The Story of Fondase
By Moise IRAUS
In 2003 Moise IRAUS finished high school and moved to Port-au-Prince, Haiti. He planned to enroll in a professional school where he would study computer repair. His Godmother objected to this and offered to find him a partial scholarship to a professional school where he could study electromechanical engineering. After several months of waiting, Moise’s Godmother had not been able to secure a scholarship for him. At that time Moise’s friend Marie Poirier asked his mother to suggest that Moise visit the University of Fondwa (UNIF), the first rural university in Haiti, launched in January 2004, to meet Renate Schneider (Executive secretary of the Rectora). After a lengthy conversation concerning Moise’s dreams and motivations, she suggested that Moise enroll temporarily at UNIF while she looked for a scholarship for him, since his parents could not afford the costs. Moise became a student in business management at UNIF. He graduated from UNIF at the top of its first graduating class.
During his study at UNIF, Moise met Fr. McKnight, a retired Spiritan Priest who was living in Fondwa and teaching at the University. In a course called “Know Yourself”, Moise was inspired by the opportunity to engage in spirted debates and the chance to express himself freely when he disagreed with something Fr. McKnight said. As a result, Fr. McKnight became a friend and mentor for Moise. For an extended period of time they met every Tuesday afternoon. During one of these sessions, after a young person had asked Fr. McKnight for money to open a business, he asked Moise to organize a business to make loans to individuals. While Moise was unsure what he was being asked to do, he tried to follow Fr. McKnight’s guidance. They successfully opened the Fondwa Loan Fund (FLF). Moise served as the Fund’s first loan officer while completing the creation of a legal institution. On June 2, 2008, an official lending institution called Fonds de Développement des activités socio-économiques (FONDASE), opened for business in Fondwa.
FONDASE’s Vision today is to
Become the leading force for lifting Haitian families out of poverty and giving everyone the opportunity to achieve to the best of their ability.
FONDASE’s Mission is to
Empower the poorest Haitian families by providing needed financial and non-financial services that will spur them to take control of their economic life.
The evolving Business Model
The loan application process.
A loan application which included:
A description of the project
An operational plan
Profit potential during the life of the loan
A plan to assure repayment of principle and interest.
The application was evaluated by Fr. McKnight and, if approved, passed to Moise IRAUS.
Moise met with the applicant to verify information on the application, analyze the situation, and give final approval.
Loans between 65 USD and 1500 USD were approved.
Interest rate on all loans was 3% per month on the full loan amount.
In September 2007, the repayment rate was 98% and the interest charge method was changed to declining balance. No other fees were charged. Most loan recipients were young men. Fondase provided some training in accounting, management and marketing to increase loan recipients’ chances for success and ability to repay.
June 2, 2008 to January 12, 2010
On June 2, 2008, Fondase was officially launched with two employees. A loan officer. A combined Office manager, secretary, accountant and record keeper. A credit committee approved all loans
The loan application process involved 4 steps
Loan application form, filled out in Fondase’s office.
Applicant meeting with Loan Officer to verify information and request additional information, if needed.
When approved by the loan officer, the application was submitted to the credit committee for final approval.
Applicant met with Loan Officer in the office to sign contract and receive the loan proceeds.
Loans were available to: women, men, youth and adult.
Loans were available in two size ranges with different interest rates.
130 to 1300 USD at 3%
1301 to 2500 USD at 4%
Interest on all loans was based on the declining balance method. All loans required a guarantor.
January 12-2010 to 2017
The devastating earthquake of January 12, 2010 destroyed most of Fondwa. Fondase was part of the destruction. Its office was completely destroyed, and looters took everything that was salvageable, including the business’s books. The only thing that remained was the credit record, which enabled reconstitution of the company database.
Many other challenges quickly appeared. The Fondase employees were unprepared for the earthquake and events that followed. In December 2009 Fondase signed a lease for a building to house its offices and other businesses. Two weeks after the earthquake the owner had found an NGO willing to pay higher rent. He asked Fondase to pay the balance of the lease immediately or vacate the building. At that time, it had two choices: Close Fondase for a while or pay the balance and plan for future operations, even if the future was not clear. The decision was made to pay to save the down payment and to have a new place to host Fondase’s office. This pressure pushed for reopening as quickly as possible to manage the high cost of the rent. In February, FONDASE reopened the credit operation. It made its first loan in March 2010.
The presence of the NGOs in Haïti, particularly in Fondwa, increased demand for professionals who know spreadsheets and are able to submit professional reports. Their jobs often depended on this. Some young people in the area asked Moise Iraus for help. In response to the demand, Fondase offered a class, “Introduction to Computers”, in April 2010. The first session had 15 young students and, by the end of the year had trained 65 youth.
There was also demand for other business services, so Fondase opened a new department, called Fondase Multi-Services (FMS), to provide a package of training, copying, printing and scanning. This required hiring its own manager. Electricity became a problem when the generator was vandalized and FONDASE was forced to purchase a second generator as well as increase security within six months.
An analysis of Fondase’s operating costs and income at the end of 2010 showed that the current two sources of income could not produce enough revenue to break even. The decision was made to open a restaurant, in the same location, named Goute pa Lese, in English, tastes so good you can’t give it up. It was launched on March 8, 2011 during the festival of Women’s Day. It was attractive, well designed, and relaxing. A dancing program every weekend, and festival every holiday, were popular. It served people in the area, especially young people.
The restaurant went very well for the first year, until management was reminded that they had created direct competition with another food seller in the area. GPL flourished, even though prices were higher than the competition, but service was better. The competitor colluded with the restaurant’s employees. When no manager was present, they stopped selling food and turned away customers, claiming there was no food.
This situation caused financial problems for FONDASE as it tried to make up the losses with income from its other businesses. By the time the real problem was identified it was too late to save the restaurant. The loan program and business services continued to operate and are still alive today.
After nine years in operation we are confident that FONDASE can provide appropriate financial solutions for the poor in Fondwa, and in the future, all of Haiti.
Since 2008, over 350 loans to over 100 people with no other access to financial services.
Highest number of loans at the same time: 43 in 2009
Lowest number of loans at the same time: 25 in 2010 (after the earthquake)
Current number of loans 25, limited by funds available to lend.
Loan repayment record: Fully repaid: 80%, Rescheduled: 15%, Written off as bad debt: 5%
Borrowers with FONDASE from the beginning: 14
A young man received a loan to bring motor cycle taxi service to Fondwa. He repaid his loan in 10 months and now has two motorcycles.
A seller of cooked food started selling it along the street. She received several loans to provide working capital and now has a small restaurant which serves over 30 customers daily.
Stories like this convince us that we can increase borrowers’ success by providing, assistance with their loan, including business training and creation of business development strategies. This challenges us to keep our model simple and flexible so that even the poorest are able to participate.
For 7 years FONDASE has been providing technical skills to Fondwa’s population.
Basic computer skills: 200 students, 75% professional work and studies, 25% chat and internet navigation.
Fondase Multi-Services (FMS) has continued to serve Fondwa and to grow. Most schools in Fondwa have documents and exams copied in FMS. Most also type exams there. These services are very important and have a profound influence on the way classes are organized in the area.
While the restaurant, GPL, was open, about 300 people per month enjoyed food and drinks as well as movies and dance every weekend and watching football (world cup, champions league and different leagues in Europe)
In preparation for the expansion of Fondase, Moise Iraus completed a Masters Degree in Microfinance at the University of …… in Brussels, Belgium in 2017.
Fondase’s goals are:
Strengthen its system and expand its services to the population.
Educate the poor to raise them above the mindset that there is no way for them to have a better life.
Provide education for the poor in marketing, accounting and organization of businesses.
For these reasons, we would work to achieve the following objectives.
Organize an advisory board to support the work of the executive staff.
Write the business plan for 2019- 2024
Have 3000 active customers at the end of 2024.
Generate enough revenue to cover operating expenses and provide added revenue to expand the business operation or invest in additional loans.
Develop a family loan program specifically for family businesses where multiple family members will be involved. It would include education and training to help the family to make a commitment together to improve the quality of their family life.
Develop a loan program for young people which will first require education in creating a successful business. FONDASE will provide assistance and coaching over the life of the loan.
Develop a savings deposit program that can help the client save money for a special event, disaster or future expansion.
Improve the quality and capacity of services provided by Fondase Multi-service.
We at FONDASE have a relatively short history with some solid accomplishments. In our nine-year existence we have worked our way through interesting and challenging times and events. An earthquake, vandalism, loss of records, unfaithful employees and the general difficulties of life and the economy in Haiti. We are still strong and ready to take on new challenges with enthusiasm and energy. We are eager to help poor Haitians improve their lives and, in the process make Haiti a better place to live.