Bumps in the Road

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.