WASHINGTON, D.C. -- The Consultative Group to Assist the Poor (CGAP) has chosen the U.S. Agency for International Development (USAID) to be recognized in its Microfinance Donor Good Practices case-study series for USAID's support of the microfinance sector in Haiti. USAID supports this initiative through the Financial Services Network for Entrepreneurial Empowerment (FINNET) project. USAID and its partner, Development Alternatives, Inc., designed the project to build microfinance industry infrastructure, such as credit information exchange mechanisms and external audit services, and to improve information flows, networking opportunities, and coordination within the industry. The goal is to expand access for low-income entrepreneurs to these services.

In Haiti, interest rate ceilings designed to protect poor people actually deterred banks from making loans to poor entrepreneurs. FINNET "gave a jump start to the microfinance industry," according to CGAP Director Elizabeth Littlefield. Making market interest rates for microlending a precondition for assistance transformed loans to poor people into a competitive commercial niche. Targeting technical assistance to the most promising microfinance institutions helped build their capacity and lay the foundation for the broader industry.

"The program in Haiti is just one example of how USAID missions around the world proactively develop diverse financial services for poor entrepreneurs and their households," says Kate McKee, Director of Microenterprise Development at USAID. "FINNET demonstrates the value of a broad, industry-building approach. Microenterprise development programs from Armenia to Morocco to Uganda are expanding poor people's opportunities, helping microenterprises integrate into formal economies and transforming key commercial sectors in which micros are particularly active."

In 2001, USAID's microenterprise funding totaled over $158 million. Its partner lending institutions reached 2.9 million clients worldwide, the vast majority of whom were women and the very poor. In addition to making loans, USAID's partners advocate policy reforms on behalf of microenterprise institutions and microentrepreneurs and help business owners gain access to business development services.

CGAP is a consortium of 29 bilateral and multilateral donor agencies that support microfinance and seek to improve the capacity of microfinance institutions to deliver flexible, high-quality financial services to the very poor on a sustainable basis, including the Australian Agency for International Development (AusAID), the U.K. Department for International Development (DFID), and the U.N. Development Program. The CGAP Donor Good Practices case studies highlight examples of donor good practices in microfinance. The case studies, designed to draw out lessons on how donors' decisions and actions contribute to successful projects, can be found on-line at case_studies.

The U.S. Agency for International Development has provided economic and humanitarian assistance worldwide for more than 40 years. (end text)

There has been only scant progress in Organisation of American States (OAS) efforts to end the long-running political dispute between the government and the opposition, which have centred on conditions set out in OAS Resolution 822 of September 2002. The conditions concerned reform of the Police Nationale Haitienne (PNH), which has been plagued by allegations of human rights abuses and corruption, and is generally regarded as poorly managed ; disarmament of the government's supporters ; and payment of reparations to the victims of the violence those groups had committed in disturbances in December 2001.

In the last days of March, as another deadline for the government to demonstrate its commitment to the resolution approached, there were several indications of the government's desire to be seen to be meeting the conditions : the head of the PNH and three other senior officers resigned ; judicial authorities issued arrest warrants for ten FL militants in connection with the violence that followed an attack on the National Palace in December 2001 ; and police raided a location in Gonaives in an attempt to arrest Amiot Metayer, who was implicated in violence against opposition politicians in December 2001 but escaped from prison in August 2002. However, further progress has stalled since then.

Neither the OAS nor the opposition were satisfied with the way the changes at the PNH were made, or with the choice of the new appointees. The new acting head of the PNH appointed at the end of March, Jean-Claude Jean- Baptiste, was formerly a member of Mr Aristide's close group of personal advisers (known as his personal cabinet) and is considered to be a staunch Aristide loyalist, and his appointment was greeted with a salvo of criticism. On June 4th, with his appointment not yet ratified by the Senate, he resigned. Two days later, Jean-Robert Faveur, who had been police chief for the South-east department and enjoyed a reputation as a professional with no special links to the government or ruling party, was nominated as the new police chief. This appointment appeared to be welcomed by the OAS, although on June 10th the US ambassador in Haiti, Brian Dean Curran, said it was not enough to prove the government's commitment to reforming the police, and said deeper changes were needed to ensure security for elections.

In the event, Mr Faveur's effectiveness was not tested : on June 21st, he abruptly resigned and left the country. In a resignation letter to Mr Aristide, he revealed that he had been warned that his life was in danger if he continued his efforts to reduce corruption and increase the independence of the PNH. The letter accused the government of seeking to exercise complete control over the police force, including decisions on the appointment of senior officers and the allocation of the PNH budget. The episode suggests that the struggle for control of the PNH, which has been a political issue for a number of years is continuing.

There has been no significant progress in resolving the impasse that has dominated the political agenda since a dispute over the vote count for ten senate seats in the May 2000 legislative elections. The government has made some efforts to apply the measures called for by the Organisation of American States (OAS) in an attempt to break the deadlock. However, opposition political parties and influential civil society sectors remain unconvinced that the government is genuinely trying to create the conditions for free and fair elections.

As the stalemate has continued, the government has focused on seeking to secure the release of suspended international aid (with some sign of positive results), while simultaneously trying to rally public support by taking an increasingly nationalistic stance as the country prepares to celebrate the 200th anniversary of its independence next year.

While refusing to co-operate with the government, the most important opposition group, the Convergence Democratique (CD) coalition, has also failed to build on the outpouring of anti-government sentiment reflected in the street protests in the last quarter of 2002. Nor has it been able to take advantage of the resentment arising from price rises for fuel and other household products during the first quarter of 2003. This failure to build any mass appeal despite propitious circumstances appears to have left the CD without any strategy other than to perpetuate the stalemate. Public statements by CD leaders have been restricted to pouring scorn on every initiative taken by the government, and the continued refrain that the president, Jean-Betrande Aristide, must resign.

The newer opposition umbrella group of civil society organisations, known as the Group of 184, has maintained a higher profile than the CD, staging a series of public meetings billed as the "Caravan of Hope" in the provincial towns of Jacmel, St Marc, Hinche, Gonaives, Fort Liberte and Cap-Haitien. Andre Apaid, a prominent businessman, and Maurice Lafortune, president of the Port-au-Prince Chamber of Commerce, have emerged as the main spokesmen for the Group. Unlike some CD leaders, they have not publicly taken the position that Mr Aristide must depart prior to elections, but neither have they encouraged the opposition parties or the five nominated civil society entities to state they would participate in the electoral council should the authorities create the right conditions.

Although there are no opinion polls to gauge public reaction to the Group of 184's appearance on the political scene, there is nothing to suggest that it has succeeded in developing a broad base of support. Attendances at its meetings were reported to be in the region of a around a hundred. For the most part, meetings have passed without violence, and the fact that the police have provided protection has been noted and commended by the OAS.

Relations between the CD and the ruling party, Fanmi Lavalas (FL), continue to be fractious, with both sides exchanging insults and accusations of violence. Tensions have increased with the government pointing to a number of incidents as evidence of the existence of an armed opposition, which it claims has links with the CD. A particular flashpoint has been the troubled town of Petit-Goave, where the government blames an armed group based in inaccessible hills outside the town for a spate of violent attacks on FL supporters. Elsewhere, too, anti-government groups have emerged. In the northern city of Cap-Haitien, a participant in a pro- government demonstration was shot dead on April 6th in a neighbourhood considered to be an opposition stronghold. In the Plateau Central region, following a spate of violent incidents involving former soldiers in previous months, national security concerns were heightened in early May when 20 heavily armed men attacked the hydroelectric facility at the Peligre dam, killing two security guards and setting fire to the control room. Power output from the facility-by far the largest in the country and source of much of the electricity used in the capital, Port-au-Prince-was interrupted for two days while repairs were carried out. While escaping, the attackers commandeered a vehicle belonging to a local hospital and identified themselves to hospital staff as anti-Aristide former soldiers from the disbanded Haitian army.

Government alleges coup plots

The Peligre incident came just hours after the Dominican army raided a hotel in the town of Dajabon, near the border with Haiti, and detained five Haitian men for questioning. Those detained included Guy Philippe, the former police commissioner who has been linked with earlier attacks on police and government installations, and Paul Arcelin, a former diplomat during the 1988-90 military regime headed by Lieutenant-General Prosper Avril. The five were detained after Haitian authorities reported to their Dominican counterparts their suspicions that the men were plotting to overthrow the Haitian government. Although the Dominican authorities released them after one day, saying they had no evidence of any threat to Dominican security, the Haitian government's concerns appeared to be substantiated a short time later by Mr Philippe himself. A few days after his release, he gave interviews to the Dominican media in which, while he denied meeting to plan a coup, he called on Haitians to plot to overthrow Mr Aristide and said he would support any such attempt. Government spokesmen were quick to link the group to their political opponents. A CD spokesman, Paul Denis, denied any involvement with the group but confirmed that Mr Arcelin was one of the coalition's official representatives in the Dominican Republic.