Micro-finance paying off in Haiti

The fish were rotting on Ile a Vache, a lush island of palm trees and white sand off the southern coast of Haiti. Since the sea is the main source of income and protein for the island's 15,000 or so residents, this was both a minor daily tragedy and a sinful waste in a land where millions are malnourished.

With limited electricity on the island, fishermen had to sail 10 kilometres to the mainland for ice. For those who couldn't, their catch became food for flies after two days.

In this hardship, young islander Jean Dieunest Exerre saw opportunity: Buy a freezer, sell ice, help the fishermen feed the people, help his parents care for his five brothers and seven sisters, and earn extra money for himself.

But as a cellphone network technician making about $25 a week, with no collateral to get a loan, there was little hope Exerre's entrepreneurial brainstorm would fly.

Until he approached Haitian-American businessman Jean-Patrick Lucien.

"Mr. Patrick," Exerre said. "We have an issue."

Lucien, a computer engineer who emigrated from Haiti to Massachusetts at 16, has been involved for years with the islanders of Ile a Vache, visiting three or four times a year, helping restart one of their schools, starting a micro-credit program and creating a modest tourist resort, among several other initiatives.

I won't lend you the money, Lucien told him. I will be your business partner and put up the funding to buy a freezer, and a blender, too. You will do the work and slowly pay off the freezer and I will share the risk and offer funding and business advice, and we will share the profits.

Last month, Lucien put up the $900 to buy the blender and a 24-cubic-foot freezer, the same size one would see in a typical Canadian basement. Exerre runs it with a generator, and sells ice to the fishermen at 80 cents for a 10-pound bag. He also makes a 16-ounce "health drink" for $1, blended from grapefruits, potatoes, carrots and other secret ingredients he won't divulge, that has become so popular some people buy it daily. And he sells ice cream at 25 cents a pop, a sideline he expects will take off once school begins.

In his first two weeks, Exerre was making $50 a week from his freezer business and still earning a salary as a technician. He expects that to double as he ramps up production. He has plans for several other business ventures, but he won't say what they are yet, for fear of competition from other islanders.

"I feel good because people see that I am working, and I feel that I am really helping," Exerre said. "I feel I have much more independence."

The freezer startup is typical of the type of programs Lucien and his partners - fellow Haitian-American businessmen, charitable organizations from the U.S., and business and community collectives on the island -have been involved in over the last six years on Ile a Vache, partnering with Haitians on the island, using a business model of investment, training and profits, to ensure long-term success. In the wake of the massive earthquake that devastated much of the nation's already precarious infrastructure on Jan. 12, business-oriented models for sustainable development have become all the more crucial for a population that craves, more than anything else, the means to feed itself.

"The main reason we are successful is because we have an interest in the whole project," Lucien said. "An NGO does not have a long-term interest or stake in the project. We not only bring funding, we bring our own experience -marketing, sales, accounting. ...

"I think ownership is key -rather then just teaching people how to fish, we go out and fish with them and we share the profit. This way, we want to make sure it is successful."

NGOs receive their funding through donations, and are often not held accountable for the outcome of projects they are involved in, he said.

"If there is no return on investment, there is no growth."

Lucien and his partners have big plans for Ile a Vache, and other areas of Haiti as well.

Their model for development, giving Haitians the tools needed to earn a living and the dignity that comes with self-empowerment, is gaining ground in Haiti and around the world, where other forms of international development have failed.

In Haiti, as much as 70 to 80 per cent of

the population is not employed in the formal sector, which means they do not have standard jobs in which they pay taxes.

"When there are no jobs, you have two choices," said Alex Counts of the Grameen Foundation and a board member of Haiti's Fonkoze organization, a micro-finance development program. "You work for yourself, or you starve."

But to get started you need money, and if you don't have any, you have to borrow it, explains Fonkoze on its website. Banks, however, don't operate in the far-flung rural regions of Haiti, and most won't grant loans to the impoverished with no collateral, no business documents and no ability to read. The only alternative is to borrow from street-lenders at loan shark rates of up to 300 per cent, dooming borrowers to an endless cycle of poverty and indebtedness.

Enter Fonkoze, which works on the same principle as micro-lender Grameen Bank founded by Bangladeshi economist Muhammad Yunus. The bank and Yunus were awarded the Nobel Peace Prize in 2006 for three decades of work to end poverty. Fledgling entrepreneurs, mostly women, can apply for loans of $25 to $25,000 to buy anything from chickens, beans, plastic buckets and pigs, to batteries to charge cellphones or funding to start a hair salon. Fonkoze, which stands for shoulder to shoulder, normally lends the money to a group of five women, so if one is having trouble the others can give support, or cajole her to pull her weight. Over 200,000 people have savings accounts with Haiti's bank of the poor, and more than 45,000 like Odette Eloi have taken out low-interest loans.

Eloi lived in a ramshackle home and couldn't feed her three children before a loan from Fonkoze let her expand her business of buying and reselling used clothing, and then branch out into buying recycled mattresses in the capital, trucking them to her town and selling them. She can afford health care and to send her children to school. Now she has a two-storey, six-bedroom house. It has a proper roof so the rain doesn't come in. It has a concrete floor, so the little ones won't get sick sitting in the dirt and mud. She rents out the bottom floor and sleeps upstairs with her well-fed children.

Jean-Patrick Lucien studied at one of the best high schools in Port-au-Prince, run by Quebec priests of the Sacre Coeur order. But in the summers he went back to the land, travelling the rural back roads with his agronomist father to teach farmers the best agricultural practices, and show educational films at night.

Lucien moved to the U.S. as a teenager after his father died and studied engineering, but the soil never left his blood. He was drawn back to his homeland in 2001 when he saw pictures of shoeless schoolchildren in his grandmother's town. He collected 200 pairs in his neighbourhood and sent them over. He travelled to the Central Plateau region and tried to help young people there with agricultural projects. But he was dismayed by an attitude of expectation without accountability: "All you would hear is 'give me, give me.' "

He spent a few years researching international aid projects in Africa and Asia to see which ones could best apply to Haiti and waited for an opportunity. (Asked where he finds the time on top of his full-time job as a computer software engineer and father of two young girls, he says: "I don't watch TV.")

That opportunity came on the island of Ile a Vache. The town had lost one of its schools for lack of teachers, so Lucien and his partners organized a committee on the island to find two new ones and started the EDEM foundation to fund the school (the teachers' $800-a-year salaries are covered by U.S. charities. Many of the students are sponsored by foreigners). The school has grown from 23 students to 102 today.

Because the market is the economic backbone of the community, Lucien decided to adopt a Fonkoze-type approach, making micro-loans of $60 to $100 to about 60 women, so they could buy commodities like beans, rice, cooking oil and fish on the mainland and sell them at local markets. The $4,000 in startup money was raised through his friends and a local high school.

Lucien soon realized, however, that the model didn't work here: The islanders would be better off buying the items in bulk at wholesale prices and shipping them over, rather than having 60 women pay $4 each every week to travel to the mainland. He hired four women to manage the purchasing and transportation, and the sellers are allowed to purchase some goods on credit, eliminating the need to come up with cash beforehand.

Lucien and his partners

share in the profits, which are put back into growing the enterprise. "We are a for-profit enterprise," he stresses. "If I take an investor's money and do something with it, I have to report to that person. We are all accountable."

"But they (the islanders) run it, they are responsible for it."

Lucien and his partners started the Ile a Vache Development Group to promote any resources the island might offer. It has built an Eco-Village, a mini-resort area with three bungalows on the beach built so far, to rival the other two hotels on the island. They are supporting an initiative to convert charcoal husks into charcoal, so the island's trees won't be decimated. Lucien is helping with funding and marketing, trying to get the island's schools to use their charcoal when cooking lunch for their students. (A funding website called Zafen. org has already raised more than $1,000 in investment loans for the initiative). They are looking into growing corn so they don't have to buy it from the mainland -the island's mayor has donated 100 acres. They're growing and selling fruit trees, and leasing beachfront for monthly festivals and markets. He's looking into building homes for $5,000 that could be mortgaged at around $50 a month. Owners could subsidize payments by renting rooms to tourists.

The biggest undertaking is Bel Soley, a Haitian-American company producing organic fruits, vegetables, juices and hot sauce for export that takes advantage of the fact Haitian farmers are organic by circumstance -they can't afford chemical fertilizers or pesticides. Hundreds of farmers tending quarter-acre or half-acre lots are visited by an agronomist each week.

The initiative brings together U.S. investors, businessmen and charitable organizations like North Virginia's Community Coalition for Haiti with NGOs working on the ground in Haiti, like Catholic Relief Services and World Vision. The business side takes care of the buying, processing, marketing and distribution both in the U.S. and Haiti, while the NGOs take care of education, training and micro-credit. More than $200,000 has been invested so far, with the intention of increasing five-fold, eventually employing 3,000 farming families.

"Things are not as bad as people think in Haiti," said Lucien, who is toying with the idea of turning his interests in his homeland into a full-time job one day.

"It's easier to see the value of what you're doing, from a human standpoint. ... Just a small investment can make a huge difference."

Some of the benefits are

unexpected. Ile a Vache was hit by heavy tropical storms in June. Four sailboats transporting merchandise from the mainland sank, although no one was killed. The island was cut off. But the Wholesale Commodity Store (Marche du Village) started by Lucien was fully stocked, and their motorboats could still make the trip. It was the only market able to supply the island. One of the retailers bought a phone card so she could call Lucien directly to express her thanks.

"The thing I am most happy about," said Julaine Bellaire, the woman hired to manage Marche du Village, "is that I am helping my neighbours. That we are doing good."

source: http://www.montrealgazette.com/business/Micro+finance+paying+Haiti/33985...