A Glimmer of Hope
On January 12, Clarice Baptiste was cooking rice and vegetables in her modest home outside of Léogâne, a town southwest of Port-au-Prince, the capital of Haiti, when the ground began violently shaking.
Frightened, Baptiste dropped her utensils, ran to her bedroom and stood within her closet’s doorframe. Baptiste, an elementary school teacher, remembered someone once telling her that a doorframe’s reinforced structure makes it one of the safest places to be during an earthquake. Her split-second decision probably saved her life.
When the minute-long trembler subsided, Baptiste emerged to discover that half of her house had collapsed, including the kitchen where she had been cooking. The falling concrete walls might have killed her had she not escaped. Baptiste also found herself facing a country roughly the size of Massachusetts, of which an estimated 20% had been damaged or destroyed. Port-au-Prince alone is said to have lost more than 230,000 people in the earthquake. Another million have been displaced, losing homes and businesses, and living in refugee tent camps scattered throughout the city and around the countryside. Still others simply disappeared.
St. Rose de Lima School, where Baptiste taught, fared worse than the teacher’s residence. The late-afternoon quake, which measured 7.0 on the Richter scale, found the school in Léogâne—considered the earthquake’s epicenter—empty except for its principal, who was crushed when the concrete building collapsed on her. Buried under the rubble, too, were the most recent paychecks for faculty and staff. It took Baptiste two months and 12 days to finally collect her pay—a period during which Caisse Leogannaise d’Epargne & Financement (CLEF), Baptiste’s credit union, waited patiently for her loan payments without charging her a penalty.
But what sounds like a small credit union concession is just one of many hurdles for CLEF, as is the case for many of Haiti’s credit unions. The 3,000-member institution now operates out of a tent staked to the sidewalk on a heavily trafficked street a block from the rubble that was once its office. CLEF’s shelter is one of more than 100 such tents donated by World Council of Credit Unions (WOCCU), which has been working in Haiti since July 2009. WOCCU programs help to bring savings, credit, and remittance-linked products to underserved areas of the country and provide technical training to micro-, small- and medium-size enterprises. Those efforts continue despite the fact that credit unions in Port-au-Prince and other communities along Haiti’s southwestern shore are experiencing what are rapidly becoming debilitating levels of loan delinquency.
“Nine members died and many remaining members carrying large loan balances lost their businesses,” says Jean Gabriel Rousseau, president (chairman) of the CLEF board of directors. ‘We had no policy covering people who lost their businesses, but we have allowed them to extend their repayment periods.”
Members who line up outside CLEF’s tent wait for the sound of a schoolteacher’s desk bell before they enter to conduct transactions. Some make small deposits, but most withdraw money to meet increasingly desperate personal needs. Because member deposits, fees, and interest on loan payments are credit unions’ only source of capital in Haiti, loan delinquency rates of as much as 90% at some institutions threaten the very existence of the country’s credit unions.
“Many of Haiti’s credit unions face the challenge of finding adequate and safe physical space in which to operate,”
says Greta Greathouse, chief of party of the Haiti Integrated Financing for Value Chains and Enterprises (HIFIVE) program.
HIFIVE is funded by a
$34 million grant from the U.S. Agency for International Development through the Academy for Educational Development, and implemented by WOCCU and other microfinance agencies. “They’re also experiencing high portfolio losses, which cause grave concerns for their capital position and future survival,” Greathouse adds.
Of Haiti’s estimated 175 credit unions, many were seriously damaged or destroyed by the quake, according to the Central Bank of Haiti, which serves as the industry’s regulator, and La Fédération des Caisses Populaires Le Levier, a trade group representing the largest 50 of those credit unions and an affiliate of Canada’s Desjardins Group. Even credit unions in rural areas—which constitute the bulk of participants in WOCCU’s HIFIVE program—face the same concerns about capital position as CLEF. Members who have died, disappeared, or lost everything have no capabilities to repay their loans, and the magnitude of the threatened losses could seriously undermine Haiti’s credit union movement.
“It has been a catastrophe,” says Jean Sanon Bozil, general manager of Caisse d’Epargne et de Crédit in Gressier, whose credit union operates out of a WOCCU tent and corrugated tin shed behind a new headquarters office seriously damaged in the quake. “Two credit union employees were killed in the earthquake and the rest have had their homes destroyed and are living outside, under the trees. They need psychological counseling to cope with the personal challenges they face.”
Bozil’s staff attempt to collect delinquent payments from borrowers if they can locate them. Given the situation under which everyone is living, however, it’s hard to make too many stern demands on now-destitute members, Bozil explains.
Pointing to the devastation, Bozil says, “When we go to collect, members usually say, ‘Don’t you live around here, too? Can’t you see what has happened?’
“It’s hard to become insistent when you consider the circumstances,” he adds.
Financing the future
The plight facing Haiti’s credit unions was brought to light early in the recovery process, when WOCCU in January launched a Haiti relief campaign that raised more than $1 million from credit unions worldwide. The funds were earmarked to provide immediate relief in the form of food and water for Haiti’s people, as well as tents out of which damaged credit unions could operate and now-homeless credit union employees could live. Next steps include funding necessary psychological counseling for credit union staff members, and assessing the damage to credit union buildings with an eye toward possible reconstruction assistance.
The greatest need facing Haiti’s credit unions is a stabilization fund with two objectives. The first is to recapitalize affected credit unions, enabling them to restructure and refinance loans now delinquent due to the quake. The second goal is to provide new loans to members for home construction and small-business creation so they can get their lives back on track. The funding needed for 12 damaged credit unions examined during a March visit by WOCCU technical staff was pegged at an estimated $7.2 million. That figure is expected to increase.
“We know that some of Haiti’s credit unions were struggling before the earthquake and may not return for a variety of reasons,” says Pete Crear, WOCCU president/CEO, who led a donor delegation to Haiti in April to examine conditions and make recommendations. “However, it’s absolutely critical that we not let go of an entire movement whose services now are so desperately needed by the Haitian people.”
As many as 25% of the country’s credit unions may not survive the disaster, according to Haiti’s regulators. Going forward, it’s important that relief efforts focus on rebuilding credit unions into a position of even greater strength at a time when those services are most needed, says WOCCU’s Greathouse.
“Credit unions and their members worldwide can help rebuild Haiti’s credit unions well beyond where they were in terms of stability and capabilities,” Greathouse says. “Nearly 80% of the population don’t have relationships with banks, meaning there’s a great opportunity for credit unions to prosper and grow by providing services critical to Haiti’s survival. Products as basic as home and small-business loans need to be introduced to Haiti. There is great need in these areas, and a real opportunity for Haiti’s credit unions to expand their business if they have access to funding that would enable them to launch these products.”
Such a service evolution would be helpful to Clarice Baptiste and her neighbors who aren’t willing to spend the night in their already damaged homes, fearing an earthquake aftershock could collapse the walls and crush them. Along with six neighbor families, Baptiste sleeps across the road from her home in a makeshift tent, confident that even if the fabric walls collapse, she will not be injured.
Baptiste continues to do business with her credit union, even though the tent office is a trek of an hour or more for the diminutive woman. As a public school teacher, Baptiste is fortunate still to be paid regularly by the Haitian government. Those payments allow her to continue making small deposits into her savings account. Along with those of several other members, Baptiste’s actions offer CLEF a glimmer of hope that its capital position will one day stabilize and it will be able to return to business as usual.
“My credit union helped me when I needed it and I believe in them,” Baptiste says. “I am not afraid because I also believe in God, and that is sufficient for me.”
Michael Muckian is senior communications manager for World Council of Credit Unions.
• Haiti Disaster Relief Fund: woccu.org, select “give.”
• Haiti development project: woccu.org, select “microfinance, development programs.”