In Haiti, the Fonkoze Model of Constant Evolution
Editor’s Note: This is the first in a two-part series on Fonkoze’s operations following last year’s earthquake in Haiti.
In September 2009, Natalie Domond arrived in Haiti as the new director of social impact for Fonkoze, Haiti’s largest microfinance institution. After four months, just as she had gotten the hang of things, the earthquake shook Haiti, but it did not shake the organization’s mission. Fonkoze sprung into action as a curious, adaptive, disciplined organism coping with a natural disaster of epic proportions.
“Right after [the earthquake] hit we did a rapid assessment to find out what clients expected of us,” Natalie recalled. As one of the few trusted large organizations in Haiti, Fonkoze couldn’t operate without a clear vision for what was expected of it in the days and months to come – and that vision had to come from its clients.
Fonkoze’s dedication to its clients is embodied in its chief executive, Anne Hastings, who in the immediate aftermath of the earthquake, arranged for the U.S. military to airlift some $2 million of Fonkoze reserves from City National Bank of New Jersey and drop them from helicopters to 34 Fonkoze branches around Haiti.
Besides cash – delivered by helicopter or otherwise – for critical, life-sustaining needs like food and healthcare, Natalie and other Fonkoze staff encountered an immediate need to access credit for restarting businesses. Haiti’s private sector badly needed liquidity. “They lost homes. They lost merchandise. They lost stores and storage spaces,” Natalie explained. They didn’t lose their business acumen.
Ninety-nine percent of Fonkoze’s 45,344 active borrowers are Ti Machann, women street vendors who could shift quickly from selling secondhand clothing to foodstuffs to water to whatever customers need next. Disasters or disastrous economic conditions aren’t anything new to Ti Machann. Fourteen-thousand Fonkoze clients lost assets in a horrendous 2008 hurricane season. In response, Fonkoze created Kredi Siklon, a sort of combination loan restructure-renewal tailored specifically for that one post-disaster occurrence. The need for a long-term solution to disaster protection emerged from the Kredi Siklon experience.
At the time of the earthquake, during which 19,000 of its clients saw homes or businesses completely wiped away, Fonkoze had been developing a micro-insurance product as a long-term solution for disaster protection. In the immediate aftermath of the earthquake, Fonkoze began collecting feedback from clients to further refine and test viability of a micro-insurance product before putting it to market.
“We used the disaster as an opportunity to innovate,” Natalie said.
James Kurz, Fonkoze’s senior financial analyst who came on board in June 2009, is deeply involved in new product development. “Right from the beginning [of product development for micro-insurance], they were building in ways to evaluate impact and keep planning ahead,” James said. “Basically by default, I have to understand what Natalie’s team does.”
Under immense pressure to extend credit after such a catastrophe, Fonkoze also developed a new client evaluation tool for a post-disaster recovery program. Taking a holistic look at a loan applicant’s situation, the tool incorporates recent loan history; previous business records; lost assets; and the feasibility of re-starting a business based on current resources – including physical, emotional, and human resources such presence of family members or employee capacity to operate a business.
“Yes, the situation is urgent, but it doesn’t mean we won’t take time to make sure we are responding responsibly,” Natalie emphasized. The microloan evaluation tool since became one of the winners posted under the SMART Campaign’s Call for Tools to Prevent Over-indebtedness. It allowed Fonkoze to remain disciplined as a micro-lender in the face of enormous pressure to do otherwise.
To really understand how Fonkoze was able to innovate while maintaining discipline in the aftermath of a major earthquake, you really have to go back to its beginning.
Click here to read the second part of this series.
- Impact Assessment