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Haitis CUs face grave issues on capital
PETIONVILLE, Haiti (3/25/10)--Nine of its member institutions were seriously damaged in a Jan. 12 earthquake and three were destroyed, reported officials at La Fédération des Caisses Populaires Le Levier, an organization serving 50 caisses populaires, or credit unions, throughout Haiti.
Click to view larger image Staff members and workers dig through the wreckage of KOTELAM's Magoire Ambrose caisse populaire--or credit union--branch office in Port-au-Prince, Haiti, following a Jan. 12 earthquake. The building was destroyed.
One institution, KOTELAM, was reduced to rubble. However, the remaining institutions, many in rural areas, face even greater challenges in the coming months, said World Council of Credit Unions (WOCCU). Many of Haiti’s 120 credit unions survived the earthquake with minimal damage, but that’s not necessarily the case for their members. Members who died or faced a complete loss of personal assets could undermine the financial well-being of their credit unions. Increasing loan defaults could lead to the financial collapse of some credit unions, many of which are struggling to restore their operations. “Haiti’s credit unions are already facing physical challenges that include structural damage, logistics and computer connectivity,” said Greta Greathouse, chief of party for the Haiti Integrated Financing for Value Chains and Enterprises (HIFIVE) program administered in Haiti by WOCCU. “But many of them will soon be facing grave issues regarding their capital position.” Most credit unions in Haiti are self-funded, with members’ savings as the only source of capital on their balance sheets. Members whose homes were destroyed, assets lost and relatives killed in the earthquake no longer can repay their loans. Each default drives the credit unions closer to financial ruin. “If members can't repay their loans, credit unions could lose all of their net worth ... and then some,” said Greathouse.
Click to view larger image Greta Greathouse (center), who heads up World Council of Credit Unions’ (WOCCU) program in Haiti, explains the challenges facing credit unions to Barry Lennon, WOCCU senior vice president (left), and Dave Richardson, WOCCU senior manager of technical development, in one of WOCCU’s temporary Haiti offices inside an art gallery. (Photos provided by World Council of Credit Unions)
HIFIVE, a three-year, $34.4 million multi-partner program funded by the U.S. Agency for International Development through the Academy for Educational Development and administered by WOCCU, is designed to strengthen enterprise development and promote job creation in rural Haiti. HIFIVE is working with the financial sector to bring savings, credit and remittance-linked products to underserved areas of the country and provide technical training to micro-, small- and medium-sized enterprises. WOCCU's Haiti office is undergoing its own logistical challenges. It is operating out of temporary space in two locations, one on the veranda of an apartment building and the other inside Gallerie Expressions, an art gallery in the Port-au-Prince suburb of Petionville. Permanent office space has been rented, but will require significant refurbishing before it becomes functional. “We hope to be in the new space in a few weeks, but then we had hoped to be in March 1,” Greathouse said. Meanwhile, logistical connectivity issues continue to challenge daily operations and escalating prices have caused additional hardship for the staff, most of whom live in tents near the sites of their homes. WOCCU staff stability will continue to be critical in the program’s efforts to help the country’s credit unions, she added. “If employees have a house or tent, chances are they have between five and 20 relatives living with them,” Greathouse said. “With prices climbing since the earthquake, our budget has been challenged and it’s become that much harder for staff to care for family members’ needs.” Haiti’s credit unions also are strapped for critical resources and face similar challenges. Regulators at the Central Bank of Haiti have already earmarked 15 struggling caisses for closure, a number that could climb to as high as 50 of the country’s roughly 220 financial cooperatives. Any type of assistance judicially administered could help the struggling movement continue serving members, according to Evans Jerome, the Central Bank's assistant director. “Before the earthquake, many of [the credit unions] needed help,” Jerome said. “Now they will appreciate that help even more.” (See related story in News Now's System section, "Fundraising for quake victims totals $854,983.")
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