Microfinance Project Could Be New Kiva For Haiti’s Diaspora
March 1, 2010
by Emma Jacobs, original reporting for Haiti Rewired

The Haitian diaspora has long played an important role in life on the island, not just culturally but with cold, hard cash.

Money sent back from abroad, known as remittances, have added up to more than a quarter of Haiti's GDP, but it's difficult to know what role they will play in rebuilding.

Now, a new project, Zafen.org, proposes to connect diaspora groups directly to projects on the ground in Haiti in need of support. Modeled in part on the online lending platform, KIVA, Zafen is as a joint project of Fonkoze, the Inter-American Development Bank (IDB) and a Catholic order commemorating St. Vincent De Paul. It launches in April.

"Remittances are going to be an important part of reconstruction, according to Greg Watson, remittance specialist of FOMIN, a member-group of the Inter-American Development Bank. But historically, it's been difficult to direct the money because the remittances are private funds sent between families.

Katleen Felix is a Project Director for Fonkoze and its Haitian Diaspora Liason. She says Zafen emerged out of conversations during a Fonkoze video conference last April with Haitian leaders in Boston, Miami and other American centers of Haitians living abroad. While it predates the earthquake, it has  acquired new importance because of the worst natural disaster in memory.

One problem, suggests Karl Solomon, an accountant born in Haiti who moved to the U.S. at the age of nine, is that many diaspora investors haven't had much success. Speaking of his own generation of young Haitian professionals in the Boston area, Salomon said, “They have a lot of ideas, but stuff doesn't always take.”

Hometown associations, Felix points out, have been present for a long time and investing in development projects with varying degrees of success. "Some got lucky...Some got burned. They lost money investing in projects that were not sustainable."

Projects often founder after initial seed funding has been used up. Hometown associations or other groups of diaspora members often expend a lot of resources sending one member to Haiti to check in on a project and how their money is being used.

In trying to make involvement from the diaspora more effective, the major challenges are sound planning, and ongoing oversight and communication in the follow-through. And it's that crucial management and accountability that Fonkoze hopes to provide using its existing networks on the ground.

Felix gives the example of a coffee-growing cooperative. Its potential members may have $5,000 of $10,000 needed for the purchase of equipment. They present their proposal to Zafen. Fonkoze will take on the task of assessing whether the group looks like it has the organization and resources to sustain itself long-term and then checking back to see that the equipment has been purchased. It will update donors on progress with written reports and photos.

Donors can chime in on developments online with their own suggestions, based on business training or other experiences abroad and can recruit additional support for projects.

Zafen will start relatively small on its original April start date. Hiring and funding applications have been sped up since the earthquake, but the project doesn't want to overreach it its first months. Long term, Felix hopes that direct contact and some successful models may influence participants Haitians at home and abroad to take up the challenge of starting businesses on the island. Grants or loans can start as low as $25.

If it goes well, it could provide the much needed startup capital for a Haitian economy starved of funds for local businesses.

"[Haitians] do not lack entrepreneurial spirit, but are lacking access to markets and credit, and modes for investment," remittance specialist Watson said.

Ms. Jacobs is a writer/reporter in Boston, MA.  Her contributions to Haiti Rewired (an ongoing conversation about technology, infrastructure and the future of Haiti) can be seen at http://haitirewired.wired.com/profile/EmmaJacobs