Pay As You Go

by Steven Visscher, Mawer Investment Management

Sometimes it feels like we live in a world that rewards fiscal irresponsibility. If a government spends too much, they can just borrow more and promise to pay later. If a business assumes too much risk and gets into trouble, we bail them out. Individuals who get too leveraged can just declare bankruptcy and start over again. It’s unfortunate we don’t have greater rewards for those who are fiscally responsible. This concept came to mind during a recent volunteer trip to Haiti where I met a young woman named Joelle. I was fascinated by her story, and believe it provides quite a contrast to the fiscal irresponsibility all around us.

Joelle is a single mother living in a small fishing village. She owned a small convenience store that provided a modest income. In January 2010, an earthquake devastated much of Haiti. Joelle survived, and her store was intact, but many of her neighbours perished. In the months following the earthquake, Joelle had few customers and shared many of the items in her store with her impoverished neighbours. Before long, her shelves were empty and her savings depleted. Aid organizations poured into Haiti to help rebuild homes and infrastructure, and gradually her community became functional again, but Joelle’s livelihood was over. When school resumed, she could no longer afford to send her child. They faced a grim future.

But thankfully, numerous micro-credit agencies had also arrived in Haiti to make small loans that traditional banks would not. Joelle qualified for a $100 loan to re-start her business. She also received some basic business training on how to manage this loan and guidance on what items may be most needed in her community. With that $100, Joelle travelled to the city to acquire inventory for her store and began to earn a modest income once again.

When I met Joelle she had already re-paid that $100 loan. In fact, she proudly showed me her simple ledger that indicated she had made each loan payment before it was due. I knew she still faced a difficult road ahead, so it was tempting to reach into my wallet and simply gift her another $100. But that solution could rob Joelle of her dignity and promote a cycle of dependence. She didn’t want a gift. She didn’t want a bailout. She was adamant about paying her own way.

Even after seeing her circumstances first-hand, it is still hard to fathom how difficult her life is. But I was both humbled and encouraged to see her tackle life’s challenges with more fiscal responsibility than many around us. Governments, businesses, and consumers alike could learn from Joelle.

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