|Incompetent USAID bungles financial assistance to Haiti
An audit of a US Agency for International Department program that aimed to boost Haiti's economy by providing loans to businesses has found that the program failed to award loans to intended targets, train workers and keep accurate records.
The aim of the audit released in late February by USAID's Office of the Inspector General was to see whether a USAID loan program was indeed introducing lending practices to overlooked areas and borrowers, particularly in the areas of agriculture, construction, tourism, handicrafts and waste management. Most of the loans were supposed to go toward women, first-time borrowers and small- and medium-sized enterprises, AP reports.
The USAID office in Haiti had seven guarantees worth US$37.5 million as of last year. The audit focused on the four largest, worth US$31.5 million, two of which were awarded after the devastating earthquake in 2010.
They were a Haitian bank named Sogebank, a Haitian development finance institution named Sofihdes that USAID helped create in 1983 and an agriculture-focused outfit named Le Levier Federation.
The audit found that few women and first-time borrowers received loans and lenders did not make much effort to work with them.
Loans were supposed to go to three “development corridors’’ instead they stayed in the Port-au-Prince area.
Ninety percent of Sogebank's loans were confined to the capital and the bank did not give loans to other parts of the country. Some 81 percent of the Sofihdes loans were in Haiti's capital.
Training could have been better, the audit also said.
The USAID office in Haiti failed to properly train workers who make the loan guarantee coverage decisions.
The audit found other problems.
The loans were not supposed to go to enterprises that appeared on a list of “prohibited businesses’’ that supported law enforcement activities, surveillance, gambling, tobacco, pharmaceuticals, and alcohol and jewelry. Loans, however, went to some of these businesses.
The loan program sought to expand financial services to underserved areas but most borrowers already had relationships with at least one of the lenders. More than a quarter of the Sofihdes and Sogebank borrowers interviewed by auditors said they could qualify for a loan elsewhere.
A radio station in the capital, for example, purchased a generator and was told to get the loan from Sofihdes. The borrower already had a relationship with another Haitian bank and easily qualified for much larger loans.
The USAID mission said it will begin talking with the financial institutions this month to figure out guidelines for including women and first-time borrowers, and will have a plan to pursue them by mid-June 2013.
USAID also said it now has a way to screen borrowers from prohibited activities and remove non-qualifying loans.
Sogebank and Le Levier Federation couldn't be immediately reached for comment Monday. An email to Sofihdes wasn't immediately returned.