Beyond Microcredit

Fonkoze’s standard solidarity-group microcredit has been proven to be an effective tool to help poor women help themselves out of poverty. Groups of five women organize themselves to receive and reimburse their loans together. They act as guarantees for one another, eliminating the need for collateral and for someone to cosign.

Loans start at about $85 and can increase to more than $1400, and the success women have at managing increasing loan amount is only one small sign of the progress they make. Fonkoze has a battery of data that demonstrates clients’ progress out of poverty by showing how their standard of living improves: better houses, more children in school, and better nutrition are typical results.

But microcredit is not the answer for all of Haiti’s poor. Over 50% of Haitian households function on less that $1 a day, and some of these are so poor that they would not be able to absorb and make good use of a sum as large as $85. For some of these, Fonkoze has created a special program of mini-microcredit, with even smaller loans – they start at less than $30 – shorten repayment periods, and closer accompaniment from specially trained credit agents. It’s a six-month program that prepares a woman to enter standard microcredit by giving her some additional structure.

Even this program, however, can’t reach the poorest of the poor. It depends, after all, on a woman’s capacity to take $30 and invest it immediately into a business that will enable her to make repayments and generate profit. But if a woman has no business, has never had a business, then she can hardly invest money in one. If her children are consistently hungry, she cannot even be expected to invest money that comes her way. She needs to buy food.

Fonkoze is now experimenting with a program designed to help these poorest of the poor, It’s called “CLM” or Chemen Lavi Miyò, which is Creole for “the Road to a Better Life.” It features education, close supervision, some subsidies, and the transfer of income-generating assets. At the end of 18 months, participants have sustainable incomes, small bank accounts, and can move into regular microcredit without need of further subsidies. It’s based on a program that has been developed of the course of ten years of research and practical experience in the field by BRAC, one of Bangladesh’s large NGOs. Fonkoze is piloting the program with 150 participants in Haiti, spread out through three locations: Lagonav, Boukan Kare, and Twoudinò.

I spent the day yesterday on horseback, slogging through the deep, black mud of Boukan Kare, meeting program participants. It was stunning.

Anyone who’s spent even a little time in Haiti has seen poverty of a sort that we in the United States are unaccustomed to. But CLM participants endure poverty that is even harsher that what one generally sees in Haiti. They have no income-generating assets of any kind. They own no animals. They own no farming land. If they own a home, it’s one room, with a mud floor, walls of woven sticks packed with mud, and a straw roof. They might go a day, even two days, without eating. They tend to have large families, but none of their children can go to school. What little they have comes from begging. They are, of course, sick all the time.

Adeline can serve as an example. Her mother was chosen through an exhaustive, three-step selection process to be a program beneficiary. First, Fonkoze organized a meeting in her neighborhood at which community members identified the poorest households in their area. Then, Fonkoze field workers visited the homes of the families the community had identified as its poorest to complete detailed surveys of each household and create a preliminary list of recommended participants. Finally, Fonkoze’s CLM Program Manager visited each recommended household to confirm that it qualified for the program.

Adeline’s mother was selected. She had Adeline and six other children to support with a husband who wasn’t helping her. She had no income except what she could beg. She would go, as Adeline told me, for a week at a time without lighting a cooking fire.

And then she died. Adeline was the oldest surviving child. A couple of older siblings had died. Her father was ready to send her away to live in domestic servitude in Mirebalais, the nearest city. Instead, Fonkoze offered her the chance to participate in the program in her mother’s place. She would have to become the de facto head of her household at the age of only 14, but she would get to stay with her little brothers and sisters and have the means to help them to a better life.

So she received extensive training in the care of goats and chickens. Those are the two businesses she chose to enter. Then she received seven chickens and three goats. Her weekly visits from her Fonkoze Case Manager include coaching directly focused on her businesses, but also lessons in nutrition, hygiene, and health. They also include literacy training – Adeline’s never been to school – and lots and lots of encouragement. Fonkoze is helping her repair the dilapidated shack her family lives in, and is partnering with Paul Farmer’s Partners in Health to guarantee them free access to essential health care. Finally, she receives a stipend of just under $1 a day to free her from begging to support her siblings so that she has the time she needs to take care of her animals and go to school. She’s starting first grade this fall.

Adeline is excited to be part of the program. Her goats are doing well: There are four of them now, and one of them is pregnant. She’s been managing to save almost $1.50 per week of the stipend she receives. That will be important down the line as she prepares to enter microcredit. And she and her siblings now eat every day.

She still has problems. One is her father. He’s been unwilling to help her at all, even by just building a simple coop to protect her chickens. Several have died. And it must be awkward for both of them as he watches her assume responsibility for her own and his other children’s lives. And make no mistake: She is still very, very poor.

But already her life is very much better than it was. That’s what she says. The question for Fonkoze is whether that improvement will sustain itself beyond the program’s 18 months. Is CLM a short-term relief from hunger, or truly the road to a better life? If the experience in Bangladesh is any indicator, it will be very much the latter. BRAC has been able to help a high percentage of participating families there remove themselves from extreme poverty. But Haiti is Haiti. It should work here as well, but only time and experience will tell.