Nan Kwende is almost a two-hour hike from the crossroads at Nan Otè. This time of year, it’s through mud and wet, slippery rocks. Closer to Nan Otè the mud is orangey-red. As you hike up, down, and along the ridge it turns brown and then black. The farther you go, the thicker the vegetation. There’s little sign of the deforestation that has left most pf Haiti bare once you approach the first stream. And by the time you cross the second and, so begin to near Nan Kwende, you recognize the prominence of large trees that is typical of regions, like this one, that produce a lot of coffee.

Nan Otè itself is a little over an hour by motorcycle from Marigo. So the trip to get to the credit center in Nan Kwende is one of the longest ones we make. It would probably be the longest, except that Plantiyon is another half-hour walk – down a steep slope, across a waterfall, and back up the other side – beyond it. Jean Bellande, the credit agent who serves these centers, is not someone who needs to look for ways to squeeze additional exercise into his life.

Most of the women who belong to these centers have small businesses that move from rural market to rural market. There’s a weekly market in Nan Otè, another up the hill and along the ridge after Plantiyon, and a third that’s almost a straight shot up the mountain in Kajak. Few of them can make it without wandering from market to market, because the footpaths that crisscross around their homes have too little traffic to create a client base.

Most use their credit to buy sacks of this – beans, rice, sugar or flour – or cases of that – tomato paste, cooking oil, laundry soap, or shampoo – that they can then sell in smaller units. It is a steady income, though not a big one. It’s a good way to complement the less regular, riskier business of farming that they all engage in as well. If they manage their money well – which means discipline, but also a lot of luck – they can invest some profit in livestock to create a third independent income stream.

When they have crops to sell, they load them onto their heads, and hike past Kajak all the way to Kenscoff, the market town that overlooks Pétion-Ville and Port au Prince. That’s a six-seven hour hike for someone who walks fast, and the women do it with loads so heavy that they don’t have the arm strength to lift them onto or off of their heads. If they want to stop for a rest, or even just need to go to the bathroom, they have to wait for someone to come along and give them a hand.

They are tough, dynamic, hard-working businesswomen. Exactly the sort who make the most promising members of Fonkoze.

And their credit centers show a lot of promise as well, even if they are not yet where they need to be. Attendance has been steadily increasing in both centers. Delinquency in Plantiyon is minimal. It’s much higher in Nan Kwende, but appears to be sinking there as well.

But one key to putting the centers on solid ground will be making center meetings into useful investments of the women’s time. Though the women appear to recognize more and more that Fonkoze really does require their attendance, we cannot yet claim that this requirement is more than an imposition.

They understand the importance of attendance for Fonkoze. We always explains that, especially in centers that are carrying a delinquency, we need to stay in close contact with members so that we can remain hopeful that they will eventually pay their debts. But we believe that these meetings should be even more important to our members than to us. And most of that importance is still lost on them, because the meetings are not functioning the way they should. They are not yet serving our members well.

This is the centerpiece of the challenge I face in Marigo. My assignment to Marigo follows from a double hypothesis. Fonkoze supposes, first, that one can straighten out even a malfunctioning office like Marigo by fixing its credit centers and, second, that the key to fixing those credit centers is to make their meetings engaging and productive for the members who participate. That is why putting a classroom teacher with no management or banking experience, but some experience in popular education, in charge of an ailing branch seemed as though it might just be a good idea. My primary charge has been to help credit agents learn to run good meetings. The hope is that, once that’s done, much of the rest of the office’s problems will take care of themselves.

But the road to establishing the right ambiance in center meetings puts one squarely in the middle of a catch-22. What can make a meeting useful to the members who participate is if they have the chance to talk with one another about the common problems they face. Creating space for such dialogue means, in turn, freeing the meetings of the time-consuming work of chasing don delinquent loans that dominates them. We think, however, that fighting delinquency requires the very conversations we are hard-pressed to hold.

The centers in Plantiyon and Nan Kwende illustrate the problem well. Jean Bellande and I left our office at 6:00 AM for a 9:30 meeting in Plantiyon, and we arrived a few minutes late. Few of the women were there to greet us. They don’t have watches or clocks. In many other centers, women wait for the sound of a credit agent’s motorcycle to start to assemble, but Jean Bellande walks to Plantiyon.

So by the time the meeting got started, it was 10:30. It was a reimbursement meeting, not a discussion. So things should all be pretty quick. The center has six solidarity groups, so all Jean Bellande is supposed to do is take the reimbursement from the leader of each of those six groups, and do it under the watchful eye of the center’s elected chief. The group leaders should have already collected repayments from individual members, and have an accurate account of any reimbursements that are short. If there are reimbursements that are a little but short, Fonkoze shouldn’t even know about them. The women are supposed to take care of that with small internal loans between themselves. This can be harder with bigger problems, but there the center chief can step in. In any case, even if a payment issue cannot be resolved right away, everything should happen pretty quickly, because the credit agent only needs to deal with group leaders and their center chief.

But the system can’t work if the women don’t know how to manage these responsibilities. The credit agent can have to talk to individual women, and it takes a lot of time.

In Nan Kwende, where there are many more members than Plantiyon and more delinquency as well, the situation is much worse. Things started off badly because we ourselves were late. We had spent more time in Plantiyon than we should have needed to. Nan Kwende has a promising but very new center chief, so most of the work she should have been doing had to be handled by Jean Bellande instead. Dealing with the problems of the members of nine disorganized solidarity groups is frustrating and time-consuming. Every delinquent borrower has a story to tell, and you want to listen to them all.

The visit to Nan Kwende was not a scheduled reimbursement meeting. It was supposed to be a discussion. But as long as women have late payments and penalties to pay, discussion has to take a back seat. We were there for a couple of hours. It tried Jean Bellande’s patience and the women’s patience as well.

But there are encouraging signs. Center chiefs in both centers seem anxious to assert more control, and we have time scheduled in the next month to give them some of the additional training they need. Reimbursements in both centers are coming in at an accelerating pace, even if they are still doing so more slowly than they should. And the loud and angry arguments between individual borrowers seem entirely without hostility. Jean Bellande recognizes that the women are defending their interests, and they recognize that he’s just doing his job. The loudest and angriest borrower he fought with in Nan Kwende caressed his head fondly as she send good-bye at the meeting’s close.

So we can’t pretend to say much about results we’ve achieved in almost three months in Marigo. But we can hope that the signs of a comfortable and serious relationship between Fonkoze’s Marigo members and Fonkoze, signs we see at meetings almost every day, point to a future that is bright. If we can help center chiefs, groups leaders, and Fonkoze’s credit staff manage the time they spend together more efficiently, they can make more of that time as well.

But here, too, time is anything but on our side. Members are increasingly willing to come to centers because we say they must, but it won’t last. We’ll need to sell them on the value of the meetings before their tolerance runs out.

The first sign that something was decidedly right about the credit center in Mablanch was evident the moment we arrived.

Mablanch is one of the most distant centers that our Marigo office serves. It’s an extremely rural, agricultural region in the mountains overlooking Belans, the isolated coastal town to the east of Marigo. A fast motorcycle needs about 90 minutes to get to the path that turns off from the main road to head up to Mablanch. The path is steep, winding, and rocky. A lesser driver than Moïse, the credit agent I accompanied, would be in for trouble. As it is, the cycle slipped out from under us a couple of times – there’s been a lot of rain – but Moïse was up to the challenge.

It is also the strongest of the Marigo branch’s nearly forty credit centers. It has about seven solidarity groups, and a little over thirty members. The members there are 100% up-to-date with their repayments, and center meeting attendance is, if not perfect, at least very good.

When we got Mablanch, the women who belong to the center had already gathered on the patio where the meeting was going to take place. There were a half-dozen assorted men and boys on the patio as well, chatting with the women and with each other. But the minute Moïse and I showed up, the women sent the men away. A few of the older men left immediately, without being told. Then the women politely but firmly told the others they’d have to go. These women were distinctly in charge of their center.

Fonkoze works towards developing the necessary underpinnings of a democratic economy in Haiti. That means providing the poor with the financial services – and other accompanying services – they need to improve their own livelihoods. But a crucial aspect of Fonkoze’s mission is that it works especially with and for Haiti’s women.

We often explain this by saying that, in typical Haitian households, especially in poor households, women end up with an ultimate responsibility for seeing their children clothed, fed, educated, and otherwise cared for. Many households have men that contribute, even significantly, but typical Haitian gender roles leave women with some money in their hands – whether they earn it through their own work or receive it from their partner – and the responsibility to turn that money into all that their family needs. So, Fonkoze can support the progress of whole families most directly by dealing with women.

But that’s only part of the story. In Haiti, as elsewhere, women live with men on very unequal terms. This is, in part, a consequence of Haiti’s poverty, but it is also a cause.

Fonkoze has learned a lot about this, for example, from its experience with the poorest of the poor, whom it serves with Chemen Lavi Miyò, an 18-month program designed especially to combat extreme poverty. The women in that program start with no income-generating assets of any kind – no land, no goats, no chickens, no small commerce – and are living on as little as 50 cents per day. It is not unusual for them to have seven, eight, or nine children, acquired with multiple different fathers, because they have sought, by joining themselves to one man after another, to find someone who’ll help them support their kids. Instead of support, they end up with additional children to fend for on their own, and their poverty only intensifies.

Even less extreme examples are striking enough. I attended a ceremony held in Boukankare for women who were graduating from Fonkoze’s Ti Kredi program, the one designed for those better off than Chemen Lavi Miyò members, but not strong enough to enter into standard solidarity-group credit.

The main speaker was one of the graduates, and you can find her speech on youtube.

http://youtu.be/otfP4yzSEOw

Her central message is clear: Women love Fonkoze for helping them escape the humiliation they are subject to in their lives with men.

So a second reason Fonkoze has for prioritizing women in its work is that the world, and Haiti within it, is sexist, and justice requires that women are able to establish their own independent sources of income.

But it’s not easy. There is no easy way, for example, for me to replace Moïse with a woman to work with the credit centers he serves. The Marigo branch can count itself fortunate to have one woman on staff who rides a motorcycle well and can get to the least accessible credit centers to work with members. Her name is Judithe, and she supervises Fonkoze’s educational programs for us. But such women are hard to find in Haiti. So though our tellers are women, all our credit agents are men. Fonkoze has very few women credit agents at its 40 offices throughout Haiti.

And when Moïse arrives at even a strong credit center like the one in Mablanch, they treat him with all the traditional gestures of respect we show for those we view as more important than ourselves, even though there are those among the women more than old enough to be the twenty-something Moïse’s mother. He sits in a comfortable chair, while they sit on benches or stones walls. They call him “ajan”, or agent, turning his job title into a title of respect. They tell one another to shut up whenever he opens his mouth. It’s a problem that we will have to fight to overcome.

But if only it was the only problem of domination by men that we face, we be in pretty good shape. Though it’s probably the most pervasive form of domination we see, it might be the least grave.

I recently wrote of a man I called Jean. He attends meetings at a center in the Belè neighborhood of Segen, making repayments for his two daughters, who have loans in their names. It is now clear that the girls never had access to credit at all, that they don’t even have businesses, but that their father was simply using their names to gain access to credit he’s not entitled to. At the last Belè meeting he informed me that he would be withdrawing his girls from the credit program at the end of their current loan, and he spent a lot of time going over and over his reasons. When some of the women at the meeting asked him to leave so that they could take care of their business, he blew up at them. He informed them that they have no right to tell him to leave, that he in fact can tell them to leave because he has a position of authority in the church that let’s the women meet in its building. And for all I know, he can just cut of access to the space whenever he wants. Most of the women, in any case, seemed to feel they had to put up with his boorishness, even if they complained to me about it once he finally did leave.

And Jean is by no means the worst of the worst. On Wednesday, I visited a very remote center in an area called Kajak. Kajak is high in the mountains, beyond Segen, at the entrance to one of Haiti’s national forests. The women who belong to that center walk hours to get there. Many of them live closer to Pétion-Ville, on the other side of the mountain, than they do to Marigo. Most sell produce in the markets in Kenscoff, Pétion-Ville, and Port au Prince, with side businesses in the little rural markets near their homes.

Their credit center was established by Fonkoze with the help of a community leader named Dickenson. He introduced the women to Fonkoze’s credit agent, and that’s where his participation, his leadership, should have stopped.

But the reality is that he is much closer to the women than Fonkoze can hope to be, and he has used that fact to his own profit.

We spoke with a couple of dozen of the women at length on Wednesday, and learned that Dickenson had been assessing them various fees in exchange for their participation in Fonkoze. They paid him a registration fee and a fee for each new loan they received. Those who came to Marigo to receive hurricane credit, who needed help badly enough to make the long and expensive trip, had to deal with Dickenson first. He arranged transportation – for a high fee. He served them a meal on the way – an expensive one. And he charged them a fixed price for the credit Fonkoze gave them. We knew none of this at the time.

What’s worse, he began actually collecting reimbursements, promising to turn the money over to Fonkoze. And the money remained in his hands. So, many of the women are carrying debt that they believe they’ve paid.

It’s a mess. If we can straighten it out at all, it’s going to take time. And even if we recuperate some of our losses, it is unclear whether we can continue to serve these women, as badly as they need us, because we don’t know how to prevent a scoundrel like Dickenson from preying on them and us.

But helping women take control must remain a priority, even if we consider only our own operation. It is surely no coincidence that the best-functioning credit center we have in Marigo is the one in Mablanch, where the women have the largest measure of control.

I try not to be naïve. There is more to the inequalities that women suffer every day than the unequal economic conditions that structure their lives. But helping women develop their own income stream seems like a necessary and significant first step in the right direction.

Chrismise is a former member of a solidarity group called “Dye la”. That means “God is present,” and it’s a none-too-unusual name for a five-woman solidarity group. Hers had been part of Fonkoze from 2005 through the end of 2007. They were members of a credit center in the Belè neighborhood of Segen, the agricultural market town in the mountains above Marigo. The center had been established by the large but distant Fonkoze office in Jacmel even before the Marigo branch was opened, but it was transferred to the much closer office in Marigo at the beginning of 2007.

I’m not sure why she had dropped out of credit. But she had come to the meeting to speak with me about re-joining Fonkoze. I said what I always say in such instances: I would go back to office and look at her file. If everything looked good, I could arrange for her to visit a credit center – there are now centers a good deal closer to her home than Segen – and see about getting her back into our program.

We were speaking in front of the Belè center – we had both arrived early for the meeting – when a passing woman muttered under her breath that she wouldn’t take credit from Fonkoze. Chrismise stopped her, and asked her why. She replied that she was afraid of debt. Women that borrow money just get themselves into trouble, she explained.

Chrismise answered that it all depends. Credit does become a problem for some women, she explained. Generally, they are women who borrow money and then put it somewhere other than into their business. Either they feed their household or buy new clothes. They don’t make money, and so they can’t repay their loan. Soon enough, they are left with a debt that they can’t manage.

Then she told her own story. She had used 2000 gourds of her first Fonkoze loan – the loan was for 3000 gourds or about $75 right now – to buy four bags of cabbage seeds. She and her husband planted, tended, and harvested the crop, and she sold it for 6000 gourds. Meanwhile, she was investing the other thousand gourds into her business. By her second loan, she had made enough money to buy a calf. It grew up, and had a calf of its own. She was able to sell the two of them for almost 15,000 gourds. “Even if Fonkoze doesn’t take me back,” she concluded, “I will never say that Fonkoze has done nothing for me.”

There is a problem with her story, though. Fonkoze’s loans are for commerce. Though one might hear a lot of talk about the importance of national production, talk that is true enough, the most reliable way for poor Haitians to develop a consistent and growing source of income is commerce, buying and selling in the marketplace.

Haiti and its limited infrastructure have yet to produce a Sam Walton. The market women who travel back and forth between the cities and the towns, and between the towns and the countryside, are the only distribution network this country has. They add significant value to the goods they sell just by getting them to where someone wants to buy them, and their profit margins are high.

What’s more, sales can be relatively steady throughout the year. There is some seasonal variation, and many effective market women will shift businesses several times a year to respond to those changes, but their income is much more constant than farm income can be. Farmers can go months without selling anything.

And though commerce entails risks – bad weather, traffic accidents, thievery, an occasional bad purchase – those risks are nothing compared to the ones that farmers face. Haiti’s deteriorated and deteriorating environment leaves crops exposed to frequent drought and frequent floods. Rain or wind on the wrong day can eliminate a bean harvest by stripping of fragile buds. Pests of various sorts can ruin a good crop. A couple of years ago, to cite one example, a bumper crop of pumpkins in my area was destroyed by a bumper crop of rats.

Fonkoze does not know how to work with borrowers who have no steady income. Monthly repayments require regular sales and regular profits. And it has no resources to help borrowers manage the risks inherent in farming. So we generally just insist that loans be used for commerce.

But that insistence hasn’t taken root in Segen, and the consequences are as one would predict: We have some borrowers who have managed to steer themselves through the hazards on all sides of them, and a lot who haven’t. The delinquency on loans in May, as the women wait for harvests in June and July, is high. And that delinquency will be expensive for women who’ll have substantial lateness charges when they finally do repay.

I’ll cite just one example, an extreme one perhaps, just to illustrate how hard things can be. Dieula is a member of the center with a good repayment record. She came to yesterday’s meeting unhappy about her growing debt. She is not used to falling behind. She made almost three full payments on her current loan on schedule, but that leaves her almost two repayments behind. She wept as she told her story in the center.

The crop she planted last summer was washed away by the hurricanes. She tried to make up for the loss by buying some sacks of peas that she would send by truck for sale in Port au Prince. But the men working the truck loaded sacks and sacks of cabbages on top of her more fragile peas. The truck was slowed by heavy rains, and by the time she got her load to Port au Prince it was unsellably rotten. So she went back home, took the last four turkeys that she had saved from the storms, and loaded them onto a basket that she carried on her head for the eight or nine hours it takes to walk to Pétion-Ville.

When she arrived, she began walking the streets, looking for customers. Suddenly, she felt a blow to the back of her head. She turned around and watched in horror as men claiming to work for the Pétion-Ville mayor’s office killed her turkeys and threw them into the back of a truck. The mayor of Pétion-Ville is trying to clean up the streets. She seems to believe that market women are a big part of the problem. Her strategy has opened them up to all sorts of violence and theft.

Dieula wandered around downtown Pétion-Ville until she found her brother, who sells shaved ice in the streets, and she borrowed the money she needed to get back home. Her loss was total.

Fonkoze will need to find a way to work more effectively with women like the ones in Segen or we will have to prepare for the losses that their losses entail. We could insist that we do not provide loans for agriculture, but the genie is, in a sense, already out of the bottle.

Sunday the 19th was election day. Haitians voted on replacements for the senators whose terms ended back in January. The day passed with hardly a hitch, except in one part of Haiti. Unless non-participation counts as a hitch. Few Haitians chose to vote.

As I spoke yesterday with Manita, the election was on her mind. “I wish I could have voted for Fonkoze,” she said. “They’re the ones who actually help me.” She went on to explain how Fonkoze’s Hurricane Credit had enabled her to keep her business alive.

Manita belongs to a credit center in Bwanèf. It’s at the end of a 45-minute hike along a winding narrow path. You go up and a couple of slopes, cross two streams, and pass a lovely waterfall that empties into a series of rocky pools. It’s a tough walk. And just getting to the mouth of that path takes another half-hour on a fast motorcycle.

Manita sells fried snacks at a small stand right where the path branches off from the main road. There are two primary schools nearby, and when one or the other is letting children go, her stand swarms with little customers. They seem to like her work.

She had borrowed 6000 gourds from Fonkoze last June. That’s about $150. It was a six-month loan, her second with Fonkoze. She made her first two payments, but in August and September the storms were shutting down the local economy. By October, she was having real trouble. She was left with a balance of about 2200 gourds, and little sense how she would repay it.

Fonkoze took that balance and re-lent it to her without interest. We added a new loan, for another 6000 gourds, that was also interest-free. Her total debt was thus about 8200 gourds, more than she had ever managed in a single loan to that point, but it was all interest-free and she’d have twelve months to pay it back.

She points to that loan as the crucial assistance that enabled her to get her business back on its feet. Manita is starting to flourish again. She makes her payment two at a time, because she’s determined to repay her loan in six months and apply for a new and larger one.

But many of the borrowers in the area are having a much harder time. The area around Marigo is one of those hardest hit by the hurricanes that tore through Haiti last year. Floods and landslides destroyed whole communities. Fonkoze’s borrowers were badly damaged. They lost their businesses as their merchandise was swept away.

Those who did not lose their merchandise immediately continued to be at great risk of losing it in the aftermath. Both the main route between Marigo and Jakmèl and the mountain route from Segen to Pétion-Ville and Port au Prince became treacherous. The mountain route in particular, which winds through a sparsely populated national forest, was closely watched by robbers, preying on the market women depend upon it.

But even women who did not lose their merchandise, could lose their business. Their neighbors’ suddenly increased poverty left them without a client base. Sales plummeted. Many borrowers who made a first repayment were left struggling to make a second and a third as their hoped-for income failed to materialize. Those who started repaying best could be at greatest risk if repayments prevented them from leaving sufficient capital in their business to ensure its on-going operation.

And there’s another aspect as well. Repaying loans is never easy for Fonkoze borrowers. They are poor. They lack the safety nets that many of us in the States and elsewhere are accustomed to. Their livelihoods are fragile. They are rarely more than a prolonged sickness or a death in the family or an accident of whatever sort away from losing what they have.

I wrote recently about a man I called Paul, and his situation illustrates the point. (See: DealingwithMen.) Many successful Fonkoze borrowers count on their businesses to a substantial degree, but not for everything. They farm. They raise animals. They might do odd jobs. Or they may have husbands or partners that do something to earn extra income.

But the hurricanes wiped out crops and swept away livestock. Families that had been able to solve occasional business problems by selling a goat or a sack of sweet potatoes, had more and more serious problems in their businesses and few or no resources to fall back upon. All the little problems they have had were leading them straight to delinquency. It’s a tough situation.

We can help them by re-writing their loan contracts, giving them more time to repay, but so far not one of the women I have suggested that to has accepted. They do want to see their progress toward their next loan slowed, and they remain optimistic that something will soon go right for them and enable them to get caught up.

The wisdom of such optimism is hard to see. Women who are carrying growing delinquencies regularly point out that “nou pat konn bay pwoblèm.” That means “we haven’t caused problems in the past.” It’s their way of saying that they always dependably repaid their loans. They recognize that something has changed, but not clearly enough to draw what appears to me to be the most reasonable conclusion, that they need to restructure their debt. And I am reluctant to impose a solution that the women do not want. For now, I can only keep talking to them and make sure they know we will be ready to address their problems whenever they themselves are.

Edeline had provided one of the most memorable scenes of my first visit to Djomond. She is a young woman, probably in her twenties, who said that her business is in Ansapit, a Haitian market town on the Dominican border. Ansapit is, together with its Dominican twin city, an important center of trade.

What made Edeline so memorable was the way she screamed with rage and despair as I made it clear to the members of the Djomond credit center that I would be charging all the women who were late with their reimbursements the standard lateness fee of ten gourds per day. They had known about the fee, but the Marigo staff had become so lax about it that members like Edeline had come to see it as an empty threat.

Edeline’s response was filmable. I don’t mean to take it lightly. I cannot judge whether it was her sincere, heartfelt reaction to what was for her very bad news or a theatrical performance aimed at getting me to relent. But she yelled and cried and appealed to everyone within earshot. She explained: It wasn’t her fault. How could Fonkoze assess a penalty when someone had simply drawn away all the money she made in Ansapit? “Drawn away all the money,” is a rotten translation of what she actually said because it conveys nothing. What she said was “yo te rale tout kòb la.”

“//Rale kòb//” is something Fonkoze hears frequently from market women. It refers to a belief that someone with the right magical powers can siphon the money out of whatever purse or bag a market woman keeps it in. It is a standard explanation for an unprofitable day at the market.

Generally speaking, market women who participate in Fonkoze’s Business Skills class come to realize that no magic is involved. The truth is that they hadn’t kept track of their expenses. They knew how much they had paid for their merchandise, but not what they’d paid to transport it. They hadn’t recorded money they spent on food and drink during the workday. They had forgotten about the couple of gourds they gave their godchild when he or she came by to say “hello.”

Once Fonkoze members learn to keep close track of their income and expenses, once they begin separating the money in their business from the money in their household, Fonkoze hears very little further talk of money drawn away. Helping women understand their own business clearly is a basic objective of the Business Skills class because it is the key first step that can eventually enable her to make that business grow.

When I returned to Djomond yesterday, I was able to put Edeline’s explanation in context. She had come with her reimbursement and also with a friend’s. She brought exact change for her own, but the friend had given her 1000 gourds to pay a balance of 970. I gave her back 30 gourds, and asked her to verify whether the change was correct. She couldn’t. She had to ask other members to count it for her. She couldn’t distinguish different bills accurately.

It’s easy to imagine why Edeline would think her money had magically disappeared. If she can’t identify the different bills she receives, then a dishonest client could easily give her smaller bills than she is owed or talk her into paying out more in change than she should.

This is especially true in Ansapit, where commerce involves both gourds and Dominican pesos. It even can involve dollars, since moneychangers generally won’t go between gourds and pesos in a single transaction. Market women can have to change gourds to dollars and then dollars to pesos. Edeline could have been cheated in either of those transactions as well.

I’ve written about how microcredit depends on discipline and solidarity, but it depends on clarity as well. The small business women who take Fonkoze loans needs to see what they are doing clearly, otherwise their businesses are almost certain to fail. That is why Fonkoze struggles hard to provide educational programs to accompany its credit. Money alone is not enough.

It’s a struggle in two respects. On one hand, the programs, though inexpensive, are not free. It costs about $25 to provide one woman with one four-month class. With more than 50,000 members, the cost of providing it to all of them would be significant. As the credit operation grows increasingly profitable, it will be able to take over much of the expense. But, for now, Fonkoze depends on fundraising. On the other, offering the programs depends on the existence of credit centers where women are willing to come regularly to participate.

It’s true that the programs can sometimes serve, in fact, as an incentive that brings women together. Members can initially find it hard to understand why they should come to their center more than once a month, when a reimbursement is due. They can even want to send their reimbursement in with their husband or a child. They resent anything that takes them away from the market. That sentiment begins to change as they see that the meetings are valuable. Most eventually see how important their regular discussions with their fellow members can be, but educational programs offer value that is easier to see.

At the same time, in really dysfunctional centers, in centers in which any sort of regular contact with members is hard to maintain, it’s hard even to establish the educational programs that could eventually bring them back together. It’s a challenge.

But it’s one that needs to be faced and overcome. Members like Edeline, with all the best goodwill, will never prosper until they learn to see their businesses clearly. And their growing prosperity is both the end that Fonkoze seeks to attain and a key piece of the means that can further us towards that end.

Segen is a market town high in the mountains overlooking Marigo. It sits just below one of Haiti’s national forests, the Parc de la Visite, in the midst of rich farmland. Fonkoze Marigo has two credit centers in Segen. Moïse, a Marigo loan officer, and I were making our second visit to the weaker of the two.

Most of the members of this center have gotten behind in their repayments, some of them substantially. And few of them attend center meetings regularly. Fonkoze has generally found that these two issues are closely tied. Centers with good attendance will usually have good repayment records. Centers with poor attendance will generally have poor repayment records, at least they will eventually.

There were about ten people at today’s meeting. There should have been more than twice that many. Two of them were men, and that deserves some explanation.

Like most institutions with solidarity-group microcredit programs, Fonkoze offers its loans to women exclusively. There are at least three reasons for this. First, Fonkoze seeks to help Haitian families, and the people who take fundamental responsibility for seeing that children are fed and clothed are their mothers. Fathers contribute. In many families, they are the major breadwinners. But it is the mothers who deploy whatever resources are available in a household to care for their families.

Second, many Haitian women – like many women in other countries – are subject to all kinds of abuse because they lack access to independent sources of income. Too many are forced for economic reasons to stay with men who treat them badly. Fonkoze wants to do what it can to enable women to choose the partners as freely as possible.

Third, men don’t pay back loans. It’s a hard truth for a man to read or hear. Or to write, for that matter. But experience has been pretty consistent. Poor women overwhelmingly repay their loans. Men are much less dependable.

So these two men – I’ll call them Jean and Paul – shouldn’t have been at the center meeting. But their stories say a lot about the range of problems that righting the Marigo portfolio will require our team to overcome.

Jean is an older man. When we asked him why he was at the meeting, he said that he had come to represent his two daughters. “When you look at me,” he said, “you should see my two girls, not me.” The girls both have loans, but they live in Pétion-Ville, across the mountain from Segen. They are in school, he said, but have small businesses they run in the mornings. Under the circumstances, they cannot come to center meetings. They come to the center to sign for their loans, but then they send him to make repayments on their behalf. They are on their third or fourth loan, for 15,000 gourds, or about $375. And their repayment record has generally been good.

Until two weeks ago. Jean didn’t come to that regular reimbursement meeting. He thought, he told us, that the meeting was supposed to be a week after the day it was actually scheduled for. But today he had brought a full payment for each of his daughters, two weeks late.

When Moïse told him about the lateness penalty he would have to pay – about 10 gourds, or 25 cents, per day – he was supportive at first. Penalties were, he agreed, a good idea. Too many borrowers were taking their debt too lightly. They come to meetings with their money in their pocket, but then decide not to make a repayment because they’d rather keep the money in their business. He was eloquent.

That is, until Moïse made it clear to Jean that he really planned to collect the penalty that was due. Jean didn’t think he should pay a penalty. It was a mistake. He was misinformed about the repayment date. (The correct date was written in the contract in Jean’s family’s hands.) He didn’t know about the penalty policy. (He admitted that he knew the policy existed, but argued that it hadn’t been applied. Several women in the center answered that they had paid penalties in the center before.)

He said he wouldn’t pay at all if Moïse insisted on the penalty. (Moïse pointed out that, unfortunately, the penalties would just keep accumulating.) He asked me to intervene on his behalf, explaining the leading role he had always tried to play in the center. (Moïse and I told him that we were in total agreement about penalties.)

He said he didn’t have any more money with him. (Moïse said that he could bring it to a meeting of the neighboring center in two days. The additional penalty wouldn’t be too much.) But then he angrily pulled the money out of his pocket and paid. No too long after that, he left the meeting.

This won’t be the end of our problem with Jean because I also had to take a few minutes to make sure he understood that we would no longer accept the role he was playing on his daughters’ behalf. If they are to have Fonkoze loans, then they must come to Fonkoze meetings. They can’t send their father. They have to attend themselves.

He answered that they couldn’t. They could not miss school in Pétion-Ville just to come to their center. I suggested that they take their next loans from the branch in Port au Prince. It has credit centers in Pétion-Ville. He answered that that wouldn’t work either because they come home for vacations.

The reality probably is that his daughters have no businesses. The reality probably is Jean has a business that is built on taken Fonkoze loans, two at a time, in his daughters’ names.

Such deceptions are tempting because Fonkoze won’t make loans to men. It would be easy to pull it off in Marigo because loan officers have not routinely visited our members’ businesses here.

This is an important point. A couple of different factors are supposed to go into analyzing a member’s loan request. You consider their repayment record, their attendance at center meetings, and the size and nature of their business. This third factor is crucial. A woman who can comfortably repay an 8000-gourd loan may not have enough of a business to pay back a loan twice as large. By letting her increase her loan size without analyzing her business with her, you are almost ensuring her delinquency. Either she will buy more merchandise than she can sell and have money frozen as inventory, or she will spend the part of the loan that she can’t use in her business on consumption. In either case, repayment is going to be very hard.

I’ve already written of the branch’s lack of attention to attendance. But the lack of attention to our members’ businesses has been just as damaging. Loan sizes spiraled upward until a large numbers of them were bigger than what borrowers could repay.

Another consequence of this inattentiveness is that we have no way to know whether Jean’s daughters really have businesses. We’ve never seen them. My guess is that they don’t. The credit center’s women were too quick to suggest that he ask his wife to take out the loans for them instead. As though it didn’t really matter whose name would be on the contract. He was too quick to insist that they can take their loans in Pétion-Ville. Of course, I could be wrong.

Paul’s story is, in some ways, harder to deal with. It’s much sadder. His wife gave birth to a son in January. It didn’t go well, but now mother and son are doing well. She’s not ready to leave the boy at home, and doesn’t want to bring him to the meetings. So Paul has been coming to the center in her place. He’s been making repayments on her loan as well. They work together. Though the business and the credit that feeds it are nominally and normally her responsibility, he’s been running it while she cares for their son.

In January, things got much harder. She was about eight months pregnant when she got her most recent loan. Under the circumstances, she probably shouldn’t have been given a loan at all. Paul had to take the money for her and go to Port au Prince. He did their buying. When he was ready to bring their merchandise back to Marigo, robbers took every bit of it.

He and his wife made the first three repayments on their loan anyway. They squeezed them out of what was left of their business. But that business doesn’t exist right now because they’ve run out of merchandise and have nothing to buy new merchandise with. In former times, Paul would have sold a couple of goats or a cow to straighten things out. He’s had to put money into his wife’s business to help her out before. That’s part of working with her. This time, he can’t. The hurricanes last year eliminated their livestock and, for that matter, their crops. They were forced to depend on their business entirely. Now he doesn’t know what he will do. He was in tears as he and I talked after the meeting.

Righting the ship here in Marigo will require more than just managing things more carefully or more energetically than they were managed in the past. It would be a mistake to believe that I can just come in and fix things by helping the staff do things more correctly. Many of the problems here in Marigo, like the problem Paul and his wife are facing, are real.

Haitians don’t tend to speak of weeks. Where Americans might say “See you in a week,” or “I’ll be away for two weeks,” Haitians are much more likely to give the number of days. What is interesting for an American is that Haitians do not speak of seven or fourteen days, but of eight or fifteen. Since it’s Monday as I begin to write this, next Monday is eight days away.

I mention this because of the safe.

Fonkoze branches have to stay liquid, and as hard as transportation can be in some parts of Haiti, that means keeping a fair amount of cash on hand. That cash goes in a safe, which is secured behind various locked doors. The keys to those doors are distributed among a specific set of people. So getting to the cash always requires more than one person. The safe itself requires both a combination and a key. The tellers keep the key. As the branch’s manager, I’m the only one on-site who knows the combination.

It’s a standard type of combination. You turn the dial a certain number of times one way and stop at a number. Then you turn it a couple of times in the other direction and stop somewhere else. After you’ve gone back and forth the right number of times and stopped in the right places, you can open the safe with its key.

So I had to learn the combination. My supervisor, Domerson, wrote it down for me, and told me to memorize the sequence and destroy the note. And then he went off to Port au Prince, leaving me in charge.

The problem arose when it was time for me to open the safe the next day. I had his instructions. But what did “turn the dial x times to the right and stop at y” mean? How was I to count the x times? What constituted once around? It wasn’t at all clear. I tried working the combination several different ways, and none seemed to work.

After each failure, Béatrice, the teller who’d try the key, would sing, “dezole.” Roughly translated, that means “sorry” or “too bad.” But a more precise translation would be the noise a game-show buzzer makes after a contestant’s wrong answer.

I tried to call Domerson a couple of times. When I finally got through, and he was done laughing, he was able to talk me through the process. But I learned that Haitians count the rotations of a combination lock the same way they count the days of the week.

The easiest aspects of learning my new job are minor struggles like figuring out how to use a safe, learning to distinguish the office’s many keys, and adapting myself to the electronic and manual systems we use to keep track of the transactions we handle every day.

But the real issues involve straightening out problems in the office’s loan portfolio. For an institution like Fonkoze, which does almost all of its lending to solidarity groups that meet in credit centers, straightening out the portfolio means straightening out its credit centers.

And straightening out the centers means, first and foremost, helping the centers’ members, who are Fonkoze’s borrowers, understand what we can offer them and what we have to expect.

It also means helping them understand that expectations are, well, expectations. Fonkoze borrowers in the Marigo area, for example, have been told, quite consistently, that they must come to credit center meetings. But since there have been no consequences for those who don’t attend, members have come to believe we don’t mean it. And so attendance in the centers I have visited so far has been poor. They have been told, over and over, that we expect timely repayment. But since lateness charges have not been regularly applied, they have come to believe we don’t mean it. And so the delinquency rate has been rising steadily.

The most important responsibility I’ve taken on at the branch, then, is to work with the staff to get our message out, in word and deed, as convincingly as we can.

On Wednesday, that job brought me to Djomond, a small seaside village about halfway from Marigo to Belans, the next larger town on the coast to the east. Djomond is home to a midsize credit center. The problem is that the road from Marigo to Belans winds up into the mountains above Marigo before it descends back to the coast. There is no coastal road. Not even a motorcycle path. The only way to get from Marigo to Djomond is on foot. It’s about a two-hour walk.

That’s a problem. Not because two hours is too far for a healthy credit agent, or branch manager, to walk. Fonkoze is committed to reaching out-of-the-way parts of Haiti. The problem is that the Marigo branch is too small to have extended itself that far just yet. Extending the branch’s reach properly would have meant penetrating the areas closest to the branch first, and then gradually moving outward.

But that’s not what the branch’s staff did. Feeling pressure to grow the portfolio as quickly as possible, credit agents sped from one village to another, signing up the 25-40 women who were most anxious to join Fonkoze, the ones who took the least convincing. As a consequence, the Marigo portfolio is thinly spread across a broad geographic region. The credit agents have to travel to different villages almost every day. And so they have little time to follow-up with members. They don’t have the chance to visit their businesses. If they don’t see them in the centers, they are unlikely to see them at all.

The consequences are easy to predict. When I got to Djomond, I found less than half of the members at the center meeting. The center’s elected chief, the borrower with the main responsibility for running the meeting and managing the members’ relations with Fonkoze, wasn’t around. And her fellow members couldn’t even say why or where she was. The members who came to the meeting brought only a portion of the reimbursement money that was due. I ended up collecting only about 9000 of the 69,000 gourds that were due.

I started to call the members forward group by group. Fonkoze credit centers are not collections of individuals, but collections of five-member groups. Women join together with close friends, other women they know well enough to vouch for. They serve as guarantors for one another’s loans. They help each other out in a pinch.

But the Djomond center is not really a center right now, and its groups don’t really function as groups. Only one member of the first group I called was present. She seemed surprised when I asked her why the other members of her group weren’t there. She started to make her repayment, and that’s when things got exciting.

She had been a little short on her repayment two weeks earlier, a matter of 56 gourds on a repayment of about 1300. The reason she had been short was that those 1300 gourds were already two weeks late at the time, and she had paid them on the day after I told the credit agents that they had to start collecting penalties on late payments. She had paid the charge, but that left her short. Normally, Fonkoze would expect that she would turn to the other members of her group for help. Since her group was and still is dysfunctional, she had nowhere to turn. So she had had to leave the meeting with a balance.

She had brought those 56 gourds to the meeting I attended, and her new reimbursement as well, but the 56 gourds was late. So I told her she would have to pay another 120-gourd lateness penalty.

She was not happy, and I could understand why. She couldn’t imagine that I would collect a penalty that was more than twice her overdue balance. The credit agent who had been working in the center hadn’t previously been collecting penalties at all. She could understand when he had told her that she would have to pay a penalty on a whole reimbursement payment that was two weeks late. He had just explained that his new boss – namely, me – had insisted that he start enforcing the rules rigorously. But paying a penalty again on the very small balance that remained seemed too much, and she argued with me about it for over twenty minutes.

But I insisted. The center will never pull itself together unless its members organize themselves to get things under control and learn respect for the rules that make microcredit work. Fonkoze can not lend to women unless their repayments are pretty regular. The standard on-time reimbursement rate for microcredit is about 97%, and Fonkoze had several branches at which it is 99% or better. I collected the penalty on her trivial balance because the women must learn to understand that repaying their loans on time is a priority.

And that’s when something interesting happened. Paying her 56-gourd balance along with her 120-penalty left her short once again on her reimbursement. She had come with a little more cash than she thought she needed, but turned out to have about seventy gourds too few. Threatened with the clear prospect of another penalty in two weeks, she turned to a couple of the other women in her center and borrowed money she needed. She would pay them back, and avoid the penalty.

That’s just how things are supposed to work: Businesswomen working in solidarity with one another. And that’s something sadly lacking in the Marigo centers. Helping them learn to work with one another might go a long way towards righting their solidarity groups and credit centers. And it might be one key to healing what ails the portfolio itself.

Kòray is an area covered by mountainous woods that overlook the coastal town of Belans. It’s also the home of the most distant of the credit centers that Fonkoze’s Marigo office serves. A two-hour motorcycle trip takes you to the entrance to Belans, and then you turn uphill for another hard 45-minute ride. The center in Kòray has 64 members, divided into thirteen solidarity groups.

In one respect, it is one of the better-functioning credit centers that we work with: Though there are some delinquent loans, none is yet so far gone that it must be written off. We’d like to be optimistic about this center. It was founded when members of the community came all the way into Marigo to request that we bring credit to their neighborhood, and it’s hard to imagine what alternative borrowers in Kòray have to Fonkoze. Though there is a small savings and loan association down in Belans, such associations do not deliver loans to their borrowers’ doorsteps the way that Fonkoze does, and Belans is a long, steep, difficult hike from Kòray.

But there are problems with the way the center is functioning, and they are similar to the ones that are everywhere in the Marigo branch. Borrowers are irregular about coming to meetings. The meetings are held twice each month. At one, a borrower will pay her monthly installment on her loan. At the other, there is a discussion of issues related to their loans, their businesses, their community, or generally their lives.

Fonkoze requires attendance at both meetings. In a country where all forms of communication at a distance are unreliable, it is essential that we regularly see all our borrowers face-to-face. What’s more, doing banking transactions in a center meeting if front of all a center’s members is a key piece of ensuring the transparency of the process. All exchanges of money take place in front of multiple witnesses. Finally, and perhaps most importantly, collecting repayments in the center gives members the chance to ask for and receive each other’s help. A member who is short can go to other members for a loan to complete her repayment and, so, avoid a lateness penalty.

But many of the borrowers in Kòray, like those elsewhere, have settled into the belief that the meetings are optional. If they are not receiving a loan and they have no repayment to make, they don’t come. Even if they do have a repayment, they might decide to send the money with someone else.

This is neither dishonesty nor laziness. It’s not that they are failing to live up to their agreements in any blameworthy sense. It is, rather, their sound business sense, shrewd and hard, looking at the immediate consequences of various ways they could choose to manage their affairs. These women make the money that feeds their children by taking to the street, buying and selling sugar or shampoo or cabbage or sandals or charcoal or perfume: whatever it is they each deal in. Many of the women at a center like the one in Kòray are only intermittently even at home. Their businesses have them traveling between Kòray and Port au Prince, and they might spend more time in the capital than in the place where they nominally reside.

Though we at Fonkoze know that, over the long haul, regular attendance at meetings is better for all of them if it ensures that their center is strong, it can hardly seem that way to them. At least at first. Leaving their business twice a month must initially seem like a loss. They might eventually come to understand the value of the meetings. Many Fonkoze members, in fact, do. But it’s a recognition that can take a long time. Meanwhile, it makes perfect sense for them to stay with their businesses as much as they can.

And there is nothing merely officious about insisting on center attendance. Fonkoze has a lot of experience that shows that even centers where members are regular about their repayments quickly degenerate if attendance is poor. Microcredit lives or dies with the discipline of the process, so the key to saving centers like the one in Kòray will be reintroducing the discipline that should already have been there.

The Marigo staff is to blame for way that things have degenerated. Though there has never been a lack of talk about the importance of meetings, it has remained just talk. Haitians have a proverb, “//Tande ak wè se de//.” That means that hearing and seeing are two different things. Fonkoze’s Marigo’s members have heard Fonkoze expectation, but they have not seen it at work. Credit agents and branch leadership have done nothing to show that the expectation is real except say it loudly, sometimes even angrily. Members understandably ignore such talk as long as it is only talk.

So my work with this center began last week when I was studying a request for new credit by three of the solidarity groups that had finished repaying their loans. The members were requesting between 10,000 and 12,000 gourds – that’s about $250 to $300 – after having repaid loans of about half that much or less.

The first things I looked at were their repayment records and the center’s attendance book. I saw two things. First, though they had repaid their loans fully, they had been late with some payments along the way. They hadn’t been able to keep to the strict repayment calendar they had agreed to. Second, most of them were very irregular about their attendance, having missed half or more than half of the meetings that fell during their repayment period. So rather than approving loans of 10,000 to 12,000 gourds, I approved loans of 3000 to 6000 instead. Borrowers with the worst attendance records got loans of only 3000 or 4000 gourds. Members will begin to see that required attendance is really required.

The second step we took involved the way we would disburse the new loans. The total disbursement would amount to something around 60,000 gourds. But the credit agent brought much less than that sum to Kòray. He was scheduled to collect over 45,000 gourds in repayments from other center members, so he brought only 15,000 gourds. We would only be able to make a new disbursement if scheduled repayments came in.

When we got to the center, we found only about 20 members. Those in attendance had some information about those who weren’t there, but of others they said they just didn’t know. Some of the absent were, we were told, in Port au Prince. They hadn’t been able to leave their businesses to come to the meeting. Others were at home. One, for example, was busy doing laundry. Another had a sick relative.

I hate to preach to the converted. The members in the center were, of course, the ones that had come. But I had to talk to them. Only they would be able to help me get out the word. So I told them that Fonkoze would cut the loan amount of members with poor attendance, and eventually cut of their credit entirely. The reduced loan amounts I had approved for the credit we were scheduled to disburse that day would be proof that I was not making an idle threat. In fact, the repayment we were scheduled to receive was short, so we weren’t able to make any new loans.

These strategies must be applied with care. The most important motivation for repayment that Fonkoze borrowers have is the prospect of getting new and larger loans. If they start to believe that they will be blocked by problems they cannot control – like difficulties that might interfere with their coming to meetings or problems that other members have repaying their loans – they could choose non-repayment as a way to ensure that their businesses don’t get too short on cash. We could end up making loan repayment worse than it already is.

But we have to take this risk. The branch cannot continue as it has been functioning up to now.

March 25 2009

Marigot is a coastal town in southeastern Haiti. It’s located about a quarter of the way from Jacmel, Haiti’s main city in the southeast, to Anse à Pitre, at the Dominican border.

There is a good road from Jacmel to Marigot, at least for now. In places it runs especially close to the water, and it looks as though a little more erosion would be enough to cut the road in two. East of Marigot, the coastal road is impassible to motorized vehicles. They have to make a long, steep, winding climb into and through the mountains. So Marigot is an important little port for commercial traffic between Jacmel and the DR. The fish market at Marigot’s wharf supplies restaurants, hotels, and private residences in Jacmel and even Port au Prince.

Fonkoze’s office in Marigot opened early in 2006 with great promise. It quickly grew to be one of the larger branches in the system. Fonkoze now has forty branches offices, spread across all parts of Haiti, a country about the size of Maryland, but that does not nearly represent how broadly it spreads out its services. Motorcycle-riding credit agents travel two hours or more along the dirt paths that crisscross the Haitian countryside, bringing credit to the people who need it most. The Marigot office’s agents reach groups of borrowers all the way from Cayes Jacmel, a small town on the coast right outside of Jacmel, to la Visite, a pine forest in Haiti’s highest mountains, almost halfway back through the hills to my home outside of Pétion-Ville, to the high farmland overlooking Belle Anse, a isolated sea-side town well east of Marigot.

The problem is that management of the credit the Marigot office provides has been poor.

It’s not from lack of trying. Credit agents are in the field, wearing themselves out almost every day. But their results have not been good. Though the portfolio has grown quickly, it is of poor quality. The loan delinquency rate, typically 2%-3% in microfinance, has been several times higher.

This creates two very serious problems. On one hand, Fonkoze’s main source of income is the interest that its borrowers pay, and without that income the Marigot branch is drifting farther and farther from the minimal level of profitability that is necessary for it to sustain itself. Though Fonkoze’s goal is not to make bundles of money for investors, it must eventually turn a small profit just to keep itself alive.

On the other hand, Fonkoze, like other financial institutions around the world, is struggling to find sources of loan capital. Not only is its ability to borrow hurt when potential lenders see a repayment rate like that of the Marigot office, but that fact that lent money isn’t coming back in means such loan capital as Fonkoze has is slipping out of circulation.

So we must start collecting the loans we’ve made. But to do so requires, at a minimum, that we understand why the usually effective approach to credit that Fonkoze uses is failing here in Marigot. An obvious answer presents itself. But it requires some explanation.

Fonkoze’s approach to credit is called “solidarity-group” microcredit. It’s designed for making loans to the poor, who have neither assets they can easily offer as collateral nor cosigners with salaries who can guarantee their loans. The idea is that, instead of their taking out individual loans that would thus be without any backing, they take out loans in groups of five, in which each woman has four others who vouch for her.

This approach depends fundamentally on disciplined solidarity. This means, first of all, that women attend required meetings twice each month. At one of those meetings, they make their repayment. At the other, they discuss issues important to them all. These bi-monthly meetings ensure that Fonkoze can stay in contact with all of its borrowers and that the borrowers – who are, after all, guaranteeing one another’s loans – can stay in contact as well.

It means, second of all, that Fonkoze must pay close attention to its members – to their loan amounts and to the investments they make with their loans – and that the borrowers must pay close attention to one another. Fonkoze borrowers are poor. They have lots of real needs in front of them all the time. The temptation, even the need, to spend their loan capital on food or on their children’s education or on other household expenses is enormous. But if they do anything with their loan capital except invest it in their businesses, they are almost certain to fail to repay their loan and, more importantly, lose the one sustainable source of income they have.

Such discipline has been sorely lacking in Marigot. Its borrowers show very little sign that they feel they are expected to come to meetings. The attendance sheets credit agents keep tell a depressing story. What’s worse: when you ask those who do come to meetings where the absent members are, they often say they don’t know. They behave as though they are surprised that they are even asked. An am-I-my-sister’s-keeper mentality pervades.

And the lack of discipline doesn’t start with the borrowers. It starts with the staff. They’ve been taking short cuts they’re not supposed to take, and they’ve shown flexibility beyond what they are authorized to show. They sometimes fail, for example, to completely fill out the all forms related to the loans they are managing. And lest the reproach sound like silly bureaucracy at work: The reality is that without the completely filled-out forms, our office can not accurately track either the borrowers’ eligibility for credit or the loans themselves.

Or they might approve a loan for a member without verifying that she has a business to invest in. Women are sometimes sent by their husbands to apply for credit because men are not eligible for Fonkoze loans. A mother will send her daughters so that she can stay by her business while her daughter attends meetings and is nominally responsible for the loans. Or a woman without a business may ask for Fonkoze credit as a way to keep cash in her household between regular or irregular remittances from someone abroad. None of these instances work well for Fonkoze, because we lack contact with the person actually responsible for the money.

Just yesterday, I visited credit center west of Marigot where all but one of the members has been repaying well. The one, however, has yet to make a single repayment for the loan she took out in December. The other women in the center were worried, because her delinquency could lead to delays in their getting their own new loans. They were mad at Fonkoze because we were taking no severe action against the late payer. If we put her in prison, they said, her family would find a way. I asked them to take me to see the woman, and they readily agreed.

It turns out that she has never run a business in her life. Her husband always took the loan money and used it to make their money. For two loan cycles, he gave her the money to make repayments roughly on time. But she said he lost the money he took from her last loan. He then had gone to the Dominican Republic to work to make it back. Neither she nor her four small children have heard from him in the months since he left.

So we sat trying to figure how we could works towards repayment. It turned out that she had some money in her savings account. She said that if I let her withdraw it she would use it to make money to start paying us back. I knew she would have 15% of the amount of her last loan. That much is required as loan collateral, s she wouldn’t be able to withdraw it. But it turned out that she had 1100 gourds more than that.

But I told her that there was a problem: She already held over 10,000 gourds that she wasn’t repaying, and had already admitted that she had no experience whatsoever in business. If I were to release another thousand, how was I to know whether I’d see any of that money again?

That’s where group solidarity came in. I offered her the following proposition: She would be able to withdraw 1000 gourds to start her business, but she had to do it in the presence of the elected chief of her credit center and had to agree to let fellow credit center members supervise her business. The center chief liked the idea, as did the rest of the group. The woman herself seemed nervous, but she agreed. Several of the members started planning with her what she could do with the money. The consensus was for her to start with a small roadside grilled corn-on-the-cob business. One woman offered to lend her a grill, another to go with her to buy the corn and the charcoal. It seems like a worthwhile experiment for Fonkoze.

Credit agents sometimes, to take another example, rescind penalties for late payment even though they are not authorized to do so. This latter point has been especially important in Marigot. A few words about the way Fonkoze loan repayments are calculated can explain why.

Fonkoze’s repayment calculations are simple. We figure out the interest payment that a member will owe assuming that she repays on time. That’s where her interest payment stays. Our information system doesn’t allow us to recalculate interest payments on the fly for late repayments. It would be too complicated. That’s where lateness penalties come in. A borrower owes ten gourds – about a quarter – for each day her repayment is late.

If a borrower comes to see that she’ll not need to pay that penalty, the motivation she would otherwise have encouraging her on-time repayment reverses. Though she knows that won’t receive a new loan until her current one is fully repaid, she is better off keeping as much of the money in her hands as she can until the day she’s ready to complete her repayment and take a new loan.

And this is not a small matter. Many of our members depend heavily – too heavily – on our loans to keep their businesses afloat, and they may have nothing but their businesses with which to finance their families’ daily expenses. So if they know that they can delay repayment without there being serious consequences, they are very likely to do so. I can’t blame them.

It must all change.

So the branch’s assistant director and I have been traveling to credit centers with credit agents, giving a kind of there’s-a-new-sheriff-in-town speech. No doubt the women have heard such talk before, but if the start to see that we mean what we say, some of the problems we have with delinquent loans should improve. Not all, but some.

20 March 2009