United States Helps Recapitalize Haitian Microfinance Bank
Washington, United States, January, 25 2010 -
The U.S. government has facilitated recapitalization of Fonkoze, the largest microfinance institution in Haiti, in a mission that required close cooperation of the U.S. military, the United Nations and multiple U.S. government agencies.
In the wake of the devastating earthquake that hit Haiti on January 12, Fonkoze was the only bank able to stay open for customers making withdrawals and receiving money transfers. While goods were available for purchase in Port-au-Prince and other locations, many people had no money and commercial bank automatic teller machines were not functioning, according to news reports.
As Fonkoze grew short of cash, its chief executive, Anne Hastings, developed a plan to retrieve $2 million in reserves from City National Bank of New Jersey (CNB) and distribute the cash to the 34 Fonkoze branches still operational in Haiti. The plan would require tight logistics and a military escort.
“We got an urgent request for help” on Friday morning [January 22], said Jennifer Harris, a member of Secretary of State Hillary Rodham Clinton’s policy planning staff. Fonkoze wanted to withdraw the cash that day, before the banking window closed at 5 p.m.
The mission was approved at 4:52 p.m. on Friday, with consent from officials from the U.S. military, the United Nations and the U.S. Agency for International Development (USAID) and with advice from the Federal Reserve, Harris said. By 5:17 p.m., funds had been transferred from CNB to JP Morgan Chase in Miami, divided into 34 packets of cash and placed in office supply boxes to camouflage the contents.
An armored truck took the boxes to Homestead Air Force Base in Miami, where a C-17 military aircraft picked them up and took them to Haiti overnight, for distribution by military helicopter on Saturday morning.
“We are indebted to many individuals and government agencies that helped make this happen,” Fonkoze President John Mercier said in a statement on the Fonkoze Web site. Mercier mentioned “unprecedented cooperation from civilian government, the military and civil society, including Fonkoze — toward the end of ensuring that rural Haitians have access to their own resources so they could begin the process of rebuilding their country.”
While $2 million may not seem like much, Fonkoze’s distribution network is unmatched in reaching into the population of Haiti, especially the poor and underserved, Harris said. Fonkoze serves more than 55,000 women borrowers, more than 175,000 savers and 1 million families who receive remittances from relatives and friends abroad.
“Fonkoze is essentially the way in which Haiti’s most vulnerable populations get cash,” Harris said. “They have a reach in that population that it would take years to recreate if they went under. As a priority of stabilizing the banking sector, Fonkoze matters as much, if not more than recapitalizing the Citibanks and Sogebanks.”
Traditional commercial banks have begun to reopen in Port-au-Prince, and at least one was limiting withdrawals in order to have enough cash for the long lines of customers, according to news reports. The earthquake killed at least 111,400 people and displaced 1 million, according to a fact sheet from USAID, which has been distributing blankets, kitchen sets, water purification tablets, fuel and other relief supplies. Food prices outside Port-au-Prince have doubled.
Harris expressed gratitude for the efficient military response to Fonkoze’s request for help. “They jumped in, and it was amazing to see them turn this around on absolutely zero formal notice,” she said.