Microfinance And Ultra Poverty

The woman was quite malnourished, and when the team returned, they learned to their shock and sadness that she had passed away in the few short days since they last saw her. The team came across another family that was clearly malnourished, and they were able to provide some food during the assessment period to sustain them until the program launched.

The team was in this Haitian community to identify potential participants in a program called Chemen Lavi Miyo, which is creole for Pathway To A Better Life (Pathway). Opportunity International Canada has joined forces with its German and USA counterparts to support the Pathway program in order to help the poorest families in Haiti acquire a sustainable livelihood so they can break free from grinding and dehumanizing cycles of poverty.

Opportunity International is a microfinance charity that fights poverty through financial inclusion and training. This usually takes the form of small loans that empower poor clients to start and operate a microenterprise so they can feed, clothe, house and educate their kids.

The resiliency and entrepreneurialism of our clients is very inspiring, and over the past 50 years microfinance has proven to be very sustainable, with average repayment rates above 95%.

But what about ultra-poverty? How can microfinance help people with no livelihood prospects, no voice, barely eking out a subsistence that is characterized by malnutrition, lack of education, poor health and hygiene, and ramshackle housing? And what about sustainability?

THE PATHWAY TO A BETTER LIFE PROGRAM IN HAITI IS ONE ATTEMPT TO ADDRESS THAT QUESTION.

When forming the recent Pathway cohort, an assessment team traveled to one of the poorest regions in Haiti, where they visited 22 villages to identify potential candidates. Each village is no more than an informal cluster of about 70 households scattered among forested hills.

I visited some of these villages in August 2019. The drive was almost impassible, and we eventually abandoned the vehicles, completing the journey on foot.  We visited a number of homes and, despite the evident poverty, there was a lot of activity.  It was avocado season and women were carrying heavy sacks down the hill on their head or on mules and horses. 

The selection criteria for potential candidate households included:

• No productive assets
• No regular support from abroad or from an NGO
• Led by a woman between 15 and 65, able to work, or a male or female with a disability
• The family typically goes several days without a hot meal
• One or more school-aged children who can’t afford the uniforms to attend school

Working with local community leaders, the assessment team identified 659 potential candidates in this group of 22 villages, and Opportunity International was able to fund a new cohort with 400 participants, 390 of whom are women. The cohort is organized in eight groups of 50, and a Pathway Case Manager is assigned to each group.

At program launch, each candidate and their partner (if any) receives intensive training on several topics including nutrition, hygiene and financial literacy. They receive a small weekly stipend to help feed their family so they can focus on the program. They also receive a water filter, and materials to build a latrine and put a waterproof roof over their house.

The above items are of course critical for the survival and health of the family – but the program would fail if it stopped there, because there would be no sustainable solution.

The ultimate goal of the Pathway program is to help each participant acquire a sustainable livelihood so they can break the cycle of poverty and provide for their family.

The real challenge – and the ultimate goal of the Pathway program – is to help each participant acquire a sustainable livelihood so they can break the cycle of poverty and provide for their family. To stimulate economic activity, each candidate can choose a grant of two productive assets.  Asset examples include chickens, goats, or items to sell in the market such as oil and grain.

Each candidate must also join a local Village Savings and Loan Association (VSLA) where they learn to save, even if it’s just a few gourdes each week. The VSLA continues after the candidate graduates from the program and becomes part of their sustainable path forward.

But the key to the success of the program is the support each participant receives from their Case Manager. Case Managers meet each participant one-on-one weekly for 30 minutes over a period of 18 months. During the 30 minutes, participants receive vital mentoring on how to increase the value of their productive assets, in the process becoming entrepreneurs.

A GRADUATION CEREMONY FOR PARTICIPANTS WHO COMPLETED THE PATHWAY PROGRAM.

 In order to graduate from the program with a certificate after 18 months, the value of the productive assets must have grown by at least 40%. Over Pathway’s 13-year history, more than 8,000 women and families have been through the program with a 96% graduation rate.

During my visit last August, I met women new to the program, some about halfway through, and a graduate.  Considering what I knew of their status prior to joining the program, I was absolutely struck by their confident smiles and by the real hope I could see in their eyes.  They knew they could now provide for their families and become contributing members of the community. The economic transformation was underpinned by a powerful transformation in confidence, ability and hope, as these women become empowered over 18 months.

I am sometimes asked how the Pathway program fits into the DNA of sustainable microfinance, since there is no repayable loan and because each participant requires an initial grant.

Historically, microfinance has been sustainable because the poor are a good financial risk and will repay their loans as they grow their business. This has resulted in a sustainable eco-system where loans are recycled over and over in a virtuous cycle of poverty reduction.

But the purpose and foundation of microfinance was always aimed at helping the poor acquire a sustainable livelihood so they could provide for their families. That’s the sustainability that matters the most. 

Pathway program funding covers the cost of one-time start up grants and 18 months of training that together leverage a 96% success rate in launching sustainable livelihoods. The Pathway program is consistent with the mandate of Opportunity International Canada and will remain the focus of a modest proportion of its annual program funding. 

As the Haiti Program Director told me, “we’re changing Haiti one woman at a time”.