March is planting season in Fond Baptiste. Every farmer needs credit to purchase seeds and to pay labour to prepare the acres and acres of land which are tilled by pick and shovel. In many cases, groups of men form a ‘konbit’ and travel to various farmer’s lands helping each other. The new pcH Credit Protocol helps identify the most needy planters, as we can only respond to a limited number of credit requests. The rest must wait for next season.
Our Country Manager in Haiti, Janet Bauman, writes, “It is so exciting to be able to help farmers grow more food. Their sense of hope is such a great encouragement to us. This is the first time that Fond Baptiste farmers are receiving loans in order to plant more fields.”
The pcH credit programme equips farmers in Fond Baptiste with the resources they need to expand their farming but demand high levels of accountability for the money loaned. It is credit that is sorely needed-outside of city centres, credit isn’t easy to access in Haiti. In rural communities, the only access to credit for peasants is from a local landowner who demands unjust interest rates that can be as high as 600%. There is no hope whatsoever of farmers repaying these loans, and the desperate peasant is bound by this debt forever. Loans from pcH, which average 1,000 gourdes ($40 USD / $60 CAD) per farmer, are made to the cooperative at an interest rate of 10%. The cooperatives will reloan the money at 24%, with the profits going to the cooperative both as a benefit to the cooperative and to cover any bad loans. pcH sets rates that are both profitable for the cooperative and reasonable for the peasant. The loan capital fund is revolving and interest earned is turned back into available capital.
pcH, unlike direct aid programmes, demands accountability from the cooperatives and their members. Accountability in a loan programme means that it doesn’t become a handout, poisoning the community and creating a dangerous cycle of dependency.
How accountability is ensured
Before requesting credit, a cooperative must abide by rules that are governed by the international cooperative community. Each cooperative must:
• be registered or be in the process of registering with Haiti’s National Cooperative Council
• have held a General Assembly and proper elections in the last year
• be in good standing with pcH on past loans
• must demonstrate that they are able to repay the loan
To request credit, the cooperative submits a small business plan to pcH. Credit is available, and needed, for two main reasons: as capital credit for cooperatives to make speculation purchases of grain after harvest and as agricultural credit to lend to cooperative members in order to pay for labour to prepare the land and/or harvesting the crop.
The pcH Credit Committee (made up of the Finance Administrator, the Agriculture Coordinator, the Member Skills Coordinator and the Country Manager) reviews each application and meets with the cooperative to discuss their proposal. The Committee makes a final decision based on its ability to fulfill the request.
If the request is approved, and each party is clear on their roles and responsibilities, pcH and the cooperative sign a contract. This is a moment of great joy for everyone. “We at pcH rejoice that we are able to lend, proud that they have met the rigorous criteria and the cooperatives, in turn, are thrilled to have access to credit.”
For the cooperative member, accountability means they must meet several criteria to be eligible for a loan. The member:
• cannot borrow more than five times the value of their cooperative shares
• must have a garden in the cooperative area
• must practice soil preservation and environmental techniques such as composting
• must use soil conservation and agriculture techniques employed by the cooperative
• must sign a contract (which encourages participation in literacy classes)
• must agree to pay a penalty if they are late in repaying their loan
The cooperative can expect support from pcH, just as pcH can expect full accountability for the loan. The cooperative must leave their books open to scrutiny and demonstrate that the loan has been used for its intended purpose. However, they receive support, training and advice from the pcH Agricultural Technician, the ADEVKO (Agents of Development Kooperativ) and field monitors. If the cooperative is late in repaying their loan, they will be subject to penalties from the pcH Credit Committee.
What is the impact?
Credit, for urban Canadians, often means student loans, mortgages and car payments. Canadian farmers would find it nearly impossible to manage their farms profitably without credit. Likewise pcH offers a basic necessity to Haitian farmers. While a $40 US loan to a farmer in Fond Baptiste may seem small in comparison, it enables them to significantly expand their farms while maintaining their self-respect and freedom. By not giving a handout, we are making a statement of faith in them as cooperative members, as business owners and as people. We are acting on the belief that they have the will and the ability to succeed. Reasonably priced credit also means freedom: a loan at 24% can be paid off, while a loan at 600% means a lifetime of indebtedness. Reasonable interest rates beget economic growth; inflated interest rates beget a lifetime of economic disability.
Spring 2002 Newsletter