Rebuilding Haiti: The Inter-American Development Bank Is Helping Put Haiti Back in Business
When one thinks of reconstruction after a natural disaster, the first things that come to mind are the need to help victims, restore basic services, and repair damaged infrastructure. These are clearly urgent, but countless catastrophes in different parts of the world have taught us how essential it is to help people recover their capacity to earn a living as quickly as possible.
That is the strategy the Inter-American Development Bank's Multilateral Investment Fund (MIF) followed after the January 12 earthquake in Haiti MIF, which specializes in supporting microenterprise and creating economic opportunities for the poor, responded to the largest natural disaster in the history of the Americas on the very day the earthquake struck.
MIF quickly approved Emergency funds to help its Haitian counterparts get their operations up and running. Given its experience in Haiti, MIF focused on the areas where it has comparative advantages, such as remittances, microfinance, and productive value chains.
The day after the earthquake, Haitians were reeling from the loss of hundreds of thousands of lives and the destruction of a large part of their capital city, Port-au-Prince. But the earthquake also struck a blow to the Haitian financial system, which handles the distribution of remittances, the money sent by Haitians living abroad to support countless families at home.
Haiti receives more than US$1.6 billion a year in remittances, which are as essential for the country as international aid. More than one million people depend on these transfers as their main source of income.
Fonkoze is a microfinance organization that plays a key role in delivering remittances around the country. In an unprecedented effort of coordination with United States government agencies and armed forces, MIF helped Fonkoze to continue disbursing money during the emergency.
"Haiti's microfinance industry serves very poor people and is present in places where traditional banks aren't," said MIF General Manager Julie T. Katzman. "With so many people migrating to rural areas [after the earthquake], Fonkoze was the only microfinance institution that kept distributing remittances. It played a crucial role in giving many families access to money to pay for water, food, and shelter."
While most Haitian banks were closed for several weeks after the disaster, Fonkoze was able to begin serving its clients in various regions in less than six days, even though its main offices were destroyed by the earthquake. Nevertheless, as days went by, Fonkoze began to run out of cash to pay out remittances.
At that point, Fonkoze Director Anne Hastings contacted Greg Watson, a MIF specialist who had worked with Fonkoze previously on a project to improve the distribution of remittances. Watson spoke with Katzman and, together with Hastings, they came up with an unusual plan for taking urgently needed cash to Haiti from the United Sates, where Fonkoze had available resources.
Since the Port-au-Prince airport only allowed humanitarian flights, MIF and Fonkoze coordinated their actions with various US government agencies and armed forces. In less than four days, a military transport airplane landed in Port-au-Prince with a shipment of $2 million in small bills discreetly packed in plain boxes. The packages were transferred immediately to helicopters where Marines flew them to ten different locations, from where the money was then distributed to 34 Fonkoze branches. By noon, the network was running at full capacity.
"This was a fantastic example of what we can do when donors, microfinance organizations, governments, and international institutions work together," added Katzman.
Through its projects to develop value chains in Haiti, MIF has established ties with numerous other organizations. These agencies work with more than 300,000 people all over the country, who were also feeling the effects of the earthquake. …