Todd Watkins, Arthur F. Searing Professor of Economics, is the director of Lehigh’s entrepreneurship program and its microfinance program. He is co-editor of the just-published book, “Moving Beyond Storytelling: Emerging Research in Microfinance.”
Even before the tragic earthquake, Haiti faced overwhelming economic challenges. Three of four Haitians already lived on less than $2/day, an extreme poverty rate five times worse than right next door in the Dominican Republic and 12-fold their neighbors to the west in Jamaica. Half or more of working age Haitians were already unemployed, making gangs attractive options and riots and violence commonplace. All this despite billions and billions and billions of foreign aid; aid that utterly failed to help. And now this.
Looking to the future beyond emergency relief, can we find any hope? If aid has failed, where might the economic growth that Haiti so desperately needs possibly come from?
Deep-pocket international aid programs will inevitably and justifiably focus on financing big-ticket needs to rebuild hospitals, roads, ports, telecommunications, government infrastructures, police systems, schools, and so on. The vast majority of Haitian economic activity, including 95% of employment before the quake, was in little-ticket places--informal micro-enterprises or simple subsistence farming. The devastation of their infrastructure will surely drive Haitians to rely on market stall vegetable vendors, fish mongers, wood gatherers, and the like to an even greater extent. Yet many have lost even these tiny businesses, lost their suppliers, lost their meager inventory. These millions of little-ticket financial needs make up the core of the Haitian economy. They need to rebuild too.
One ray of hope aimed exactly at this core is Fonkoze, Haiti’s largest microfinance bank and one of the world’s most well-respected. Fonkoze targets a comprehensive package of financial, educational, and health services to 200,000 poor, mostly rural women throughout the country. Despite the chaos after the quake, Fonkoze was able to leverage this network of women (and helicopters and a C-17) to get $2 million in cash, remittances from Haitians working in the US, into the hands of Fonkoze clients within days, all while other Haitian and foreign banks remained closed. A remarkable 38 of Fonkoze’s 40 branches nationwide were up and running in some form by January 27. A 39th should soon be operating out of a borrowed van—the first mobile microfinance branch in Haiti.
Anne Hastings, Executive Director of Fonkoze, came to Lehigh several years ago for an engaging set of discussions with students and faculty of Lehigh’s Microfinance Program. We were relieved to hear she and all of her dedicated staff are accounted for. They’ve launched an international campaign to attract urgently needed capital to invest directly in helping tens of thousands of Haiti’s women rebuild their lives and families, their homes and microenterprises. That is a hopeful long-term big ticket indeed.