Building a Microfinance Industry: PRET/FINNET in Haiti
Summary — This case study examines USAID's support for the microfinance sector in Haiti from 1995 onwards, focusing on the PRET and FINNET programs. It highlights the strategic redirection of USAID's approach, the importance of engaging commercial banks, and the development of industry infrastructure.
Key Findings
- Strategic redirection of USAID's approach was critical to success.
- Engaging commercial banks was essential for scaling up microfinance.
- Building industry infrastructure, such as credit information exchange, was crucial.
- Flexibility and willingness to take risks were important factors.
- Emphasis on institutional capacity building over direct loan capital.
Full Description
The case study details USAID's involvement in building a microfinance industry in Haiti, starting with the PRET program in 1995 and continuing with FINNET. Initially, USAID supported a single, struggling MFI, but later shifted its strategy to engage commercial banks and other actors in the financial sector. This involved providing financial assistance, loan guarantees, and technical support to promising institutions. The study emphasizes the importance of creating industry infrastructure, such as credit information exchange mechanisms and external audit services, and highlights the keys to project success, including supporting a diversity of institutions, building institutional capacity, and fostering strategic alliances.