Vital remittances flow uninterrupted after earthquake

Rome, 2 February 2010.   While other banks in Haiti were still closed, it was almost business as usual at most of the Fonkoze branches in Haiti.  Whether operating from a branch office in an area spared the devastation of the earthquake or from desks set up in the yard outside the remains of their office in Port-au-Prince, this microfinance organization was back serving its clients.

Fonkoze (from the Creole words “shoulder to shoulder”), which operates predominantly in rural areas, is a recipient of IFAD grants supporting improved remittance flows in rural Haiti. They have been providing these critical remittance services every day since the earthquake in the places where their branches were operational.

Although early communication problems made it difficult to contact their scattered staff, “The message went out that all branches were to work wherever they could,” said Anne F. Hastings, CEO of Fonkoze Financial Services. They were able to open 34 branches almost immediately; two weeks after the earthquake, 39 of their 41 branches were actively in business.

Over $1.9 billion dollars in remittances was sent to Haiti in 2008 alone, more than official development assistance and foreign direct investment combined. With more than half of these funds going directly into the hands of families in rural areas, remittances are key to meeting short-term needs and to encouraging long-term development.

A team from the International Fund for Agricultural Development (IFAD) has been working with Haiti’s Minister of Agriculture, IFAD-funded project staff and other partners to assess the post-earthquake situation in the rural areas. First-hand reports are coming in about the impact of the earthquake on areas outside of the capital and in areas where there are IFAD-funded programmes and projects.  

With assistance from IFAD’s multi-donor Financing Facility for Remittances, Fonkoze purchased satellite phones and diesel generators in 2007 to facilitate the delivery of remittances in rural areas where basic infrastructure is often undependable or lacking. But in the wake of the earthquake, the true value of this investment came to light in an unexpected way, helping Fonkoze became one of the first in the country to resume operations almost immediately after the earthquake

Hastings, reporting from Haiti said that after reopening, however, Fonkoze’s staff faced a number of obstacles.  Since the banks were not open, Fonkoze had little access to cash. They met this challenge with a mix of grassroots ingenuity and international cooperation which resulted in a delivery of $2 million dollars to their functioning branches.

In these days of extreme hardship for the people of the country, Fonkoze and its partner institutions such have either eliminated or drastically reduced fees to ensure that the maximum amount of money reaches those who need it most.

Although Fonkoze was ready for business, “There was a big drop in remittance payments just after the earthquake,” according to Hastings.  She attributes the drop to several possible causes, including the lack of confidence people outside of Haiti had that the remittances would be paid, as well as the fact that so few places could actually make the payments. “Because a lot of places are still not open, the number being ordered may be quite large, but the number paid out doesn’t show that. In other words the backlog can be growing in the systems,” Hastings continued.

As an example, Hastings adds Fonkoze is seeing a big increase in the number of transfers they are paying in the town of Jacmel; the only other payer there is still not open.  Big increases have been seen in provincial towns like St Marc, Gonaives, Cap Haitien; as people are leaving Port-au-Prince, they are picking up their transfers outside of the capital city.

Fonkoze offers a range of other financial services to rural populations often ignored by traditional banks and lending institutions.  In addition to the essential remittances, they offer savings services, loans to start or expand a small business and Business Development Loans that help farmers export their products. According to Hastings, at least 98 percent of the loans are made to women, while recipients of other services are split are evenly between men and women, according to Hastings.
  
Fonkoze continues to be a strong ally of families living in the rural areas. On the numbers of people reported to be leaving the hard-hit capital for the less-affected areas, Hastings confirmed that reports of migration from Port-au-Prince to rural areas. “We all would like for those people to have the means to stay in the provinces but if all the aid comes into the capital, they will return. Fonkoze wants to give cash transfers to families that have accepted migrants into their homes and to broaden our program to help bring the poorest residents into the economy.”