Households in rural Haiti have a finite number of ways to make a living. Most farm the over-farmed hills or fish the over-fished coasts. They also run eateries, buy and sell mobile airtime, or manage gambling stalls. Perhaps the most visible members of the Haitian economy are Madan Saras, traveling merchants who buy goods, haul them across great distances, and sell them in marketplaces, along roadsides, or near construction sites and truck stops. Tying rural supply to urban demand and vice versa, Madan Saras are integral to Haitian commerce.
A limited range of financial services supports this economic activity. In Haiti, financing even the most marginal enterprise is an expensive proposition. Costly and spotty financial options limit the growth or survival of crop and livestock production, as well as the provision of retail and wholesale services. Poor financial options also constrain the other activities a family might do to invest in its future and present wellbeing. Purchasing food, textbooks, and clothes or contributing to feasts and celebrations are expenses that keep a household ticking throughout the years, and financing these costs might require credit or stores of cash.
To meet demand, formal financial services such as deposit-taking, credit and insurance have emerged in Haiti, but their performance disappoints. Bank branches remain confined to major cities and towns. More geographically dispersed, credit unions are on the whole threatened continually with collapse brought on by weak management and poor regulatory oversight.
Although microfinance has extended to and benefited some isolated parts of Haiti, its impact is not always positive. Along the country’s southern coast, farmers complained bitterly of their experiences with FINCA International, an MFI based in Les Cayes. “They beg us to take loans and then hassle us when we can’t pay, despite our poor harvests,” a criticism leveled by one disgruntled borrower but echoed by many. Reportedly, the timing and high interest of FINCA’s loan terms spurred women heads-of-household to leave the farm and become Madan Saras. They were in search of steady income to meet a tight repayment schedule. The loan offering, which bore no relation to the rhythms of the agricultural season or the demands of daily life, forced women to cut trees or sell land to make come up with the needed amounts.
A lack of quality financial services takes a toll on Haitian families. Rural households require lump sums of cash to pay for school tuitions, improve their land or homes, or fund the burials of relatives. Funeral expenses can cost several thousand dollars, and poor families will go deeply in debt to finance a proper burial. Against the backdrop of weak formal and informal financial service offerings, people save, borrow and insure based on goodwill agreements with neighbors and relatives, or seek the services of pawnbrokers to amass the blocks of cash they need. They also use savings groups to supply credit, grants and cash distributions. Finally, they turn to the lottery for the chance to win a lump sum.