Key Statistics Prior to the January 2010 Earthquake 1
There are 196 formal microfinance institutions in Haiti.2
Total credit portfolio: HTG 3.8 billion (approx. US $95 million)3
Serving 239,474 borrowers (over 75 percent of the borrowers are female)4
HTG 2.24 billion savings (approx. US $55 million)5
Serving 687,000 saving account holders6
Potential market size: 40 percent of the (adult) population (2.8 million persons ) qualify for credit7
Geographic distribution: Port-au-Prince (41 percent), Departments/provinces (47 percent), rural areas (12 percent)8
Credit portfolios: 82 percent petty commerce (e.g., market stalls), 5 percent production, 5 percent services, 4 percent consumption, 4 percent housing9
The sector employs 3,648 people directly.10
The microfinance sector in Haiti has only existed in its current form since the late 1990s, when microfinance began to be viewed from a commercial perspective. Prior to this, microfinance was seen as the domain of credit unions and cooperatives. Four types of institutions represent the microfinance sector: credit cooperatives, microfinance institutions (MFIs) affiliated with banks, NGOs, and others. In comparison to the commercial banking sector, which provides 1 percent of the Haitian population (approximately 90,000) with formal credit, the microfinance sector serving around 240,000 borrowers, is significant. However, the sector currently only reaches around 10% of the potential credit market.
I. Sector Strategy and Priorities
The Government of Haiti has currently no overarching strategy for the microfinance sector. An improved legal and regulatory framework is required. While credit cooperatives have been regulated since 2002, a legal framework is needed for the non-cooperative sector.
(i) Government Priorities:
Drafting of a new microfinance law: While microfinance might not be a priority area for the government, several initiatives are being implemented to promote this sector. The Central Bank has the mandate to control micro-financing and is collaborating with the Agence Française de Développement (AFD) to develop a much needed new microfinance law for the non-cooperative institutions.
(ii) International Community Priorities:
Create a legal framework for the sector and expand beyond 10 percent of the potential market
Develop regulatory and supervisory norms
Develop technologically-based products, tailored to the needs of the underserved semi-rural and rural populations, such as value chain financial products, remittance-linked credit or investments to productive sectors. Strengthen the managerial and technological capacity of microfinance institutions.
Provide emergency liquidity support in post-hurricane period.
Need to expand outreach and access to products:
The current high costs of setting up branches and the lack of available tools to mitigate the risks associated with rural lending make it difficult to expand this sector in a low cost manner. Solutions need to be found to reach a greater number of people, in particular in rural areas (e.g., through mobile banking).
Information and Communication Technology (ICT)/ Management information systems:
ICT solutions, such as mobile banking are a critical element that would strengthen microfinance institutions. The new regulation regarding participation in the credit bureau requires microfinance institutions to have a data interface. Some microfinance institutions do not have the basic technological infrastructure or skilled human resources to roll out a data interface. Nonethless, ICT solutions would simplify the credit check process and allow for more accurate data information.
Microfinance institutions need to expand in order to provide services at a low/ reasonable cost:
Several of the 196 microfinance institutions are currently not fully functional. A proactive approach is needed to strengthen institutions and increase the client base (see above). It is necessary to scale up operations - be it through mergers, capital expansions, etc. - to improve viability.
Access to funding:
Microfinance institutions have limited access to the credit they require to expand. Improved access to funding at a lower cost for the smallest institutions of the sector is needed. A new microfinance law could facilitate this through the promotion of savings.
Development of viable and sustainable products:
Financial services/ products are needed to promote economic diversification that will support agricultural and other forms of production.
Development of non-credit products:
More emphasis on non-credit products that reduce vulnerability is needed. This includes expansions of savings and more micro-insurance.
Various types of insurance against disasters required:
Many families were unable to repay their loans following the devastating impact of the 2008 hurricanes. As a result, insurance products need to be developed to provide institutions and clients protection against fires, agricultural failure, hurricanes, etc.
Lack of qualified human resources and training:
The sector is particularly affected by the ongoing brain drain, the constant staff turnover and subsequent need for training. As the salaries are not competitive it is difficult to attract and retain staff, in particular IT experts. There is a need and demand for management courses for microfinance institutions, in particular in the provinces. As the sector grows, training demands increase.
70 percent of clients are women, but only 30 percent of the employees in the (surveyed) microfinance sector are women.
- Census of the Microfinance Industry in Haiti 2006/2007 (Recensement sur l’Industrie de la Microfinance haitienne 2006/2007) Data based on 80 institutions as of end 30.9.07.
- Ibid., p.36
- Ibid., p.38
- Ibid., p.36
- Estimates provided by UN Country Team. It appears difficult though to find a consensus definition of what it means to ‘qualify for credit.’ The difficulties in measuring market size are discussed in this brief on the CGAP website
- Ibid., p.22 (These numbers reflect the study sample, not the entire population of microfinance institutions.)
- Ibid., p.21 (Again these numbers are for the study sample only, not for the entire population of microfinance institutions.)
- Ibid., p.36
- IFC/World Bank
- Census of the Microfinance Industry in Haiti 2006/2007 (Recensement sur l’Industrie de la Microfinance Haïtienne 2006/2007) Data based on 80 institutions as of end 30.9.07