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Haitian street vendors will soon get some overdue relief when the country's
first commercial microlending institution opens its doors.
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Jiri
Haiti's poor survive by operating small businesses like this
bakery shop.
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Peter Tropper, an investment officer at the International Finance Corporation
(IFC), announced on July 20 at a press conference in Port-au-Prince that IFC
will invest up to $500,000 to create MicroCredit National (MCN), S.A. MCN will
make very small loans to Haitian entrepreneurs to develop everything from market
stalls to car repair shops and house-cleaning businesses. The investment marks
IFC's first capital markets project in the country.
Operating very small, informal businesses, whether selling cooking oil at
the market place or operating taxis, is how many of Haiti's poor survive. These
microentrepreneurs make up Haiti's unusually large informal sector, which comprises
over half of the country's labor force.
Currently, family connections and banks are the main conduit for people needing
small start-up loans. But Banks willing to lend to low-income entrepreneurs
usually charge astronomical interest rates of up to 100 percent. MCN will give
those entrepreneurs a market-oriented alternative.
Karl Voltaire, Director of IFC's Latin America and the Caribbean Department,
says that the project will make an important contribution to building Haiti's
economy by providing microentrepreneurs credit on a self-sustaining basis. Lending
to women entrepreneurs, prime recipients of microcredit, will indirectly help
improve the education, health, and nutrition of families.
Haiti's second largest bank, Unibank S.A., is the project's leading sponsor
with a 40 percent stake in MCN. IFC's equity investment will be up to 25 percent
of the total project cost of $2 million. And IPC GmbH, a German firm, will take
a 25 percent stake in the bank and manage the project for the first few years.
Additional shareholders are expected to include International Cooperation and
Development Fund of Taiwan, China, which also plans to extend a loan to MCN.
In its first year of operation, MCN will offer microentrepreneurs loans of
about $260, with terms of three months to one year. MCN interest rates will
be above prime, reflecting the higher risks and administrative cost of microlending,
but much lower than the rates charged by other financial institutions. By the
end of its third year of operation, MCN expects to have a loan portfolio of
$3.6 million with 11,000 loans.
MCN plans to open additional offices in Cap Haitien, Jacmel, and other cities,
eventually expanding to rural areas. In five years, MCN anticipates employing
60 loan officers in six locations. For more information, call Jannette
Esguerra, 202-458-5204, fax 202-974-4384, or visit IFC at www.ifc.org/press.
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