Rebuilding in Nan Kajou

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.