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.