|
>View discussions about this entry Country: Haiti
Organization: S. A. Filature et Corderie d'Haiti (SAFICO)
Year initiative/program began: - 2002
Field of work - Banking/Financial Services
Service / Activity focus (If "other" please explain in entry form) - Other
Year organization founded (yyyy) - 1952
Positioning in the Mosaic of solutions
What is your signature innovation, your new idea, in one sentence? - By allowing employees to borrow against their retirement savings they gain access to credit and high returns for their savings at no risk.
Describe what makes your idea unique—different from all others in the field. - In Least Developed Countries (LDCs) pension plans are usually non-existent or inadequate. Most companies are only willing to set up Retirement Savings Plans (RSPs). These plans can work well when managers can find high returns for the savings at low risk; this is very hard to do in most LDCs. Employees are often reluctant to participate because the benefit is so far into the future as to be irrelevant to their current situation.
Our plan allows employees to borrow against their savings. This simple idea has a huge impact. It provides a short term benefit, ensuring the employees’ willing participation. The company manages the loan portfolio and all interest earned on the loans is returned to the employees as interest on their savings. Over the past five years our RSP has averaged 11.8 % annual returns in US$ and we have loaned over $240,000 to our 100 employees without losing a dime. Our employees are better able to face routine and unexpected expenses because they have reserves that they can borrow against. Several employees are investing in building homes or setting up small businesses. How do you implement your innovation and apply it to the challenge/problem you are addressing? - I manage the RSP and the loan portfolio and we have a committee of employee representatives who oversee my work. Each employee receives a monthly statement showing the evolution of their savings and the balance owed on any outstanding loan. We are in the process of turning the RSP into a co-operative.
Do you have any existing partnerships, and if so, how did you create them? - We have some other companies that have started RSPs based on our model and we have helped them set up their plans. There are currently about 1500 employees covered by this kind of plan. I hope to reach about 5,000 or 6,000 employees and then try to set up an Association.
The Association would allow us to take it to another level. We could look at doing something about the payout phase and there are possibilities for micro-insurance against specific risks. In which sector do these partners work? (Check all that apply) - Citizen sector (nonprofits, NGOs)
Provide one sentence describing your impact/intended impact. - We will help as many employees as possible to create significant savings which can give them better financial security, both before and after retirement.
Please list any other measures of the impact of your innovation. - I have been keeping track of the motives for borrowing since December 2004. Employees are not using the money frivolously. I have found the following results for 895 loans, worth US$154,804.06, over 3 calendar years:
Motive---- % Number of Loans ---- % Value of Loans
How many people does your innovation serve or plan to serve? Exactly who will benefit from your innovation? - We currently have about 1,500 employees, in 6 companies, benefiting from this kind of plan and I have another 2,000 or so in companies who are in the process of setting up similar plans. If we can get some Pension Reform in Haiti we could establish a second pillar, based on this model, serving 10s of thousands.
How is your initiative financed (or how do you expect your initiative will be financed)? - The RSPs are financed by the employees, through payroll deductions, and employers, through matching payments. The employer assumes the cost of managing the RSP. So far I have been spreading the word on a volunteer basis.
If known, provide information on your finances and organization: -
1 Part-Time Volunteer (myself) What are the main financial barriers and how do you plan to address them? - There are no financial barriers
Aside from financial sustainability, how do you plan to grow the initiative? - I have been spreading the idea by word of mouth so far. I want to keep a fairly low profile until we can achieve a critical mass. Some companies show reluctance because they don’t want to manage something like this so I am considering offering a service which would have to be paid for.
What was the motivation or defining moment that led to the creation of this innovation? Tell us the story. - I was managing a successful company when its parent company got into financial trouble. It was decided to merge the two companies in order to save money. I became CEO of the new entity. In the consolidation process many employees of the parent company were let go after 30 or 40 years service. I found this hard to stomach and determined to set up an RSP. When I talked with the employees they said OK but they wanted to be able to borrow against their savings. I was not too enthusiastic about the additional work implied until I realized that they could pay interest on the loans which would provide higher returns for the savings. I was able to develop some spreadsheets which reduced the work to a minimum.
Please provide a personal bio of the social innovator behind this initiative. - Note this may be used in Changemakers marketing material. Please upload a photo of the project innovator or innovation at the bottom of the page. I am a 57 year old Canadian civil engineer. After graduation, in 1974, I went to Malawi with CUSO for two years. After returning to Canada I got a job with a consulting firm who sent me back to Ghana for 1-1/2 years then to Haiti for 9 months in 1978. I met my wife in Haiti and decided to settle down here, I have been working in the private sector here ever since.
a) Please identify the individuals that your innovation benefits (Please check all that apply) - Holders of assets
b) Do you help the people you serve to buy goods or services using financial innovation? If so, how? - By providing access to credit.
c) Do you help the people you serve to sell goods or services using financial innovation? If so, how? - By providing access to credit.
Contact Information:
Tom Adamson
CEO S. A. Filature et Corderie d'Haiti (SAFICO) (business) Discussions about this entry
|
Retirement Savings meets Micro-Credit
|
|
Copyright © 2009 Changemakers | Legal & Privacy Policy | Credits
Changemakers is an initiative of Ashoka
|
 A Changemakers Partner
|
A Changemakers Partner
|
|
|
||
Dear Tom,
On November 3, 2008, the judges reviewed the entries for the Changemakers “Banking on Social Change: Seeking Financial Solutions for All” competition and would like to pass on the following feedback (listed below) for your entry. Thank you for applying and for your hard work in the field. We are excited to archive your entry to serve as a leading solution for the worldwide community of innovators who are seeking solutions that allow financial security to become a reality for everyone. We wish you continued luck with your sustainable, innovative, and socially impactful initiatives.
All the best, The Changemakers Team
“This concept of a revolving loan fund paired with a system of borrowing against savings is similar to Indian companies that sponsor Provident Fund programs—where a revolving loan fund is established for members to borrow from. This could offer a potential for partnership and development opportunities with similar organizations.”
- Changemakers “Banking on Social Change: Seeking Financial Solutions for All” Judges: Citi, The Times of India, Nokia, Soros Fund Management LLC, PlaNet Finance.
----------
Kaylena Bray
Ashoka's Changemakers