A recent article in US-based Newsweek magazine entitled ‘Big Crisis, Small Help’ examines the importance of microfinance institutions (MFIs) in mitigating crises in post-disaster environments. “Microfinance institutions are used to dealing at grassroots levels in a way that large commercial lenders cannot,” says Mr Don Terry, a former Inter-American Development Bank (IDB) microfinance and remittances specialist, adding that “devastation typically paralyzes the big banks.” Moreover, microlenders are accustomed to working with the poor and often have an established network, making it easier to locate people after disasters.
Examples discussed in the article include the work of microlender Funcación León 2000 after hurricane Mitch hit Nicaragua and Honduras in 1998; MFIs such as Grameen acting in the aftermath of the 2004 Asian tsunami; and the 2008 hurricanes and 2010 earthquake that struck Haiti. As reported by MicroCapital in January, the Haitian MFI Fonkoze “was the only bank able to stay open for customers making withdrawals and receiving money transfers” immediately following the January 12th earthquake.
By: Stefanie Rubin, Research Assistant
About Fonkoze:
Fonkoze was established in Haiti in 1995 with the mission of “building the economic foundations for democracy in Haiti by providing the rural poor with the tools they need to lift themselves out of poverty.”
Fonkoze is comprised of three institutions: Fonkoze, Fonkoze Financial Services (FFS) and Fonkoze USA. Fonkoze is a non-profit microfinance institution that opens and builds new branches. FFS is a commercial MFI that expands the branches established by Fonkoze. Fonkoze USA channels financial and technical support to its Haitian partners.
As of 2008, Fonkoze and FFS served over 50,000 borrowers and had over 100,000 depositors, making it the largest Haitian MFI listed on the MIX Market, the microfinance information clearinghouse. As of 2008, Fonkoze had a gross loan portfolio of USD 4 million; FFS has a gross loan portfolio of USD 8.2 million.
About the Inter-American Development Bank (IDB):
The Inter-American Development Bank (IDB) was established in 1959 and provides multilateral financing in Latin America and the Caribbean. The bank works with governments, companies and non-governmental organizations (NGOs) to provide both loans and grants to support small and medium enterprises (SMEs), health, and education, among other sectors. It also provides technical assistance and research in these areas. Its Board of Executives are elected by 48 member countries, 26 of which are from Latin America and the Caribbean.
Additional Resources:
Source Article: Newsweek: “Big Crisis, Small Help,” http://www.newsweek.com/id/233334
MICROCAPITAL BRIEF: US Government Facilitates $2m Cash Transfer to Haitian Microfinance Institution (MFI) Fonkoze: https://www.microcapital.org/microcapital-brief-us-government-facilitates-2m-cash-transfer-to-haitian-microfinance-institution-mfi-fonkoze/
MicroCapital Universe: Fonkoze: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Fonkoze#Description_140_word_limit_
MicroCapital Universe: Inter-American Development Bank (IDB): https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Inter-American+Development+Bank+%28IDB%29
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