Fonkoze attacks poverty on all fronts. Its approach is comprehensive, increasingly so, in two respects. On one hand, it offers its members and clients a comprehensive range of tools, financial and otherwise, with which to improve their lives. These tools include the solidarity-group microcredit that is its hallmark. Groups of five friends organize themselves to take out their loans, serving one another as guarantees in place of collateral or guarantors.
But they also include other financial services, like life insurance and savings, and educational services that range from Basic Literacy to Business Development Skills to Children’s Rights. Fonkoze is also in the process of hiring a Director of Health Services, whose task will be to facilitate members’ access to healthcare.
On the other hand, Fonkoze reaches to Haitians at all levels of poverty, as long as they have the strength to work. I have written before about CLM, Fonkoze’s Chemen Lavi Miyò or Path to a Better Life program. (See: Beyond Microcredit.) It serves the poorest of the poor, families with no income-generating assets whatsoever, offering eighteen months of very close accompaniment by highly-trained Fonkoze staff that emphasizes education and motivation, free access to health care, housing repair, water treatment, and the transfer of an asset, like a couple of chickens or goats. The goal is to prepare program participants for economic independence, including microcredit if they choose to become borrowers.
Most poor Haitian families do not need CLM. They generally have some sort of activity, whether it is farming, animal husbandry, commerce, or some combination. For most of Haiti’s poor, the appropriate Fonkoze program is standard solidarity-group credit, with loans that start at about $80. The first loan is for three months, and subsequent loans are for six. They loans go as high as $1000. Women whose businesses outgrow such loans can then get individual loans, and for such loans, the sky’s the limit. Fonkoze has individual borrowers with $25,000 or more in their hands.
But there are women whose families cannot be said to need CLM – they have small businesses or at least have the motivation and the minimal know-how needed to start one – but who also don’t have enough of a business to absorb an $80 loan.
Fonkoze knows only too well that lending a woman more money than her business can handle is a great disservice. It almost ensures that she will be delinquent in her repayment, because whether she consumes the extra money or holds it in her hands, it won’t be earning the income that interest payments require. What’s more, standard solidarity groups will not accept such women as members, judging, probably correctly, that they are likely to have trouble. The solidarity-group approach requires women to cover for fellow-members who cannot repay, so women aren’t willing to join together with other women unless they believe in their ability to make the loans work.
So Fonkoze has created an approach just for such women, those on the threshold of readiness for standard microcredit, who just need a little extra something to prepare them to move forward. We call it “Ti Kredi” or “Little Credit.” It’s a six-month approach that combines some of the features of CLM with standard, but smaller, solidarity-group loans.
Ti Kredi helps women organize themselves into credit centers that will eventually function together as regular Fonkoze credit centers do. But for the first six months, they meet with their credit agents on a weekly basis, twice as often as standard solidarity-group credit clients do. They take out a series of three loans. The first, for just a month, is for less than $30. The last, for three months, is for more than twice as much. It’s a way to accustom members gradually to making use of credit.
Because Ti Kredi and standard solidarity-group credit are run separately, the passage from one to the other is a graduation of sorts. Participating women have proven their ability to manage loans and to make their businesses grow. Six months is very little time in which to change one’s life, and there’s no clear data showing that such small loans can do very much for a family’s finances. But the testimony of participants is moving. (See: The Non Graduate.) It suggests that, even if these little loans cannot bring about significant progress by themselves, they can help a woman on her way.
To see a pdf file that explains Fonkoze’s battery of programs for each level of poverty, click here: Inserts_Borrowers (pdf)
To see photos from a Ti Kredi graduation ceremony in Boukankare, click here: Boukankare Graduation.