The Microfinance Insider is a forum for graduate students engaged or interested in working in the field of microfinance. Through weekly posts and comments we hope to inspire students and foster the creation of a knowledge community of bloggers with a commitment to financial access and first hand industry information.

Thursday, July 31, 2008

Alms for the really poor - TUP in Haiti

I’ve been reading the postings made by some of the other authors in this network, some working in the “squishy office-chair” department of microfinance, and, while I sit here trying to open my email account for the last three and a half hours on a chair made of rope, I do feel a tinge of jealousy. I’d like to take this opportunity to wish all of the interns luck on the remainder of their work in all of the various fields of microfinance and development they’ve chosen to help out in. Comfortable chairs or not, it’s all important.

For the next four weeks I will be here, in rural Haiti, meeting with families and members of Fonkoze’s pilot Ultra-poor programme, CLM (Chemen Lavi Miyo). Structured after BRAC’s TUP successes, CLM attempts to meet the most basic needs of Haiti’s extreme poor: smoothing consumption, creating access to healthcare, access to savings, confidence-building, skills training etc. The goal is to introduce these members, after the 18 months, into solidarity groups and access to traditional microcredit through Fonkoze. Essentially, this pilot program in Haiti, having a little over 100 women who have been selected through poverty-assessment scores, personal interviews, and a general agreement by their village of their dire need, dedicates itself to helping them form a foundation both economic and, in many ways, emotional from which to build a sustainable access to financial services.

Fonkoze is the largest MFI currently operating in Haiti. With their financial services reaching far into remote, rural villages, Fonkoze displays a clear social mission to target the poorest of the poor. As an organization, ASAP-Alliance of Students Against Poverty (through which this internship has been made possible) shares a similar interest, helping encourage institutions to target the families that microfinance has increasingly been neglecting. The arguments are all too familiar: the extreme poor are too costly to serve with traditional microcredit, their projects are too risky to our portfolios, or they don’t generate enough profit to attract commercial funding. All of these are more or less accurate, but there is a danger inherent to arguing too strongly for a global shift towards the commercialization of MFIs, and that is that we tend to forget about the most destitute. It’s a dangerous mission drift. It’s true that not all of the poor, specifically the extreme poor, can benefit from microfinance, but it’s also become increasingly apparent that some local programs simply aren’t tailored for their specific needs.

CLM offers its members asset transfers (goats, chickens, and an option to start some form of micro-commerce), training, free healthcare, bi-weekly checkups, an emphasis on saving, and a weekly allowance of ~$7 to help smooth consumption for the first 8 months. The 18 month program, now 14 months in, is looking to graduate roughly 85% of their members into the microfinance programs available through Fonkoze, also known as Ti-Kredi. During their membership in CLM, these women are not asked to pay for any of the services extended to them, and are even compensated for some; the 3 days of training are supplemented by free transportation to the site and 2 meals/day to avoid a classroom of starving, and thus inattentive, women.

I can hear all of the editors at the Economist grinding their teeth from here. Yes, it costs an arm and a leg to give basic commodities to those who have absolutely nothing to their name, ~$2000 per person in this program specifically (Haiti must import most of its livestock). It’s not cost-effective, nor does it follow classical economic models of market structures and incentives, but it is necessary. Imagine also, that as an MFI, Fonkoze will welcome future clients who’ve graduated from CLM, who they’ve invested greatly to ensure that they can succeed with the opportunities they’re given. I think these clients will be less of a risk in the long run.

My job will be to interview these women and relay their stories back to the microfinance and development communities in the US through a documentary I’ll be helping to film. I’m not sure what to expect. Extreme poverty is one of those things that, no matter how much you study it, or read about it, or hear others talk about it, or hear Bono talk about it, it doesn’t ever truly feel real until you witness it yourself. It is hard to imagine a level of poverty that cripples a person so completely that they struggle simply to exist. Hopefully, I can learn a little more about the nature of poverty and how, in the near future, I can help relieve some of the suffering associated with it.

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