Sephora Pierre Louis had a big project when she returned to Haiti after completing her MBA in marketing in the US last year. She intended to set up basic training workshops for SMEs in her native country, the poorest one in Latin America. “Our aim is to help SME leaders in low income communities,” she said in Busan, South Korea, among various other young entrepreneurs selected by the IADB to present their case.
Pierre Louis’ FormatAide project is a shoe-string operation, training small business such as grocers or hairdressers to give them basic skills in accounting or marketing. She only managed to launch her project after collecting $1,000 from individual donations on the internet and putting some of her own money in the venture. But this is insufficient to cover fixed costs to maintain a permanent office, so FormatAide has had to operate from temporary rented space for entrepreneurs.
Now, the young Haitian entrepreneur is aiming higher, trying to raise $50,000 to launch new training for 50 SME leaders. “We need a lasting contribution. I am struggling, but I have faith to finally get the funds to have the necessary infrastructure,” she said. “SMEs do not have access to loans. We can work towards achieving partnerships with microfinance institutions, but we first need to cover our own fixed costs,” she said.
Her experience reflects the difficulty that many SMEs have in attracting financing.
The Inter-American Investment Corporation (IIC), the private arm of the IADB, has tried to respond to such needs. It launched a dedicated Haiti SME Fund jointly with Spain after the 2010 earthquake, which now has capital of $12m. “It was very difficult to make that work, but we gained traction in the last couple of years,” said John Beckham, chief of debt and equity investments at the IIC. A new local currency loan equivalent to $500,000 will be disbursed in Haiti in the next couple of weeks via Finca Haiti, the microfinance lender. Beckham said loan activity has increased exponentially in recent years. “Our book has increased from a couple of million dollars to $700m within less than 15 years — and 95% of those loans are channelled to SMEs,” he said.
In addition, the IADB says it provides loans for technical assistance to SMEs through governments to allow them to facilitate trade, boost their exports, and help remove non-tariff barriers, such as certification in various countries. Access to information and knowledge is also a new priority for the bank.
Back in Haiti, Pierre Louis says it is hard to run a small business amid economic hardship and political instability in the country. “The political situation affects everyone. When there is a strike, there is no business for vendors. It is hard to live in this environment,” she said.