The recent trend in bank credit in Haiti shows a major shift in access to formal financing. According to data from the Bank of the Republic of Haiti (BRH), the number of credit accounts dropped from around 140,325 in 2017 to 44,777 in 2025, a contraction of about 68% over eight years. This drop isn\u2019t just about a slowdown in lending activity; it mainly shows that bank credit is increasingly concentrated among a smaller group of borrowers.<\/p>\n\n\n\n
Over the same period, the volume of loans went from about 89 billion gourdes to 114.8 billion gourdes, an increase of around 29%. In other words, banks are still lending, but to a much smaller number of economic players. So, the Haitian banking system hasn\u2019t completely pulled back from financing the economy, but it seems to have tightened its selection criteria, favoring clients with documented income, sufficient collateral, better creditworthiness, and risks that are easier to manage.This trend ends up pushing out poor households, informal workers, small shop owners, women entrepreneurs, young people, those living in rural areas, and farmers. Even though they\u2019re economically active, these groups rarely have the guarantees that formal financial institutions ask for. They also face irregular incomes, little traceability of their activities, no formal credit history, and high transaction costs because bank branches are far away.This situation can be seen through the lens of the credit rationing theory developed by Stiglitz and Weiss (1981). According to them, banks may voluntarily limit the supply of credit, even when there is demand, due to the information gap between lenders and borrowers. In uncertain times, banks can\u2019t always tell the reliable borrowers from the riskier ones. Raising interest rates doesn\u2019t necessarily fix this problem; it might even attract riskier borrowers or discourage cautious ones. So banks prefer to ration credit, meaning they limit the number of loans they give out, instead of expanding their portfolio to borrowers they see as vulnerable.<\/p>\n\n\n\n
This observation invites us to rethink financial inclusion in Haiti beyond just having a bank account. Access to a bank account or a formal loan isn\u2019t enough to ensure real financial inclusion. A more realistic approach needs to take into account local economic practices, community solidarity mechanisms, social constraints in remote areas, and the role of local financial services.In this perspective, Village Savings and Credit Associations, commonly called VSLA, can play a strategic role as complementary tools for financial inclusion, economic resilience, and local development. Yet, they are still not sufficiently recognized in public policies and national financial inclusion strategies. However, VSLAs offer a practical, flexible, and socially adapted response to the financial exclusion observed in Haiti’s financial ecosystem.According to the BRH\u2019s statistical reports, bank deposits in gourdes went from around 25 billion gourdes in 2000 to over 580 billion gourdes in 2025. Deposits in converted foreign currency also grew significantly, rising from about 10.9 billion gourdes to over 373 billion gourdes during the same period. So, when you add together deposits in gourdes and converted currency, total deposits exceed 953 billion gourdes in 2025.<\/p>\n\n\n\n
Yet, this large pool of resources doesn\u2019t translate proportionally into credit for the economy. The approximate credit-to-total-deposits ratio went from about 33% in 2000 to just 12% in 2025. That means in 2025, for every 100 gourdes available in the banking system, only around 12 gourdes are actually turned into credit.This level reflects a weakness in financial intermediation. The banking system collects funds, but they flow only weakly to households, micro-enterprises, small producers, and local economic activities. So, bank liquidity doesn\u2019t automatically turn into financing for the real economy.<\/p>\n\n\n\n
This situation raises a fundamental question: what\u2019s the point of a liquid banking system if it doesn\u2019t adequately fund the real economy? A financial system can be strong on paper, yet still not very inclusive socially or productively.<\/p>\n\n\n\n
It can protect deposits, maintain decent prudential ratios, and show some stability, without fully playing its role as an intermediary supporting development.That’s why financial inclusion needs to be thought of as an ecosystem. Banks play an important role, but they can’t meet all the needs on their own. Microfinance institutions, cooperatives, fintechs, mobile money services, public programs, and community mechanisms all need to work together in a complementary way. In a country marked by informality, insecurity, low banking coverage, and regional disparities, this complementarity becomes a necessity.The importance of Village Savings and Loan Associations can’t be understood without considering the banking geography in Haiti. The distribution of banking service points is still heavily concentrated in a few urban centers, especially in the metropolitan area. According to banking supervision data from the BRH, Port-au-Prince alone accounts for 63.3% of the country’s banking service points.<\/p>\n\n\n\n
By comparison, some major secondary cities have a much more limited banking presence: Cap-Ha\u00eftien 4.79%, Les Cayes 3.72%, Gona\u00efves 2.66%, Saint-Marc 2.66%, Jacmel 2.13%, Hinche 2.13%, Ouanaminthe 2.13%, Port-de-Paix 2.13%, and J\u00e9r\u00e9mie 1.60%.This breakdown shows an important reality: physical access to banking services is still very uneven depending on the area. Several towns only represent a tiny part of the national banking network, sometimes around 0.53% or 1% of service points. This is especially true for towns like Limb\u00e9, Fort-Libert\u00e9, Bellad\u00e8re, Cabaret, Aquin, Fonds-des-N\u00e8gres, or Saint-Michel, which seem to have limited coverage. In other rural or isolated areas, the banking presence is even more limited, or even nonexistent.This limited territorial coverage increases the costs of accessing financial services. To get to a bank, some households have to bear transportation costs, lose a day of work, face security risks, and rely heavily on cash. So financial exclusion is not just a matter of income or creditworthiness; it’s also a matter of location.<\/p>\n\n\n\n
In this context, AVECs appear as a close-to-home response to territorial financial exclusion. They don’t just arise from a need for credit; they also respond to the lack of accessible financial infrastructure. Where banks are far away, scarce, or ill-suited to the realities of poor households, AVECs make it possible to locally organize savings, credit, solidarity, and financial discipline.AVECs are groups of people who voluntarily come together to save regularly, build a common fund, and provide small loans to members. They usually operate on a set cycle, often yearly or semi-annually. At the end of the cycle, the accumulated funds are redistributed to members based on their shares or contributions. The principle is simple: each member saves a regular amount, even if modest; the collected resources are then lent to members according to rules set collectively; repayments and interest feed the common fund; and finally, the funds are shared at the end of the cycle. In several AVECs in Haiti, the loans given can reach multiple times the amount saved by the member, often up to three times the amount saved, depending on the group\u2019s internal rules.This practice allows for balancing access to credit with risk management. Unlike traditional bank loans, which mainly rely on formal guarantees, documented income, and an institutional risk assessment, credit in VSLAs (Village Savings and Loan Associations) leans more on mutual knowledge, social trust, community closeness, and collective responsibility.<\/p>\n\n\n\n
The VSLA approach is built on three key pillars: local savings, social trust, and collective governance. Unlike some credit models based on external capital, VSLAs first tap into the group’s internal resources. They turn small individual savings, often invisible to the banking system, into a collective financing capacity.This approach is especially relevant in communities where incomes are low, irregular, and mostly come from the informal sector. It allows households that wouldn\u2019t have access to bank credit to finance small business activities, deal with emergencies, cover school expenses, support agricultural activities, or stabilize a fragile income.<\/p>\n\n\n\n
Allen and Panetta (2010) describe savings groups as simple, low-cost mechanisms suited to people excluded from the formal financial system. Their strength lies in their accessibility. They don\u2019t require heavy infrastructure, complex computer systems, permanent physical branches, or large initial capital. Their main asset is social capital.That’s exactly what makes AVECs suitable for rural areas, remote towns, and communities where formal banking is still distant, expensive, or socially hard to access. They can therefore be seen as forms of local financial intermediation. They’re not just informal savings groups. They organize a structured flow of savings and credit at the community level. They create rules, financial discipline, a record of contributions, a practice of repayment, a space for collective decision-making, and a dynamic of social cohesion.<\/p>\n\n\n\n
However, their role should be understood as complementary, not as a substitute.<\/p>\n\n\n\n
AVECs do not replace banks, cooperatives, or microfinance institutions. They are more like a first step toward financial inclusion, gradually preparing members for a more structured relationship with formal institutions. In this way, they can become a bridge between community finance and the formal financial system, as long as they are recognized, supported, and guided without being bureaucratized or distorted.<\/p>\n\n\n\n
The Haitian state, the Bank of the Republic of Haiti, local authorities, NGOs, microfinance institutions, and technical partners should recognize AVECs as complementary mechanisms for financial inclusion. This recognition doesn\u2019t mean heavy-handed regulation right away. It first requires a better understanding of the sector.<\/p>\n\n\n\n
A national mapping of AVECs would be an important first step. It would help identify their number, location, size, member profiles, the amount of savings mobilized, the loans given, the sectors financed, and the support they need. Without reliable data, AVECs risk remaining invisible in public policies, even though they already play a real role in some communities.Next, a minimal framework for member protection could be developed. This framework should remain simple, suitable, and non-bureaucratic. It could include register templates, transparency rules, monitoring tools, conflict resolution mechanisms, and good governance principles. The goal wouldn\u2019t be to turn the AVECs into formal financial institutions, but to strengthen their security, transparency, and credibility. Finally, bridges could be created between the AVECs and formal financial institutions. The more mature groups could be supported in opening a collective account, accessing digital financial services, benefiting from suitable insurance products, or establishing relationships with microfinance institutions. This setup would help build a progressive chain of financial inclusion: first community savings, then local credit.then access to more formal financial services once the group reaches a sufficient level of maturity.<\/p>\n\n\n\n
A structured support system for Village Savings and Loan Associations would help strengthen their economic and social impact. Nowadays, loans granted within these VSLA groups are usually short-term, often limited to just a few months, to maintain the group’s liquidity and reduce default risks. However, with proper guidance on governance, financial management, record-keeping, simple risk analysis, and repayment discipline, VSLAs could gradually move toward more structured financing mechanisms, including longer-term loans and group credit among members.Beyond individual credit, AVECs could also become spaces for the emergence of collective economic initiatives. The most active members could pool part of their savings, skills, and networks to create small community businesses or local microenterprises, especially in areas like agriculture, processing, small trade, crafts, or local services. However, this development would require proper technical support, covering things like creating small business plans, simplified business management, basic accounting, market access, collective governance, and preventing internal conflicts.<\/p>\n\n\n\n
This perspective is all the more relevant as several villagers report having to travel more than 25 kilometers to reach a bank branch. This distance represents a significant economic and social cost: transportation expenses, lost time, security risks, disruption of daily activities, and discouragement when it comes to banking procedures. Under these circumstances, AVEC provides a particularly convenient solution. It makes access to savings, small loans, and financial solidarity easier in areas where formal banking remains distant, expensive, or hard to reach. Thus, AVEC should not be seen only as informal savings collection mechanisms. When well managed, they can become real local platforms for financial inclusion, economic empowerment, and community development. Their potential lies in their ability to transformsocial trust into economic capital, and to turn small individual contributions into collective opportunities for funding, investment, and resilience.<\/p>\n\n\n\n
Conclusion<\/strong> In this context, Village Savings and Loan Associations offer a realistic, social, and complementary solution. They make it possible to mobilize local savings, facilitate access to small loans, strengthen community solidarity, promote financial education, and support local economic activities.<\/p>\n\n\n\n <\/p>\n","protected":false},"excerpt":{"rendered":" The recent trend in bank credit in Haiti shows a major shift in access to formal financing. According to data from the Bank of the Republic of Haiti (BRH), the…<\/p>","protected":false},"author":2,"featured_media":5114,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"googlesitekit_rrm_CAow67bgCw:productID":"","_angie_page":false,"content-type":"","_lmt_disableupdate":"","_lmt_disable":"","_ayudawp_aiss_exclude":false,"_ayudawp_aiss_summary":"","_ayudawp_aiss_summary_provider":"","_ayudawp_aiss_summary_hash":"","page_builder":"","footnotes":""},"categories":[44],"tags":[],"coauthors":[57],"class_list":["post-5113","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy"],"_links":{"self":[{"href":"https:\/\/times509.com\/index.php\/wp-json\/wp\/v2\/posts\/5113","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/times509.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/times509.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/times509.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/times509.com\/index.php\/wp-json\/wp\/v2\/comments?post=5113"}],"version-history":[{"count":1,"href":"https:\/\/times509.com\/index.php\/wp-json\/wp\/v2\/posts\/5113\/revisions"}],"predecessor-version":[{"id":5115,"href":"https:\/\/times509.com\/index.php\/wp-json\/wp\/v2\/posts\/5113\/revisions\/5115"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/times509.com\/index.php\/wp-json\/wp\/v2\/media\/5114"}],"wp:attachment":[{"href":"https:\/\/times509.com\/index.php\/wp-json\/wp\/v2\/media?parent=5113"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/times509.com\/index.php\/wp-json\/wp\/v2\/categories?post=5113"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/times509.com\/index.php\/wp-json\/wp\/v2\/tags?post=5113"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/times509.com\/index.php\/wp-json\/wp\/v2\/coauthors?post=5113"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
The evolution of the Haitian banking system between 2000 and 2025 highlights a major tension. Deposits are increasing sharply, but credit is becoming more concentrated and the number of borrowers is dropping significantly. So, the banking system appears more liquid, but less accessible to a large part of the population. This situation reflects a weakness in financial intermediation and a rise in financial exclusion.<\/p>\n\n\n\n