Zafèn

By Barbara Magnoni

The golden way is to be friends with the world and to regard the whole human family as one.  Mahatma Gandhi

Zafèn, a crowdfunding platform that supports Haitian entrepreneurs is celebrating 3 years of operations. I would like to celebrate along.

Since its inception, Zafèn has raised $1.6 million for 300 entrepreneurs and social projects in 33 cities around Haiti. The enthusiasm around the projects in this relatively new platform is especially impressive in a country where entrepreneurship is often stunted by a lack of infrastructure, government bureaucracy, and corruption. After all, Haiti is second to last in the World Bank’s Doing Business Ranking for starting a business worldwide (only Djibouti outranks Haiti worldwide with 185 vs. Haiti’s 183 days on average to start a business). I am sure that I am not alone in wondering, who would “bank” on small businesses in this environment?

The answer is primarily Haitians! Zafèn has worked hard to mobilize and inspire Haitians to bank on their own people, leveraging a trusted and professional platform that can help them identify projects with reliable leaders and sufficient oversight to ensure that lent money is repaid (83% of loans to Zafèn businesses are re-paid).

The mechanism is crowdfunding, which offers investors the opportunity to put small amounts of money into a common “pot” to invest in a project or business.  Jennifer Powers and I wrote a paper in 2008 looking at some of the early crowdfunding models, particularly those that aimed to fund small businesses in developing countries. The paper: P2P Lending is Financial Democracy a Click Away, highlighted early on that these platforms leverage social goodwill and are able to pool small amounts of funds in an unprecedented way. We identified over USD200 million in crowdfunding investments back then.  We could not have imagined the growth of this sector in only four years. In 2012, Crowdfunding websites raised a record USD 2.66 billion. What is terrific about crowdfunding is that to different degrees, it allows for investors with limited resources to participate. KIVA, the most widely known microfinance lending platform has already raised USD 427 million for its 191 microfinance institution partners and their borrowers, for example.

Where Zafèn has been truly innovative, however, is in marrying the crowdfunding concept with diaspora outreach. It has shown that diaspora crowdfunding is not only good for businesses seeking funding but that it offers the diaspora an opportunity to link into the social and economic development of their home countries and make their money count. Yet the promise of Zafèn faced some important obstacles:

·         Lower education: 22% of Haitian immigrants (ages 25 to 65) in the US have not graduated from high school vs. 9% of native-born Americans.

·         Greater poverty rates: 20% of Haitian immigrants and their young children (under 18) live in poverty vs. 11.6% of native-born Americans.

·         Lower home ownership: 49% if Haitian immigrants own their own home vs. 69% of native-born Americans it is 69 

·         Distrust of Haitian institutions: Many Haitian entrepreneurs recall their own or family’s difficult experience of running businesses or developing social projects in Haiti and have a distrust for institutions in the country.

While these are certainly obstacles, first and second generation Haitians are rapidly joining the ranks of the middle classes in Canada and the US. Additionally, Haitians send a lot of money home – Haiti’s USD1.5-1.8 billion in annual remittance receipts place it 7^th worldwide in terms of the ratio of remittances/GDP.  The potential is enormous and crowdfunding overcomes some of obstacles, for example, low purchasing power, by reducing the threshold for entry (USD 25 investments are welcome). It also reduces “softer” obstacles such as lack of trust by offering the pre-screening and monitoring of projects by a reputable intermediary so as to reduce the “guessing” on the part of investors. What I find particularly inspiring about Zafèn, however is that it is more than an investment vehicle, it is a space to create a cross-border community where members understand that their futures are intricately inter-linked:  a “whole human family” as Mahatma Gandhi said in the quote above.

Ms Barbara Magnoni is President of EA Consultants, a development consulting firm based in New York. She has over 18 years of international finance and development experience and has worked with organizations including Goldman Sachs, Chase and BBVA and has advised institutions such as the International Finance Corporation, the US Agency for International Development and the International Labour Organization. She may be reached at +1 212 734 6461 or bmagnoni@eac-global.com.

By Will White

“Where did all the Haiti earthquake relief money go?” I hear that question a lot and see regular news stories on how money was wasted, contracted to foreign companies or just promised but not actually given to Haiti.

I am a pilot with Mission Aviation Fellowship and have lived, with my family, in Haiti for 13 years.  We were in Port-au-Prince during the earthquake in 2010 and slept in the street like everyone else, wondering if the next tremor would knock down our house.  In the following months, many of our friends and family wanted to help Haiti in a more personal way than just donating to a large organization. They would give us funds and simply say “use it to help Haiti how you see fit”.  Of course a lot of money went initially for basic shelter, food and water throughout different Haitian communities.  But soon I wanted to use the money in a way that would have a more sustainable and deeper impact in Haiti.

Having flown passengers and cargo for Fonkoze, I was familiar with their financial efforts in Haiti and their microloan programs.  At the end of February 2010, I contacted Fonkoze and asked specifically if I could sponsor a microloan project.  After a few emails back and forth I was told that soon there would be a program in place for individuals to connect directly with small business people in Haiti needing a loan. 

This was very exciting to me.  In the past I had tried to help friends with starting small businesses in Port-au-Prince.  Some worked out, others did not.  It is all but impossible for a small business to get a loan in Haiti.  And if they do, the interest rates are extremely high.

On April 28, 2010 with some of our own money and donated money, we made our first interest free “loan” to a small business in Haiti through Zafèn.  That was quickly followed by more, and as the weeks turned to months and then to years, the number of projects started to really add up.  It was very fulfilling to see the funds going directly to people in Haiti who were building a business and employing others.  I had seen too many large organizations come to Haiti with huge projects that lasted a short time and had little, if any, long term impact on the people here.  But with Zafèn I was watching as small business owners started or improved their business and in the process, created jobs in Haiti.  Not only did they employ more people, but those people generated business from their new income.

It is always encouraging to receive an email from Zafèn saying I have received a payment back from a business.  Not only does that mean the business is thriving enough to pay the loan back, but now the money can be allocated to a new project helping a new business.

Recently my wife and I were able to visit two projects we had a hand in funding.  Oramen Bakery with Mme Alexandre was badly damaged during the earthquake and her delivery vehicle destroyed.  Today she is back employing several workers and making deliveries to their vendors in a used truck.  She has big plans to replace the wood fire oven with gas ovens in the near future.  This will reduce her dependence on local wood.

We also visited Nadou Studio of Beaute, a beauty salon and barber shop run by Mme Lamothe.  Seeing the need to offer expanded services and products to her customers, she received a loan.  Now she runs a thriving salon for both men and women.  She also has the ability to offer more hair and beauty products than before.  Her clients now come from throughout Port-au-Prince instead of just the local neighborhood.

Both of these are excellent examples of how a loan to small businesses in Haiti has an ongoing effect directly on the people receiving the funds, and on their surrounding environments as they employ fellow countrymen and provide needed services.  It is a trickle-down effect that helps the country help itself.  That is what we like to see and be involved in, when giving our money to help develop individuals, businesses, and whole neighborhoods here in Haiti.

By Katleen Felix

How can we improve the performance of our investments in Haiti? That’s the question that was confounding the Diaspora when the concept behind Zafèn was born. For decades, family and friends have supported relatives, businesses and social projects “back home” in the beautiful Caribbean towns we left for many different reasons, yet still love and always will.

Remittances between $100 and $300 per month are a constant, and the Diaspora wanted to do more. The pivotal moment came April 18,2009. More than one hundred Haitians living on the island and Diaspora now residing in Boston, New York and Miami were participating in a video conference with the Inter-American Development Bank and other partners that addressed financial literacy and investment in Haiti. Great ideas were flying across the airwaves.

Pierre Labaze, a Haitian New Yorker, was one of the strongest advocates for creating a Kiva-like financing platform exclusively for what we now call small growing businesses or small- and medium-sized enterprises (SMEs) in Haiti. A year later, it was launched, and this month, we are so proud to celebrate Zafèn’s third anniversary!

It has truly taken a village to make it happen. After that pivotal meeting, Barbara Magnoni of EA Consultants who co-authored a report on Person-to-Person lending, and I began looking for grants. The Haitian Hometown Associations Resource Group backed the idea. Anne Hastings, CEO of Fonkoze Financial Services, introduced the International Vincentian Family to the mix. The stars aligned, and together, we established an online funding source to stimulate collaboration between Haiti-based business owners, the Haitian Diaspora and caring people everywhere interested in developing the Haitian economy.

For the past three years, Zafèn has been presenting businesses and social projects to the public that have been screened for their potential viability and likelihood of contributing to Haitian economic empowerment. Due diligence is conducted by business analysts who work for Fonkoze, an alternative bank for the poor with offices across Haiti. The analysts submit the proposals to a committee for evaluation. Approved projects are posted at zafen.org to attract funding.

Congratulations to Zafèn for three glorious years of empowering Haitians!

To get involved, visit Zafèn to review great opportunities. Make a loan or donation, and join the conversation on  Facebook, Twitter and LinkedIn.

Katleen Felix is general manager of KANPE, a non-profit that seeks to end to the cycle of poverty by encouraging financial independence, and chair of the Haitian Hometown Associations Resource Group.

From right: Founding members of Zafèn, The Rev. Robert Maloney of the Vincentian Family, Professor Laura Hartman of DePaul University and CEO Anne Hastings of Fonkoze Financial Services. Not pictured: Katleen Felix of the Haitian Hometown Associations Resource Group.

By Father Bob Maloney

It is hard to believe that three years have passed since we inaugurated the Zafèn website on April 1, 2010.  This new, exciting beginning was the end of a lengthy process.  The idea of Zafèn was conceived long before the huge earthquake devastated Haiti on January 12, 2010, but the project became all the more urgent after that disaster.  Zafèn’s principal goal is to help Haitians, through interest-free microloans, start or expand small and medium-sized sustainable businesses that have a community impact.  These businesses enable borrowers to support their families and employees in an ongoing way.  The site also aimed at bringing about systemic change through education.  So far, donations through Zafèn have created 5,000 scholarships for Haitian children and lent $1.6 million to 300 entrepreneurs. 

The process began when the international leaders of the Vincentian Family met to decide how to commemorate the 350^th anniversary of the deaths of St. Vincent de Paul and St. Louise de Marillac (1660-2010).  After examining various possibilities, they focused on Haiti, the poorest country in the western hemisphere.  Encouraged by the success of some microfinance websites, they decided to create a website to facilitate micro-loans and micro-donations for Haitians. 

We began to dialogue seriously with Fonkoze, and eventually arrived at an agreement to undertake a collaborative venture.  As the project developed, the Haitian Hometown Associations Resource Group joined the International Vincentian Family, DePaul University, and Fonkoze as partners.

My first trips to Haiti after the earthquake were startling.  I was stunned by the devastation.  On top of that, most of the country’s infrastructure was not functioning, including its government.  But during my most recent trip last December (2012), I was encouraged.  While things are moving forward slowly, I saw real progress.  I am convinced that, through projects like Zafèn and through groups like Fonkoze and Mary’s Meals, the people of Haiti will continue to move forward toward a viable future.

Robert Maloney, C.M., the former Superior General of the Congregation of the Mission, lives in Philadelphia, PA.  He serves as administrator for DREAM, a joint project of the Community of Sant’Egidio and the Daughters of Charity for combating AIDS in Africa, and is also involved in works aimed at raising the level of education of children in Haiti.

Zafèn loan recipient delivers carnival masks to Montreal celebration

Colorful papier-mâché masks are one of the highlights of Haitian Kanaval. Inspired by politics, history or mystical figures from Haitian fables, the masks may have devilish or animal features that become embodied in the hands of dancers who bring them to life. 

That’s what Katleen Felix, former Diaspora liaison for Fonkoze and Zafèn, now general manager of KANPE, hoped for when she ordered six of them from Jacmel artisan Isidor Jocelyn recently.  “I remembered he had nice work at Fleur d’Expérience when we selected him for Zafèn and asked to see his carnival collections of 2012,” she said.

 “They are alive! When my sons saw them, they tried them on and started dancing around the house signing ‘Kanaval! Kanaval!’ There is something about the character of each of them that inspires you to become part of the party.”

The KANPE Foundation, which supports poverty alleviation programs in rural Haiti, is hosting its first major Kanaval fundraising event next Saturday in collaboration with the PHI Centre and POP Montreal. The masks will take center stage. Some will be used to engage the crowd like street performers would in a Kanaval parade down the streets of Port-au-Prince. Others will be hung on the wall as decorations.

The invitation promises “wild authentic masks, original costumes, and traditional Haitian delicacies all to the beat of Haitian dance troupes and music.” It is a star-studded event with performances by Montreal musical sensation Arcade Fire and other local bands, plus an art exhibition by famed British photographer Leah Gordon.

Felix calls the masks ambassadors of Haiti art and culture. “People don’t know how rich the Haitian culture is.  I can’t wait to see the reaction of the crowd!”

Here’s a link to more of the masks that were featured in the Montreal Gazette: http://www.montrealgazette.com/entertainment/7980700.bin?size=620x400s

Zafèn is proud to help Save the Children raise funds for projects in the block manufacturing industry because projects that train block manufacturers significantly improve construction practices, resulting in more resistant infrastructure in a country prone to natural disasters.

Industry    

Over 90 percent of buildings in urban centers in Haiti use concrete blocks, making concrete the largest component used in construction. The tragedy of January 12, 2010, caused major destruction and left hundreds of thousands of homeless survivors. This disaster also highlighted the many gaps facing the construction industry, among which are the lack of oversight of the sector, the inability of the state to monitor and enforce safety standards in construction and laxity in the selection and manufacture of materials used.

Concerned with this problem, organizations like Save the Children and Build Change have organized training seminars for owners and employees of block factories. These seminars stress the importance of following certain rules in the manufacturing process of concrete blocks. Some of these manufacturers, in addition to theoretical training on the strength of materials, have received a vibrated block-making machine that will vastly improve the quality and the production. The vibration of the blocks by the machine allows the components to be compacted and solidified, making the blocks stronger.

As a result of the earthquake, Haiti more than ever needs a strong and expanded construction industry to produce bricks, reinforced concrete and other vital materials to rebuild.  

Building companies are not common in Haiti, so Haitians usually buy blocks to build their own houses.  However, the majority of the people lack the technical knowledge that would allow them to identify high-quality blocks. In addition, as Haitians shop for the blocks, they generally pay more attention to low prices and immediate availability rather than quality. As a result, they often pick poor quality blocks to build (or rebuild) their houses, and they become even more vulnerable to the natural disasters that frequently strike Haiti.

At the same time, block manufacturers strive to meet the increasing demand with their limited resources and capacity. Some of them, in an attempt to overcome capacity and equipment constraints, try to speed up the process by skipping a few important steps. Others may be tempted to let the concrete dry out under strong and direct sunlight, making it weaker and more likely to crack under pressure.

Needless to say, many of the initiatives undertaken by overwhelmed producers—although driven by good intentions—greatly alter the quality of concrete blocks made available to consumers.

Both demand and supply characteristics increase the likelihood of poor quality concrete blocks ending up in new shelters and buildings at a time when Haitian infrastructure needs to be more resistant to natural disasters. Supporting improvements to the construction industry greatly helps the Haitian people; in this post-earthquake era in particular, it allows them to build the solid foundation for a fresh start.

You can finance block projects sponsored by Zafèn, Save the Children and Build Change and make a difference in the following ways:

• It allows manufacturers to acquire new modern equipment and improve the quality of the blocks.
• It allows manufacturers to increase capacity and maintain strategic stocks. This way, high-quality blocks can be available for consumers at all times.
• It allows producers to improve and speed up manufacturing processes without altering quality. 
• Production process optimization resulting from such projects reduces costs, allowing manufacturers to lower prices. Simply put, it means that high quality concrete blocks can become very competitive in terms of price.

 To learn more about the projects, feel free to visit  https://www.zafen.org/  or follow the direct links:

https://www.zafen.org/en/projects/933

https://www.zafen.org/en/projects/938

https://www.zafen.org/en/projects/945

The beads and other supplies used by the artisans of Delice Ateliers are hard to find in Haiti. They used to have to travel to the Dominican Republic and sometimes even NYC to find the supplies they needed to fulfill customer orders.  Then they received a loan from Zafen to purchase supplies for their crafts in bulk. 

Since they’ve received the loan, their business has been thriving and they’ve been able to travel to several folk art fairs to sell their work. Their staff is growing and they’ve been making repayments on schedule.  

Another Zafen success story!

Help us create more success stories by making a loan today.  

In January the Societe de Management, de Développement et Services (SOMADES) received a Zafen loan for their farmer training and crop diversification project.

Since then, the owner has rented farmland and bought an irrigation pump.  Then he enclosed the land to prevent animals from coming to eat the crops and planted diverse crops -  banana plantlets, papayas, hot peppers, okra, cabbage, and sweet potatoes after hiring about 6 men to plow the land.

Once the farm got up and running, he hired three full time employees, two to work in the morning and a watchman at night.  The first crops were sold to “Ti machann” (local vendors) at reasonable prices so that they could resell them at market for profit.  

We’re very excited about the success of this project so far. It’s good for the land and great for the local economy.  Take a look at some before and after pictures of the farm.

Click here to learn more about Zafen or to loan money directly to someone in Haiti. 100% of your loan goes directly to the project of your choice.

We currently have dozens of important projects in need of funding. Projects that will expand small businesses, put people to work and strengthen local economies. Rather than focus on just one, we’re going to use this post to highlight 3 smart investments in the future of Haiti.

A loan to the clothing shop at Rendez-vous Bureau pour la Promotion Social (RBPS) will allow them to stock up on fabric and meet production demands from their community of Camp-Perin. Realistic estimates have them adding 17 new staff members.  

A loan to Haitian Plant and Accessories (HAPAC) will make it possible for them to purchase materials in bulk for planting on the low Central Plateau. Purchasing materials in bulk will reduce the overall cost of the materials, and allow for more trees to be planted thus helping to reverse the trend of deforestation. This project will create 4 new jobs plus create boundless long-term environmental and economic benefits to the region.

A loan to the Friends of Petit of Goave Bakery will bring the first bakery to that community. 11 staff members will be hired to run the community bakery, plus many additional people will have the opportunity to be involved with baking classes, etc.

These are just a few of our projects that are currently seeking funding. You can find more at our projects page. 

Your small investment of $25 can make it happen!

Back in May, Centre d’Appui et de Developpment Rural (CADRI), a community organization in Mirebalais, received a $8700 loan from Zafen.  Their plan was to purchase a new corn and sorghum grinder so as to increase production and hire 8 additional staff members.

Recently, one of our Business Analysts checked in with them to see how they were doing.

As predicted, the new equipment allowed them to immediately increase production. The staff now includes an additional 8 members to their team: a FT manager, a PT marketing agent, a FT operator, and 5 PT winnowers. Additionally, they are on time with their loan repayments.

CADRI’s hope is to continue to grow the business and to expand their market.

You can directly support Haitian entrepreneurs with a small loan. Check out our projects page and get started today!

Recently one of our staff members had the pleasure of visiting Village Vacances on Ile-a-Vache, a wonderful vacation spot and thriving business seeking to expand with the help of a Zafen loan.

We asked him to tell us about his weekend getaway: 

Village Vacances is a small resort that is fairly new and expanding from four bungalows to eight.

The bungalows are small houses that each have a bathroom and two beds, as well as running water and electricity. Two things stuck out about Village Vacances: the food, and the individualized customer service. The price there covers three meals a day, and it is great food! We had fresh grilled fish, lobster, conch, and great squeezed juices.

Since VV is pretty small they are able to custom make your stay there. We were able to go snorkeling, hike through the island up to the highest point and see the whole island, watch the sun set from a beautiful beach, and spend time on a secluded sandbar in the middle of the ocean.

The sandbar island was probably the coolest thing we did. A boat took us there, and left us all alone for a few hours with only some water and an umbrella. We were surrounded by shallow blue water that was at least a mile from the closest land. We were able to relax and hunt for star fish. We were truly the only people on this small piece of “real estate” in the middle of the Caribbean Ocean.

Click here to learn more about this EcoTourism hotel and how you can invest in the expansion of their promising business. 

Your small loan can help Mr. Joseph open the first pasta shop in Lathan. With a loan from Zafen, he hopes to build a pasta shop from the ground up - purchase supplies, a back up power source, a freezer, an oven… everything he needs to make his new business a success.

In addition to purchasing its ingredients from local vendors, this new business will create 4 full time jobs.

Click here to learn more about Mr. Joseph and his business plan, and to lend money.

La Baguette is the only surviving bakery in the Carrefour Shadda area and its business was doing OK. But they knew it could be better if only they had the money for a new oven.

With a Zafen loan they were able to purchase that oven. In turn, they were able to increase production and hire 6 additional employees. 

Even with temporary setbacks (a broken-down generator) their business is thriving. Up 30% in the last few months. And they expect it to eventually double, allowing them pay back their loan on time, and then hopefully to continue to expand and employ even more people.

Below are some pictures from our Business Analyst’s site visit to La Baguette. 

You can loan money directly to Haitian entrepreneurs, to empower them to transform their economy and create jobs. Visit zafen.org today!

Nestled in the rural mountains southwest of Port-au-Prince near the foot of a steep hill is an educational oasis for 140 children, sons and daughters of corn and bean farmers, construction workers and homemakers who live in Laboule (Grenier).  These youngsters are the lucky ones in a nation lacking public education. They are enrolled in the Fondation Rêves et Actions School (Foundation Dreams and Action), backed by Haitian investors who are committed to supporting them through college, pledging to add a grade each year to prepare these students for post-secondary education and professional careers.

A $7,000 donation from Zafèn contributors supported dozens of children for an entire year, including a school uniform and a hot lunch for each child, which for many is the only meal they will eat that day. The earthquake destroyed several schools in the region and caused many parents to lose their jobs, rendering them unable to pay for their children’s education.

The foundation employs certified teachers, several of whom make heroic journeys to reach the school each day. Principal Fedeline Normil takes three busses and travels on foot the final 45 minutes from her home in Tabarre, especially unpleasant in the rainy season. She does it because she believes “education is important to the future of the country.” Teacher Jean Gardy Divers hits the road at 4 a.m. to arrive before his third graders.

Pierre Neptune, 53, is a retired military instructor, former Ministry of Public Justice and Safety employee and real estate investor. More importantly, he is a founding member of the foundation. “It’s difficult to find a doctor or an engineer here,” he tells a visitor, explaining the motivation to support the school and foreshadowing its measure of success 20 years from now.

Divers echoes the concern through a translator: “There is a crisis in Haiti in the education sector. This area lacks professionals, lawyers, teachers and agricultural experts.”

The possibilities are promising. Students enroll at age 3 and follow the national education ministry’s curriculum, getting full doses of math, grammar, history and science. Unscathed by the earthquake, the facility is better than many American elementary schools, brightly painted with a nutritious lunch program and supplies for such perks as art and music.

Students dressed in royal blue—the girls with coordinating ribbons in their hair—regaled foreign visitors with a charming French welcome song in classrooms adorned with geometry lessons on the chalkboards and posters of native fruits. 

Tragically, many college students in Haiti already on the path to the professions these teachers envision for their pupils perished in the earthquake as multi-story universities collapsed on a generation ready to take on the mantle of a nation. Now it’s up to the foundation, its dedicated teachers, eager students and generous donors to prepare this generation for leadership.

The foundation has begun to raise funds for a professional school and is accepting donations.

To support other empowering projects in Haiti, visit https://www.zafen.org/en/projects.

Before the Zafen Loan

After the Zafen Loan

A loan from Zafen helped the community organization (MOTION), who runs this fish shop in Mole St. Nicolas rebuild, purchase new refrigerators, solar panels for the roof, batteries, plus other materials they needed to run the shop.

They received their loan less than 2 months ago and were opened for business in just over 30 days.  

Our business analysts will continue to check back in with MOTION to make sure that their business succeeds.  

You can directly support Haitian entrepreneurs with a small loan. Check out our projects page and get started today!

We asked Grazuéla to tell us a bit about her job:

It is good to work in Zafèn since it allows me to meet some great people all over the department. I like all parts of my job but the most interesting part is when I meet clients and they tell me what they do and their needs.

Some of them maybe face some issues to run their business but they try as hard as they can to do their best to overcome those issues and continue running it. In order words, they know what they do with great skill despite their limited means. They are fighters and I learn a lot from them, too. 

With little they have, they create positive impacts in their community and they are the ones that work in the national production field. Then, when they find a loan from Zafèn they have the opportunity to increase their activities and get more people involved in business activity for the benefit of their community which is a sign of economic development. I admire their effort.

With Zafèn service they are able to help so many.

As with all of our featured Business Analysts, we asked Grazuéla to tell us her favorite Haitian proverb  (a great way to get to know someone). She chose, “Unity is strength” (Men anpil chay pa low).