TACOMA, Washington — Microfinance transforms economic prospects by allowing individuals to access loans that once seemed out of reach. As the most impoverished country in the Western Hemisphere, Haiti remains rife with political and economic instability. The latest poverty estimates in 2012 indicate that more than six million Haitians live below the poverty line of $2.41 per day. Additionally, more than 2.5 million Haitians live below the extreme poverty line of $1.12 per day. The COVID-19 pandemic has also exacerbated many of these issues. However, FINCA aims to address this economic instability in Haiti by introducing mobile banking.
Microfinancing and Poverty
Popularised by Muhammad Yunus, winner of the Nobel Peace Prize in 2006, the microfinance system supports communities growing out of abject poverty by building banking systems that are available to the general public. These banks function primarily through lending groups and a functional relationship between the credit agent and the client utilizing the service.
The Foundation for International Community Assistance (FINCA) has dedicated itself to the global development of sustainable practices and improved quality of life for individuals facing poverty. Scott Graham, with FINCA International, described in an interview with The Borgen Project how FINCA’s “work harnesses the productive energy of vulnerable populations, like low-income women or small-scale farmers, and matches it with funding and other resources that create pathways out of poverty.” Microfinancing propels people to a better future. By learning to manage resources well, individuals involved with FINCA can fund a better future.
FINCA hopes to build a global and supportive network through microfinancing and similar programs, improving sustainability and economic prosperity. Not only does FINCA provide small loans and mobile banking, but it also supports the implementation of new technology such as solar energy and clean cookstoves. The mobilization of this technology is a market-driven approach that utilizes microfinancing to reach these goals. The FINCA Forward initiative is an extension of FINCA International and works specifically to push the use of fintech (financial technology) in these microfinance systems.
FINCA reaches five continents, and its work in Haiti yields promising results. One of the newer developments of this system is the linking of loan services to mobile banking. Partnering with Digicel, a leading global communications provider, FINCA offers clients access to their loans from their mobile devices. This increases accessibility and eliminates delays in payments. FINCA also links its clients to local agents with the platform MonCash. This platform is connected to Digicel and provides a protected way of viewing and managing finances from any phone or digital device. As of 2020, more than 14,000 Haitians utilized MonCash for mobile banking, tapping into the digital banking network facilitated by FINCA.
Michael Giovanni Sibilia of FINCA Haiti explained in an interview with The Borgen Project how he is “introducing a solution for Digital Financial Inclusion (DFI) for customer retention and acquisition using digital channels and a credit scoring algorithm.” This provides FINCA with the means to reach individuals in more remote areas. According to Sibilia, almost 50% of all FINCA transactions are processed through mobile technology.
FINCA Haiti was the first microfinance program to use digital finances as a part of its operating procedures. As the popularity of mobile phones grows, FINCA actively seeks out other companies to extend its reach. The business plan continues to integrate local banking systems, providing overseers with access to the larger program and implementing a more secure form of mobile banking.
The Power of Investing in Women
For the program to grow, so does the necessity for women to be actively involved in establishing this type of banking. In an interview with The Borgen Project, Drew Boshell of FINCA Canada states that “by investing in women, the whole family benefits as mothers are more likely to invest in the health and education of their families.” Involving women bolsters the reach of the program as women become equipped to support themselves. As several studies show, educated women promote growth and provide a more holistic environment of inclusion within the nation’s economic sphere.
Of the individuals participating in the FINCA program, 80% are women. FINCA actively promotes the closure of the gender gap. By closing this gap, Haiti’s GDP could potentially improve by 15%. The inclusion of women assists the country economically, but it also reduces unconscious gender biases. According to a recent update by USAID, Haitian women lead almost half of the nation’s households. However, gender-based violence and inequality continue to affect most women in Haiti. FINCA hopes that by developing software accessible to all women with a mobile device, violence will decrease as economic equality increases. Economic independent women can leave situations of violence and still have economic support.
Supporting Digital Financial Inclusion
The hope is that in response to the pandemic, mobile banking will propel Haiti toward economic growth and progress. A success story that FINCA highlights is that of Kerlande Toussaint, a Haitian woman who, with her husband, worked to establish a school prioritizing a holistic education. The couple took out their first loan in 2014 and have since built a kindergarten through 10th-grade school. The year 2022 will mark the school’s first high school class graduation. The loans provided by FINCA allowed Toussaint to follow her dreams and support the future of her community.
Graham explains how, by focusing on banking, FINCA offers a way for individuals to receive the funding they need without relying on large investment companies. This program allows the people in Haiti to build their own financial stability. In turn, they invest in the future of the nation. The expansion of FINCA’s reach provides an established means of integrating microfinance into the banking systems of the developing world, thus alleviating global poverty.
– Kate Lucht and Laney Pope