Remittances to Haiti Fill Funding Fractures
Issue #
146

PHOTO: FLICKR.COM/CHUCKHOLTON

Despite suffering a fractured vertebrae and a chest contusion, Leigh Carter feels lucky. “I always imagined an earthquake would start as a tremor,” she says of the magnitude 7.0 earthquake that ravaged Haiti Jan. 12. But “we were at 7.0 very suddenly, being thrown violently around the office with everything moving, falling and crashing around us.”

Carter, executive director of Fonkoze USA, was in the headquarters of Haiti’s biggest micro-finance organization in Port-au-Prince on that day. She had spent the previous day reviewing Fonkoze’s efforts to help Haiti recover from the four hurricanes that slammed into the country in 2008.

Though Fonkoze offers micro-credit loans, education and health programs to some 255,000 clients, Carter says it is Fonkoze’s remittance and transfer services that are particularly vital at this moment.

“The thing that struck home was how critically important our transfer and remittance services are, right now it is just desperately needed. Haitians need to be getting their remittances from their families overseas,” Carter told The Indypendent. Fonkoze transferred $57 million in remittances to families in Haiti in 2009.

The immediate need for cash has been compounded by the failure of the aid effort. The United Nations estimates two million Haitians require food and water.

In 2008, the million-strong Haitian diaspora remitted $1.9 billion to the Western Hemisphere’s poorest country, accounting for 18 percent of Haiti’s gross domestic product. Before the earthquake three out of four Haitians were living on less than $2 per day, while a third of the population relied on remittances.

The earthquake destroyed much of Haiti’s infrastructure, including financial institutions, and many of the country’s banks were closed more than a week after the earthquake. Remittances typically surge after a natural disaster, but many remitters are encountering difficulties sending money back to Haiti.

Gustave Zamy, a Haitian immigrant who has lived for 20 years in Flatbush, Brooklyn, lost seven relatives. His brother, sister, two daughters and mother survived, but he had trouble wiring money to them. “I had problems, I tried three times before it went through,” he said.

On Jan. 15, he was finally able to send $300 to his family, but the limited relief has him deeply concerned. “They’re in bad condition over there. They have no food, or medicine, they have nothing,” Zamy says.

Despite serious setbacks, including the deaths of three of five staff in its remittance department, Fonkoze credits its dedicated employees and strong community support for keeping most of its offices operating after the earthquake.

“Even when CNN was bragging about Unibank being able to open one of their branches, I wanted to scream, Fonkoze, Haiti’s bank for the poor, never shut its doors,” Carter says.

Founded in 1994 by a Haitian priest to provide financial services to Haiti’s poorest, Fonkoze now has more than 700 employees and 42 branches located throughout Haiti.

Because the majority of its offices are located in rural areas, Fonkoze says it is uniquely positioned to help many of the people who have fled the wrecked capital. Eleven days after the earthquake, the Pentagon coordinated the delivery of $2 million in cash to Fonkoze’s branches across the country.

As of Jan. 25, Carter says, 38 of Fonkoze offices were open for business. Fonkoze and many other transfer services, including Western Union, have temporarily waived transfer fees. (Western Union charges 9 percent for all transfers from the United States to Haiti while Fonkoze charges a $6 flat fee.)

Despite Fonkoze’s present focus on remittances, Carter says it continues to offer all of its services to help lift its clients, 99 percent of whom are women, out of poverty. “We teach women to read and write, we work in malnutrition and access to healthcare.”

Carter acknowledges that micro-finance is not the complete solution to Haiti’s problems. “It’s one way to bring people out of poverty, but we need infrastructure. We need funds to go into the government of Haiti. Quit funding just the NGO sector and isolating the government, that just won’t work.”

Since 2008, food shortages, natural disasters and a decline in remittances have spurred Haitian advocates to call on the U.S. government to grant undocumented Haitian immigrants Temporary Protected Status (TPS), which would allow them to apply for work permits. On Jan 15. the Obama administration relented and authorized the U.S. Department of Homeland Security to allow an estimated 130,000 Haitian immigrants living in the United States to apply for TPS.

Acknowledging its benefits, immigrant advocates want TPS extended to Haitians arriving to the United States after Jan 12 and to waive the $470 application fee. They warn that a criminal record may render one ineligible and information required for the application process can be used in deportation proceedings when the program ends.

Dilip Ratha, the World Bank’s lead economist on migration and remittances, writes that if “TPS resulted in a 20 percent increase in the average remittance per migrant, we would expect an additional $360 million remittance flows to Haiti in 2010.”

For more information, please see the following articles in this issue of The Indypendent:

"Same Old Interests Have Plan for 'New Haiti'" by Isabel MacDonald

"Haiti: How to Turn Disaster into Catastrophe" by Arun Gupta

"Haiti in Aftershock" by Nicholas Powers