ARTICLE - BUSINESSES BANKING ON RECOVERY

CANADIAN BUSINESSES BANKING ON HAITI'S RECOVERY
(Globe and Mail) - By Tavia Grant

Kick-starting Haiti’s financial system is a monumental task, given its fragility even before the earth shook last January.

But that isn’t stopping several Canadian companies from trying. Bank of Nova ScotiaBNS-T has reopened its four branches in the country and has introduced a pilot mobile-phone banking project to help make financial services available to Haiti’s devastated population. Desjardins Group is bolstering the country’s credit union network. And Toronto-based MasterCard Foundation is financing Haiti’s largest microfinance institution in a project that should reach 70,000 people.

They are small steps, given the scale of the destruction from the Jan. 12, 2010, quake, but important ones. Only 10 per cent of Haiti’s citizens had a bank account before the earthquake, while some estimates put the unemployment rate at a staggering 70 per cent at the time. A year to the day after the disaster, about a million people are still homeless, Haiti is still by far the poorest nation in the Western hemisphere, and the capital city, Port-au-Prince, remains in rubble.

Despite the painfully slow progress, Canadian companies have persevered with many challenges, and some successes.

“My hopes for this year: Restart the economy. Restart the agriculture, restart the business and entrepreneurship, so people can go back to some kind of work, and try to get back their life. But it’s going to be a long process,” said Pierre Turcotte, Desjardins’ project director in Haiti, who spent the past two years living there to support the development of caisse populaires.

Mr. Turcotte rattles off the problems: Eight of the financial network’s 50 buildings were badly hit. Some operations are squeezed in with other branches. Internet access and electricity is intermittent. Branches have no idea how many of their members died, or whether they have left the city. Many accounts are dormant; relatives would like access to them, but they need to prove their loved ones have died or, if identification and death certificates are lacking, have another caisse member vouch for the customer.

Solvency is another issue. The branches had about $7-million in loans outstanding at the time of the quake. Asking customers to repay them, when they’ve lost everything, is tough. Many loans will never be recovered, and new lending has been slow to resume because it’s hard to assess a borrower’s ability to repay.

Some microlending has resumed. Demand will likely balloon this year as the political situation stabilizes and reconstruction ramps up, said Mr. Turcotte, who expects demand for financial services will outstrip supply. “My hope rests with the small entrepreneurs.”

Scotiabank, meanwhile, has four branches in Port-au-Prince and the surrounding area and was able to reopen them within 10 days of the quake. Its first steps were to help its staff. A day after the disaster, it met with the country’s central bank to discuss how to get the banking system back up.

The scale of the wreckage was such that arch-competitors worked together – Citibank, whose branches were destroyed, shared Scotiabank’s premises for six months.

Maxime Charles, Scotiabank’s country manager for Haiti, who is also president of the professional banks association, worked with others to ensure word got out – by radio – that banks weren’t experiencing liquidity problems and that customers’ money was safe. He also worked with groups such as the World Bank to establish support funds for banks as loan delinquency rates rose.

He has hosted three trade missions from Canada over the past year – with investors from the tourism, mining, food and construction industries – and he hopes foreign direct investment will flow once Haiti’s elections are over.

In November, Scotiabank and a partner launched a new mobile-phone banking project, the first of its kind. Many more Haitians have phones than bank accounts, so Mr. Charles hopes mobile banking will make it easier to deposit paycheques and transfer money. “It’s about financial inclusion, and helping people save money for future needs,” he said in an interview from his office in Pétionville.

While much of Haiti’s economy is stuck, some programs are starting again. Fonkoze, the country’s largest microlender, is getting $4.5-million from the MasterCard Foundation, along with help from Waterloo, Ont.-based Mennonite Economic Development Associates, to restore some businesses that were wiped out, and help start new ones.

The program will provide business training, money for an asset such as a goat or chicken, and one-to-one mentoring for Haitians. It is also testing a microinsurance product that would protect borrowers from catastrophes, which seem to strike Haiti all too regularly.

Helping Haitian women “to access comprehensive microfinance services – savings, loans, insurance – as well as skills training are critical to Haiti's recovery,” said Reeta Roy, the foundation’s president and CEO. The work, she said, is crucial to “restoring hope and rebuilding lives.”