Microfinance and HFH -- Habitat for Humanity Int'l 1

Microfinance and HFH

By Jonathan Reckford

As we launch a new year of meaningful work, we have much to celebrate and be thankful for. Habitat’s mission is rapidly unfolding in the hearts and minds of people everywhere, as we create new opportunities to serve more families.

In October 2006, I traveled to India to participate in the 23rd annual Jimmy Carter Work Project. I left a week later inspired and encouraged, not only by the compassion and dedication I encountered throughout the JCWP build site, but by the commitment to build upon the work already begun in India—particularly to launch a much larger effort in the indiaBUILDS campaign, which aims to serve 250,000 people by 2010.

This kind of exponential increase in the number of families served is exactly what we must deliver all over the world.

Microfinance is one means of doing that, and it is explored further in this edition of “The Forum.” It blends appropriately with Habitat’s mission because it is consistent with our view that poor families are part of the solution, not a problem to be solved.

Wilna is a perfect example. On Wednesdays and Saturdays, Wilna walks seven hours from her Haiti home to sell corn close to the Dominican Republic border. She is a timachann, or market vendor, selling rice, sugar, salami and tamarin, a fruit used to make wine and malt.

While regular, her income was too little to afford the improvements that would render her home more solid and decent. Her husband commented that with the monthly earnings “it would have been impossible for us to find a loan that would allow enough time to repay.”

So three years ago, Wilna took out her first loan with Fonkoze, a micro-lending organization operating in Haiti. Habitat for Humanity International began a relationship with Fonkoze in 2004 by providing startup funding for a home-improvement loan product. We continue to assess and cultivate the relationship today.

After a half-dozen small, non-housing loans, Wilna took out a kredi kay loan, which is Fonkoze’s housing microfinance product. The loan enabled Wilna and her family to rebuild their home with a new sturdy roof. They are now paying back the 18-month loan on affordable terms of US$15.50 per month.

Her husband says the loan program is a “great advantage for people of our means.”

Clarence Jordan, founder of Koinonia Farm, birthplace of Habitat for Humanity, once said that poor families don’t need charity, but capital; they don’t need caseworkers, but co-workers.

In a similar spirit, Muhammad Yunus of Bangladesh founded the Grameen Bank in 1976 and, through micro-credit, has loaned billions of dollars to poor families around the world, equipping them with the capital needed to pull themselves out of poverty. Soon after being named the 2006 Nobel Peace Prize laureate—along with the Grameen Bank—Professor Yunus said, “People can change their own lives provided they have the right kind of institutional support. [Poor families] are not asking for charity. Charity is no solution to poverty.”

This self-help, partnership approach comprises the heart of the Habitat for Humanity model—and micro-credit is a compelling complement to that. Very poor families cannot afford an entire house. But, like Wilna, perhaps they can afford a micro-loan that would help them stabilize their roof or add a concrete floor or a latrine. And they don’t want merely a handout but, rather, they want to play a role in the solution—to be co-workers with us and with others in order to achieve it.

Microfinance empowers families to help themselves. We can use it—and partner with those who provide it—to bring lasting transformation to communities throughout the world. We can provide families access and opportunity, and, very importantly, we can work alongside them, with our hand in theirs, to create a new day and a shared solution to the plight of poverty on our planet.

Jonathan Reckford is CEO of Habitat for Humanity.