Article by Willy Foote, CEO of Root Capital
December 14, 2012
Last week, the Clinton Bush Haiti Fund announced that it was closing up shop in Haiti on December 31.
As you may recall, the Fund was created by former Presidents Bill Clinton and George W Bush in the aftermath of the epic 2010 earthquake that brought that small island nation to its knees. The fund raised $54 million that has now been distributed to more than 50 businesses and organizations to spur sustainable development and bridge the gap between short-term reconstruction needs and longer-term development.
Like Root Capital, the agricultural lender that I founded over a decade ago, the fund recognized that smallholder agriculture is one of the keys to rebuilding the shattered economy outside the over-burdened capital of Port-au-Prince.
Thanks to that alignment, Root Capital received $2 million from the fund for providing credit, market connections and financial management training to small agricultural businesses that provide the western hemisphere’s poorest farmers a better life. Since late 2010, we’ve financed eight rural enterprises that source from thousands of smallholder farmers producing coffee, cocoa, mangoes and essential oils used in cosmetics and perfumes. Our current clients represent 17,560 farmers supporting more than 87,000 household members.
The fact is, we wouldn’t be operating in Haiti if it weren’t for the Clinton Bush Haiti initiative, and support from The World We Want Foundation in Sweden. But even after the Clinton Bush Haiti Fund spends down its remaining funds and steps back, we will remain—even though Haiti is without a doubt the most demanding environment that we operate in across our entire global portfolio.
We have worked in 30 African, Latin American and Caribbean countries since 2000 and we’re bringing all that learning and innovation to address the challenges of building agricultural businesses that generate long-term social, economic and environmental sustainability in rural Haiti. It has been hard, truth to tell. The business challenges concentrated in that one small, impoverished nation are formidable—from weak government systems, to severe environmental degradation (less than 1.5 percent of land is forested in Haiti) to limited education and poor health status.
Consequently, most groups in Haiti, regardless of their business experience, need some form of financial management training intervention in order to grow and thrive.
Take COOPCAB, a 5,000 member fair trade coffee cooperative located in the mountainous village of Thiotte in southeast Haiti, an area of extreme poverty. COOPCAB is one of the strongest businesses we’ve seen in Haiti. With our financing it’s been able to increase its exports six-fold and source from an additional 1,000 coffee farmers, generating stable and increased incomes for its member base. The cooperative has even tied environmental conservation to economic benefit, introducing a reforestation program that delivers more than 100,000 coffee and tree seedlings to its producer members annually.
Yet even COOPCAB, which is managed by local Haitian farmers with little formal training in financial management and accounting, needs technical and financial assistance to reach its full potential.
As a consequence, we’ve had to innovate and hone our business model in Haiti, slowing our lending in the short term while accelerating and deepening our financial advisory services program. We’re making an investment that’s building long-term capacity among Haitian small businesses.
We’re doing that by sharpening our investment strategy that combines credit with financial management training. We’re developing new training tools and products, tying lead generation to introductory financial management training and tightly integrating our lending, financial advisory service, and impact analysis teams throughout our organization.
And we’re seeing slow but steady results.
Just last week I received a call from Paul Altidor, who recently left the Clinton Bush Haiti Fund to become the new Haitian ambassador to the United States. Having observed our work on the ground, Ambassador Altidor asked Root Capital to join a consortium of practitioners to make formal policy recommendations that might help unlock much-needed agricultural finance from local banks and other sources of capital in Haiti. We fully intend to do so, and it’s a two way street.
Haiti, with all its thorny challenges, is spurring innovation at Root Capital. And as we retool our investment strategies to meet the most challenging of business environments, we are taking those new strategies and systems and applying them across our entire global operation, expanding our ability to reach ever more of the 500 million farmers living on less than $2 a day.
So as the Clinton Bush Haiti Fund prepares to cease its operations, we’d like to say thanks for serving as a catalyst, for helping build Haitian agriculture that empowers small-scale farmers and is truly sustainable in the long-term.