Fonkoze offers two types of solidarity-group credit for two different types of borrowers. “Solidarity-group” credit is an umbrella term for one way that microcredit is typically offered. Women organize themselves into groups of five to take and repay their loans together.

Fonkoze’s standard solidarity group loans are the ones in the hands of the vast majority of our borrowers. The standard program starts with a three-month loan of 3000 gourdes: about $71 at the current exchange rate. Subsequent loans are for six months. Borrowers meet twice each moth with their credit agents, once for a reimbursement, and once for a discussion. Loan amounts can increase every six months, sometimes rapidly, up to almost $1200. Members can then graduate to taking individual loans.

But it turns out that a loan of 3000 gourds is not for everybody. For some, these loans are too much. Their businesses might not be ready for a 3000-gourd investment. The 250-gourd membership fee can be more than they are ready to pay. They might not have the 450 gourds they need to deposit in their savings account as a 15% collateral.

Fonkoze discovered several years ago that it was not succeeding in reaching the poorest Haitians. The 3000-gourd minimum loan was just too large. So Fonkoze created, among other things, a special loan program called “Tikredi,” or “Little Credit,” designed to reach families who would not succeed without a lower starting loan amount and some extra support.

Tikredi loans start at only 1000 gourds. Borrowers pay no membership fee, and can start with only 25 gourds of savings. Over the course of six intense months, they take three progressively larger loans. The last is for 2500 gourds. They also save towards the 700 gourds that paying their membership fee and building their collateral requires. During these six months, they meet weekly with specially-trained credit agents, more than twice as often as regular borrowers meet with their agents. The agents offer educational programs designed just for Tikredi that emphasize basic business skills, health issues, and a range of other fundamental life skills. Fonkoze has also created a book full of business models that require 1000 gourds or less. So even those who have never had a business before can receive the coaching they need to get started. After six months, Tikredi borrowers graduate to standard loans, beginning at 3000 gourds, and then move upward just like other borrowers.

I wish I could say that Fonkoze had discovered the need for Tikredi through foresight, but it was much more a result of experience. Fonkoze learned by research in the field that it was not reaching poorer borrowers and, what’s worse, it learned the lesson in part through some borrowers’ failure in programs that they were too poor to succeed in.

That is to say: When Fonkoze looked closely at those who failed at standard solidarity-group microcredit, it discovered that some of them failed because they were too poor. They did not have the financial or social resources to benefit from a 3000 gourd loan, but they took those loans anyway because Fonkoze had nothing else to offer and had no way of predicting accurately whether they were likely to succeed. They may have repaid a first or even a second loan. In some cases, their third loan was for considerably more, as much as 12,000 to 15,000 gourds. But this progress was a house of cards, ready to collapse at the first shock.

We have any number of such cases in Marigo. Magressa is an example. She was a member of our center in Desplanti, a center that probably deserves an explanation all its own. By her fifth loan, she was borrowing 15,000 gourds. But at that point, her son became ill, one of the eight children she was supporting with her commerce. Not only did expenses connected with his illness prevent her from repaying her loan, they ate up the capital in her business as well.

In March 2008, Fonkoze’s experiment in restructuring old loans reached her. Her large overdue balance was transferred to a new loan with smaller repayments stretched out over a longer period. But this didn’t really help her because her business had gone under. She made some repayments out of irregular remittances that another son sent from the Dominican Republic. But the remittances weren’t enough to get her started again. When the hurricanes came in August of that year, they washed away crops and livestock and damaged her home. Even after that, she continued to make very occasional repayments, but it would not have been enough to prevent her from being written off had a series of clerical errors by the Marigo branch’s management not done that for her.

That’s where things stood for Magressa in September, when Fonkoze’s Tikredi program came to her neighborhood. She had a large and old debt to Fonkoze, well beyond what she could repay, and no active commerce.

One key to any microcredit program is assuring that it’s reaching the right people. Tikredi identifies appropriate borrowers through an involved process called “Participatory Wealth Ranking,” which begins by inviting a neighborhood’s residents to create a list of all local households and to classify them according to their relative wealth. The Tikredi team then visits the households near the economic bottom of the list to better identify just how poor they are. Women in households that meet the criteria for Tikredi are invited to join.

When our office began the Participatory Wealth Ranking process in Magressa’s neighborhood, she showed up near the bottom of the list. Further verification confirmed that she qualified for Tikredi.

But that presented us with a problem. She already had a debt to Fonkoze. Though it should have been written off, it hadn’t been. We could not give her a new loan with one already on the books, and though I could write off her old loan, formally removing that barrier, I was troubled by the precedent that would set. The single factor most important in motivating our members to repay their loans is the knowledge that their further access to credit depends on their repayment record. If word gets out that they can fail to repay and get new loans anyway, that could affect repayment rates that are already fragile in Marigo.

So I called Gauthier for advice. He directs Fonkoze’s programs for poorer members, including Tikredi. He is the stuff that heroes are made of. Gauthier is a Haitian-American who returned to his country because he believed in trying to make it a better place. He joined Fonkoze in 2002 to take over leadership of its program of individual loans for small businesses. He succeeded in expanding the program and making it profitable. But when Fonkoze needed someone to assume leadership of its then-new program for the extremely poor, he was excited by the chance to work with those who needed him most. There’s more I could say about him, explaining why to call him a hero involves no exaggeration at all, but what is most relevant here is that his advice is always willingly given and well-rooted in both a deep understanding of Fonkoze’s mission and his years of experience working with Fonkoze members at every level.

Gauthier immediately knew what to say. On the one hand, as long as someone like Magressa truly qualifies for Tikredi, the fact that she has failed in standard credit should be no barrier. On the contrary, her failure suggests that she was in the wrong credit program to start with. On the other, it would be dangerous to let her feel that she has no responsibility for the debt she incurred. For their own benefit, and not only for Fonkoze’s, our members need to feel their commitment to repayment as something serious.

He proposed that I approve her for Tikredi, but insist that she make a small, weekly payments against her old loan. She would already be making a required 30-gourd deposit each week into a savings account. We would ask her for 50 gourds instead. 20 gourds would go towards her old loan.

The 20-gourd payments wouldn’t get her very far if the goal was to repay the old loan entirely. She owes over 8000 gourds. But they will be significant for her. Our analysis suggests that most Tikredi borrowers don’t really build up their assets during the six-month program. At best, they establish a business that will be ready to grow when they’re ready to take out larger loans. The extra 20 gourds, though it’s less than 50 cents, will make things harder.

So I invited Magressa to my office to meet with me and Moïse, her Tikredi agent. We asked her to show up at 4:00, when Moïse would have returned from a day in the field, and she was waiting in our lobby by 2:00. When he finally came, we talked for almost an hour. We talked about her experience in the Desplanti center, we went through her whole repayment history. Her adult daughter, also a Tikredi borrower was with her, as was her new Tikredi center chief. It’s clear Magressa really wants another chance. And she seems determined to succeed this time. Moïse, and I will be giving her all the extra attention we can spare.

It may be hard for us as well as for Magressa. I’ll have to go to the Desplanti center and explain to its members why a women who has failed to repay her loan has gotten new credit anyway. I’m not sure I know what I want to tell them. I can’t afford to hide what we’re doing, but I need to present things in a way that avoids making defaulting on loans appear to be an attractive alternative. It’s a center that was very troubled, and has just begun to turn itself around. Its progress seems fragile, like all of our progress in Marigo. So this will require some care.

I began to write this piece on Thanksgiving because thinking about Magressa moved me to recognize one thing I have to be thankful for. I work with an organization whose mission and leadership makes it possible for me to take a flexible view of circumstances like Magressa’s. It’s true that the Marigo office needs to be profitable. Modest profitability will enable the office to sustainably reach the many Haitians who need its services.

But for Fonkoze, profitability is never more than a means to an end. What matters is to alleviate poverty as best we can. With a lot of hard work and a certain amount of good luck, Magressa will be able to lift her family out of poverty. We don’t know whether she will succeed, but she very well might. It’s hard, though, to imagine how she could make any progress at all without the second chance that Tikredi is ready to offer her. I’m grateful that I work with an organization willing to give someone like Magressa that second chance.

Earlier in the week, I was talking to Bob, the credit agent responsible for one of our best credit centers, the one in Lakou Feliks. We gave a certificate and a present to its chief, Marie Ange, in May, when the Marigo office held its local assembly. At the time, it was one of only two Marigo centers who were 100% up to date with their loan repayments. “Zero delinquency,” as we say.

The center is no longer at zero delinquency. Two women, members of Marie Ange’s solidarity group, have fallen behind. But the center is handling these problems well, and we expect them to be solved by the end of the year. One of the women simply left Haiti to make her way in the Dominican Republic next door. Her fellow members are furious, even though she promises to send what she owes in a lump sum this month. They keep in touch with her to ensure her repayment, but they also say that they won’t take her back if she returns to Haiti. The other woman, a younger one named Manouchecar, has a more common problem. Shortly after she received her last loan, two of her brothers became seriously ill. Helping her mother take care of them ate up most of the capital in her business and took up the time she would normally spend making money as well.

I don’t have the data in front of me to support this assertion, but I think it likely that most of the delinquency we deal with is connected in one way or another to health issues. They are not the only problems our borrowers face. Their money and merchandise are sometimes stolen. Transportation issues can mean that women trying to bring agricultural products into Port au Prince can suffer losses when produce rots before it gets to market. Too much or too little rain can spoil their crops. The price of salami can plummet while they have a large stock in their hands. There are lots of things that can go wrong in their lives.

But very many of the women who have repayment problems tell us stories of children, husbands, siblings, or other family members who are sick or have died. They pay for doctors, medicines, or funerals. Many others talk about their own ill health. Being sick is expensive. They have to spend money to get better, and they lose income as long as they are sick.

The problems are especially bad around childbirth. About 6% of all Haitians die at birth. That’s ten times the number that dies in the States, a country with its own health problems. Over 500 Haitian mothers die for every 100,000 live births. Only about eight of 100,000 do in Europe.

So, for example, in the center at Lakou Feliks, Marie Ange convinced one of our borrowers not to take a new loan because she is pregnant. Another member is returning to the credit program after giving birth to and nursing a healthy child. Lakou Feliks is a good center, and good centers manage even difficult issues, like member pregnancies, well.

Other centers don’t. I’ve written before, for example, about the problems that started when Ivette, a borrower in Segen, took out a loan when eight months pregnant. (See: Working Out Problems.) And Ivette’s not the only one.

Bob and I were driving by a center in Lagad on the way back from Segen on Tuesday, and we decided to stop to see the center chief, Roselène. She is a young woman, still living with her parents, but she had been pregnant for several months. I’m not sure how many. We thought we’d stop by to ask her how she was, and discovered that she was in terrible shape. She had gone into labor, but the baby had died at birth. She had been bedridden ever since. We found her huddled on a blanket on the floor of her family’s outdoor kitchen, trying to stay warm. Her parents and siblings were sitting around the fire. She told us that she had been able neither to eat nor to sleep. And she was too weak to get onto a motorcycle or a truck for the long, bone-rattling ride it would take to get her to medical attention.

That’s where Job came in. His older brother is my “monkonpè”, the father of my godson. And that makes us family. I’ve known Job since he was a high school student. He’s now in the last month of his seven-year medical school education. He’s already a working doctor, scrambling to make a living and to help his older brothers support their younger sisters too, and he’s working hard to prepare for his marriage next March. But he always seems to have time to see me – or to see anyone else I ask him to see – whenever I call him. And I was worried about Roselène, so I gave him a call.

That was Tuesday, and Bob would have to return to the area on Friday, so I asked Job to come Thursday afternoon, spend the night, and then head up the mountain with Bob the next day. He immediately agreed.

He went up the hill on the back of Bob’s motorcycle. They had two credit centers to visit before they’d be able see Roselène, and I suggested to Bob that he have the women in those centers talk with Job about their health while he was collecting repayments.

Job didn’t do a lot in those centers. He wasn’t equipped to do a lot. But the women were grateful for his visit. He took their blood pressure, told them how they could fight hypertension by changing what they eat, and listened to their aches and pains. From what I can tell, the women loved having him, and wanted to know when he’d be back.

When he got to Roselène, he found that things were much less dark than they had seemed to me. She was overtired, a little undernourished, very sore, and somewhat depressed. She and Job had a long talk. It turns out that her labor was premature, brought on, he thinks, by the heavy farm work she was doing well into her seventh month. We sent her some vitamins. Job prescribed a couple of medicines: a pain reliever, an antibiotic, I’m not sure what else. Since Roselène has no way to get to a pharmacy, we’ll have to try to find them in Marigo. Job thinks she’ll be fine after some more rest.

Unfortunately, Fonkoze doesn’t have doctors it can send to the field on a regular basis. I’m lucky that I have Job. But the women we work with live in places where health care can be hard to find. An occasional visit by a doctor willing to donate his time is a very good thing.

The worst part of my job is write-offs. As the third quarter closed at the end of September, I wrote off a few loans. There were a couple left over at the end of October, and these I did last week. As someone who’s been to the meetings at which Fonkoze members receive their first credit, meetings animated by excitement and hope as they count out the money we put into their hands, the moment when I click the “abandon this loan” icon in our accounting system is not a happy one. I think about how far such a grim, bureaucratic end is from what a new borrower hopes for, from what she plans. It feels rotten.

We don’t generally write-off a lot of loans at Fonkoze. Generally speaking, repayment rates are high. But we are now in the fourth quarter, looking to the end of Fonkoze’s fiscal year on December 31st. And we are faced with having to write-off an unusually high number.

The reason for this is worth explaining. We are completing a year of hurricane credit, the loans that Fonkoze offered members who had been affected by the storms in August and September of last year. The loans were interest-free for the first six months. After that, the interest rate was subsidized to less than half of what the institution normally charges. These loans went to members who had lost their homes, their businesses, or both. Fonkoze eliminated the interest due on any credit already in the women’s hands, and then recapitalized them with a new loan in the amount of the loan they had taken most recently.

Fonkoze’s evaluation unit did detailed studies of a large number of hurricane credit borrowers at the time they received their loans, and the follow-up is still pending, so we can’t yet speak in very clear terms about the degree to which the loans helped people re-establish themselves. But anecdotal evidence about and from our members is plentiful and positive. And the financials are pretty good. System-wide, 80% of the money that was lent out has been repaid. In Marigo, the percentage is slightly lower.

But the hurricane credit loans that are not paid by the end of December are to be written off. Some of the credit out there is in the hands of women who are still working to pay it back. They have businesses, and are making repayments, but they are behind schedule. Some of the money is, however, in the hands of women who have no realistic chance to eliminate their debt. The loans did not enable them to re-start their business. It might be because sickness or death in their family during the year burned through their capital. It might be because their reduced level of income was too small to feed their family and send their children to school, so their assets slowly dwindled to nothing. It might be that the range of needs they had at the moment when they received the loans – to rebuild a lost home, replace furniture or clothes, or to feed hungry children – was so great that the money never went into a business in the first place. Despite Fonkoze’s efforts, livelihoods in Haiti became even much more fragile than they already were before the storms, and the impending write-offs are a direct consequence of that fact.

So our office’s whole emphasis for the next two months is to try to collect as much of the money, especially the overdue hurricane credit money, as we can before the end of the year. We laid the groundwork for part of that effort over the past six months as we improved our relationship with our credit centers’ elected chiefs and renewed an emphasis that had been flagging in Marigo on center attendance. We’re seeing more of our borrowers in their centers than we used to, and their chiefs are doing more to help us keep close track of their fellow members. Centers in places like Plantiyon, Chodri, Ravinpal and Lilankou have really turned themselves around.

But another part of that effort involves a kind of work we did little of in my first six months in Marigo. It’s called “suivi delenkans”, or “delinquency follow-up.” It involves visiting the women who are behind in their repayments at their homes or the markets where they do business.

The strategy is based on an assumption that is widely held among Fonkoze’s Haitian staff – which is more than 98% of us – that many women could pay if they felt more pressure to do so.They believe that some women, when they discover that Fonkoze can’t or won’t make them pay, will simply decide not to.

I want to be careful about this. Although it’s true that my Haitian colleagues speak of “bad faith” among some of our delinquent borrowers, I think the reality is complicated. I’m not inclined to look at the question from the perspective of the women’s moral obligation to repay their debt. There is something to that, of course, and probably have some members who have decided to take the money and run. We also have women who are so committed to making good on their promise to repay that they probably do their families some harm. Such women have been allowed to borrow too much, and they and their children are paying the price. Though Fonkoze could not survive if large numbers of women refused to pay their debt, we would rather absorb some losses than see its members’ children go without meals. If the only reason for a woman to repay a loan is her moral duty to make good on her word, she should probably default.

Fonkoze’s job is to work closely with its members to ensure both that it is more advantageous for them to repay than to default and that they understand the advantages well. This involves helping them discipline themselves to invest their whole loan in their businesses, working with them to ensure that their loan is the correct size, and accompanying them as they learn to make their businesses increasingly profitable. If their businesses are functioning well, and they can see the good use they’re making of borrowed capital, then, unless they confront a crisis in their household, they’ll repay at a very high rate. That’s been the lesson of microfinance worldwide, and in Haiti as well.

Meanwhile, we have been going out into the field to try to collect delinquent loans. Our approach to suivi delekans has been quite different from other work that we’ve done since I came to Marigo. We are sending two-four staff members out together, rather than sending a single credit agent alone. The Marigo team feels as though this gives each visit extra weight. We are borrowing staff from the Jakmèl branch for some of these visits, because the staff believes they also gain weight from the presence of an unfamiliar face. Finally, the staff has unanimously asked me not to participate. They say that in cases where something like an extra visit is necessary at all, my being foreign can only undermine them. They feel that rural Haitians are too accustomed to viewing foreigners as the bearers of gifts. So I’ve had to sit on the sidelines as credit agents and others have undertaken this important work.

So I can only report on these expeditions second-hand. They involve talking firmly with some borrowers and encouragingly with others. They have brought in some money – not a lot, but some – and have improved attendance at a couple of centers. But sending four people out into the field is expensive and hard to schedule, especially if it involves borrowing someone from a neighboring office. So we’ll need to be careful in our planning, making some good guesses as to when and where such an expedition might help.

But on January 1st, though we expect to be a smaller office after write-offs, we also expect to have a portfolio that’s in pretty good shape. Then we can return to the emphasis on reconstructing broken credit centers that has been our priority since I moved here, even as we recruit new members into those of our centers that are functioning more or less. Our intermediate goal, though not our ultimate goal, is to get our office to the point at which it can break even, and that requires a portfolio both larger and cleaner than ours now is. Write-offs are, unfortunately, part of cleaning it up. Better to stop counting on repayments from women who can’t or won’t pay back.

And it is certainly the right decision to write them off because making the branch marginally profitable is only an intermediate goal. It is, more precisely, a means. It is the means by which we make helping women remove their families from poverty sustainable. Only when this office can generate the income it needs to cover its expenses will we be able to guarantee that the work can endure.

The credit center in Tèsè has been like a little gem for us. It’s a relatively new center, just a couple of years old. But its members are wonderfully regular about coming to meetings, and very good about making their repayments. Clotude, their center chief, is forceful, but also popular. Their loans have been growing, with some of them already managing as much as 11,000 gourds, or about $270. Things have been going pretty well.

It’s not as though they haven’t had problems. In May, we gave awards to the centers we work with that had no delinquency. Tèsè had none at the time, but did not win recognition because the reason it had no delinquency on our books was that we had just written off one of its larger loans. The woman who defaulted, Silvena, had never really had a business. She would simply turn her loan over to her husband. The Tèsè members knew this, but they didn’t give it a thought, because they knew her, and she repaid regularly. But when the husband left home to try to earn a living in the Dominican Republic, he walked away with the whole loan and she had no way to repay. The Tèsè women brought me to her home so that we could try to work something out, but we got nowhere.

The truth is that they were angry and worried, and they wanted me to arrest Silvena. When I pointed out that I am not the police, they said it didn’t matter. I could bring her to my office, and tell her she couldn’t leave. She’d obey. They thought that, until she repaid her portion of the loan they had taken together, they would be unable to get new loans themselves. They said her family would come up with the money somehow if they felt threatened.

But when I got to the house, I found Silvena, a sickly-thin young woman, with her even-thinner mother, and a skinny but lively little girl. There was a very small pot on a little fire in the yard, but it didn’t appear to have much inside it. Fonkoze is not in the business of making life harder for those already on the edge of survival. The leverage we have as we try to collect low-performing loans is limited. So we assured the women that their loans would not be delayed by her default, and we wrote off Silvena’s loan.

That was March. When I attended their first meeting in September, Clotude welcomed Silvena to the center as a special visitor, and informed her fellow members, their credit agent, and me that Silvena had come with more than half of what she owed. Apparently, her husband had send her some money. Silvena looked much better. The women gave her warm applause as she counted out the money. Everyone seemed pleased and hopeful about how it was turning out.

When Ilionna started to run into trouble, they reacted differently. She is an older woman, the mother of a grown daughter who had three children of her own. She and her group got their most recent loan in June, and her problems started right away. Her mother-in-law became ill. Since she and her husband thought she could take better care of his mother than he, she gave him her loan and sent him to Port au Prince to do her buying. A reasonable division of labor.

He was mugged and robbed, beaten up badly enough to require hospital expenses on top of the lost loan capital. He then got sick — Clotude thinks that it was the stress of the loss that made him ill — and that ate up even more of their money.

So Ilionna found a job in Jacmel, as the maid in a rich family’s home. It pays poorly, and interferes with her ability to run her business, but it brings in something, and the truth is that most of her business capital is gone anyway.

By working hard, and selling some livestock, she was able to make a payment and a half by mid-August, about six weeks late. She managed to pay the late fee as well. She worked things out with her employer so that she could take the days of her center meetings off, and, so, stay involved. She wanted to be sure she’d be ready to recapitalize her business with a new loan on schedule.

But disaster struck last week. One night, Ilionna’s daughter called Clotude, who is her neighbor, over in the middle of the night. Her five-month-old seemed sick. Clotude described how she felt the child’s arms, her legs, and finally her face for any sign of warmth or breath. She found none. The child was dead. The very least part of Ilionna’s loss was the fact that the money she had collected to bring her repayments up-to-date went towards her granddaughter’s funeral.

It is hard to talk about loans at such a moment, but that is the side of things I deal with directly. And Ilionna’s case brings out the fragility of the tools we can make available to women here, a fragility made worse when credit is given recklessly, without sufficient attention paid to building in as much of a safety net as circumstances here allow.

Fonkoze’s credit is designed to help women face even such grave obstacles to progress out of poverty. A credit center should have between thirty and fifty women, organized into six to ten groups of five. When women have small problems — a payment is a few gourds short — the four other members of her group give her a hand. When more serious problems occur, the whole center gets involved. Most of the financial problems a Fonkoze member would face in the ordinary course of affairs — I’m not thinking of the hurricanes that can wipe out whole regions — are manageable when her center divides them by thirty to fifty.

But the portfolio in Marigo was developed carelessly. The staff here wanted it to grow as quickly as possible, and they lacked to patience to do things right. One consequence is that some women were given bigger loans than they could manage. Another is that some women received loans without our office ensuring that they had real businesses they were investing in. But a third was that loans were handed out in new centers before those centers were to scale.

Normally, a center should start with four or five groups. A credit agent will recruit groups in a neighborhood, and won’t hand out credit until there are four or five ready to join. Two or three might get their credit first, but only when the others are already in line to join them.

But the center in Tèsè opened with just two groups, or ten women. One woman dropped out early on. Then we had to write off Silvena. That leaves just eight members, and even in the best of times, it would be hard for a group of eight women to step in to help Ilionna right now. And these are not the best of times. Her problem exceeds their ability to pitch in.

I went to the center yesterday to talk to them about Ilionna’s plight, and about how it underscores the danger they all face. We have been talking with them for almost two months about recruiting new groups, but they’ve made little progress. They are rightly careful about the kind of neighbor they invite to join them. They want women they can count on. Now they are ready to add one more group next month, and we’ll congratulate them when they do, but it isn’t really enough. I think they are now beginning to understand how important it is for them to make their center grow, but we’ll have to wait to see whether they can find he kind of fellow-members they are looking for.

For months I’ve been bemoaning the way the Marigo portfolio is divided into too many centers that are too small. I’ve thought of it as one of my hardest management issues: how to help a reduced number of credit agents serve the number of centers we have to serve. But watching Ilionna’s experience in Tèsè demonstrates that the management issue is the smallest part of the problem.

The other seven women in the Tèsè center will have problems, too. It’s easy to imagine losing them because they lack the protection that a well-built center provides. But if we can help them grow to a core of five or six groups, Clotude’s leadership could make them one of the strongest centers we have.

One of our successes these last months has been in starting to rejuvenate the portion of our loan portfolio in downtown Marigo itself.

This is important to us. On one level, there is question of our own morale. It means a lot to us to feel ourselves in the midst of borrowers whom we can watch as they succeed. The Fonkoze members we see every day, our closest neighbors, are starting to do much better than they were six months ago, and that makes it a lot easier to feel encouraged in our work.

On a more serious level, Fonkoze has seen other offices struggle mightily once they lost the part of their portfolios closest to them. Those are the areas a branch can serve least expensively. The higher profits we make on loans to nearby borrowers can help defray the higher costs of serving more distant members. These areas often offer members with a greater capacity to borrow and invest than those in harder to reach places, so they contribute significantly to a branch’s ability to make its portfolio grow.

Marigo may not have much of a downtown, but it does have one. So we realized that repairing the very damaged credit center there, where the majority of members weren’t making repayments, weren’t coming to meetings, or weren’t doing either, had to be a high priority. And we’ve made progress.

We started by splitting the large center into two smaller groups. One is for a number of members who had been repaying regularly, but not coming to meetings. Their businesses have been managing to hold their ground or even to grow, but they aren’t in Marigo. They are on the Dominican border in Ansapit. It’s a long boat ride from Marigo, one that our members hesitate to make too often, especially during hurricane season. By offering them the chance to hold their two monthly meetings on consecutives days, we figured we’d cut their necessary trips in half, and make it easier for them to meet our expectations. (See: Creating a New Center.)

The other center is for the remaining members, women who, for the most part, were neither coming to meetings nor repaying their loans. We have been investing heavily in re-establishing this half of the center. The credit agent spends a day or more before each meeting going door-to-door, reminding members of the upcoming meeting, talking to them about their businesses and their prospects for repaying, and getting their help in locating borrowers with whom contact has been lost.

The work has been paying off. Members of the stronger of the two centers have been repaying more or less as they always do, and have been coming to the center more regularly.

More and more members of the weaker center have been coming to their center as well, and some of their delinquent repayments have started to come in. They recently elected a new center chief – the original chief of the combined center is now with the stronger group – and thus the handful of them who have succeeded in repaying what they owe were able to request new loans. It is, once more, a living center. Seeing their fellow members get new loans can only serve to encourage further repayment.

We are beginning to feel a very moderate, but distinct degree of optimism. But progress is not continual, because the barriers to progress are not only our own correctible errors, but problems our members face that are perfectly real.

Attendance was down at this month’s meetings of the new, stronger Marigo center. And, what’s worse, some of the center’s members failed to make the payments that were due. We have to take this very seriously, not just because of the money or because of the importance we attach to this particular center, but also because these are women who have always paid very well. In the midst of the worst times for Fonkoze Marigo, these women would consistently make their repayments. They would pay even if they were bad about coming to meetings. They would pay even while wondering out loud why they should repay their loans when so many other women were failing to do so. They are terrific borrowers, already able to manage significant loans and probably capable of growing.

The problem is related in part to the sardines, which I mentioned last week.
(See: Salami and Sardines). The sea has been calm and clear lately, making fishing easy. And it’s been rich as well, yielding lots of fish. The women who were not able to repay are fish merchants. They buy in large quantities from the fishermen who work the coastal waters east of Marigo, and sell to other merchants from Jakmèl and Port au Prince. The price of fish has fallen to the point that they were not able to make enough to feed their families and repay their loans.

And the situation is more difficult than that. I happen to know one of these women well, better than I know any other of our members, and so can speak of her situation in detail. Her name is Emirène. She is my next-door neighbor and landlady in Marigo. Her fourth child, Jean Manno, is my plumbing. About once a week, it is his job to fill the barrel of water in my bathroom. Now that school has started, I help him and his younger siblings with their homework after I leave the office each day.

The timing of the crash in the market for fish couldn’t have been worse, and it’s precisely the opening of school that’s the problem. Emirène has eight children in school: her own seven and a young niece who helps Emirène’s mother with chores. She and her husband, a diabetic fisherman, also support her mother, a deaf friend of her mother’s, and her husband’s two older children. It’s a considerable household.

But let me stick to the school costs for a moment. Though the Haitian constitution promises free, universal primary-school education, the government delivers nothing of the sort. Less than 15% of schools in Haiti are public. Emirène is paying private school tuition and buying uniforms, books, and other school supplies for all eight kids just at the moment her income is at its lowest. What’s worse: Her clients’ children started school this month as well. A lot of them bought from her on credit so that they’d have the cash to send their kids to school. Emirène’s finances are a mess. And she’s sick about it.

My own management probably made things harder for her. One of the first things I did when I came to Marigo was insist that we hold members accountable for their attendance at meetings. It’s something we say we require, and our borrowers agree to attend meetings. It’s one of the conditions we stipulate when they get their loans. But the Marigo staff hadn’t been pushing the point. When I started approve new loans for members who were ready for them, I did it with attendance sheets in hand. Members who missed several meetings would get lower loan amounts, even if they had repaid their loan on time. I thought that this was the least I could do towards showing that we really do expect them to come.

Emirène fell into this category and received a much smaller loan than she had wanted, and this had a big effect on her income. She used to have two businesses: her main one selling fish, and a smaller one selling cases of soft drinks to retail merchants. When her childless aunt died in April – yet another person she was responsible for – the funeral expenses ate up her soft drink business. She had hoped to reinvest in it with her new loan, but the amount she received was too small. So her second, smaller, but more regular income stream, disappeared.

All I can try to do now is help her avoid slipping into a cycle. If she continues to struggle to repay her current loan, she would ordinarily qualify for an even smaller one when it’s repaid. This will further reduce her income, ad make it even harder to reestablish her second income stream. By the time she sets her business back on firm ground, it could be much smaller than it was. And she could be poorer.

That’s not our goal. So we will need to maximize what we can prudently offer her, and get it to her as soon as she’s ready. Making the right call will take a lot of conversation. With her credit agent and, more importantly, with her. But it’s certainly the only way to help her start moving herself forward again.

Belwòch seems to bear its name like a joke, one in pretty poor taste. The name means “beautiful rock.” Until last year, Belwòch was a populous and fertile area along the river that separates Marigo from Peredo, its neighbor to the east. But when the hurricanes came, flood waters swept down the river towards the see. They carried rock upon rock with along with them, destroying everything in their path. They destroyed houses, uprooted even large trees, and washed away topsoil. Today, Belwòch is a field of large, white boulders. The topsoil, the trees, and the houses are, for the most part, gone.

But there are still people who live and try to make their living in Belwòch. And a handful of them belong to a Fonkoze credit center. It’s one of our oldest and most frustrating centers. It was established long before the office in Marigo was opened. Credit agents from Jacmel recruited its members.

Belwòch was never a large center. Jacmel chose to serve the area by opening a cluster of small centers rather than one central one. But Belwòch had five solidarity groups of five women each taking out new loans every six months, and they flourished.

But the repayment problems that started when global food prices began to spiral upward in the year leading up to the hurricanes became that much worse when the storms eliminated businesses and homes. Though Fonkoze offered interest-free loans to help its members rebuild their livelihoods, these loans were not enough for some women whose customers no longer had money to spend or whose families were facing health problems that drained the capital from their businesses. And these are just examples of the many kinds of problems our borrowers face.

So we’ve written off several Belwòch members, and lost some through simple attrition. Many of those who remain are having a hard time. They aren’t good about making their repayments, nor about attending their regular meetings. The center chief, the woman whom members have elected to approve their loans and facilitate their relationship with Fonkoze, is herself very delinquent in her repayments, and even though she recognizes that this makes it hard for her to speak seriously to delinquent members of her center, she just hasn’t been able to straighten herself out.

So when I attended their meeting a couple of weeks ago, I made a simple suggestion: We would just close the center. Women who are functioning well with their loans could join nearby centers. We would continue to follow-up with the others on an individual basis, helping them as best we can. I said I would return in two weeks so that we could discuss my proposition, and asked the handful of women who were present to encourage the others to be sure to be there for that disussion.

I had expected the meeting two weeks later to be a planning session. We would sit with each woman, and help her decide whether she really wanted to continue with credit and then help those who did choose a new center they could conveniently join. I had taken the center’s closing for written. I could not have been more wrong. The women made speech after speech insisting that no one was closing their credit center but them. They would not move to another center.

I was particularly struck by what Adeze had to say. She’s been a very reliable borrower. Her repayments have consistently been on time. She lives in downtown Marigo and pays car fare to attend her meeting twice each month in Belwòch. We have a center less than a block from her home, so I felt certain she’d be pleased to have the chance to pull out of a struggling center and join a more robust and convenient one. But it was not at all the case. She was willing to get her loans in another center if we had insisted, but her preference was to continue to go to the center that’s been hers.

The women feel ownership over the center, and though that hasn’t yet meant that they’ve worked together to solve their problems, it is a start. They agreed that, at their next meeting, they would work with their credit agent to create a calendar for home visits to all the members who owe money but don’t come to meetings. One or two of them would accompany the credit agent to each home. They would use the process to collect outstanding debt, but also to sift through the center’s membership to identify the core of women who are really committed to making it work. With that core, they would seek to make a new beginning.

We won’t know whether they are really able to make a go of it for a couple of months. I told them I would track October and November meeting attendance closely. I’ll also be looking for the results of their homes visits. But if we can help them make this center work, it would give us one more nearby post as an anchor for our programs as we seek to reestablish this office on truly solid ground.

The experiment with Yvette has me thinking that there is much more I could do by using the rules that Fonkoze loans follow to minimize our borrowers’ debt. Yvette is the woman whose interest-bearing loan I rewrote, retroactively, as the interest-free loan she was entitled to. Between that change, and a reimbursement I made for her out of her own savings, we cut her debt to a level she felt she could repay. She lost her sense of hopelessness, the feeling of shame that had brought her and her husband to tears before me. She has now been making repayments for two months, and is in good shape to eliminate her debt about a month ahead of schedule. (See: Working Out Problems.)

But Yvette is just one of many Marigo borrowers who are in trouble. Last week I spoke with Josiane, and am now working out what I can do for her.

Josiane is a long-time member of Fonkoze. She had joined before the Marigo office opened, when credit agents from Jacmel were beginning to serve the area. Her success as a borrower and a businesswoman eventually led her fellow center members to elect her to be their chief. It’s an important position. It means, among other things, that she signs their requests for loans, and this includes approving the amount they ask for.

Her own credit has grown consistently since join joined. She had been borrowing around 30,000 gourds, or about $730, which put her just a step away from graduating out of solidarity-group into a larger individual loan.

Then came the hurricanes. Floodwaters swept away her entire business and her home. Hurricane-force winds destroyed two gardens with something like 200 plantain trees in them, a harvest probably worth more than 20,000 gourds. A year later, she is living in the backroom of a frame that was rebuilt with raw lumber on her mother’s old foundation. The frame is covered by a combination of corrugated tin roofing material and fabric.

She doesn’t have a business now. Though her hurricane credit helped her get it started again after the storms washed it away, the reduced sales that all of our hurricane-affected borrowers have been struggling with held her back. Then one of her children got sick enough to require hospitalization. The costs of medical care had to come right out of her assets, eating up her business to the point that, though she regularly comes to and leads her center meetings, she hasn’t even tried to make a repayment in months.

Except once: Back in March she pulled together about 4500 gourds. Not much compared with her debt, but a lot of money for someone living as she now lives to have saved up. She brought them to her credit agent as a partial payment, but he, remarkably, refused to accept the money. He said it was too little. She pressed him to take it, saying that it would be hard for her to keep from spending it if he didn’t take it from her hands, but he was steadfast.

He no longer works for Fonkoze, but the damage had been done. She was left discouraged, with mounting debt. The 4500 gourds disappeared into the household that she still has to manage.

Josiane’s debt is a terrible problem for her, but it’s a problem for Fonkoze as well, a larger problem than the over 25,000 gourds she owed when I first saw her file. As the center chief, she is supposed to serve as a model for her fellow borrowers and, unfortunately, she seems to be succeeding. As months have passed without her making a repayment, other borrowers in her center have followed suit. We hear of their saying things like, “If Josiane doesn’t have to pay, then . . .”

For an institution like Fonkoze, that has nothing to depend on but moral suasion and a woman’s desire to preserve her access to credit, non-payment can be contagious. So we urgently need to do something to help borrowers like Josiane, who seem genuinely motivated to get back on track with us, pull themselves out of the ruts they are in.

The first step was easy. She had well over 5000 gourds in her savings account, so I asked her whether she would like to use that money to pay of some of her loan. Women are often reluctant to do so, because their savings accounts balances will eventually have a lot to say about the amount of credit they can receive. The lower their balance sinks, the smaller the loan they are eligible for. But Josiane was pleased at the thought, anxious to do anything to reduce her debt.

For my part, I helped her by dating her withdrawal and the payment she made with it June 30th. This is important, because the first six months of her hurricane credit were interest-free. She did not start paying interest until July 1st. So, backdating the repayment saved her over 300 gourds of interest payments as well. More importantly, it enabled me to let her see that we really want to help.

But the hard truth is that, whether she owes one gourd or a million gourds, until she gets some money coming in, it will remain hard for her to repay. So she and I talked about her business prospects. We ended up spending a fair amount of time talking about Dominican salami.

Josiane feels that she can somehow assemble the money to buy a half-case of salami. If the market is good, she can turn it over in one market day, so her sales expenses will be low and her margin correspondingly high. If sales are slow, she’ll have to lug the salami to two or three markets, and her profits will be a good deal less.

The problem, she says, is that the market for salami around Marigo is not good right now. It’s sardine season. The little fish are cheap. So folks buy them and prepare their food with them instead. The only women who are making money on salami are merchants with enough cash to buy two-three cases at a time. They can then sell at a lower price than people like Josiane. Their margin is lower, but they make it up with volume.

So Josiane thinks that she’ll have to wait until October, when the sardines disappear and, so, the demand for salami rises again. She believes that those sales can then become the centerpiece of a revived business. It will be hard for her to repay her entire debt with that money. She’s a long way from having enough cash to buy and sell the quantity of salami that would require.

But she is not putting all her eggs, or her salami, in that one basket. Once again, she and her husband planted a large number of the plantain trees. They give her a lot to worry about. They have reached a height at which they are as vulnerable to wind as they can be, but they do not yet have any saleable fruit at all. So she told me that she prays every day that this year won’t bring high winds. If she can get a decent harvest, it will go a long way towards getting her back on her feet.

In the meantime, we are working with her to re-establish her credit center. It takes a lot of time and a lot of conversation. She’s not the only one with debt, but if we can help them all see their debt as a burden that Fonkoze can share with them, we stand a good chance of getting through this.

Fonkoze’s method of providing credit is inefficient under the best of circumstances. It’s a choice we make. If we want to reach the women who really need our services, we need to go to them. The expenses that the women who live in the more distant centers would incur in coming to our office to take and repay loans would take such a big bite out of their profits as to make the loans useless, or worse than useless.

We have to go to the women we serve. We maintain a fleet of motorcycles and spend a lot of money getting our credit agents to the centers in which they meet their borrowers. Marigo has over 40 such centers, and it is not really a large branch. If things were working really well, each would have between thirty and fifty members. We would know their homes, and know their businesses, but would deal with them very predominantly in the centers where they’d meet us twice each month.

But we are still struggling in Marigo. We have good centers that are too small and big centers that are no good.

A center with only two or three solidarity groups just isn’t worth the trip the credit makes to get there. An example is the very strong little center in Tèsè. It has just two groups, a total of nine members. It functions very well, but if it wasn’t for the fact that it’s close enough for us to schedule two other centers as part of the same trip, it would be hard to justify. Even though it is very strong.

I visited Tèsè last week to talk to members about recruiting new solidarity groups to join them. It’s a delicate issue. We want members to continue to feel responsible for the overall performance of their center, so we can’t force them to accept new members whom they don’t trust. But we can’t let them feel as though it’s ok for them to just insist that they don’t want to add anyone new. Our centers should each have five or six functional solidarity groups at least.

So we have left recruiting in our members’ hands. We are not allowing Fonkoze staff to look for new members. Members themselves will choose whom to invite to join their credit center, and on the morning I was with the members of the Tèsè center, they had a long discussion about four names that one of them proposed. The four names were proposed by two different members, and all seemed to pass muster. The women decided that the three women that one member proposed would be asked to find two more applicants and then join as a group of five. The women agreed to refer them to the other potential member they discussed, so they would be able to take her as a fourth member of their group. If they chose instead to add two other women whom they know, that fourth woman will need to recruit her own group of five.

In any case, if we can thus start adding new borrowers into those of our stronger centers that are small, our financial performance should start to improve. Our larger and tougher problem, however, is with centers whose organization has really broken down. This can happen for any number of reasons, but the results are predictable. Center attendance drops off, and repayment rates suffer.

This has been the case at two credit centers that one of our agents, Bob, serves on the mountain road right near the border that divides Marigo County from Belans in the east. Lagad is on the Marigo side of the line, and Bèdòranj is in Belans. They’ve been pretty weak over the past months, but seem headed in very different directions.

The center in Lagad is led by a dynamic young center chief named Rosemène. She called Bob up to Lagad on a Saturday about six weeks ago because it was the day of the annual festival. She explained that if the two of them walked door to door that day, they would find almost all the center’s members, both those who come to meetings and those who don’t, including the ones who live and conduct their businesses principally in Port au Prince. They spent a morning talking to borrowers, and the result has been encouraging. The last couple of times he’s been to the center, attendance has been almost three times what it had been, moving from single digits to mid-twenties. The center still has some delinquent loans, but we generally believe that where attendance is good, repayment issues will be resolved.

Bèdòranj is another story. It is a very poor, very rural area. Fonkoze has had a credit center there for years. Long before the Marigo branch was even opened, credit agents served Bèdòranj from the older and larger branch in Jakmèl. When I arrived in March, the office was serving four centers in the area: the old one which sits right on the main road and three others that are downhill from it, in very hard-to-access areas called Kabatis, Senwòk, and Nanzèb.

The centers in Kabatis and Nanzèb were among the first centers I closed. We had already written off a considerable number of loans in those neighborhoods, but the remaining ones were seriously delinquent as well. So we bit the bullet. We admitted to ourselves that we were not going to be able to continue offering credit in the area right now.

The center in Senwòk may still go the same way, and the one in Bèdòranj is not much better. I went with Bob a couple of weeks ago, and things were grim. Of 29 members of the center only three came to the meeting. And the reason those three women came was that they were scheduled to receive a new loan that day.

But Bèdorànj has too many long-time borrowers – some of them very successful – for us to believe that it is a lost cause. We feel as though we can’t give it up. Bob and I spent a day there last week, visiting borrowers in their homes, trying to understand their situations better and to encourage members to start attending meetings again. Only time will tell whether a day spent going door to door can have an effect.

One clear benefit of the day, however, is a growing sense of the range of the issues that our borrowers face. We spoke with women who were dealing with everything from difficult pregnancies to kidnapped children. We heard of stolen merchandise, of lost crops, and of sick parents. We heard of deaths in the family. Each woman had her own more or less miserable story to tell. Most remain optimistic, but listening to them nevertheless makes you wonder what your chances are of actually collecting the money they owe.

Part of the problem is the real hardships they explain, but another is that some of the things they say only underline that their loans were made improperly in the first place. I’ll mention three examples.

We heard from a woman who had been lending her loan money to others. They hadn’t paid her yet, so she couldn’t pay Fonkoze. But Fonkoze doesn’t provide loans for lending. Its loans are supposed to go to market women who’ll invest in merchandise that they themselves will sell.

We spoke with another woman who has no business at all. She sends the money she borrows to Port au Prince, where her son uses it to run a business. He had had some illness in his household, so he hadn’t been able to send the money she owes just yet.

We ran into the opposite situation as well. A mother who is up-to-date repaying her own loan explained to us that her daughter, also a borrower and a delinquent one, doesn’t have a business. She herself uses both loans. She had her daughter sign up because she felt the loan amounts she was eligible for were not enough. But now her profits aren’t enough for her to repay both loans. So she’s let the one in her daughter’s name run past due.

Fixing a center like the one in Bèdòranj will involve several kinds of work. We need to ensure that the successful members of the center continue to get appropriate levels of credit and other services when they need them. We need to get those members to help us stay in contact with delinquent borrowers so that we can collect such past due sums as are collectible and reintegrate problem borrowers who are able to make good use of credit back into the center. And we need to find more women who want to and are able to use Fonkoze credit to improve their families’ lives.

None of this is easy, but it is the only way.

The more firmly we grasp the overall picture here in Marigo, the more we can involve ourselves in the details of individual borrowers’ loans. Getting into these details makes small decisions possible that really help women out.

I’m thinking of Ivette. She’s a member of a credit center in Segen, the mountain region above Marigo. I’ve written of her case before, though I didn’t mention her name. She’s one of the few examples of a borrower whose husband I met first. When I first came to Marigo, he was attending center meetings for her because she had just had their first child. I referred to him as “Paul”. (See: Dealing with Men.)

Ivette had taken a regular loan for 15,000 gourds – about $375 – in December, though she was more that eight months pregnant. She probably should not have received this loan. Problems around childbirth are so common in Haiti. Over seven percent of children die at birth, and for every 100,000 births, 523 women died in Haiti, compared to eight for every 100,000 births in Europe. Giving a loan to a woman on the verge of childbirth is a big risk, especially if you know little about the household she is part of.

But she got the loan, and the first thing that happened was that she had a very difficult labor and so had to give up her business and spend her time recovering with her new baby. Her husband took over the business for her, but on a purchasing trip to Port au Prince he was beaten and robbed of everything.

They were thus left with a big debt and very little to repay it with. They squeezed the first two out of their five reimbursements out of their assets, but by March they really had nothing left. They were falling behind, lateness charges were accumulating, and they couldn’t see any way out. Ivette’s husband kept coming to meetings, hoping, I suppose, that we could figure something out. Ivette and her child slowly recovered, but the financial situation was looking worse and worse.

When we finally we able to study the file carefully, we discovered something odd: The loan that Ivette took in December was at Fonkoze’s standard 5% interest rate. At the time, Fonkoze had raised donor support to offer interest-free loan to borrowers in regions that had been struck by the hurricanes last September, and Segen was one of those regions. So Ivette had been eligible for an interest-free loan.

When I asked her why she hadn’t chosen an interest-free loan, she said two things: For one thing, at the time we were offering interest-free hurricane loans, she had already repaid her previous loan. She had understood, wrongly, that only borrowers with unpaid balances were eligible for these loans. For another, the hurricane loans required a repayment in the first month of the loan. Reimbursements for standard loans start in the second month. She thought the extra month to work with the full loan amount would be to her advantage.

In any case, the first thing I did was to go into our data base and retroactively transform the loan into an interest-free one. This immediately made a big difference. The standard interest rate is 5% per month on the declining balance. The effective interest rate is thus 40% annually or 20% for a six-month loan.

This will of course seem high to anyone living in the States, but is very competitive by local standards. Loan sharks regularly charge 50-100% per month. The formal banking sector, whose loans are also expensive, won’t give loans to the poor at all. Other microfinance institutions offer loans at rates similar to Fonkoze’s.

Ivette had owed 15,000 gourds of principal and 3,000 gourds of interest, a total of 18,000 gourds. She had made two repayments of 3600 gourds each, and thus had a balance of 10,800 gourds. Shifting the loan to interest-free immediately reduced her debt to 7,800 gourds.

But there is another important difference between hurricane loans and standard ones: Borrowers are required to deposit 15% of the amount of a standard loan into their savings accounts as collateral. The money remains theirs unless they default. Hurricane loans come with no such requirement. They were designed to get women in debt back on their feet and in business, so all unnecessary barriers were removed. Ivette thus had 2250 gourds on deposit as collateral for her standard loan. I made a withdrawal of 2200 gourds for her and used it to further reduce her debt. She then owed only 5600 gourds.

But the interest-free contracts were for six months, and Ivette’s had already expired. So the last thing I did for her was the same thing we did for every other hurricane borrower who was unable to repay in six months. We rolled the whole balance into a second six-month loan at a subsidized interest rate of 2% per month. Her total debt would thus be just under 6000 gourds, and she would have six more months to repay it.

Yesterday she made her first repayment. She is back in business, and though her commerce is much smaller than it was before her troubles, she’s glad to have the resources to begin to eliminate her debt. In fact, she chose to repay somewhat more than the amount that was due. She wants to complete repayment a month or two early if she can so she can take out a new loan and begin to build her livelihood back up again.

I came to Marigo in March to see whether a teacher could learn to manage a bank branch. It wasn’t as though I was looking to change my stripes. I wanted to manage it as a teacher.

In my work as a classroom teacher I have tried to sustain a commitment to student-centered learning. I see my primary responsibility as helping students see the situations they find themselves in as questions they can work together to answer or problems they can work together to solve. The heart of the matter in Marigo is whether I can learn to be part of a bank branch’s staff that succeeds by looking at its situation in that same way.

But it’s hard to face problems when we’re buried in them. When we’re feeling overwhelmed, it can be hard even to know where to start. And the Marigo office was really in bad shape.

The heart of the problem was the result of two years of fast, careless growth. The Marigo branch opened in 2006, and from the outset it easily and quickly recruited new borrowers. But even at its period of high growth, member turnover was high. Borrowers would drop out of Fonkoze’s lending programs only to be replaced by new ones. As many borrowers who were lost would be more than replaced by new ones, however, and by early 2008, the office was serving between 1800 and 2000 borrowers.

The quality of the Marigo loan portfolio was deteriorating, however, so Fonkoze’s central office made an important decision: Marigo would have to stop recruiting new borrowers until it could learn to serve those already in the fold. Learning to serve them better would involve a lot of hard, disciplined work in the field, work that only grew more difficult in the face of an economic crisis brought on by the world-wide spike in food and gas prices and then more difficult still when three hurricanes and a tropical storm ravaged the Marigo region, and much of Haiti, last August and September.

Since putting an end to recruiting did not affect the dropout rate, the total number of borrowers started to decline. By the time I joined the office in March, there were about 1200.

What’s worse: It’s not as though they dropped out in a convenient, well-organized way. For its 2000 borrowers, the office had five credit agents serving them in 56 credit centers. When we were down to 1200 borrowers, we still had five agents and 56 centers. Our cost per loan was, necessarily, spiraling upward.

So the first charge I had from the central office was to lay off two credit agents. An ugly enough task in a country where unemployment is so high that employment in the formal sector can scarcely be said to exist. What made it worse was that we would need to plan how to serve borrowers from the same 56 centers with the three agents who remained.

I decided that we simply couldn’t. So we closed some of the very worst centers, ones we felt we could not save.

Most of these had become unsalvageable for one or another version of the same reason: A self-appointed local leader, almost always a man, had managed to interfere sufficiently with Fonkoze’s close relationship with borrowers that we no longer could make the borrowers feel genuinely responsible for their loans. For example, in Kajak a local leader had, among other things, taken it upon himself to collect reimbursement payments, but hadn’t been turning them over to Fonkoze. The women believe they’ve repaid, but the money never has gotten to us. And there’s no paper trail to pursue. In Nan Zèb, most of the loans went to ghost borrowers, women who did not have businesses at all, who signed for the money and then handed it over to the local leaders who put them up to it. Ironically, those leaders then used the money as loan capital that they then let out at truly exorbitant rates. They are loan sharks, exactly the thing Fonkoze is most anxious to combat.

We continue to pursue the money that is in those men’s hands, but our options are limited. And even if we succeed in collecting it, we have to admit that we cannot be confident of developing direct relations with borrowers that these men can’t undermine. So we just have to give up on the neighborhoods for now.

We also combined some centers that were close to each other and not too large. We thus managed to get the number of credit centers down to 42.

These changes involved a lot of chaos. On one hand, we had to change some center meeting days and times, which confused both our office and our borrowers. On the other, we had to make significant changes in the assignment of centers to credit agents. This interfered with the familiarity between the agents and their borrowers that credit depends on.

So because of the chaos, we had weeks of not really knowing where we stood. We were regularly seeing small signs of progress or of trouble, without feeling very clear about the overall state of things. Under the circumstances, it was been hard for me to do the kind of teaching I like to do. The questions and problems haven’t been presenting themselves clearly enough for the staff to face.

In this context, Wednesday morning’s staff meeting was a real step forward. The credit agents gave a short report about each of their centers: the centers in pretty good shape, the ones that are improving, the ones that are still weak, and the ones for which we have no real hope. Each of the three agents seems to see the situation he is facing in his centers with increasing clarity, and though there are a couple more centers that they think that we will lose, and a couple that we just don’t know about, the core of well-functioning centers seems to be growing both larger and stronger.

The clearest indicator of that improving core, in fact the key to it, is the increasing cooperation we are getting from our center chiefs, the women whom borrowers elect to lead them.

There is the center in Lilankou, for example, which was created when a small center already in existence there was joined by members of neighboring centers in Nan Aka and Savann Dibwa. The combined center now has very good attendance, though better among members from the non-Lilankou groups than from those from closest by.

And one has the sense when one visits the center that its chief is really in charge. I watched our credit agent, Jean Bellande, make some loans the last time I was there, and was encouraged to see how he went through the process of counting out the money and handing it over to the center chief, who then handed it to the borrowers. The chief was careful to say that Fonkoze had lent her the money and that she, in turn, was lending it to the borrowers who signed for the loan. It was the best evidence I had seen thus far that at least one center chief was ready to take the full measure of responsibility that we ask chiefs to take.

On Saturday, I was in Lagad, the home of one of our oldest centers, in the mountains beneath Segen, with another agent, Bob. He wouldn’t normally go on Saturday, but the center’s chief had told him that it would be a day of neighborhood celebrations. The locals who live in Port au Prince would be home for the weekend, and so it would be a good day for the two of them to walk door to door, talking with delinquent borrowers who aren’t usually around. And it was exciting to see that she led the way to most of the houses and that she did most of the talking as well. Her center is a little behind the one in Lilankou in terms of financial and attendance figures, but the sense of responsibility she demonstrated gives very good reason for hope.

A final example: Tuesday I went with Bob to Koray Lamòt, the most distant credit center we serve by far. It’s in the mountains above Belans, almost three hours away by motorcycle. We never should have opened the center, but we did. And we’re a little loathe to give up on it.

But it remains weak, and one of the main issues is attendance. Tuesday, its chief offered a clear explanation: Only very few of the poorest members of the centers live and have their businesses in Koray Lamòt. Most buy merchandise in the area every couple of weeks, and then take it by truck to Port au Prince. That is where they live and do most of their business. They like coming home to see their families and to buy the coffee, charcoal, and agricultural products they principally sell.

So we suggested a compromise. We would adopt the pattern we are already using for women who live in Marigo but work in Ansapit. They would need to come only once per month. Tuesday afternoon would be their center meeting and Wednesday would be their reimbursement. The credit agent would stay overnight, probably as the center chief’s guest. We can’t be certain that this plan will work, but we might as well be optimistic.

As we get a grip here in Marigo, the look of things really changes. We begin to see a finite number of problems, some big and some small, where once we saw nothing but one giant, indeterminate mess. That feels like progress.