Microfinance, the Fonkoze Way

One of the reasons I set out to write this book, besides the sheer joy I expected from learning and writing about something important and interesting, was that Fonkoze is an example of what I sometimes call, “Microfinance done right”.  I know that my “right” might not be another microfinance professional’s, or even another social scientist’s.  In my definition and the context of Fonkoze, “right” could be characterized by the following:

• Client benefit — especially for the poorest clients — is the organization’s highest priority: not just in the mission statement, but it the day-to-day workings of the organization
• Being a learning organization that is as honest about its failures as you can possibly hope for in such a competitive philanthropic marketplace
• Rigorous monitoring of socio-economic outcomes for clients (rather than simply hoping that loan repayment and renewal means client benefit) which in turn improves products and performance
• Going way beyond simply providing credit for one segment of the poor (usually the moderate poor in today’s microfinance world), but rather providing credit plus savings plus insurance plus cash transfer/remittance services and also bundling those with human development services  wherever possible, and designing different product packages for different segments of the “unbanked” demographic
• A relentless commitment to innovation
• Embracing of client protection measures and other global standards in an effort to improve performance and enhance the microfinance brand through cooperation

It is sad to say that a growing number of microfinance institutions (MFIs) in today’s world fall well short of these ideals, and in fact some appear to have stopped trying to aspire to them altogether.    (Another way of looking at it, I suppose, is to say that they prioritize other things.)  Grameen Bank, the organization that graciously hosted me when I learned microfinance, also embodies most if not all of the characteristics summarized above and on a vastly larger scale — as do hundreds of other organizations that are unknown except to a small community of specialists.  My employer, Grameen Foundation, does its best to advance organizations that embody these (and other) principles, and the principles themselves.

I was impressed with Pierre-Marie Boisson, the CEO of SogeSol, the Haiti affiliate of Accion International, whom I interviewed while still in Haiti (I return July 18).  His inclusive and honest perspective had room for organizations with as diverse missions as his and Fonkoze’s may be helpful in tackling this issue.

I also admire how Fonkoze has bounced back from a series of setbacks — most imposed by nature or the bizarre man-made disasters that frequently occur in Haiti, while a few have been self-inflicted.  Resilience is a core part of the human DNA — something I have seen up close talking to microfinance clients for more than two decades — and it is good to see an institution that reflects that quality. 

As I have said before, Fonkoze and its leaders are far from perfect, and I don’t intend to tell some kind of fairy tale.  I feel confident that I’ll find the words to tell the stories in compelling and truthful ways.  But I worry about how to address the bad press, and in some cases bad (and even unethical) performance, that we have seen in microfinance of late.  Holding up Fonkoze as some exceptional paragon of virtue will be counterproductive and spawn criticism and jealousy.  Ignoring the critiques does not seem an option, but I don’t want to draw undue attention to them either — since many are quite exaggerated. 

I am off to interview a long-time microfinance professional at Development Alternatives, Inc. who was very helpful to Fonokze when he worked for DAI’s office in Haiti.  Maybe he can help me think through how to handle this.

The press that Haiti and microfinance have gotten in the last two years provides an important opening for this book to get a wide hearing — now, how best to take advantage of this opportunity?