An audit of a US Agency for International Department (USAID) programme, that aimed to boost Haiti’s economy by providing loans to businesses, has found that the programme 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 programme 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.

The USAID office in Haiti had seven active 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 didn’t make much effort to work with them.

Loans were supposed to go to three “development corridors” identified by the US government as part of its earthquake reconstruction strategy but few did. Instead they stayed in the Port-au-Prince area.

Ninety per cent of Sogebank’s loans were confined to the capital and the bank didn’t give loans to other parts of the country. Some 81 per cent of the Sofihdes loans were in Haiti’s capital.

A portfolio manager said Sogebank was supposed to focus initially in Port-au-Prince and expand to the other corridors later, the audit said. Sofihdes, based in the capital, didn’t have the resources to expand services to the other areas, the

audit added.

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. Lenders didn’t always understand or carry out programme goals and didn’t always adjust lending practices to meet the goals.

The audit found other problems.

The loans weren’t 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 jewellry. Loans, however, went to some of these businesses because, the audit said, “lenders didn’t have effective practices in place and because USAID didn’t periodically review the loans”.

The loan programme 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.