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Local loans trump humanitarian aid

Haitian businessman says microcredit helped his country recover from political uprising and storms

The guns have fallen silent. The hurricane has swept through.

Be they man-made or natural disasters, the need for financial help is great in post-conflict or post-disaster areas.

In 2004, Haiti had some of both.

Gauthier Dieudonne, director of Business Development for Fonkoze, a Haitian organization, spoke yesterday about how microcredit helped his Caribbean nation after a 2004 political uprising and the severe tropical storm Jeanne.

With local markets suffering, Dieudonne studied how merchants acquired their goods and found that many got them from particular suppliers. With the money merchants used to make from selling their goods, they could then feed their kids.

But when conflict and disaster ravaged the island nation, the suppliers were hit hardest. A knock-on effect hurt the merchants, too.

"We found it was not a humanitarian crisis; it was a rupture in the chain of livelihood," said Dieudonne at the 2006 Global Microcredit Summit in Halifax.

So by giving small loans to suppliers to get them up and running again, it became easier to help the entire chain to make a living again.

This example of microcredit was cited at a plenary session during the summit. Another speaker, microcredit expert Warner Woodworth from Brigham Young University, said microcredit can go a long way in post-conflict and post-disaster areas.

Local connections

And with their local connections, microcredit can often offer different services than large humanitarian organizations.

Woodworth recalls the 2004 Asian tsunami and a large donation of 30,000 coffins made to Thailand, where his group of students - he has organized programs that send university students around the world to administer microcedit programs - was then located.

With only 5,000 dead, 25,000 of the coffins were not used.

So his group set up a woodworking shop, nicknamed ThaIKEA, to make furniture.

He cited the example yesterday to illustrate how the constant ground-up - rather than top-down - approach of microcredit makes a concrete difference.

In those cases, he says microcredit can help many.

"It builds self-reliance. It's not a gift, it's not a handout, it's a way of empowering them so they can create their own future," said Woodworth.

"Rather than being reliant on their government or our government or the UN or the World Bank, the decision making is theirs."