Building a Microfinance Industry: USAID's PRET/FINNET in Haiti
This paper presents the experience of USAID in Haiti after 1995, when the Haitian government began to implement policy reforms to liberalize the economy. USAID launched its five-year Program for the Recovery of the Economy in Transition (PRET). Initially the program supported one small MFI, but by 1997, while all MFIs in Haiti could access some type of assistance through PRET, it implemented a tiered approach. The simple criteria for classification were:
- Strength and vision of leadership;
- Ability to grow and have significant outreach;
- Commitment to sustainability and good practice.
Tier 1 partners had access to financial and individualized technical assistance, Tier 2 and 3 could access only general type of technical assistance. The fund also provided loan guarantees to commercial banks for micro loans.
In 1998, USAID financed a follow-up program, Financial Services Network for Entrepreneurial Empowerment (FINNET). It provides only technical assistance and concentrates on meeting the evolving need of Tier 1 partners through the delivery of sophisticated, individualized assistance. It also funds a number of initiatives to build industry infrastructure.
Some of the key reasons for project success that the paper cites are:
- Support for a diversity of institutions;
- Emphasis on building institutional capacity;
- Utilization of expertise and strategic alliances;
- Perseverance and willingness to take risks.
The author draws the following lessons for success:
- Ensure that enabling environment is nurturing;
- Be committed to the project;
- Take a long-term view.
