increased local demand has decreased the amount available for sale. It will be harder and harder for them to make a profit.

But yesterday at a center with only four active borrowers we met with over twenty women. The women want to return to credit. They feel they have no choice. They cannot afford to sit a home. So we are preparing to give them credit again. The first eleven of them will get theirs later this month. More will get loans in April. By May we could by back up to 25 members again.

But we’ll have to offer more than loans. We will have figure out ways to support them as they struggle in an environment that’s more difficult and less predictable than it’s ever been. Their desire to return to credit is a great sign for the Marigo branch. It’s one indication that things here really are turning around. But unless we can help women like those in Nan Kajou succeed, our efforts to turn around this struggling branch won’t mean very much.

Thursday, I got word from Kaglo, the small village in the mountains above Port au Prince that has been my home in Haiti since 1997. There are now about 25 people sleeping in my house there every night. Mine is one of the few houses in the neighborhood with a tin roof, and neighbors who have roofs of poured concrete – which was, until recently, the more prestigious way to build – are afraid to sleep in their own homes. There would be another couple of people there, but two teenagers, recognizing that they will have no school for the present, decided to join me in Marigo and are now staying with me here.

There’s nothing exceptional about my house’s state. Fonkoze offices all over Haiti are getting reports of rural households filling up with a combination of refugees from Port au Prince and neighbors whose homes were too badly damaged to trust. My own house presents a very manageable instance. Each of the various households whose members sleep there still cook their own meals and manage the rest of their own expenses as well. They come together only to sleep.

Other cases are more challenging. Families in the countryside, for example, might find themselves hosting grown children or siblings or cousins and their families from Port au Prince, any number of people who no longer have any means of their own. Their jobs no longer exist. The small commerce they managed in the city disappeared with their homes and most of their other belongings. They may have lost a couple of family members as well. The combination of farming, animal husbandry, and small commerce that was, until now, supporting a household of three or four or five, may now have to support twice or three times that many. I spoke to a notoriously successful credit agent from Fonkoze’s model branch in Lenbe, and he told me about a client of his whose two-room house once had three residents and now has 25. And the commerce his client manages with her Fonkoze loan has to support them all.

But there is a flip side to this emigration from Port au Prince to other parts of the country. The level of economic activity in those other areas has noticeably increased. We began to see it in the expansion of the smaller daily markets in the mountains above Marigo. Little turns in the road where we were accustomed to seeing a three or four women sitting with their wares in baskets in front of them now have a dozen or twenty women or even more. They are starting to look like markets. And the major regional markets seem to be growing dramatically too. The three closest to Marigo – Savann Dibwa, Peredo, and Kay Jakmèl – all seem much busier. More people are there, both buying and selling.

It’s been a boon to Fonkoze in Marigo and to the women it serves. At least those who have merchadise that escaped the earthquake or money to buy with. That’s been most evident in loan reimbursements. In the days when we first opened after the disaster, we collected very little of the money that was owed. Attendance at credit centers was unusually poor, and those who came told us, for the most part, that they would not be able to pay. In the first week we collected less than 25% of what was due. But in the last two weeks the ship has showed real signs that it is righting itself. If you don’t count money that was already past due, we’ve been able to collect about 90% of what we’d expect. That is much too low, substantially lower than the worldwide norm for microfinance and too low to get us to where we are sustainable, but it shows that the rapid and dangerous deterioration of our portfolio that we feared is not happening. At least not yet.

This is not to say that we have nothing to worry about. Our members were hit hard by the earthquake. They lost their homes, their businesses, their families and their friends. So Fonkoze will need to figure out how to help them get back on their feet for two reasons. On one hand, our own survival depends largely on our ability to help its members prosper. More importantly, since we exist only to help them make their way out of poverty we cannot be what we claim to be unless those members succeed.

As a step towards sorting things out, we invited almost 20 of our borrowers to a half-day meeting in Marigo. We wanted to hear from them. We chose women we view as leaders in their centers. Most, but not all, were their center’s elected chief. We felt that it was important to be dealing with women in some of the most affected communities, women whom we knew, from experience, we could count on to be clear and direct about what they had to say. We were, and still are, in a delicate position. We know that we want to take extraordinary steps to help our borrowers in this time of need. We also know, however, that we can’t yet say what we’ll be able to do. Talking too much with our borrowers about their needs could easily raise their expectations and lead to disappointment if we are not careful. We wanted to be sure that we were dealing with women with whom we feel we communicate especially well. The credit agents and I came up with a list of names, and our branch’s full-time field evaluator – called a “social impact monitor” – took care of the rest. By 9:30 in the morning, our discussions had begun.

The meeting proceeded in two stages. We started by splitting the women into two groups of manageable size to hold focus-group discussions of the earthquake and its consequences. We were speaking with women who were both victims and advocates for victims, and they spoke strikingly in both senses.

There were lots of tears, both happy and not. Madeleine is a long time Fonkoze member from downtown Marigo itself. She had two children living in Port au Prince at the time of the quake. She wept as she told about finally hearing news of them two days after the distaster. For those two days she had had no word. She had no reason to think that they were alive. Eliamène told us about how she lifted her child in one hand as the kitchen they were in collapsed around them, and then ran to her aged mother, who was sleeping in a back room, and lifted her with the other. She herself couldn’t explain where she got the strength. Then she went on to explain how her mother died just a few days later. The shock of it all, she cried, had been just too much.

They spoke in detail about the losses that they and their fellow members had suffered. Many had homes that were either damaged or destroyed. Many lost livestock. Women in one area spoke of rainwater cisterns they depend upon for drinking water that had cracked and now leak. And very many of them lost all or part of their businesses, in any number of ways. Some lost produce that rotted before it could get to market. Others lost merchandise in houses or depots that collapsed. Still others lost their merchandise because they panicked and ran when the quake struck. A young member from Mabriyòl was in Port au Prince with a shipment of beans and coffee. In the hours after the quake struck, she dumped them at a heavy loss just to be rid of them. She felt lucky to be alive. The church full of friends whom she was to meet after selling her wares were not as lucky.

After about 90 minutes of sharing, I gave the women a report. I told them first about the state of Fonkoze. Fonkoze is a membership organization. Its majority owners are its member/borrowers, and I like to emphasize that point every chance I get. They needed to know the state of their institution, if for no other reason than because it is theirs. I told them about the organization as a whole and about the Marigo office as well.

I then presented a summary of the information that our credit agents have been collecting in their visits to the centers. We have reliable data concerning over half of the women who have loans with Fonkoze Marigo, and the picture is grim. 20% of them have lost their homes, and another 67% have homes that were damaged. The vagueness of the difference between “home destroyed” and “home damaged” probably means that the percentage who’ve lost their homes entirely is really a good deal higher. More than 36% of the women lost cash or merchandise, some everything, though some less than that. Many lost family members, and a few lost children. And many lost assorted other things, like livestock, trees, or rainwater cisterns. This latter problem especially struck the dry regions in the mountains above Belans, and is especially dangerous. There’s not much in the way of spring- or well-water up there, so securing something to drink will be a problem for awhile.

They asked a few clarifying questions, but were then ready to give us advice. The first one to speak was Marie Ange, a very strong center chief from the large town of Kay Jakmèl. She suggested that Fonkoze should lend them the money they need to rebuild their homes. But Yemitsou, a young center chief from the rich farming region between Peredo and the sea answered that such loans wouldn’t work because no one would be able to pay them back. She said that if Fonkoze wanted to help them with their homes, it would probably require gifts, even if that meant that the amount was much less.

Eliamène then jumped in. She buys charcoal from smaller merchants she knows in the countryside and then sells it to wholesalers, who take it for sale in Port au Prince. She sells to them on credit. She’s had great relations with them. The system has worked well. They pay her when they return from Port au Prince. Unfortunately, this time they never made it back from Port au Prince. They died before they could pay her what she was owed. She lost everything. She didn’t think that Fonkoze could do much to help her rebuild her home. That will, she said, be a long and expensive process. But if it could help her manage her current debt, and give her an additional grant to reinvest in her lost business, she would be able to solve her housing problem herself, at least eventually. After all, she explained, she had already managed to build a home once.

We will have to give their various suggestions careful thought. They understand, I think, that part of the equation will involve our figuring out what we are actually able to do. But it is a remarkable fact, though common enough in Haiti these days, that as worried and shell-shocked and unhappy as these women were, none showed any signs of hopelessness. Though several warned me that their members would not be able to sustain the 90% repayment rate I reported to them for long, they all agreed that they are ready to move forward. They are hopeful that Fonkoze will be able to give them the kind of extra help they have learned to depend upon, but understand that, in the final analysis, they will have to, and will be able to, count on themselves.

The Haitian five-gourd coin has the national logo, with its cluster of palm trees, on one side. On the other, it has images of the five fathers of the Haitian revolution, which led to independence in 1804. Children play a gambling game that involves flipping a coin and calling “tonton” or “palmis”, which is to say “uncles” or “palm trees”. It’s the Haitian equivalent of “heads or tails”.

It’s also a convenient image for the two sides of an issue, an image that’s been on my mind a lot these days. Since the earthquake, I am especially aware of the two sides of microfinance, as opposed to microcredit. Microfinance includes the microcredit that the worldwide movement is most known for. But it also involves making a range of other financial services available to the poor.

Wednesday I was at the market in Kajak working on the credit side of the equation.

Kajak might be the highest market town in Haiti. It’s just below Pic Cabaio, one of Haiti’s highest mountains, on the edge of a pine forest. It sits at the entrance of the path that leads from ridge overlooking the southeast coast, through the hills, to the large market in Kenskof, above Port au Prince. Though the path is almost impassible for motorized vehicles most of the time, it bears heavy pedestrian traffic. Market women from the fertile region around and beneath Segen load produce – potatoes, beets, onions, leeks, carrots, whatever the season brings – onto their heads or their animals and bring it for sale in Kenskof and Pétion-Ville.

Fonkoze’s Marigo office has a long, unhappy history in Kajak. We once served so many borrowers in the region that we had to divide them into two credit centers. They were the largest and second-largest centers we managed. Though we had over forty other centers throughout three large counties, Kajak was home to over 10% of our portfolio. But that portfolio collapsed for a number of reasons, centered on a credit agent’s poor work and the dishonesty of a man named Dickenson, who was permitted to have a role in the center that he never should have had.

Effective microcredit depends on the close relationships that the staff of an institution like Fonkoze develops with the institution’s borrowers, but in Kajak those relationships were mediated by Dickenson, who was always closer to our members than we were. Rather than doing the hard work involved in recruiting new Fonkoze members, or leaving that recruitment in the hands of women who are members already, the center’s former agent just had Dickenson hand him lists of women whom he would then add to his portfolio.

Dickenson used a combination of his relative closeness to the women and the appearance of a close relationship with Fonkoze to profit handsomely at the great expense of both the borrowers and of Fonkoze. On the one hand, he would charge women for introducing them to Fonkoze and demand a fee from them for every credit they received. On the other, he collected some reimbursement payments at a time when hurricane damage made it difficult for Fonkoze’s credit agent to get to the area, and then he kept those payments. The women were left thinking they had repaid Fonkoze when, in fact, they had only paid him.

For the past couple of months, some of the former members of the Kajak center had been visiting the center closest to them – a very high-functioning little one in a place called Granfon – and politely but firmly pressuring its credit agent, who goes by “Bob”, to accept them into it. At first, I was pleased by the development. The one problem with the center in Granfon is that it has too few members. Though its members have finally recruited a third five-women group, it has been functioning with only ten women since I arrived in Marigo. I imagined the introduction of two or three solidarity groups from Kajak as a quick and easy way to expand the center.

I realized, however, that inserting them into the center would be creating a of trap for Fonkoze that the history of that same Granfon center can help illustrate. That center was established when three groups, who were already members of a center in a place called Kasedan, decided to pull out of the Kasedan center because it was functioning poorly. They didn’t want to be held responsible for the center’s other groups. They felt no commitment to the other women, nor did they trust them to right their ship. As it turns out, they were correct. The Kasedan center collapsed even before I got to Marigo.

What’s worse, of the three groups that originally pulled out of that center to form the one in Granfon, two of them were from Granfon itself and one group of only three women was from an area on the other side of the same ridge. The ten women in the two Granfon groups didn’t know these other women very well, and that third group has been a constant source of problems.

Though the members of the two Granfon groups sometimes have problems too, they have consistently shown their readiness to help one another out. I sat with them one day as the nine who were present at a reimbursement pitched to make a repayment for the tenth who was only her way from Port au Prince. They had assembled all the money so that the center’s payment would be complete when she arrived out of breath from her five-hour hike, with a smile on her face and her own payment in hand. They have been unwilling, however, to do anything for this third group, just as they were unwilling to do anything for the other members of the center in Kasedan.

The lesson is that members need to have control over their center’s membership. We cannot expect them to stand by one another unless they can choose their own team. Inserting the women from Kajak into the Granfon center would be asking for trouble.

So I offered them an alternative: Fonkoze would try to open a new center for them in Kajak if they could recruit at least four solidarity groups to start with. The center would eventually need to be larger than that. We would not be able to justify the distance for twenty women. But with twenty we could start. We know from our albeit-unsuccessful first experience there that the demand for credit in Kajak is great.

These four groups could include both new members of Fonkoze and members of the old Kajak centers who do not owe Fonkoze money. The women themselves would do the recruiting. Both new and old members would then go through the training in Fonkoze credit that we offer to all new members. Bob would spend a couple of days in Kajak, visiting them in their markets and their homes, getting to know them. He’s been very good over the last several months at building relationships with the members he serves and has this been able to bring a couple of large moribund centers back to life. Kajak would be a new an different challenge, but he seems anxious to undertake it.

Wednesday was our first meeting with them in Kajak. We all sat shivering in the breezy mountain air in a stone house that had lost one of its walls to the recent quake. Bob and I met with 25 women, ten of them new to Fonkoze. We spoke at length about credit and the other services we offer. They talked to us about their need. Most of them depend on the same core business. They buy produce in the mountains and bring it to market in , Kenskof, Pétion-Ville, and Port au Prince, and they need more money to buy more produce to make their trips back and forth more profitable. They are, I think, exactly the sort of women whom Fonkoze was created to serve. A few were young women, formerly sent by the families to school in Pétion-Ville, now returned home because the earthquake destroyed their schools. Most, however, were older women who had to “sign” the forms with which they opened their new savings accounts with a thumbprint and an “x”. We are going to want to get educational programs to them as quickly as we can.

We won’t want to rush the process as we open this center. Shortcuts are what got us into trouble here in the first place. But we are optimistic. We were brought back to Kajak by the insistent initiative of the very women who want us there. Our credit agent is, unfortunately, a man, but the movement is being driven by the women it means to serve. No Dickenson. No other local male leader either.

So credit remains one important side of microfinance, but other financial services, what Fonkoze usually lumps together and calls “operations”, present an important flip side. These include savings accounts and microinsurance, but since the earthquake remittances have taken center stage.

Fonkoze entered into the remittance business because it recognized the central role that Haitians abroad will have to play in their country’s development. Fonkoze’s original mission, to democratize the Haitian economy, would not be able to succeed as long as its citizens lack the resources to participate in their nation’, their own community’s, development. By facilitating transfers from friends and family members abroad to the rural Haitians who need them, Fonkoze branches enable otherwise isolated communities to accumulate what they need to take their own steps forward.

These remittances are an important part of the Haitian economy at any time. Estimates vary, but they account for a substantial percentage of the money here in any case. But the earthquake left Haitian families in the States scrambling to send what they can to survivors, and left those survivors scrambling to find financial institutions open and ready to serve them.

The commercial banks are still not fully operational. Unibank is perhaps the largest. It’s the one Fonkoze itself uses. Its office in Jacmel is still closed almost three weeks after the quake.

Fonkoze’s own office in Jacmel, a city that was hit almost as hard as Port au Prince, was decimated. But it has been up and running in a new building, though without any materials, for more than a week. Fonkoze’s office in Port au Prince has been paying hundreds of remittances every day. Much of our central office staff have turned themselves into makeshift tellers so that they can serve as many people as possible.

We have been helped considerably by the way our branches are scattered throughout the country. Paying remittances requires internet service, but long before it was restored to the branches that were hardest hit, Fonkoze was able to serve its customers by telephoning branches that continued to have good connections. A branch like ours, in Marigo, was doing double duty, paying not just its own clients but those of other branches as well. We in Marigo are still paying most of the remittances for the branch in Jacmel.

Here, some data might help. The first weeks of the year are usually a slow time for remittances. Haitian Americans like to send something to Haiti in December to help their families celebrate Christmas and January 1st, which is Haitian Independence Day. Our Fonkoze office offers remittances through several different companies, and in the third week of January 2009, for example, we paid one dollar-denominated remittance for one company and none for a second. This year, the week of January 18th saw us pay 21 for one company and 14 for the other. That was while we were forced to change all remittances into gourds. We received a shipment of dollars on Saturday, January 23, and in the three days that followed we paid out 36 remittances for one service and 41 for the other. None of this increase includes the remittances we were paying for Port au Prince and Jacmel.

Thanks to the extraordinary efforts of our central office and its friends in Port au Prince, Washington, and New York, liquidity has not been a problem for us for over a week. We have never had the level of activity we’ve had for the past two weeks, but our cash reserves have held. Although in the first days after the earthquake, we had to ask a couple of customers to make smaller withdrawals than they planned – I thought of Jimmy Stewart in “It’s a Wonderful Life” – and though we spent a week paying all remittances in gourds because we didn’t have dollars, we never had to turn anyone away. Our biggest, our only, priority has been to get money into the hands of people who need it, and at this we have succeeded without qualification.

And getting cash to our customers is important. And not only because, like Jimmy Stewart’s bank, Fonkoze needs to be there for them for the long term. Our customers need the money that’s sent to them, right now more than ever. There are many indications of its importance, but none is perhaps more telling than the difficulties they are willing to endure to receive even small sums. We have been paying remittances as small as $20 for our Port au Prince office. That might not be a lot, but it’s enough to drive someone to wait in line for half a day, in the hot tropical sun.

Right now, they are not using the money to pay school tuition or to buy the presents for their kids they tend to buy with the transfers that annually arrive as Christmas approaches. They may have no other way to access to money they need to feed themselves and their families every day.

So microfinance is, more than ever, showing its two sides. But those two sides are connected by a common substance, just as the two sides of a coin are equally connected to the metal the coin is made of. Everything we do aims to get resources, money, into the hands of people who would otherwise have no easy access to them. Once they have money in their hands to work with, their own intelligence and energy combine with educational programs that we also provide to give them their most likely route out of poverty.

Operating after the earthquake is presenting challenges both inside our office and in the field.

In the office, the biggest problem is the office itself. I made the decision to close one side of the building. I’m no engineer, but it looks unsafe. What appears to be a load-bearing wall has a large horizontal crack, and the portion above the crack has shifted enough that it doesn’t sit squarely on the part beneath it.

And as unsafe as parts of the building look, the office staff hasn’t wanted to work inside. They will go inside to get something, or to check something on one of our computers, but the tellers, for example, are not will to spend the day working inside as they normally would, especially after Wednesday’s very noticeable aftershock. Even yesterday, we had two minor shakes in the middle of the day, so I can’t really blame them. For now, our tellers are working in the yard in front of the branch, and I am entering transactions, a day at a time, on the desktop in my office.

We’ve had some problems with clients as well. Though many are simply grateful that we are open at all, some are frustrated by one aspect of the service we provide. The exchange rate has dropped significantly. Before the quake, we were offering almost 42 gourds to the dollar. When we opened on Monday it was only 30 gourds, though it has risen to 35 since then. Dollars are flooding into the country, and everyone wants to change them into gourds. This has hurt those receiving remittances, which is one of the important services we provide. Friends and family abroad are sending people they know here dollars, doing what they can to help them in difficult times, but when it comes time to change them into gourds, they get much less than they had hoped for.

Normally, this wouldn’t be a serious problem for our office. We would simply pay out the remittances in dollars to anyone unsatisfied with the rate we can offer. But right now we just don’t have dollars. The only currency we can pay in is gourds. And no one else in Marigo is able to serve them yet, so if someone in Marigo wants to receive a remittance right now, they are stuck with our exchange rate. We’ve had arguments with customers, and I can understand their frustration. We just won’t be able to do anything for them until the commercial banks open, so that Fonkoze can get me the dollars I need to give our customers the choice they have a right to.

And the fact that I’m working in my office every day is only making work in the field, which is already difficult, even harder. We aren’t due to have a lot of reimbursements coming right now, but those that are due have not been coming in at anything like the rate we need. The earthquake has done a lot of harm in the southeast of Haiti. Our members have suffered in lots of ways, some of them financial. And one of the consequences of the fact that Fonkoze tries to be an understanding lender is that repaying Fonkoze is not always the first priority for borrowers who have difficult spending choices to make.

It’s a little frustrating.

We spent 10 months trying to straighten out a portfolio in Marigo that was already in bad shape before the hurricanes devastated this region in 2008. Those hurricanes just made things worse. Thanks to a lot of hard work by our staff in the field, our central office, and our partners around the world, we were able to help a large majority of our members put their businesses back together over the course of 2009.

We took losses at the end of that year, the vast majority of them because of those of our members who hadn’t yet been able to right their businesses entirely and clear their debt. After that loss, and a good first week of January 2010, we had whittled the delinquency rate for Marigo to 6.5%. Too high. More than twice the traditional number for solidarity-group microfinance. But very much an indication that we were moving in the right direction.

But in the week after the earthquake our repayment rate was only 23%. We collected lots of information – about loss of life, loss of merchandise, loss of homes – but haven’t been able to collect much in the way of loan repayments. Already our delinquency rate has jumped to 10%.

It’s easy to understand. And we know that we’ve come back from big problems before. We have to be optimistic.

And, what’s more: we have good reason to be optimistic. It’s not a matter of the blind hope that springs eternal, nor of our preference for hope over despair. Real progress is already visible everywhere around us. The road from Port au Prince to Jacmel is already open to all but large trucks. The “free market “ – in this case the smuggling trade – has already shifted the Marigo supply chain for many commodities from trucks that pass from Port au Prince to Jacmel to Marigo to boats that come to Marigo from Anse à Pitre. Our liquidity has been holding up so far. Fonkoze’s main office and Port au Prince branch are up and running. And last night Marigo even had electricity for the first time since the quake.

So things are moving forward, if slowly. And we therefore conclude, reasonably I think, that we will be able to move forward as well.

Thinking during the weekend about some of the issues we might face as we opened our office in Marigo on Monday, I was worried on several levels. There were both human and technical issues to face.

The most urgent human issue was staff morale. The people who tend to work at a Fonkoze office come from one of the classes of rural residents who have been most affected by last Tuesday’s earthquake. Very many have friends, siblings, or other family members studying in universities in Port au Prince. The schools tend to be housed in large, poorly constructed buildings. Classes are often scheduled into the early evening, so when the earthquake struck, they were full. One of my colleagues in Marigo lost a brother. Others lost cousins, nieces, or nephews. All lost friends. Many have spent days not knowing whether or not their friends or loved ones were safe. As I hiked over the mountain on Sunday, I realized that I could not know how ready anyone would be to work.

The most urgent technical issues were liquidity and fuel.

We had a smaller than usual amount of cash in our safe. A large transfer from our central office had been planned for Wednesday, the day after the quake. So I was worried that money would run out fast. Normally, we coordinate liquidity problems with help from Port au Prince. They share with us the job of ensuring we have an appropriate amount of cash on hand. But for the time being, we have no central office. It’s in ruins. The large branch in Jacmel that might help us as well is in worse shape than that. There is another branch in Fondwa, on the road between Jacmel and Port Prince, which we sometimes apply to when we are in a particular fix. Its director gave me most of the training I received in branch management and his assistant is a former member of the Marigo staff, so our relations are close. But though I saw the building still standing when I went by on Thursday – it’s one of the few that still is standing in Fondwa – we haven’t been able to contact its staff thus far. For now, we are on our own.

The main ways we ourselves bring in cash are loan reimbursements and savings deposits. We couldn’t count on deposits. Right now, our clients will be making withdrawals, not deposits. The few deposits I expected to receive as I considered the matter on Sunday would come from remittances in excess of what the people receiving them needed at the time or, if in dollars, in excess of what we could pay out. But though such deposits would improve our situation on paper, it would not put a gourd or a dollar in the vault.

Nor could we count on reimbursements. Most of our borrowers took out new loans in December to maximize their inventory for the time around the end of the year, when sales are most brisk. Fonkoze loans are repaid in six months with five equal payments that start in the second month. We do this so that our borrowers have some time up front to invest their new loans before repayments begin. Right now, however, the consequence is that not much in the way of reimbursements are due.

And even if they were due, it might not help our situation. We don’t know much yet about the earthquake’s effect on our borrower’s ability to repay. From the little data that we have, it’s already clear that we have borrowers who lost family members and that some lost their homes. It appears to have been especially damaging in the poor neighborhoods above Peredo, Marigo’s near neighbor to the east, where we have some of our best-functioning credit centers. Areas like Limè and Madival were apparently hit very hard. These are, by the way, among the areas most damaged by the hurricanes scarcely more than a year ago. We don’t yet have much information about some of the other areas around us.

We have borrowers who lost merchandise as well. I was in a credit center in Granfon yesterday, above Segen on the mountain road toward Pétion-Ville, and learned that four of its fifteen members had substantial business losses. Two had purchased loads of leeks that they were sending to sell in Port au Prince. The leeks rotted in transit when the road to the capital was blocked. Two others were bringing sugar, flour, and cooking oil over the mountain from Pétion-Ville. When the quake struck, the mule carrying their goods shied and threw off its load. Their stuff fell irretrievably over a cliff. We estimated their losses at 50% to 70% of the value of their last loan.

Fonkoze exists for its members’ benefit. There are limits to the lengths we can or should go to in pressuring them to repay what they owe when they’re in trouble, because we recognize that their repayment problems among are rarely a question of goodwill. This makes our work distinctly harder, but we really have not choice. So until our central office can figure out how to get any funds we might need to us, we can do little about liquidity but grit our teeth and hope.

Fuel is another problem. Now that the public power in southeast Haiti is out of commission, we need a regular supply for our generator. In addition, we always need a fair amount for the motorcycles we use to visit our members in the areas where they live. The fuel situation in Port au Prince is bad enough. Apparently, the main line that allows tankers to unload was damaged. But the road from Jacmel was damaged as well. Even if Port au Prince had been full of fuel, there would be no way to get it to Jacmel. Trucks cannot bring it over the hill.

But none of these issues turned out to affect us seriously. For at least the first two days, our cash has been holding up. We were helped in a way that I should have been able to anticipate. One of our best customers is a local organization that runs, among other things, a cooperative market. They sell various things wholesale. They usually make a deposit every day or two, and then make a very large withdrawal – sometimes almost 300,000 gourds, or roughly $ 7,500 – when they’re ready to restock, every two-three weeks.. They had accumulated much more cash than they were comfortable with, so they deposited about 85,000 gourds with us. It couldn’t have come at a better time.

And fuel has been a troubling expense, but not a major problem, so far. The supply from Port au Prince through Jacmel was cut off. But a new supply chain quickly established itself. Sailboats started bring barrels of it from the Dominican border. Marigo’s small port has become a fuel depot. While it’s true that this is, technically, smuggling, it’s also true that it’s working. Prices were initially very high, over $12 per gallon. (Just before the quake it had been selling for about $5.50.) But they have already dropped somewhat. At the end of the day on Tuesday, it was at roughly $7.75.

The question of morale was answered in front of my rented room on Sunday night. The staff met for a couple of hours. Though everyone was anxious to say something about their losses and to hear about those their colleagues had felt, they were all even more anxious to figure out how we would get our office up and running. Some spoke as though returning to work would be a kind of relief from more important misery, some as though it was a difficult duty, but an important one. But no one wondered whether we should open, only how.

One of the credit agents, Jean Claude, had already been working on his own, even when the office was closed. He bought his own fuel and used his own motorcycle to visit two of our hardest-to-reach centers on Friday, the day after taking the same motorcycle all the way to Port au Prince and back to establish whether his older brother, a seminarian, is alive. (He is.)

Jean Claude was anxious to know the state of the members he serves. He learned that in Mablanch, a remote area in the mountains above Belle Anse, the most urgent problem is neither loss of life nor wrecked homes nor damaged merchandise. It’s water. Area residents depend on rainwater, which they collect in cisterns. Though our members’ homes are intact, their cisterns now leak.

He also collected both reimbursements and savings deposits, which he had to hold on to until we opened on Monday.

If there was a morale problem, it was mainly a fear some had that our building could still collapse. There are minor-looking fissures. I’m not qualified to assess how minor they really are. And there have been aftershocks. But the tellers agreed they could sit in the enclosed yard in front of the building for the time being. We would manage transactions by hand, and wait to enter them into our database until we feel a little better about the building we’re in.

We’re doing a couple of things to make things easier on the staff – offering small advances on their salaries to those short on cash and a hot meal in the middle of the day – but the truth is that nothing we can do for them is the real source of their strength.

So we are managing. I hope to coax our tellers into the building in the next couple of days.

The center in Kòray Lamòt is much farther from Marigo than any of our other centers. It’s more than 45 minutes beyond the second farthest, which is in Mabriyòl, and almost twice as far as the already-distant centers in Ravin Pal and Chodri, along the ridge east of Segen. Fonkoze probably shouldn’t have opened it in the first place. Though our mission is bring financial and other services to rural Haitians, we need to do it sustainably, and the trip to Kòray twice every month is hard to sustain. We should have worked first to penetrate the market for microcredit in the areas closest to Marigo. Once the office had a strong core, further expansion would have been easy to manage.

It’s easy to understand why it was opened, though. At the time when the Marigo branch was opened, the watchword at Fonkoze was “rapid growth.” Senior management had a sense that the institution could accelerate its jump to sustainability by greatly expanding the number of borrowers it serves. Lots of branches were opened quickly and lots of credit agents were added to existing branches in an effort to dramatically speed up expansion. Under those circumstances, when a woman from Kòray came to the branch, requesting that Fonkoze begin offering credit to her and her neighbors, it was too easy to say “yes.” The center grew quickly, until it was serving thirteen solidarity groups of five women each. It was what we consider a very big center.

Then the problems started. Attendance at meetings deteriorated, and reimbursement rates did as well. By the time I got to Marigo in March, we were lucky to get fifteen members to come to a meeting, and the delinquency rate was high. Things were so bad that a woman who had come to the reimbursement meeting twenty gourds short – a trivial sum even for the vast majority of our borrowers – of a payment for more than a thousand gourds was unable to find someone in the center to lend her the other twenty gourds. She thus incurred a 120-gourd late payment fee. Her story became one of my set pieces to explain the importance of solidarity when I visited other centers.

I probably should have simply closed the center, thus cutting Fonkoze’s losses, but I couldn’t bring myself to do it. A couple of months of visiting Kòray with Bob, the credit agent, or sending my assistant director with him, didn’t seem to improve things very much, however. So we decided to try another approach. We would send Bob once each month, but he would spend the night. That way, he’d still be holding his two meetings with the women each month. Tuesday mornings would be for discussions, and Wednesday mornings would be reimbursement.

I talked about the idea with Thomas, Fonkoze’s premier branch director. I doubted whether he would like the idea, because one of the hallmarks of his consistently successful approach has been to strictly implement Fonkoze’s simple method. I thought he might dislike the change from two trips each month to only one.

But he immediately responded that he thought the change might be just the thing for a place like Kòray. Microcredit, Thomas explained, depends completely on developing very close relationships with the borrowers. The twice-monthly trips weren’t doing that, and he wasn’t surprised that the center was failing. The length of Bob’s trip meant that he had to leave as soon as his business was complete. Getting there and back in a day involved over five hours on a motorcycle. By spending the night, he was freeing up a lot of time he could then use to get to know the members well.

I went with Bob this week, and was pleased by the progress I saw. After drop-outs and write-offs, the center is down to about thirty members. Over twenty were at the meeting, and they had news of several of the others, explaining why they hadn’t been able to attend. As I followed the discussion, I could see that Bob was getting to know them well. He addressed them by name, drawing quieter ones into the conversation through gentle teasing. The center’s chief was feeling sick, but she was present and active. He now knows where almost all of the members live, can talk about the different neighborhoods they are from, and knows where many of them do business as well.

We spoke at length with the women about the new approach, and they were very enthusiastic. They think it a big improvement over the old way, and their explanation was clear: Though they all nominally live in Kòray, they can’t afford to spend much time there. It’s a very rural area, a long way from any center of population. There isn’t much buying and selling to be done. A few of them hike from rural market to rural market with their merchandise on a donkey, a mule, or their head to make their living. But for many, their businesses are in Pòtoprens or Jakmèl or Ansapit. The buy agricultural products in Kòray, and get them to places where they can be sold. Having to come home for their meeting just once each month makes things much easier for them. If their improved attitude towards the center can combine with their improved relationship with Bob to make their center strong, I’ll have a lot to be pleased about.

But it will still leave me with a problem. The center currently has, as I said, about thirty members. We will lose a few of those. They are women with very old debts they have not been able to repay. Bob and I spoke to a few of them, and heard the usual stories: Sickness or death in the family, pregnancy, merchandise lost at sea. There are lots of ways that a market woman’s business can fail. Bob has recently started the process that will enable him to add a new solidarity group or two, but it’s hard to imagine the center growing to , say, forty reliable members any time soon, and I have a hard time justifying this very expensive trip for that small a number.

So I asked Moïse to join Bob and me on our trip this week. Moïse is the agent responsible for Tikredi, or “Little Credit,” the Fonkoze’s program for poorer borrowers. It’s an intensive six-month combination of credit and training designed for women who would fail if they entered into standard solidarity-group credit directly. From my perspective as a manager, it seemed perfect, since it functions by recruiting a whole center of women – generally thirty-forty – at once. If it works, a the Tikredi members would graduate by July, at which point we’ll suddenly have two good-sized credit centers for Bob to visit each time he makes the trip.

The Kòray center’s elected chief arranged for us to meet with her husband, the principal local elected official, along with several other local leaders. We explained the program both to the members of the center and the guests who joined us, and the response was very enthusiastic. The center chief made a long speech in which she described the different sort of women she thought could benefit: young mothers who haven’t ever been in business but whose sudden pregnancy has left them with the need for income, older women who’ve lost their husbands and now need to run their households on their own. She spoke of the women she sees who go out day by day with a little basket of this or that on their heads, trying to eke out a living, but with little prospect of getting very far with the means and skill set at their disposal. She was eloquent and, what’s more, demonstrated that she understood what we were trying to accomplish very, very well.

There was lengthy agreement about the need for just such a program in the area. Everyone said that there are many women in and around Kòray who could qualify. And there was an even lengthier discussion about which neighborhood of Kòray we should choose. Kòray is a large region. There are members of the Kòray Solidarity-Group center who walk more than an hour to get to meetings. But Tikredi works strictly neighborhood-by-neighborhood. The leaders would have to choose one area of their large community to benefit.

Eventually, there was a strong consensus that we should start in an area called “Ba Kòray.” Their reasoning was encouraging to me in my role as a manager. They said that one of the poorer areas in their region is right along the main road that leads up the mountain from Belans, the same road our agent takes to get to his center. Though the need in their own neighborhoods, mainly up above the Kòray center, might be great, especially in the less-accessible areas off the main road, serving Ba Kòray first would be easier for Fonkoze. The work would thus, they said, have a better chance to succeed.

So Moïse exchanged contact information with a few of them, and they will follow up in the next weeks.

Of course it’s too early to claim success for any of this. The signs in the solidarity-group center in Kòray are positive, and the signs are that Tikredi there might really take off. But signs are just signs. A couple of signs and 25 cents will get you a couple of coffee. Two cups, actually, in Haiti.

But if it does work, it will exemplify what I take to be one of the fundamental truths about Fonkoze. We can succeed at creating a sustainable institution, just profitable enough to guarantee that it will endure, by aiming single-mindedly at our more important objective: by reaching as deeply as possible to provide the poorest, most isolated Haitian families with the services they need to improve their lives. A better, tougher, more decisive manager than I am might have shut down the center in Kòray, but it would not have been the right decision for Fonkoze. Not until we try to save it by doing more for its members and serving their poorer neighbors as well.