Fonkoze at 20: A Haitian Financial Institution Empowering the Organized Poor

by Fr. Joseph

Twenty years ago, local grassroots organizations in rural Haiti were struggling to democratize their economy. They wanted to create a bank that could provide financial services to everyone, regardless of their financial position. Although they had organized themselves politically, they lacked the resources to organize economically. Seeing this great need, I knew that Haiti could not move forward until something was done to increase the economic power of the organized poor.  To just give services to the people was not sustainable, but increasing their capacity to grow as people, as human beings, and as citizens in our country was the key to our stronger future.

When Anne Hastings, a management consultant from Washington DC, arrived with her expertise and passion to help the poor in 1996, and other brave individuals began to join us, I knew that we had started an institution with the strength to build a more stable foundation in Haiti. We created a movement that resulted in a bank for the organized poor—Fonkoze—the first institution of its kind in Haiti. Before Fonkoze, ti machann (“market women”), and others trying to build lives in the rural areas did not have access to financial services and were burdened by massive interest rates provided by predatory moneylenders. If they had no collateral, could not pay the minimum deposit amount required of them, or could not read or write, they would find commercial banks closed to them.

When Fonkoze was founded in 1994, we knew that in addition to providing financial services, we needed to provide support and promote solidarity for the women of Haiti, who for so long have served as the poto mitan (“center pole,” or backbone) of the Haitian economy. We realized that to properly support a woman who has made the decision to start the difficult ascent out of poverty, a loan by itself would not be enough. As an institution, we had to also walk with them along their difficult journey.

Since our founding, we have established the Chemen Lavi Miyo (CLM) program, an 18-month intensive training program that guides women out of extreme poverty. CLM provides a year and a half of guidance, training, and confidence building to help ultra-poor women change their lives. That is the level of commitment that it takes to strengthen this country that I love. As Fonkoze grew, we developed education and business skills training, and later, health services to act as handrails for the women climbing our Staircase out of Poverty.

Our vision for a Haiti where people stand together to pull themselves out of poverty has guided us to act. Because of our dedicated Fonkoze family, with the assistance of our partners and supporters from the United States and around the world, that vision has become a reality. Together we have enabled hundreds of thousands of women throughout Haiti to transform their lives. Yet even today, in spite of all our successes, our organization is still changing and adapting to meet the needs of our members and clients. This process will be ongoing as long as there are still disadvantaged women in Haiti.

Throughout Fonkoze’s 20 years, we have remained committed to the founding principles Anne and I drew up during our first meeting. These values have shaped our development, and have guided us through some of our most challenging times. As Fonkoze has grown, these have helped us stay dedicated to our mission of universal economic access:

  • Women constitute the backbone of the economy in Haiti.
  • You can’t just give a woman a loan and then send her on her way – you have to accompany her as she struggles to make her way out of poverty.
  • All Haitians deserve a chance to participate in the economic development of their country.
  • A political democracy cannot survive without economic democracy.
  • Nothing in Haiti can be effective without the endorsement and support of Haitians living in the Diaspora, for it is those Haitians who keep the economy of Haiti afloat through the remittances they send home.

Today, guided by our principles, we are the largest microfinance institution in Haiti, with 46 branches covering the entire country and over 800 employees working together for a more economically inclusive Haiti. We now have the ability to reach those farthest removed from access to financial services and other vital resources. I am humbled and grateful for everyone who has stood with us through this long and difficult struggle.

I have faith that Fonkoze will continue to strengthen the economic foundation of this country, as we have for the past 20 years. This task has never been easy, but we will continue for as long as is necessary to build a stronger, more inclusive Haiti. We will continue to lead the fight for economic and financial access so that Haiti’s rural poor have the opportunity to reach their potential and finally break the cycle of dependency.

One Response to “Fonkoze at 20: A Haitian Financial Institution Empowering the Organized Poor

  • A heart-warming story of good intentions. However, a quick glance at the financial data for Fonkoze suggests there may be some more fundamental problems, even beyond those that affect this nation.

    Fonkoze is chronically loss-making. It’s return on assets has not been positive for as long as the MixMarket has been keeping records, even after 20 years of operations. PAR 30 (the proportion of the portfolio overdue by more than 30 days) is currently 10.42%, high by any standards other than by Fonkoze’s standards (it was over 17% in 2012). The write-off ratio for 2013 was 18.02%, which MixMarket defines as the ratio of written-off loans to average portfolio. I.e. nearly one in five loans were simply written off. The institution managed to make a net loss of $816,308 in 2013. It’s operating cost ratio is 71.08%, which means it costs Fonkoze $0.71 for each $1 in outstanding loan portfolio.

    This is far from a healthy MFI. In addition, the portfolio yield is 45.82%. This is a poor proxy for the actual interest rate charged but still appears high. The actual APR is generally higher than the reported portfolio yield. What do Fonkoze investors and donors (i.e. those that stump up the net subsidy to keep this institution afloat) think of such interest rates? They hardly appear to be particularly low. And if this is having a positive impact on the lives of the clients, why are so few clients able to repay loans on time, and such a high proportion are simply written off each year?

    http://reports.mixmarket.org/mfi/fonkoze-financial-services-sa-sff
    http://reports.mixmarket.org/mfi/fonkoze

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