Adapting to Adversity: Rural Population and KPPP Members Cope through Phase 3 of 'Peyi Lok'
Creating economic prosperity for all of Haiti’s citizens remains a challenge today. Haiti is the poorest country in the Western Hemisphere, with 59 percent of the population living below the national poverty line of US $2.41 per day, according to the most recent household survey (2012), and only 13 percent of the labor force in the formal sector. Despite this, World Council of Credit Unions’ (WOCCU) experience in Haiti demonstrates that Haitians do have money to save, even if deposits are small. However, accessing financial services poses another layer of challenges. Reaching a financial institution requires paying high transport costs, as services are several hours away and concentrated in the main cities. Furthermore, financial institutions often lack liquidity and the capital needed to introduce new products and services tailored to both meet client demand and attract new clients to the sector.
WOCCU has been working on increasing financial inclusion in Haiti for over nine years. This effort has culminated in the Accessible Finance Activity, funded by the United States Agency for International Development (USAID). This program supports both USAID’s objective of promoting a stable and economically viable Haiti, and the Central Bank of Haiti’s goal of creating a financially and economically more inclusive society by ensuring the greatest possible access to savings, credit, and other financial products and services. Building on knowledge gained under USAID’s previous financial inclusion project, HIFIVE implemented by WOCCU, the Accessible Finance Activity tackles financial access challenges through two primary objectives:
Expand financial services and products to rural areas through established groups and digital financial services (mainly field officer banking methodology).
Sustainably address liquidity and capital challengesfaced by microfinance institutions (MFIs) and credit unions.
Under objective 1, WOCCU is piloting its Field Officer Banking methodology —developed and tested in several Latin American countries—with CPF, SOCOLAVIM and LE LEVIER federation of credit unions in Haiti. Through field officer banking, branded as Kes Pam Pi Pre’m (KPPP) in Haiti, or ‘My Credit Union Close to Me’ in English, Rural Agents from formal financial institutions use motorbikes to reach rural areas, bringing financial services through smartphones or tablets with portable printers.
Rural Agents meet with members in person to collect deposits, process loan applications and payments, and sign up new members. Utilizing digital channels reduces transaction costs for both clients and financial institutions and increases transparency through digital receipts. With direct access to accounts through the smartphone or tablet, financial institutions can offer clients individual accounts, rather than the traditional group accounts and guarantees—enabling clients to have a direct relationship with financial institutions to start building credit history and access an array of products that meet their individual needs.
Under objective 2, WOCCU addresses liquidity and capital challenges faced by MFIs and credit unions through savings and investment mobilization. The program is working with the national association of credit unions, Association Nationale des Caisses Populaires haïtiennes (ANACAPH), an affiliate member of WOCCU, to identify and recommend client-driven deposit products, policies, and mobilization strategies. WOCCU is also partnering with SSG Advisors/Resonance to pilot its Sustainable Investment Facilitation Toolkit (SIFT) with FINCA Haiti to support capital-raising efforts.
In the beginning of Q2 FY 2020 (January 1 to March 31, 2020), KPPP service resumed activities following intense periods of unrest in Q1 FY20. However, in March 2020, measures implemented by the Government authorities around the COVID-19 pandemic led our financial institution partners to slow down operations and focus on critical activities, including reviewing institutional organization plans to protect their staff and maintain services continuously as much as feasible.
As of March 2020, KPPP pilot credit unions are serving 227 groups, with 3,318 members, of which 60% are women. Despite a challenging environment of unrest and the onset of COVID-19, KPPP service has been maintained. Loans outstanding increased by 2.8 % in Q2 FY20—fewer loans were issued due to the periods of unrest in Q1 FY19. However, savings increased by 27% in local currency. Anecdotally, members have reported they are realizing the importance of keeping money saved for unexpected situations; that KPPP services have helped them save and cope with the conditions of unrest.
Progress was made in piloting the Intermediary Agent component of field officer banking/KPPP. Testing of the application was completed; however, launch was delayed with the onset of COVID-19. Given the interest of LE LEVIER and credit unions in implementing Intermediary Agents to strengthen access in areas where implementation of a new point of service would not otherwise prove profitable, and combined with the necessity of decreasing member numbers at credit union premises (especially with the COVID-19 pandemic), pilots are anticipated to move forward in the coming quarter.
Additional meetings with the central bank of Haiti (BRH) financial education steering committee took place to complete the first draft of the 2020-2024 National Education Program work plan. Participants contributed to the process of identifying actors and developing priority objectives, strategic objectives, expected results, and performance indicators. Activities anticipated for the end of Q2 FY20 were delayed as the committee was unable to meet after mid-March 2020 due to COVID-19 restrictions.
Furthermore, Association Nationale des Caisses Populaires Haïtiennes (ANACAPH) was awarded a new Phase III subaward to carry on the implementation of the marketing and communications plans for credit unions. ANACAPH was able to organize a coaching workshop in the South, in accordance with the work plan. Field work moving forward will be contingent on COVID-19 travel and movement restrictions, but ANACAPH is already performing activities remotely with the participating credit unions. Eight credit unions have already approved new savings products under their improved marketing and communication plans and are preparing to launch the new products when feasible.
In FY 2019 Q4 (July 1 to September 30, 2019), KPPP service continued to progress despite periods of unrest with unpredictable location, intensity, and length. In August 2019, Accessible Finance and partners managed to start up the expansion phase of the KPPP pilot in both pilot credit unions, CPF and SOCOLAVIM. However, in September 2019, activities were rapidly slowed down by the shortage of fuel and new periods of unrest.
As of September 2019, KPPP pilot credit unions are serving 172 groups, with 2,648 members, of which 61% are women. The start-up of the expansion phase showed a favorable increase in groups and membership, as predicted. The challenge will be in maintaining services for these remotely located members in the ongoing unpredictable context. Use of services through the groups continues to rise, as loans outstanding increased by 17.3% in this quarter and savings increased by 30.7%.
As part of the KPPP pilot expansion, CPF and SOCOLAVIM credit unions targeted new areas, including the Gonaives area, which regroups Associations Villageoise d’Épargne et de Crédit (AVEC) groups created under CARE activity. CARE’s support to the AVECs ended in 2019. Gaining access to Accessible Finance’s KPPP services provides these groups with the opportunity to build on the structure developed under CARE, while taking the next steps to joining formal financial institutions.
Furthermore, Association Nationale des Caisses Populaires Haïtiennes (ANACAPH) completed 90% of activities related to phase 2 of mobilizing savings this year, despite delays related to the unrest. Credit unions received a comprehensive training on how to prepare marketing and communications plans. Several of the 33 participating credit unions have already submitted a first draft of their new marketing and communication plans.
Finally, Accessible Finance partner, Resonance, continued to support FINCA Haiti’s executive management to prepare for an equity raise. This quarter, Resonance provided technical assistance that focused on creating guidance documents and updating financials and business models to provide a clear path for the eventual equity raise. Following the finalization of the digital Product Roadmap, which illustrates the value of FINCA Haiti’s FinTech platform and details the expenses required to build it, efforts concentrated on the creation of a Capital Raise Playbook, to be used as a reference document for the FINCA Haiti executive team to engage investors beyond the life of the activity.