Programs: SOFIHDES
Facts
Announced:
January 7, 2011
Category:
Promoting Job Growth & Economic Opportunity
Grant Amount: $1,000,000
Grant Objective:
To finance lending to Haitian small and medium enterprises (SMEs).
SOFIHDES' core business is making short and medium-term loans to Haitian small and medium enterprises. Through its on-the-ground experience, SOFIHDES has a sophisticated understanding of this business sector in Haiti. Since SOFIHDES does not take deposits, it does not have sufficient funds to meet the borrowing requirements of current and new customers. This loan will help SOFIHDES support the credit needs of small and medium enterprises in Haiti.
Donors and Haitian authorities have struggled to find mechanisms to provide small to medium enterprises (SMEs) access to the capital they need to thrive. Efforts to create SME funds and facilities in Haiti and assist the transition from the informal to the formal economy are underway, including a large "Partial Credit Guarantee Fund" being organized by IDB, the World Bank, the IHRC and other donors (including the USG). It may be six months or more before this PCGF is operational. Many deserving SMEs have an immediate need for capital. Increasing the funding available for SOFIHDES lending is an efficient way to meet the needs of these SMEs in a timely manner.
SOFIHDES management has identified a pipeline of projects requiring $18M in financing, of which $3M represents immediate needs for the financing of Haitian companies. The Clinton Bush Haiti Fund's $1M program-related investment (PRI), structured as a two-year loan to SOFIHDES, helps to meet this need. Funding will rapidly reach SMEs and infuse new capital into the Haitian economy.
SOFIHDES also provides business skills training. It is the Haitian implementing partner for the World Bank/IFC's "Business Edge" training program, branded as SOFITRAINING, providing expert assistance and training programs for SME managers in areas such as feasibility studies, business plan preparation, accounting, marketing, strategic development, and workforce training. Haitian SME owners pay for the training courses out of their own funds, demonstrating that they find them cost effective. In turn, trained owners and managers are less-risky borrowers for SOFIHDES.
Why We Invested in SOFIHDES
Our PRI loan to SOFHIDES reflects our commitment to long-term reconstruction and job creation, with a focus on supporting small and growing businesses.
Transforming Lives and Livelihoods
With support from the Clinton Bush Haiti Fund, SOFHIDES plans to:
- Focus on longer-term reconstruction and job generation, and specifically address small and medium enterprises.
- Supply immediate financing to SMEs while outsourcing the requisite due diligence to a reliable, well-regarded Haitian organization.
- Provide business skills traning to SME managers in areas such as feasibility studies, business plan preparation, accounting, marketing, strategic development, and workforce training.
About SOFIHDES
Originally established 27 years ago by USAID (but now independent), SOFIHDES' core business is making short- and medium-term loans to Haitian SMEs. Through its on-the-ground experience, SOFIHDES has a sophisticated understanding of the SME sector in Haiti. Its expertise lies in the extension of short and medium term loans to productive enterprises in such sectors as trade, services, construction, retail commerce, and agribusiness. SOFIHDES's existing credit portfolio stands at around $12M, and it is one of two Haitian financial institutions (the other is the public development bank - FDI) that are currently willing to finance start-ups.
