Microlending's Unexpected Role in Haiti's Recovery

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In the aftermath of the earthquake in Haiti, microbanking is proving to be useful in unexpected ways. Haiti has a microlending bank called Fonkoze. It's a branch of Muhammad Yunus's Grameen Bank, in fact. It has been working in Haiti for 15 years, giving tiny loans to poor Haitian women.After the earthquake, Haitians working abroad were desperate to get money to their relatives, and the banking infrastructure set up by Fonkoze-which, unlike that of other banks, reached deep into the city's rural and poor areas-was the best distribution network available.Over the weekend of January 23, Fonkoze worked with the State Department, the Pentagon, and JP Morgan to quickly collect and deliver $2 million in cash to Haiti's most vulnerable earthquake victims.

Jennifer Harris, a member of the policy staff of Secretary of State Hillary Clinton, in a memo to Pentagon officials released by Fonkoze, spelled out the implications of the combined State-Defense operation."Fonkoze has by far the deepest reach into the country's rural poor, a remittance network that would take years to recreate from scratch. As people continue to migrate from Port-au-Prince, Fonkoze's branch network will become even more essential," she said. "Perhaps most important, unlike the commercial banks, Fonkoze has re-opened many of its branches and has continued to pay out remittances using its cash on hand."

There are still some open questions about the extent to which microcredit creates real entrepreneurs, but it's clear that the distribution networks a good microbank establishes can help vulnerable communities more resilient in all sorts of ways.