Haiti's microfinance success stories

Microcredit helps street vendor to become store owner

Haiti’s economic reality is divided into two parts: the service sector, which accounts for half of the country’s GDP, and the rest, which is fueled by remittances and transfers. In a country where 76% of the population lives on less than $2 a day, Immacula Desjordins was a Haitian street vendor—someone who typically wouldn’t get any money to move forward in her used cloth business,—but she obtained her first loan of US$400 in 2000. She was the first client of Sogesol, a commercial microfinance institution that has offered microcredit in the informal sector in Haiti since it was created in July 2000.

Sogesol, operating under the umbrella of Haitian bank and majority owner Sogebank, has permitted Mrs. Desjordins and many others like her in the informal sector advance from being street vendors to become store owners, Chairman Pierre-Marie Boisson of Sogesol pointed out recently.

In a presentation at IDB headquarters, Boisson shared Sogesol’s successful microfinance story, discussing how much microcredit can do for people who traditionally have been denied access to formal financial institutions. He estimated Haiti has 700,000 clients in the microenterprise market.

Against a political crisis that has included severe social turmoil, employment crises, loss of assets, violence, massive human exodus, economic stagflation and monetary instability in recent years, Sogesol’s performance demonstrates business efficiency and a new opportunity for its clients to stay in the local market.

Haiti’s instability after the end of an 18-year political crisis with the bloody exit of former President Jean-Bertrand Aristide in February 2004, presented a real and significant challenge to business in the country. Boisson stressed that keeping both staff and clients was a great challenge for the company, as some 70,000 families left the country while the violence continued and an interim government took office to organize new elections.

The microfinance industry was severely hurt, and Sogesol lost 3.000 clients and thousands of dollars. But Sogesol kept being profitable—Boisson said—and it represents a US$9 million company with 10,000 clients even after two years of deep crisis.

As for Mrs. Desjordins,—after six years and 11 loans given—she is the proud owner of “Desjardins Varietes et Lunetterie”, selling various clothes, shoes and glasses in her own shop. And she recently obtained a US$5,000 loan from Sogesol.

Sogesol has served 23,000 clients with US$50 million disbursed since it was established in August 2000 by its parent company Sogebank, which received IDB grants in 1999. “Microentrepreneurs must have the cash flow, otherwise they will be killed in business,” Boisson emphasized.

According to IDB financial specialist for microenterprise, Fernando Campero, Sogesol’s history began with the Multilateral Investment Fund’s (MIF) line of activity for institutional strengthening for microenterprise. Thus, Sogebank received a technical cooperation of US$300,000 to develop a market study and a strategic plan to consolidate Sogesol. And Sogebank obtained the support of Accion Internacional, a private non-profit organization focused on microenterprise, which not only offered its technical assistance, but also bought a 19.5 % stake in Sogesol through an investment of US$195,000.

Boisson pointed out that Sogesol’s case shows that there is more and more “cushion” for other institutions also interested in microfinance and for sustaining the industry itself.

Also, the recent IDB study "Strategies and Structures for Commercial Banks in Microfinance" by Glenn D. Westley, includes Sogebank and Sogesol as an example of bank and financiera doing microlending through an internal unit, service company, or subsidiary.