Fonkoze USA is Haiti’s largest microfinance provider and the $4.5 million "investment" says MasterCard Foundation, aims to "enable Fonkoze’s long-term recovery "by re-establishing its headquarters and branches destroyed in the earthquake."
Exploring the information available on the MasterCard Foundation and Fonkoze websites, it soon becomes apparent that this partnership is an open relationship.
On the one hand, MasterCard is coupled with MasterCard Worldwide – which bills itself as "The Heart of Commerce." In this relationship, MasterCard Worldwide brings home the bacon, having established the MasterCard Foundation with "a generous gift of shares" at its initial public offering in 2006. No need to worry though, Fonkoze, "The MasterCard Foundation is an independent, private foundation with over $3 billion in assets."
Of course, profit margins are the touchstones of a credit card company such as MasterCard Worldwide, so one shouldn't expect that the MasterCard Foundation is any less concerned with the bottom line. In fact, on its website, the MasterCard Foundation, expresses a belief in "market-driven programs" and features a quote by controversial economist Milton Friedman: "The poor stay poor not because they are lazy, but because they have no access to capital."
Mr. Friedman's methodology was laissez-faire economics, which basically "means allowing industry to be free from state intervention. The French meaning of the term "laissez-faire"1 literally means "let it be." It's interesting to note that "some of his [Friedman] laissez-faire ideas concerning monetary policy, taxation, privatization and deregulation were used by governments, especially during the 1980s." Deregulation is seen by many economist as a focus of blame for the current global economic crisis.
On the other hand, Fonkoze, which has total revenues of about $1.7 million, has a rather more altruistic motto: "Building the economic foundations for democracy in Haiti."
Fonkoze is involved in several liaisons – to continue with the French theme. Interestingly, they are linked to USAID and their Canadian counterpart CIDA through their close relationship with Mennonite Economic Development Associates (MEDA).
According to the MasterCard Foundation, "[b]oth organizations have worked closely for more than 15 years. MEDA is an investor and a board member of Fonkoze." On the MEDA website they acknowledge unspecified support from the U.S. and Canadian government: "MEDA gratefully acknowledges the support of CIDA and USAID."
What does non-governmental agency (NGO)2 mean anyway? Evidently, it's complicated.
"the story of how microfinance will help Haiti rebuild."
"[...] about the loans, during the course of this program, 4,000 women in two rural areas - Lower Artibonite and the Central Plateau – will receive initial loans of $20-$25, which carry an interest rate of 89 cents. The repayment period – eight months – is combined with intensive literacy and business skills classes, and counseling on how best to invest the loans. Following repayment, the women are ready to join Fonkoze’s microfinance groups, where first loans start at $75.They have an interesting way of expressing the interest rate. The interest rate is usually in percentages. Why not express the interest rate in a straightforward manner that everyone can understand? One can only hope they will make their interest rate system clearer for the benefit of their extremely poor and mostly illiterate clients.
Fonkoze will also work with another 1,000 women in those area who, according to their wealth rank score, qualify as extremely poor. Working with these women, Fonkoze will help them to determine which enterprise might work for them and provide a needed asset (livestock). As they are trained and begin their businesses, they will be provided a short-term stipend to cover basic needs. They’ll graduate into the program described above after 18 months.
As for local control - Fonkoze was founded in 1994 and currently serves more than 225,000 clients through 41 branches. Its leadership will manage this program in cooperation with Mennonite Economic Development Associates (MEDA), which has operated in Haiti since the early 1980s. So, while the funding for this program was provided by a Toronto-based Foundation, the program will be implemented locally and in accordance with local laws."
"New Interest-Free Microloan Initiative Launched for Haiti"
Additionally, Fonkoze is now part of a new partnership. It is called Zafen. Zafen, an article on HuffPost declares, may just be "the right program" which will benefit everyone. It is "a new interest-free microloan initiative enabling lenders and donors to finance small and medium-sized Haitian businesses."
The four organizations comprising Zafen are:
1) Fonkoze USA – Haiti's alternative bank with 41 branches, 200,000 savings accounts, 47,000 borrowers and 15 years of experience covering rural Haiti;
2) The worldwide Vincentian Family – a network of groups numbering one million strong that derive their inspiration from St. Vincent de Paul;
3) DePaul University – the largest Catholic university in the United States;
4) Haitian Hometown Associations Resource Group (HHTARG) – which enables the Haitian Diaspora to foster economic and social growth to alleviate poverty in their native communities.
|A Haitian woman tending her garden is working her way out of extreme poverty with the support of a Fonkoze micro-loan.|
(Photo: MasterCard Foundation)
Excellent. No interest micro-loans!
In the interest of full disclosure, Fonkoze's altruistic bankers will have to tell their poor illiterate clients about the new Zafen program, since it offers participants these great "new interest-free" micro-loans.
Reportedly, the Vincentian Family Board responsible for Zafen conceived the program in "meetings with Haitians living abroad [when they] generated the idea of creating a website showcasing sustainable and viable projects and enterprises in need of a loan or donation. [...] These lenders and donors fill the void traditional banks have left in many world economies."
A quick check of the Fonkoze website today (04.29.10), shows that they have not yet announced the new Zafen collaboration. However, Fonkoze is announcing the expansion of their "Financial Services":
Fonkoze Financial Services (FFS) is a Haitian commercial microfinance institution that takes profitable branches and well-tested products from Fonkoze and expands them, reaching hundreds of thousands of Haitians, especially those living in the hardest-to-reach rural areas.The problem is, Haitians will tell you they already use micro credit businesses like banks. A client may take daily loans or overnight loans from a micro credit entity. In a typical scenario, some of the borrowers are meat sellers who will price a cow or a pig, go get the money from a micro credit place, pay for the animal, then go to a restaurant who had a pre-arranged agreement to buy the animal. The micro credit client becomes a middle man and only spends hours with the animal before selling it. The micro credit outfit makes a handsome profit that same day, maybe in a matter of hours.
Fonkoze is in the process of spinning off its financial services into a high-growth, full service bank with the mission of providing the rural population of Haiti with a full range of financial services designed to generate self-reliance and promote a democratic economy in Haiti. The name of this institution is Bank Fonkoze. S.A. A commercial banking license from the Central Bank is pending. In the interim, Fonkoze Financial Services was incorporated in 2004 and will undertake all of the operations of Bank Fonkoze until a commercial banking license is granted.
The microfinance outfit ACME launched its operations in Haiti with a "$350,000 loan capital grant from USAID" and recently "celebrate[d] 10 years of success[ful]" micro-financing in Haiti:
"ACME’s recent 10 year celebration highlights USAID/Haiti’s 10 years of support to Haiti’s microfinance sector. Founded in 1997, ACME has become a leader in the Haitian microfinance sector, with a client base of 20,169, of which 69% are women, and a total portfolio of $23.2 million as of December 2007. Its list of achievements is even more impressive when considered against the background of Haiti’s economic and political instability during this period. ACME is one of Haiti’s leading MFIs as well as a defining example of USAID/Haiti’s role in building Haiti’s robust microfinance sector and in encouraging growth and geographic expansion."All of this "commercial" growth and the burgeoning of business partnerships in the name of "charity" and "democracy" is coming on the heels of the disastrous earthquake and there is a term for that – disaster capitalism. It was at work before the disastrous earthquake of January 12 and it is expanding exponentially in the wake of the disaster. The capitalists are descending on Haiti full force to take advantage of the horrific situation. Haitians who don't know where their next meal is coming from, nor when they will have a decent roof over their heads are pitifully vulnerable to these micro credit entities.
NGOs are not a "path to a better life" in developing countries. Back in 2003, then United Nations Secretary-General Kofi Annan revealed: "Funds should be moving from developed countries to developing countries, but these numbers [almost $200 billion] tell us the opposite is happening."
In Haiti and the Aid Racket, How NGOs are Profiting Off a Grave Situation, Nikolas Barry-Shaw of Haiti Information Project (HIP) explains the NGO situation in Haiti:
"[...]Agriculture provides a telling example, as Nazaire St. Fort reports: "[M]ore than 800 NGOs work parallel with the agriculture ministry, but most define their own priorities." The Association National des Agro-professionnels Haïtiens (ANDAH) explains that of the "3.4 billion gourdes (91 million dollars) budgeted for public investment in 2006-2007, 3.2 billion (85 million dollars) are managed by NGOs."
[...]The NGO nexus aims to succeed where repressive force has failed, "killing with kindness" in an attempt to suffocate the vibrant grassroots activity that overthrew the Duvalier dictatorship and brought the Lavalas movement to power. As one Haitian peasant told anthropologist Jennie M. Smith, "They call it development, but it is more like envelopment!
[...] The growth of NGOs and the atrophying of the Haitian state are in reality two sides of the same coin; the role of government is reduced to implementing neoliberal policies favorable to foreign capital while managing the haze of NGOs that effectively run the country, with the UN occupation in the background, ready to dish out the necessary repression."
1Laissez-faire economics is the belief that economic imbalances are self-correcting, not requiring intervention by government so long as the equal rights of individuals are respected. The Laissez-faire principle is also referred to as the principle of Spontaneous Order or the Invisible Hand of the Marketplace.
The earliest recorded use of the term "Laissez-faire" in this context may have been by French minister René de Voyer, Marquis d'Argenson, a champion of free trade, in 1736:
"Let it be, such should be the motto of every public power, ever since the world is civilized... A detestable principle that we cannot grow but by the lowering of our neighbors! [emphasis added] There is nothing but mischief and malignity of heart that are satisfied with that principle, and interest is opposed to it. Let it be, damn it! Let it be!!
2 A non-governmental organization (NGO) is a legally constituted, non-governmental organization created by natural or legal persons with no participation or representation of any government. In the cases in which NGOs are funded totally or partially by governments, the NGO maintains its non-governmental status by excluding government representatives from membership in the organization. Unlike the term "intergovernmental organization", "non-governmental organization" is a term in general use but is not a legal definition. In many jurisdictions, these types of organization are defined as "civil society organizations" or referred to by other names.
“True charity is the desire to be useful to others without thought of recompense”
– Emanuel Swedenborg
UPDATE 06.02.2010: The Limits of Microcredit— A Bangladesh Case (PDF)