MADISON, Wis. (10/14/14)--As credit unions celebrate International Credit Union Day Thursday, they can look to a World Council of Credit Unions project in Haiti as an example of how cooperative financial institutions make a difference globally.
|Mobile money services help Haitian business people, such as this Haitian artist who sells pottery, get access to the financial system. (World Council of Credit Unions Photo)|
In Haiti, financial institutions are reluctant to provide credit to the agricultural sector because of the risks involved. It is also difficult for rural residents to get access to financial services because of limited branch networks.
Haiti Integrated Financing for Value Chains and Enterprises (HIFIVE), implemented by the World Council and FHI 360, empowers Haitians by working to provide access to innovative financial services such as mobile banking at Haitian credit unions as well as "value chain" financing for agricultural products like coffee and cocoa.
Haiti Mobile Money Initiative (HMMI), implemented by the USAID-funded project HIFIVE, is a partnership between USAID and the Bill & Melinda Gates Foundation to accelerate the introduction of mobile money into the Haitian market and to expedite the delivery of cash assistance to victims of the devastating 2010 earthquake.
HMMI partnered with local mobile network operators and their partner financial institutions to provide Haitians with improved access to financial services nationwide. The initiative operates on the premise that access to safe, affordable financial services is an effective way to provide disaster and poverty relief and stimulate economic development.
Mobile banking allows the poor in rural or underserved areas to safely and cheaply receive, send and save money, which directly contributes to improved economic well-being, said the World Council. Mobile payment platforms can help address the limited points of financial service available in Haiti, where the population in many zones may face more than a seven-hour walk to conduct the simplest financial transactions.
There is also a "value chain" component to the program. By using the credit unions and producer cooperative to produce a more-refined, higher-value product that is saleable on the export market, credit union members move up the supply chain and receive a greater return for their produce.
By providing funding to local financial institutions, including credit unions that are members of the Le Levier federation, HIFIVE stimulated lending to farmer associations and cooperatives involved in the processing and export of coffee and cocoa. The credit helped these associations to increase their procurement from local farmers, creating new and improved markets for cocoa and coffee in regions that had until recently been dominated by a handful of private traders.
For example, instead of Haitian farmers selling raw cocoa to a middle man as they have traditionally, through the HIFIVE program farmer-members can use the cooperative to aggregate the raw cocoa and process it to sell as processed cocoa to the international export market.
Processed cocoa sold by a cooperative on the international market gets a much higher return than the individual farmers could get for raw cocoa on the local market in Haiti, and this increase in value accrues to the farmer-members.