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.