MICROFINANCE IN RURAL HAITI: A CASE STUDY OF

INSTITUTIONAL START-UP & MICROENTERPRISE

DEVELOPMENT1
Michael J. Pisani
Central Michigan University

Abstract
HAPI-Kredi, a small not-for-profit microfinance institution (MFI), entered
into the Haitian marketplace shortly after the devastating 2010 earthquake.
HAPI-Kredi, with a mission to serve female entrepreneurs at the economic
margins, emerged as a complementary financial service to HAPI, a young
NGO with strong ties to the impoverished rural area of La Vallee, Haiti.
This article highlights the challenges and opportunities of providing and
growing microcredit in rural Haiti through a start-up MFI with two employees and a loan portfolio approaching $10,0002 derived primarily from
church-centered charitable donations. Extensive interviews with 30 clients
of HAPI-Kredi conducted in May 2013 and in June 2014 provide business
context for the demand and potential impact of microcredit in the region.
This article, through the lens of a case study, details the experience of one
MFI in La Vallee, Haiti situated in the poorest country in the Western
Hemisphere.
1. Introduction & Haitian Context
One June day in 2013, Wideline Dalice,3 the new director of HAPI-Kredi
sat sweltering in the second floor of HAPIs new building pondering what
she has gotten herself into. As a recent university graduate in accounting,
Wideline could have stayed in the capital city of Port-au-Prince and found
work with the scores of NGOs inundating post-earthquake Haiti. Instead,
Wideline wanted to return to her home village of Mizak, some 55 miles
and a long tortuous four hour car ride away, and make a difference.
When Wideline began work with HAPI-Kredi she had a single fulltime staff member and loan officer, Toussaint Leone, to get her up to
speed. Toussaint, also a local of Mizak, began employment with the organization in January 2013 and has tried ardently to make things right, but
many challenges face the fledgling microfinance institution (MFI) known
locally as HAPI-Kredi (or HAPI-Credit in English). In its first two years
of existence, HAPI-Kredi had gone through three directors and a financial
scandal; Toussaint and Wideline were charged with turning things around
with the assistance of the organizations founding partner in Michigan.

C 2015

Southeastern Council on Latin American Studies and Wiley Periodicals, Inc.

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The Latin Americanist, September 2015

The offices of HAPI-Kredi consist of a single and nearly bare concrete

room with only a table, three wooden chairs, a printer, a single electric
outlet, and a window. June in Haiti is hot and humid, the beginning of
the hurricane season. Near the window Wideline found a stack of folders
flapping in the breeze, these folders contain the details of the two dozen
clients in which HAPI-Kredi had lent money. HAPI-Kredi, an offshoot of
the non-governmental organization Haitian Artists for Peace International
(HAPI), suffers from much of the problems that affect Haiti: corruption,
poverty, lack of resources, and poor infrastructure.
Mizak is located in the La Vallee region of southeastern Haiti. Unlike
most of Haiti, this rural and mountainous area remains somewhat forested
and verdant where most families eke out an existence farming food staples supplemented with market activity or day labor when available. Few
people in the area make it through high school and precious fewer still
graduate from university. Wideline has beaten the odds, her university
training has landed her the director position of HAPI-Kredi making $250
a month, in a country where most make barely a dollar or two a day.
Nonetheless, by coming home, Wideline has forgone a higher salary with
better resourced NGOs operating in Haiti. Toussaint too has done well.
Toussaint graduated from the leading Catholic high school in the region,
speaks and is literate in English, French, and Haitian Creole, and possesses business acumen and charisma. His talents were quickly rewarded
by HAPI-Kredi where his monthly salary nearly doubled (from a starting
salary of $125 a month) within his first year of employment.
While staffed with qualified personnel, HAPI-Kredi faced a crisis as
Wideline took over the directorship . . . HAPI-Kredi only served 26 microbusiness clients. Microfinance generally entails the routine delivery of
relatively small business loans (i.e., microcredit) to micro-entrepreneurs,
at market rates, that are otherwise excluded from the regular banking
community. Access to microfinance has been trumpeted as a key developmental tool to reduce poverty. At this time it was clear that HAPI-Kredi
could not support the salaries of its staff on so few clients. Hence, Toussaint
had been hard at work since January 2013 trying to rebuild the client base
after the financial scandal. The first loan officer, Wilfred, made off with
half of the money designed to capitalize HAPI-Kredi. While HAPI is utilizing the court system to recoup their losses, the Haitian courts are of little
recourse as inefficiency and corruption are the norm. The action is more
a public display to discredit the founding loan officer in the community
and separate him from HAPI-Kredi in the minds of the local population.
An overview of the Haitian context follows.

1.1. Haitian Context-Brief Historical Overview

HAPI-Kredi is part of the trajectory of Haitian history. HAPI-Kredis
financial founders are outsiders from the US pursuing development
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Pisani

embedded within the local community. Outside influence has been a

hallmark of the Haitian story.
Haiti is home for nearly 10 million people and since independence at
the turn of the 19th century has been challenged to deliver positive political or economic results. Haiti is located on the west side of the island of
Hispaniola, the second largest island in the Greater Antilles situated in the
Caribbean Sea just east of Cuba. The encounter between the hemispheres
began when Columbus visited the island in 1492.4 Soon after Columbus
visit, the Spanish colonized the island of Hispaniola and in so doing devastated the indigenous Taino population. By the middle of the 16th century,
the conquering Spanish had mostly moved on from western Hispaniola
after the depletion of easy to find riches and the genocide of the islands
native population. The Spanish did leave behind a space devoid of most
humans but abundant in feral pigs and cattle in which French Buccaneers
a hundred years later would first feed themselves and crews of passing
ships.
In this void, French pirates secured the northwestern space of Hispaniola as their own. The transition from buccaneer outpost to French colony
also re-oriented the economy toward cash crops: cotton, indigo, coffee,
and sugar. It was sugar that transformed Saint-Domingue with its slave
workforce stolen from Africa. African slaves comprised a significant majority (90%) of the colonial population and numbered more than 500,000
by the end of the 18th century. Sugar generated great wealth, disparity,
and inequality during the 1700s in Saint-Domingue.
The internal struggle to end slavery by the hands of slaves began in 1791
and concluded with an independent Haiti in 1804. Haiti remains the only
successful example of a slave revolt resulting in national independence
this success came at a relatively high price in destruction of people and
property, limited access to international markets, and reparations (that
lasted about 100 years) transmitted to France. With independence, Haitians
quickly transformed their economy from plantation to small-scale staple
agriculture (Frankema & Mase, 2014).
On the political front, independence wrought continued political chaos.
Early on governments empowered socio-economic elites (i.e., the ruling
class) through coup detats, civil war, conflict with the Dominican Republic, political intrigue, corruption, and other political machinations including foreign military intervention. France gave way to the US as foreign
interloper in the 20th century. In 1915, US Marines landed and stayed for
20 years ostensibly to bring order, but nefariously made the country safe for
US agricultural investment. This intervention was followed by the homegrown dictatorships of the Duvaliers (19571981) and subsequent failed
attempts at democracy. US troops arrived again in 1994 giving way to UN
peacekeepers since 2004. The present Haitian Republic, while ostensibly
democratic, is virtually absent in daily affairs.
In addition to Haitis already weak economic and political status, natural disasters proved to be another contributing factor to Haitian instability.
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More recently, hurricanes and tropical storms have devastated the country.
And in January 2010, a massive 7.0 earthquake killed more than 300,000
people, displaced millions, and destroyed much of Haitis infrastructure.
The present-day Haitian economy is based on agriculture, which is
also the main source of employment for two-thirds of the population. Remittances also play an important role where approximately one-third of
households receive a total annual remittance flow of $2 billion (Maldonado
& Hayem, 2014). Haiti remains the poorest country in the Western Hemisphere where 80% of Haitians live in abject poverty (i.e., earnings less than
$2 per day) and per capita income is $760. Somewhat paradoxically within
this challenging economic environment, cellular phones have achieved
a household penetration rate of nearly 90%, perhaps a tool that may be
leveraged toward future development (Rodman, 2010). Corruption, high
unemployment, political instability, and inefficient state enterprises are
additional barriers to the countrys well-needed development.
1.2. Haitian Context-Business Climate
In the last decade, NGOs have steadily replaced services once the responsibility of the Haitian government. In essence, the Haitian government
has abdicated much of its work and authority to others or to none at all. For
the most part, the physical infrastructure in Haitiroads, energy, water
are in disrepair, absent, or non-existent. The condition is even worse in
rural areas where only 12% of the arable land is irrigated (Haiti lies in the
relative rain shadow of the Dominican Republic) and few have little if
any electric power, feeder roads are in extremely poor condition [where
only 5% have access to asphalt roads and 32.8% have access to dirt roads],
and conservation and processing facilitates are lacking, which regularly
leads to sizeable postharvest losses (Shamsie, 2012, p. 135, 148). And
where the government is present, corruption is rampant. Transparency
International groups Haiti5 with the ten worst corruption offenders, such
as Iraq, Afghanistan, North Korea, and Somalia. Fatton (2014, p. 6) argues
that Haitis economy is conditioned by the global economic system and
structurally confined to the outer periphery as an economic dependency
of and development project for the developed world.
The World Bank offers complementary data with regard to the ease of
doing business in Haiti. Haiti ranks nearly last, 173 out of 185 countries in
the ease of doing business in country. For example, it takes on average 105
days and costs about three times per capita GDP to start a legal business in
Haiti. Acquiring electricity takes 60 days and costs on average 4.6 times per
capita income to get linked into the electricity grid, where available (World
Bank, 2013). Operating within the formal sector in Haiti is very difficult and
costly. In the rural areas and particularly for small businesses, operating
outside of the purview of government or informally is standard in Haiti.
Business is also challenged by the expectations of foreigners and the past.
Girard (2010, p. 10, 13) argues that Haitians expect foreign countries, not
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Haitians, to pull the country out of poverty because of the Haitian view
that foreigners are to blame for Haitis troubles and as such make it
difficult to foster a sense of enterprise.
Lastly, structural adjustment and free market policies since the 1980s
has hastened the demise of the small farm sector in Haiti. As a result,
roughly 60% of food consumption in Haiti comes from imported foods
that literally eat up 80% of Haitis export earnings. Even so, 80% of Haitian
households are food insecure where most households cannot satisfy their
food needs and the country is nowhere near achieving food sovereignty
(Shamsie, 2012).
It is within this challenging environment that the present study seeks to
examine a start-up MFI and the surrounding microenterprise landscape.
The remainder of the article positions HAPI-Kredi within the related literature and offers an examination and assessment of HAPI-Kredi through
fieldwork conducted to analyze both HAPI-Kredi and its associated microbusiness clientele.
2. Literature Review A Focus on the Haitian Microbusiness
Environment
This section highlights the related literature from three areas: microfinance institutions, microenterprises at the base of the pyramid, and Haiti.
2.1. Microfinance Institutions
Microfinance has emerged as a viable strategy for development over
the past 40 years. Microfinance today is promoted not only as a tool for
poverty reduction (De Soto, 2000; Lashley, 2004; Ortiz, 2001), but also as
a means to economic dynamism for commercial banks and microfinance
institutions (Ledgerwood, 1999), microenterprises (Pisani & Yoskowitz,
2004), and national economies (Pisani & Patrick, 2002). In essence, microfinance has entered into the mainstream development dialog and is
increasingly touted as a tool for fighting poverty and hopelessness (Smith
& Thurman, 2007). The presence of microcredit is substantial. According to
the Inter-American Development Bank, microfinance is available to about
17% of the population in Latin America and the Caribbean (LAC). Over
10 million people from LAC had microcredit loans totaling more than
$12 billion.6 Recent evaluations and impact studies reinforce microcredits
ability, though not universally, to enhance business outcomes and living
standards (Banerjee & Duflo, 2011; Karlan & Appel, 2011).
The operational approach of MFIs may range from simply offering
credit (a minimalist MFI) to an integrated MFI offering social intermediation (e.g., group formation and leadership training), enterprise development (e.g., training in marketing and bookkeeping), and social services
delivery (e.g., literacy training) to base of the pyramid (BOP) enterprises
(Ledgerwood, 1999). Primary microfinance activities include: 1) small
loans, typically for working capital; 2) informal appraisal of borrowers and
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investments; 3) collateral substitutes, such as group guarantees or compulsory savings; 4) access to repeat and larger loans, based on repayment performance; 5) streamlined loan disbursement and monitoring; and 6) secure
savings products (Ledgerwood, 1999, p. 1). For the most part, the literature
suggests that MFIs may be sustainable provided that they focus on loan
repayment, internal efficiency, and market growth (Otero & Rhyne, 1994).
Within Haiti, Hossein (2014, p. 55) found MFIs viewed microfinance
as the vehicle through which the economically active poor, who are left
without easy access to financial services, can improve their quality of life
when they use finance as a tool to bring policy change with regards to
financing.
2.2. Microenterprises at the BOP
Micro is the key word in microenterprise, as Mead and Liedholm
(1998) found that working proprietors or one-person businesses accounted
for over half of all microenterprise employment in the developing world.
Extending the workplace to unpaid family members within working
proprietorships accounts for over 75% of all workers engaged in microenterprise establishments (Mead & Liedholm, 1998; Portes & Hoffman,
2003). London et al. (2014, p. 37) suggest BOP microenterprises are
organizations that seek to be economically sustainable and contribute
to alleviating poverty by creating new transactional linkages between
formal and informal markets. The operators of microenterprises are
referred to as microentrepreneurs (Portes & Hoffman, 2003). These
microentrepreneurs are self-employed where entrepreneurship refers
to own-account employment (Blanchflower & Oswald, 1998). Academic
researchers have classified microenterprises as business entities with
typically five or fewer employees, engaged in non-primary activities, and
selling at least 50% of their output (Johnson, 1998; Mead & Liedholm, 1998).
The great majority of the self-employed in developing countries, particularly in Latin America and in Haiti, work under conditions of anonymity
with relation to governmental and regulatory authorities and thus are considered informal sector participants. In essence work activities that avoid
state regulation best describes informality (Itzigsohn, 2000, p. 11). This
hidden from government purview employment has been referred to as
informal employment (Hart, 1973, 1970). Yet informal work activity is not
said to be criminal in the respect that the work itself could be undertaken
within the legal bounds of government legislation (Portes & Schauffler,
1993).
Elsewhere in the French Caribbean, Browne (2004) argues that informal activity in Martinique serves the purpose of undermining the French
state, a state that has enslaved the ancestors of the present population and
thus deserves less than full cooperation of the current generation. Hence,
informality is part of the historical process and culturally acceptable as an
act of cunning, if no real harm is done (outside of the bureaucratic state).
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Pisani

This cultural relativism may also be at work in Haiti, though most informal microenterprises skirt government oversight because the government
lacks compliance and enforcement capability.
2.3. Haiti
The need for and access to microcredit is great in Haiti as the commercial
banking sector has historically and actively discriminated against the poor
(Hossein, 2014). While access to microcredit has been a challenge for most
Haitians, small scale credit from credit unions began as early as 1937 and
microcredit more formally in 1981.7 This early start is a critical element
in the legitimacy of microfinance in Haiti as it is viewed as a domestic
creation given that there is a contemporary level of foreign participation
in the sector (Hossein, 2014).
Within the current Haitian banking landscape, three types of financial institutions engage in microfinancethese are credit unions and
cooperatives (regulated); some commercial banks (regulated) and NGOs
(unregulated); and informal banks (unregulated).8 Perhaps as many as
500,000 Haitians are actively receiving loans from 200 or more MFIs operating in Haiti with the largest eight MFIs serving nearly 40% of this total
(Paul et al., 2012; Mix Market, 2014). Hossein (2014) argues that as much as
25% of Haitians are within reach of MFIs, however reach and participation
differ as the nation contains two million small urban traders and vendors
who are typical prospective MFI clients. Shamsie (2012, p. 135) reports
that 60% of Haitians live outside the city where the majority of Haitis
farmers are resource-limited, residing in remote areas and farming takes
place, for the most part, in small plots of land [4.4 acres on average], and
is carried out by small producers with little access to capital.
For those with access to microfinance in Haiti, the vast majority (85%)
utilize funds for commercial activities rather than for production or manufacturing (Barrau, 2010). And these microenterprises exist in a national
environment where 90% of all economic activity (i.e., production and
employment) takes place within the informal sector (Pierre, 2010).
Mauconduit et al. (2013) argue that female microentrepreneurs in Haiti
face special challenges in obtaining business financing and often look to
MFIs for assistance. Hence, women have been a primary recipient of microfinance in Haiti and comprise perhaps as much as three-quarters of
MFI clientele (Oriza & Paul, 2014; Mauconduit et al., 2013).
Modern microcredit has achieved some success in Haiti in spite of
the political, economic, climatological, topographical, and environmental
challenges. Hossein argues that this is in part based upon cultural and
MFI staffing. Specifically, Hossein (2014, p. 47) states that the collective
aspect of Haitian society facilitates microcredit solidarity lending model,
where inaction and lip-service paid by political leaders to the needs of
poor entrepreneurs has increased the necessity for informal banking systems which have tapped African traditions of kombit (working together)
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to meet their livelihood needs. Furthermore, Hossein argues that MFIs

in Haiti hire staff that more closely resemble and come from, even if a
generation removed, the racial group (Black) and economic class (poor)
of MFI clients in Haiti. Hossein (2014, p. 49) suggests these cultural and
staffing considerations result in borrowers [that] trust microfinance as
an institution and they also value the work of the people working inside
these institutions.
3. Methodology & Local Context
In May 2013 and June 2014, the author spent a total of 17 days with
HAPI-Kredi staff and clients. Extensive field interviews were conducted
with staff and clients; local day-markets in Mizak and Ridore (both in
La Vallee) and nearby communities were also visited. The staff interviews
were conducted at the office of HAPI-Kredi included a range of topics from
general operations, mission, strategy, tactics, and technical considerations
(e.g., operations manual development).9 Two HAPI board members (one
Haitian-based and one Michigan-Based) were also consulted as part of
the research process with a greater focus on mission and operations. In
May 2013, twenty HAPI-Kredi clients were interviewed representing at
the time over 75% of current clients and nearly 40% of current and past
clients. These client interviews were followed up with another set of ten
interviews conducted in June 2014. Most interviews were conducted at the
home or place of business of the client with the assistance of a translator
embedded in the local community.
Interviews followed a structured interview guide, adapted from previous field research conducted in Central America (Pisani & Yoskowitz,
2012, 2004), containing 85 questions focused in 3 sections: 1) the business
and ones work in the business; 2) loan information; and 3) demographics, both respondent and household. On average the interviews
lasted between 1 and 2 hours and typically included a brief tour of the
microbusiness.
HAPI-Kredi serves Mizak, a primarily rural-based population of about
15,000. Mizak is part of the larger district of La Vallee, with an area population of about 35,000. The region is estimated to be 97% rural with
households spread over a score of rural hamlets (IHSI, 2012). Like much
of Haiti, this region relies mostly on subsistence agriculture and small
occasional markets. These markets and region are populated by perhaps
as many as 1,800 microbusinesses; though both men and women possess
microenterprises, the marketplaces are generally populated by a greater
number of female microenterprises engaged in selling necessity foodstuffs
(rice, beans, cooking oil, etc.).10 Infrastructure is poor (i.e., roads) or nonexistent (i.e., municipal water). Schools exist, but are the domain of those
families who can forgo the opportunity cost of children not working. On
top of lost child labor are added the actual costs of school attendance including tuition, school uniforms, and school supplies. Literacy rates hover
around 50% for the nation, perhaps lower for Mizak. There are signs of
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modernity in Mizak, however, where cellular phones and rural taxis (the
motorcycle) abound.
While most residents own their self-built housing, food security is a
major concern. Most families are only able to provide one or two meals
a day for household members and very few households have more than
a weeks supply of rice and beans, Haitian food staples. While economic
activity persists just above a subsistence level in Mizak, there are more
robust local markets nearby in Ridore or further away in Jacmel.
4. Results & Discussion
This section reports findings in sub-sections, one focused upon HAPIKredi, the microfinance institution, and the other focused on the interviewed microenterprises associated with HAPI-Kredi.
4.1. HAPI-Kredi- The Organization
This sub-section contains the following areas: organizational origins,
organizational background, timeline, core product, employees and organizational culture, financial situation, and competitors.
4.11. Organizational Origins of HAPI-Kredi
The actual creation of HAPI-Kredi came after the 2010 earthquake when
HAPI was provided a donation for food distribution in June 2010. HAPI
requested the donor to re-direct those funds to provide microloans because
the earthquake destroyed many microbusinesses or left many without the
means to restart their lives. At the direction of the HAPI director in
Michigan, the focus of the loans was to be directed toward the poor and
extremely poor, primarily women, who demonstrated a viable business or
business idea.11 This target market is essentially un-bankable within Haitis
formal banking sector and has few credit alternatives. Locally, women
are the poto mitan or mainstay of the family, providing daily food and
the means for children to go to school and exit crushing poverty. In essence,
HAPI chose the dignity and productivity of teaching her to fish rather
than contributing to a cycle of charitable dependency (giving her a fish)
with HAPI-Kredi start-up.
4.12. Organizational Background of HAPI-Kredi
HAPI-Kredi is a very small budding microfinance institution focused
upon female empowerment. Its parent organization HAPI, founded
bi-nationally (based in La Vallee, Haiti and Michigan, United States) in
2006, is dedicated to the principle of economic empowerment for rural
women in Mizak located in southeastern Haiti. HAPI12 engages local
women in fair trade artisan production where most of their output
paintings, hats, purses, greeting cards, dolls, jewelry, journals, and
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knick-knacksis sold in the United States. HAPI has since expanded to

provide nascent medical care through the introduction of baby wellness
programs, including pre-natal care and a facility to give birth, with
a nursing and physician station (health clinic13 ), and pharmaceutical
repository (completed in early 2015), and engagement with youth through
a weekly PeacePals program.14 Local computer training and English as a
second language classes began in 2014.
More broadly, HAPI engages the Mizak community through the
partnership with a local pastor and the involvement of the Methodist
faith-based community from West Michigan. HAPI is a recognized
ministry available for charitable church giving, a major source of HAPI
funding, by the West Michigan Conference of the United Methodist
Church and the United Methodist Committee of Relief.15 So HAPI-Kredi
began with the goal of serving the poorest of the poor in a region
of Haiti in which the parent faith-affiliated NGO already operated
and received supportspiritually, financially, and solidarity/mission
exchangeslocally and abroad.
4.13. HAPI-Kredi Timeline
Highlights for the years 20102014 appear in this sub-section. In the
late fall of 2010, HAPI-Kredi began with a very modest preliminary capital endowment (under $5,000) but an ambitious agenda of providing microloans. During this time period, the initial capitalization of HAPI-Kredi
was made available and a local director was hired. The first director was
charged with finding suitable clients to provide $75 micro-loans at below
market interest rates (3% per month).16 The directors salary was fully
subsidized by HAPI.
From 20112012, HAPI-Kredi and the first director were able to reach
26 clients in the Mizak community. However, things did not go smoothly.
Relatively few loans were made in the region and those that were made
went mostly to enterprises that were fully able to repay a business loan
rather than to those who met the target market: poor women with a viable microbusiness or business plan. The parent organization continued to
subsidize the salary of the single director/loan officer of HAPI-Kredi and
provided tuition reimbursement (to study accounting). In return, the first
director absconded with or wasted about half of the start-up funds. This
deceit was uncovered in late 2012 and by early 2013 the first loan officer
and director was terminated.
In January 2013, a new loan officer, Toussaint, was hired. Toussaint, a
loyal member of the HAPI family (his mother is a long term member and
artisan of HAPI), became the new loan officer for HAPI-Kredi and a temporary director, Emmanuel, was retained to straighten out the books from
January through June. Emmanuel, a university graduate with prior experience working for Fonkoze (a leading microfinance institution in Haiti),
established a set of bookkeeping materials, including the first draft of an
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Pisani

operations manual. With two people working in HAPI-Kredi, financial

checks were put into place including a third check with the bookkeeper
for the parent organization, HAPI. During this period of transition, Toussaint met with all existing clients to discuss the personnel changes in
HAPI-Kredi and, with Emmanuel, documented the status of old loans and
current loans. With the help of outside unpaid consultants, business workshops were held in May 2013 to assist current and prospective clients build
their microbusinesses. Also by May, Toussaint and Emmanuel had a handle on HAPI-Kredis information and operations. Emmanuel, slow and
methodical, was honest but distant in the office and reluctant, perhaps
even reticent to leave the office and enter the field to meet with clients
at their place of business or home. In June, Emmanuel left to undertake
graduate study in Canada.
Toussaints popularity in the local community restored credibility to
HAPI-Kredi. His salary of $125 a month was a point of contention as the
director earned twice what he earned. This disparity was rectified in late
2013 with an increase in his monthly salary to $220. To supplement his
salary, Toussaint has a small window installation business on the side
that more than doubles his monthly earnings. At this time, Toussaint felt
it was his personal mission to help move forward HAPI-Kredi, in a way to
give back to his local community. By June, HAPI-Kredi was stabilized and
ready to make new loans with an experienced loan officer (Toussaint) and
a newly hired permanent director, Wideline Dalice (to replace Emmanuel).
During the interview process, Wideline indicated that she was willing
to go into the field to meet new and existing clients and make loans.17
Initially, Toussaint would train Wideline until she felt comfortable leading
HAPI-Kredi.
Toussaint set upon a path of quality client recruitment within the
constraints of the organizations stated mission and available funds to
loan. From the summer of 2013 to the summer of 2014, HAPI-Kredi added
99 clients to its operational base. Also during this time, Toussaint had
taken firm control of the reins of HAPI-Kredi with Wideline moving into
more of a financial oversight rolewhere she maintained appropriate,
transparent, and timely record keeping. Transportation and mobility
constraints were decreased with the donation of a new motorcycle in late
2014.
New challenges arose in 2014. With the additional clients came a halt
to new loans as the available capital for disbursement was tapped out.
New infusions of capital were few and far between. Market saturation
for specific classes of microloans, such as funding market women selling
household food products, became a concern. Lastly, leadership turnover
visited again upon HAPI-Kredi as Toussaint left amicably in late fall 2014
to further develop his own business. In his place, Fabiola Benoit, long
time secretary with HAPI transitioned to become the new loan officer for
HAPI-Kredi in October 2014.

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4.14. HAPI-Kredis Core Product

HAPI-Kredi produces a singular product at a below market interest
rate18 : a microloan. Microloans come from HAPI-Kredi in three sizes, $75,
$125, and $250. All carry a monthly simple interest charge of 3%.19 The
lengths of the loans vary from three to five months. The loans utilize
social collateral for repayment insurance whereby loans are provided to
groups of three people, each guaranteeing each others loan. An additional
incentive to repay is a 15% loan holdback that is issued to the borrower as
the last loan repayment was made. Repayment intervals generally occur
once a month at the office of HAPI-Kredi.
For example, three market women form a group. These women know
each other through family and business interactions and agree to work together to access microcredit. This group would apply for individual loans
of $75 each, with each person guaranteeing the repayment of all members
of the group. That is, if a member could not repay, it was incumbent upon
the other group members to repay for her. The penalty for non-repayment
was exclusion from future loans for the entire group; however, temporary
repayment delays incurred a small financial penalty (fine). The original
disbursement is $75 minus the 15% holdback or $63.75. The individual $75
loans are repaid in monthly or biweekly installments over a three month
period. In all, $81.75 is repaid by the end of the loan period if the loan
is repaid in full (without penalties). With the last payment, the 15% loan
holdback ($11.25) is disbursed. This loan holdback serves not only as a
method to incentivize complete loan repayment, but as a method of forced
savings. Once the loan is fully repaid by the group, the group could be
finished with HAPI-Kredi, access another round of $75 loans, or step up
to $125 loans. The $250 loans are reserved for holdovers from the first two
years of HAPI-Kredi operations for non-target market clients who have
been excellent clients in order to maintain the peace in the community
after the HAPI-Kredi embezzlement scandal.
4.15. HAPI-Kredis Employees & Company Culture
HAPI-Kredi has two fulltime positions: a loan officer and director.
Wilfrid, Toussaint, and Fabiola have served as HAPI-Kredis loan officers.
The principal duties of the loan officer are to attract new clients and
service existing clients. When Toussaint was employed with HAPI-Kredi,
he served as the English language liaison between HAPI-Kredi and its
partners in Michigan. Fabiola is in the process of learning English, but
has little English proficiency. Wideline is the nominal director who spends
about half of her time with HAPI-Kredi as a manager, record keeper, and
occasional loan officer. With the remainder of her time, Wideline serves
as the primary accountant for HAPI.
As HAPI-Kredi is located in the building that houses HAPI, there is
much interaction between the two. Additionally, the HAPI building is
located adjacent to the home compound of the Haitian general director
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and Haitian HAPI board member (who is one of eight board members20 ).
So the HAPI building and personnel are secure during the day and a night
watchman is on duty during the night.
HAPI-Kredi personnel are infused with a passion to serve others, particularly poor women. This has not always been the case, initially HAPIKredi also served those who were able to repay, but were not part of the
espoused mission. In part, this could be a legacy of helping social networks (those with means and those without), rather than conforming to
the mission of serving poor women with a viable business or business
idea.
Nonetheless, the staff is gaining capacity in the microfinance field with
on the ground experience and occasional volunteer consulting coordinated through the executive director of HAPI (based in Michigan). Transparency and checks and balances are now the organizational norm for
HAPI-Kredi. Language barriers persist between many board members,
volunteers, and HAPI staff. As of January 2015, only one HAPI affiliate
personnel is English-language capable, the Haitian general director and
HAPI board member, and nearly all organizational forms, data, reports,
and manuals are produced in Haitian Creole which is inaccessible to the
English speaking board members, volunteers, and donors. The process of
translation of necessary information to English is slow, but necessary for
the bi-national organization.
4.16. HAPI-Kredis Financial Situation
Early in its existence, HAPI-Kredi had been rocked by slow growth,
competition, theft, loss, and mission drift. All of this came to a head at the
end of 2012 and was partially addressed by terminations and new hires in
2013. In June 2013, HAPI-Kredi had $10,000 on the books available to loan
and 25 active clients across eight groups of three and one individual loan.
Perhaps as many as ten previous micro-business loans, all made prior to
2013, needed to be written off the books.
Currently, HAPI-Kredi is not financially self-sufficient. The ultimate internal financial goal for HAPI-Kredi is to achieve financial sustainability.
The primary costs associated with HAPI-Kredi operations include staff
salaries ($350 monthly), operational costs ($100 yearly21 ), and overhead
charges (normally equaling 15% of loan profits, but can be as high as 85%
depending upon the financial needs of HAPI). In addition, discussion is
underway to add services, such as literacy training and business workshops for HAPI-Kredi clients.
Given this information, best estimates are that HAPI-Kredi must continually service roughly 200 clients a year to achieve self-sufficiency or
break even.22 Yet HAPI-Kredi is currently constrained to reach this operational goal because its total loan portfolio (e.g., money available to lend)
is $7,000, the amount reduced overtime by scandal and bad loans. Hence,
growing the capital fund base available for loans (to at least $15,000) is
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The Latin Americanist, September 2015

imperative to the goal of financial sustainability. In this sense, demand for

microcredit from HAPI-Kredi outstrips the supply of loanable funds. And
several nearby communities, especially the market vendors at Ridore, are
virtually an untapped source of scores of new clients. The goal of eventual
self-sufficiency may seem distant and elusive, perhaps even unobtainable
without an infusion of new capital.
4.17. HAPI-Kredi Competitors
There are no formal banks in the Mizak area. The nearest large town,
Jacmel (population 40,000), is about 20 minutes away from Mizak by motor vehicle; Jacmel does have a basic financial infrastructure including a
formal Haitian bank, Sogebank. However, the formal banking system is
uninterested in funding small rural and informal microenterprises. HAPIKredis primary competitor in the region is Fonkoze, the largest national
MFI in Haiti serving more than 50,000 borrowers. Fonkoze, established
in 1994 is a full service MFI (Tucker & Tellis, 2005); it charges a monthly
compounded interest rate of 5%. A small credit union, Caisses Populaires,
has a small microcredit operation in La Vallee and charges a monthly
compounded rate of 3% with no additional services provided. In Mizak,
borrowing options to start and sustain business involves the 6Fs: founders,
family, fans, friends, fools, and microfinance. And for microfinance in
Mizak, the choices are essentially Fonkoze, the premier MFI in the nation,
and HAPI-Kredi, a Mizak-based struggling MFI.
4.2. HAPI-Kredi Clients and Microenterprise Development
Reported in this sub-section is a description of the client interviews revolving around respondent demographics, microbusiness characteristics,
and expanded case studies.
4.21. Respondent Demographics
Women comprise 90% of the 30 HAPI-Kredi clients interviewed
(see Table 1). By design, HAPI-Kredi focuses mostly on female entrepreneurs who come from impoverished households. The average age
was just over 50 years, though the ages ranged from 24 to 70. The respondents averaged just over 3 years of formal education collectively,
however, half of the interviewees had no formal schooling at all, 10% had
a high school education, and the remainder had between 1 and 9 years
of schooling. All but one respondent live in a home they owned with an
average of 6.3 people residing in the home. The sole non-home owner was
living in a relatives home in Mizak after her home in the capital city was
destroyed in the 2010 earthquake.
It is not uncommon for Haitians to have relatives living abroad who
send financial help back to family in Haiti; among the interviewees 22.7%
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Table 1: Respondent Demographics (n = 30)

Variable
Gender (%)
Female
Male
Mean Age (range, median)
Mean Years of Education (range, median)
Mean Number of People in Household (range,
median)
Home Ownership Yes (%)
Receive Remittances
Yes (%)
Mean Amount of Remittances per Year for
Remittance Receivers ($US)
Quality of Life Indicators Food
Mean days of Rice on hand (range, median)
Mean days of Beans on hand (range, median)
Number of Meals Eaten over Last Two Days
(before interview)
56 Meals (%)
34 Meals (%)
12 Meals (%)
0 Meals (%)
Mean Number of Days over the Last Month
(before interview) Without Eating Food (range,
median)
Quality of Life Indicator Health Care
No Resources to Buy Medicine of Go to the
Doctor (%)
Only Go to Doctor in Case of Emergency (%)
Occasionally Have Resources to Buy
Medicine/Go to the Doctor (%)
Medicine/Go to the Doctor (%) Have Enough
Resources to Buy

Value
90
10
50.9 (2470, 53.0)
3.3 (014, 1.0)
6.3 (313, 6.0)
96.7
22.7
460
8.0 (030, 5.0)
11.2 (045, 2.5)
22.7
54.5
13.6
9.1
2.3 (020, 0.0)

13.6
54.5
9.1
22.7

received family-origin remittances averaging $460 per year. This money

cushioned income shocks and permitted the families to send their children
to school. Two quality of life indicatorsfood and medical carereveal
a high degree of food and health care insecurity. Just over three-quarters
of the respondents ate 2 meals or less per day and average just over one
week of food staples on hand. Food quality was measured by the consumption of specific protein-laden foods over the last seven day period.
The respondents reported eating on average the following foods over this
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Table 2: Microbusiness Characteristics (n = 30)

Variable
Business Type (%)
Basic Foods & Household Cooking Supplies
Animal Husbandry (chickens, pigs)
Agricultural Seeds
Charcoal
Clothing
Cosmetics
Fruit Re-seller
Lumber
Shoes
Snacks/Food Stand
Gasoline
Mean Age in Years of Microbusiness (range,
median)
Mean Weekly Business Income ($US) (range,
median)
Parental Occupation
Father (%)
Self-Employed Farmer
Other Self-Employed
Unknown/Did Not Work
Mother (%)
Self-Employed Farmer
Self-Employed Merchant
Unknown/Did Not Work
Loan Cycles Average Loan Size ($US)
Cycle 1 (n = 27)
Cycle 2 (n = 16)
Cycle 3 (n = 9)
Cycle 4 (n = 4)
Cycle 5 (n = 3)

Value
57.1
3.3
3.3
3.3
6.6
6.6
3.3
3.3
3.3
6.6
3.3
16.5 (140, 15.0)
19.68 (060, 12.25)

75.9
17.2
6.9
37.9
55.2
6.9
85
119
142
266
292

period: beef or goat or pork, 1.7 times; chicken or turkey, 0.6 times; cheese,
0.2 times; and fish, 0.6 times. Not only are most respondents not eating
sufficient amounts, but they are not eating much protein. Lastly, just under
one-quarter of the interviewees were able to regularly access health care.
4.22. Microbusiness Characteristics
More than half of the interviewed microentrepreneurs owned a basic
foods and household cooking supplies business (see Table 2). Essentially,
these small business concerns sold household food necessities such
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as rice, beans, cooking oil, sugar, flour, corn and differentiated themselves
by stall size and volume and additional secondary items sold such as
cookware, coffee, bouillon cubes, spaghetti, detergent, vegetables (often
home-grown), and gasoline. Typically these microbusinesses sold from
their homes, or a separate roadside stall at their home, during non-market
days and sold from the local markets on market days, which typically
occur on Wednesday and Saturday in Mizak and Friday in Ridore and
Daed. Oftentimes, these small-scale merchants only sold at the market
what they (and helpers) were able to physically carry with them, some
however had access to burros or motorcycles (via taxis) to assist them in
bringing their goods to market. None had access to a vehicle, but some
non-interviewed sellers in the marketplace do.
Five other microenterprises resold goods itinerantly, from their homes,
and in the marketplace included clothing, shoes, charcoal, and cosmetics
(one merchant sold both cosmetics and clothing [underwear]). Another
microentrepreneur set up a makeshift stall selling snacks to children next
to the lone public school compound in Mizak during school hours while
another cooked fried foods in her food stand alongside of the primary
road in and out of Mizak. One microentrepreneur specialized in selling
gasoline, primarily to motorcyclists (mostly taxis) in small containers such
as used plastic soda pop bottles, in a remote stretch of road adjacent to her
home. When she had chickens to sell, she would supplement her gasoline
stand with fresh poultry. One microbusiness focused on the production
of pigs, chickens, and eggs sold from their home or sold wholesale to
market vendors who would prepare the animals for home consumption,
often in smaller ready to cook pieces. Another microbusiness specialized
in reselling agricultural seed for planting season and another commissioned sawyers to saw lumber planks from hulking tree trunks for resale.
Lastly, one microbusiness collected fruits from La Vallee and resold them
at market in Port-au-Prince.
Most of the microentrepreneurs interviewed were experienced in
running their business enterprise with an average business age of over 16
years, though 4 businesses had not yet reached 3 years of operation, a noted
watershed of business stability and longevity (Amoros
& Bosma, 2014).
Self-reported weekly business income average $19.68 with a range of $0 to
$60. Five (or 16.7% of) microentrepreneurs reported earning $1 or less per
day in their business operations. The largest group, basic foods and household cooking supplies, averaged weekly earnings of $26.15 (standard
deviation of $19.74). However, there was much dispersion in earnings with
2 of 10 earning $1 a day or less, yet 7 in 10 earned $20 or more per week with
a top performer earning $60 per week (another firm in this category had
weekly earnings of $12). Only one other business, the combined cosmetics
and underwear merchant, earned $60 weekly. The accumulated business
acumen of both of these relatively high earning individuals was clearly
evident in the interview and business operation. The entrepreneurs
with the lowest earnings were involved in charcoal ($3 per week),
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The Latin Americanist, September 2015

cosmetics only (no sales in the previous week, hence no earnings), the snack
seller adjacent to the school ($7 per week), and the fried food stand owner
($5 per week). When business income is considered with the number of
persons living in the home, per capita weekly business income ranges
from $0 to $15.00 per person or $0 to $2.14 per person per day. Only
3 microbusinesses return daily average per capita household earnings
greater than $1 to $2, these include two basic foods and household cooking
supply merchants and the cosmetics/underwear merchant.
Business acumen may also be passed down by generation. Hence,
the interviews revealed the occupation of both the microentrepreneurs
mother and father, if known. In both cases, respondents were able to
identify nearly all of their parental occupations as either a self-employed
farmer or other self-employment, 6.9% were unknown or did not work.
Microentrepreneurs with self-employed parents (e.g., merchants) outside
of farming earned, on average, more than those self-employed in farming.
This difference was statistically significant for mothers occupation, but
not for the fathers occupation. Earnings for the microentrepreneurs in the
present study with a self-employed mother outside of farming averaged
$25.96 per week versus $10.50 for self-employed mothers in agriculture
(ANOVA, F = 4.548, p = 0.047). As most microentrepreneurs in this study
are women, the passing down of business knowledge from mother to
daughter helped create an environment that significantly enhanced business earnings.
Loan cycles too displayed a difference (though not significant) in earnings where those microenterprises in their first through third loan cycles
averaged more than $23 per week in earnings and those enterprises in their
fourth and fifth loan cycle averaged $7 and $16 in earnings per week, respectively. Two enterprises yet to receive loans earned in between ($9.50)
those in their fourth or fifth loan cycle. Longer termed clients may suffer
from adverse selection under the previous director of HAPI-Kredi who
left the organization after scandal. Three microentrepreneurs were either
in arrears or default in their loan payments.
Generally, while these microbusinesses receive credit, they also are in a
position to provide credit. For their best customers, 65% of the microbusinesses offer credit, 35% do not. For those that do not offer credit, their
weekly business incomes surpass those that do, $21 versus $19, respectively. It seems that credit at the bottom of the pyramid for consumption
suppresses earnings and that microenterprises that do not provide credit
achieve higher performance (if not goodwill from clients who may be their
neighbors [a difficult and sometimes ostracizing decision in a culturally
collective society]).
No microenterprise interviewed operates in the formal sector. However, on occasion, a handful of microentrepreneurs indicated that vagrant
government personnel would attempt to extort payments for the right to
sell (e.g., a permit, agricultural certification for animals) in the marketplace.
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4.23. Case Studies

The following extended case studies provide a more intimate view of
the microbusiness landscape in Mizak and highlight relatively successful
microenterprise cases.
4.23.1. Basic Foods and Household Supplies Vendor Andrelie
Andrelie, 53 years-old with one week of schooling, sells from a market stall in the Mizak marketplace, something she has done for the past
20 years. Andrelie typifies many of the current loans HAPI-Kredi has made
in the La Vallee region. As of May 2013, her market stand has a potpourri
of household goods for sale: flour, onions, corn, cooking oil, rice, sugar,
soap, candy, animal feed, and gasoline (available in old soft drink bottles).
When she has chickens, pigs, or goats to sell, she will bring those, but
does not have any live animals to sell on the day she was interviewed. All
of these items are displayed on a couple of old plank boards and on the
ground. On the two market days in Mizak, Andrelie takes her goods for
sale via donkey. Otherwise she sells from her home each day but Sunday.
All in all, the value of her inventory hovers around $75 and when the market is not in session, her home doubles as a local convenience store. She
began her business with $12.50 in goods and has steadily built it up over
the past 20 years. At the market, she employs a helper and moves about
one-third of her inventory on a weekly basis. Andrelie likes the prospects
for her market sector saying, People will always eat food.
Andrelie serves about 2025 regular customers, offering credit to her
10 best clients.23 Like most microbusinesses in the region, she operates
informally. She is happy with her business, though she becomes energized when sales are good. Lately, more competitors have entered into
the marketplace squeezing sales volumes. In the past, Andrelie borrowed
from Fonkoze (in rounds of $75, $125, $300), but switched to HAPI-Kredi
because of its lower costs to borrow and home base in Mizak. Andrelie
is currently waiting for her second loan cycle with HAPI-Kredi, she has
already paid off her first $75 loan. As an experienced borrower, Andrelie
prefers an individual loan product, but understands the need for social
collateral within the microfinance industry. Andrelie is stuck in a credit
market constrained by social collateral where microentrepreneurs such
as her may have the wherewithal to navigate individual credit, but not
the institutional banking infrastructure to meet her needs outside of the
microfinance arena.
Andrelie is the primary breadwinner for a family of six and she is one
of the more successful vendors in the market, averaging $25 in profits
per week. Her husband is a self-employed farmer (like her parents) who
provides in-kind food (corn and beans) support for the family. While they
all had not missed a day without a meal in the last month, in toto, they
average 1 to 2 meals a day as a family. On occasion, they are able to
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The Latin Americanist, September 2015

supplement their rice, bean and bread diet with beef one or two times
a week. Andrelie does not have any health insurance and only a very
small emergency fund if there were a shock to the family. Fortunately, her
house has a concrete floor allowing for a relatively more sanitary home
environment. No one in Andrelies immediate family has emigrated from
Haiti to the US to send back remittances.
4.23.2. Basic Foods and Household Supplies Vendor Antoine
Like Andrelie, Antoine is a seasoned market seller in Mizak. She began
working in the market fulltime at age 14 learning from her mother and
has continued to sell over the past 40 years. At the Mizak market twice per
week, Antoine sells food and supply staples (rice, cooking oil, sugar) and
offers garlic, spaghetti, yams, coffee, mangoes, bullion packets, other food
supplies, detergent and beans and corn when harvested from home. On
market days, Antoine has her stall set up by 10am and remains until the
end of the market day at 5pm. On Mondays, Tuesdays, Thursdays, and
Fridays, she sells from her home and takes Sunday off. All told, Antoine
has about 40 regular customers, 25 of whom receive credit. Antoine has
a daughter that helps her sell at the market and at home and she too is
learning the business.
Antoine managed to obtain 6 years of schooling and understands the
importance of school where her two youngest children are still enrolled
(ages 21 and 16). Antoine earns about $22.50 per week through her microbusiness which supports a household of 5. Antoine is single and the
sole breadwinner in her household; she is fortunate to have grown children
working in the United States who are able to send around $500 per year in
remittances that is used to pay for her youngest two children to complete
school and as a buffer for potential shocks to the family (such as emergency medical care). Antoines household enjoys a relative high degree of
food security for the region with 15 days of rice and 30 days of beans on
hand. Additionally, Antoine is able to provide a higher quality diet for
her household as they consume beef or chicken 5 times per week spread
over two meals per day. On occasion, Antoine is able to provide cheese, a
food luxury, with her home meals. She also has access to a cellphone and
primitive solar electricity at home, but no running water.24
Antoine travels to the regional hub city of Jacmel on Sundays to buy
her weekly inventory to resale in Mizak during the week. She uses her loan
from HAPI-Kredi to buy in Jacmel and sell during the weekessentially
HAPI-Kredi is her credit line to buy lower and resell higher. Antoine
is in her fifth loan cycle with HAPI-Kredi. She switched to HAPI-Kredi
because of their lower interest rates as compared to Fonkoze where she
used to borrow money to increase her cash flow to buy and resale (and
offer credit to her customers). Antoine repays her loans on time, serves as a
solidarity group leader, and expects to borrow again from HAPI-Kredi in
the future. Some forty years ago, she began business operations with $50;
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today her inventory has grown to nearly $90. Recent access to microfinance
in the region has permitted growth in competitors; Antoine estimates that
there are 40 other market stalls similar to hers and 5 nearby homes that
sell basic foods and household supplies out of their homes like she does.
Antoine believes this increased competition has begun to squeeze profits
in this market segment. Antoines immediate plans are to fix a hole in her
roof and better secure her storage room where she keeps her merchandise
from spoilage and theft.
4.23.3. Clothing Vendor Simone
It is a Monday and Simone sits comfortably at her house speaking
about her clothing resale microbusiness. If it were a Wednesday, Friday
or Saturday, Simone would have been selling at one of two local markets: Mizak or Ridore. Only 35 years old, Simone has already worked 20
years, the last 7 as a microentrepreneur selling mostly clothing (e.g., shirts,
undergarments, socks, hair ties, perfumes, and lotions). Simone first
gained market experience buying and selling animals and started her
clothing business with $50 in family savings. She demonstrates how all
of her $140 inventory fits in 2 large plastic bags that she carries to market
on the back of a motorcycle taxi. Simone acquires her inventory through
astute purchases made in the capital of Port-au-Prince once every 3 weeks
or so. Minimizing traveling expenses to $6 (or 5 days earnings), Simone
takes the bus early in the morning to the capital, packs her own lunch,
makes targeted purchases, and returns late in the evening.
Simone works on average 6 days per week, half of which is spent at the
market. In Mizak, Simone has about 30 regular clients and about 50 more
in Ridore. Of her 80 or so clients, 15 of her most trusted clients receive
credit from Simone. On a typical market day, she leaves her home by taxi
(round trip cost is roughly $1) about 7am, sets up her market stand by
8am and sells until about 4pm in the afternoon before returning home. On
a typical day, she may sell about $12.50 worth of clothing earning a little
over $3 after expenses (or about $9 for the week). Simone usually prices
her goods cost plus 20% to 30% depending upon market demand and on
her two competitors. Other than travel and inventory restocking expenses,
Simone pays her husband a nominal wage to help when needed. When
not needed, Simones husband teaches at the local public national school
where he receives an income of approximately $10 per week, and perhaps
as important, he receives medical and pension benefits for the family of
seven.
Like her husband, Simone also went to school and she made it through
14 years of formal education. Supplementing her formal education, Simone grew up in a family in which both her mother and father were
self-employed outside of agriculture. Simones father was a carpenter
and Simones mother was a vegetable vendor. Undoubtedly, these selfemployment experiences were handed down to Simone.
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At the time of the interview, Simone was waiting for the disbursement
of her first HAPI-Kredi loan of $75. Simone is not new to microcredit; she
has previously taken out and repaid 7 loans over 5 years with Fonkoze
totaling $250. Simone switched to HAPI-Kredi because of the lower interest charge and the smaller solidarity group loan guarantee model of
3-members (versus a group of 5 with Fonkoze). Simone believes a 3 person group is more manageable where she can keep better track of her social collateral responsibilities and assist her sister borrowers in improving
their own microbusinesses so as to avoid financial repayment obligations
on behalf of non-performers within the group. Her only misgiving about
HAPI-Kredi is its policy of holding back 15% of the original loan until the
full loan has been paid off. With her $75 from HAPI-Kredi, Simone wants
to add seasonal products to her clothing microbusiness, such as shoes for
graduation; cups, bowls, silverware and plastic flowers for Mothers Day;
and jeans, shoes, and slippers for Christmastime.
Overall, Simones household does not experience extreme poverty; they
all are able to eat at least twice daily, and enjoy beef, fish, or chicken at least
4 times per week as well as cheese twice weekly. Additionally, Simones
family has in stock 15 days of rice and 30 days of beans and is able to visit
the doctor for both emergency and health prevention needs. Simone has
access to a cellphone, a cement-floored home with a water cistern, but no
electricity. Though they do not receive remittances from abroad, having
both parents earn an income, with the husband doing so in the formal
sector, allows for greater financial, food, and medical security.
5. Conclusion
From the examination of HAPI-Kredi, several insights emerge. Startup MFIs need more than good intentions to succeed. HAPI-Kredi began
when a single donor sought to assist the Haitian people after the devastating earthquake in 2010. The benefactors small donation to HAPI
was re-routed from emergency food aid to financial assistance for small
microbusinesses impacted by the earthquake in HAPIs home district of
Mizak. A short-term one time infusion of money was converted into a
long-term financial commitment via microcredit to microentrepreneurs in
Mizak. While noble, this commitment meant the creation of a new subentity within the parent organization that was established through a crisis
rather than careful institutional planning. Mission drift is common within
development NGOs who want to respond, act, and make an impact and
HAPI is no different.
This lack of planning, however, resulted in a very tumultuous
beginning for HAPI-Kredi in which it is slowly emerging from several
years later. For example, careful planning before business launch would
more clearly: establish mission, evaluate business viability (both for the
institution and the target market), leverage learning from others, and
identify key personnel (able to communicate locally and internationally).
Because of the absence of planning, HAPI-Kredi was not able from
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its start to determine who it should serve (e.g., misalignment between

mission and action, market segment saturation avoidance), at what level
it would serve (e.g., insufficient loanable funds, auxiliary training, and
appropriate personnel), and how long it could serve (e.g., scalability
and sustainability). Furthermore, lack of initial financial controls and
monitoring led to scandal and lowest in the market loan rates created
pent up demandboth creating unplanned organizational pressures. Yet,
HAPI-Kredis rapid client growth in 2013 and 2014 may be attributed to
the dynamism and skills of and attention to motivated staff, indicating
the importance of aligning mission with key personnel.
In part as a result of this planning void, there is a current tension between client retention and client graduation. HAPI-Kredi clients not only
desire the lower rate of interest provided by HAPI-Kredi in the marketplace (as operationalized by clients switching loan accounts from Fonkoze
to HAPI-Kredi), but also display a customer loyalty to continue working
with their home-based NGO for their microbusiness financing needs. Yet,
the primary mission of HAPI-Kredi is to provide early and small scale
financing for female-owned microbusinesses, not long term business financing that grows with the business.
The study of the 30 microenterprises and the three case studies exhibit the presence of both necessity and opportunity entrepreneurship in
Mizak. According to Muhammad Yunus, founder of the Grameen Bank
and Nobel laureate for his work in microfinance (2003, p. 207), all human
beings are potential entrepreneurs. Yunus pronouncement reflects the
capacity of all to become entrepreneurs, but not why people become entrepreneurs. Oftentimes in impoverished spaces like Mizak, entrepreneurs
emerge because of economic necessity and establish survival microenterprises. Others, such as Simone, seize market opportunities and become entrepreneurs by choice. Generally, opportunity entrepreneurs outperform
necessity entrepreneurs. From the case studies, we understand that advancing and nurturing opportunity entrepreneurs may be derived from
passing along entrepreneurial knowhow from generation to generation
and may be facilitated by microcredit and business training and sharing.
Beyond the scope of this present paper, future research may focus on
the bundling of HAPI products as a holistic approach to development
(e.g., health care, literacy training, and microcredit), the role and extent of
generational entrepreneurship in facilitating necessity versus opportunity
entrepreneurship, and comparative approaches to MFI start-up and
sustainability.
In summary, HAPI-Kredi is a new microfinance organization in rural
Haiti in its early stages of development. Established out of the tragic earthquake of 2010, HAPI-Kredi has sought to extend the overall footprint of
its parent organization, HAPI, in the community. HAPI-Kredi has been
slowed by many of the challenges associated with development in Haiti:
poor infrastructure, lack of resources, and corruption. Within its first four
years of existence, HAPI-Kredi still lacks financial viability and relies on
37

The Latin Americanist, September 2015

a heavy subsidy from HAPI. Nevertheless, HAPI-Kredi has begun to professionalize its processes and has gained recent momentum. In early 2015,
HAPI-Kredi serves over 130 clients, but is constrained by its capital stock
in providing loans to all clients simultaneously and staff turnover. Within
its current context, HAPI-Kredi would need to add another 100 clients
with the same level of staffing to achieve sustainability in the futurea
possible future even in the presence of local MFI competition. This drive
toward financial sustainability will challenge HAPI-Kredi as it seeks to do
so while maintaining its espoused mission of helping poor women achieve
business ownership and success through microcredit.
Within Mizak, there are many existing microbusinesses that benefit
from microcredit. Successful female microentrepreneurs, illustrated in the
case studies, may serve as role models to others to improve their daily
existence through small business ownership. HAPI-Kredi may assist existing targeted microbusinesses and viable start-ups, particularly those
who come from entrepreneurial families, while being wary of saturating
the marketplace in particular business sectors. Additional training and
workshops may also assist in microbusiness development and business
capacity building. Though the future does not appear overly rosy for
HAPI-Kredi and its client base, it does appear to offer some hope with the
development intervention of targeted microcredit to microbusiness at the
base of the pyramid.
Endnotes
1
The author would like to thank HAPI and HAPI-Kredi for access, translation, and assistance in completing this article, especially Reginal Zamor
and Berline Pierre in Haiti and Valerie Mossman-Celestin in Michigan.
Additionally, the author would like to thank the participants of the 2014
annual conference of SECOLAS for their helpful insights as well as the
comments and suggestions of two anonymous reviewers.
2
All monetary figures are reported in US dollars unless otherwise noted.
3
All Haitian names used within this article are pseudonyms.
4
This section relies heavily upon Philippe Girards Haiti: The Tumultuous
History- From Pearl of the Caribbean to Broken Nation (2010) and Laurent
Dubois Haiti: The Aftershock of History (2012).
5
In 2012, Haiti ranked 165 of 174 countries as one of the most corrupt
governments (Transparency International, 2012).
6
These statistics are derived from the Inter-American Development
Bank report, Microfinance by the Numbers (http://www.iadb.org/
en/topics/microfinance/microfinance-by-the-numbers,2450.html,
accessed April 1, 2015).
7
Informal financial circles such as grouped-based voluntary rotating savings and credit associations (or tontines) have a much longer history and
are more a cultural legacy (Hossein, 2014; Paul et al., 2012)and are beyond the scope of this study. See Fritzner (2009) for a detailed discussion
38

Pisani

on tontines (and its variants, sol and sabotay) in Haiti. A tontine in Haiti is
similar to a tanda in Mexico.
8
Paul et al. (2012) provides a good historical overview and a listing of
MFIs operating in Haiti. Mix Market also displays a contemporary listing
of MFIs in Haiti. As Haiti has a large rural population, networks such as
Kons`ey Nasyonal Finansman Popil`e (National Peoples Funding Council) are
important partners in rural finance and development.
9
The author also provided no cost pro bono consultative advice focused
on the MFI.
10
This estimate is based upon a 2013 survey of HAPI-Kredi clients conducted by the author where households averaged 6.3 persons or about
5,550 households in La Vallee. Furthermore, it is estimated in this same
survey that about one in three households fosters a microbusiness other
than or complementary to subsistence agriculture. Hence, there are estimated to be about 1,835 microbusinesses in the area. If at least half of this
number is female-led microenterprises, then there are roughly 917 target
ready firms for HAPI-Kredi, an MFI with a focus on micro-lending to
female-led microbusinesses.
11
To determine poverty, Schreiner (2010) argues that a simple five question
poverty scorecard (and its total) can correctly identify the likelihood of
households in poverty in Haiti. These five questions are: 1) what is the
dwellings floor made of? 2) does the household have a toilet or latrine? 3)
do all children ages 617 go to school? 4) how many plots of agricultural
land, forest land, pasture land, or gardens does the household use? and 5)
does the household own a television? (Schreiner, 2010, p. 124).
12
HAPIs Mission reads: Haitian Artisans for Peace International works
to break the cycle of poverty, maternal and infant mortality and broken
family systems by changing the trajectory of individuals, families and
communities. Focusing on community health, holistic education and economic empowerment, HAPI embodies the love and mission of Jesus Christ
(http://www.haitianartisans.com, accessed April 1, 2015).
13
Planned for mid-2015 is a micro-insurance program based out of the
health clinic. For a subscription fee of $1 per month per person, residents
of Mizak may access basic health care at the health clinic free of additional charges. This micro-insurance plan is open to La Vallee inhabitants
including HAPI-Kredi clients.
14
See the PeacePals website for more information on PeacePals at
http://wppspeacepals.org (accessed April 1, 2015).
15
The West Michigan Conference and the United Methodist Committee
on Relief have screened and approved HAPI as a Methodist-designated
charitable organization where member United Methodist churches may
send donations and receive credit for congregational giving. More
information may be found at: http://westmichiganconference.org/
pages/detail/1973 (accessed April 1, 2015).

39

The Latin Americanist, September 2015

16

While the below market interest rate was not initiated as a market penetration strategy, prospective clients certainly took notice in comparison to
other MFIs in the region.
17
Socio-economic class is an important marker in Haiti increasing the social
distance among people. In contrast to cultural norms, the willingness of
the director to meet customers outside the office met an organizational
imperative.
18
The commercial lending interest rate in Haiti is approximately 20% per
annum for those participating in the formal banking sector. The leading
microfinance organization in the country, Fonkoze charges 5% or more
per month. Hence the standard rate for microcredit is approximately
5% per month for microenterprises.
19
At one time, the interest rate was a compounded interest rate, but was
changed for ease of explanation to clients and monitoring by staff.
20
In all, there are eight board members; three are located in Michigan
(including the overall director of HAPI), two in Haiti, and one each in
Indiana, Texas, and Alaska.
21
Though this cost will rise for 2015 with the addition of a motorcycle,
perhaps $45 monthly or $540 annually.
22
This is calculated as Costs (fixed and variable [$426]) divided by revenue
per client ($2.25) over a months time (equaling 189.3 clients).
23
In a region where business financing is profoundly deficient, the provision of customer credit by Andrelie illustrates the wretched state of
consumer financing in Haiti.
24
Most homes in Mizak secure water from cisterns that collect rainwater.
Many households have water filters to purify the water for safe usage,
most of which were donated through HAPI.
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