Paving the Way for Economic Recovery in Haiti

Dialogue concerning Haiti's development is changing.  First, there is more discussion than ever before about Haiti's private sector, and a sense that trade will do more for Haiti in the long run than aid.  Second, there is a growing emphasis on integrating Haiti economically and socially with the rest of the Caribbean and Latin America.  Finally, donors are increasingly helping the Haitian government to address its own priorities.  There are many challenges but also many possibilities.  As Haitian say, little by little birds make their nests...

In Haiti, any discussion of the economy will have to start with agriculture.  Stability depend on people being able to feed themselves and their families.  The country is experiencing a bit of a respite from food cost inflation right now.  The Famine Early Warning System (FEWS-NET) notes that current prices for staple foods and transport are relatively low now, due to improved supply and demand on international markets and normal to above-normal winter harvests in February and March.  The main concern now is that widespread flooding during the rainy season could result in a loss of lives, crops, and livelihoods.

Decreases in food prices are most welcome but they will not last forever.  A recent UN report predicts that food prices will again rise by 2015, when economies are expected to have recovered from the global recession, pushing up demand for food and fuel once more.  The report goes on to state that land degradation, brought on by over-intensive cultivation, and the use of mineral fertilizers are major threats to agriculture. In deforested countries such as Haiti, sustainable agriculture requires regenerating arid soils impacted by deforestation and erosion as well as preventing flooding by protecting watersheds and tree cover.

Olivier De Schutter warns that ramping up food production alone would not alleviate the suffering of the hundreds of millions going hungry around the world.  Increased investment in agriculture is necessary, but it must benefit those who are food insecure.  As he put it, “Increasing agricultural production must go hand in hand with increasing the incomes of the poorest." He called for a form of sustainable development that was “more about how to help the world feed itself” than “how to feed the world.”  The “real problem of hunger” is not linked to inadequate food supplies, but rather that many people lack the purchasing power to buy available food, he said.

To increase purchasing power, people need employment.  The World Bank recently approved a four year, $121 million Haiti lending plan for Haiti which will focus on economic growth, jobs and reducing the impact from natural disasters.  The World Bank said the plan provides assistance through a mix of investment, projects and development policy measures.  Agricultural and textile manufacturing sectors were identified as potential growth areas for Haiti.  

The Organization of American States (OAS) and the Caribbean Community (CARICOM) are two regional organizations helping Haiti integrate economically and socially.  OAS Secretary General José Miguel Insulza briefed Congress last month on the importance of working together in a coordinated manner to support Haiti's National Development Strategy, where the Haitian government developed to lay out its goals and priorities.

At a recent OAS press briefing, OAS Assistant Secretary General Albert Ramdin said there was a moral obligation for CARICOM to show more political commitment and support to Haiti, as a member of the regional grouping.  He hopes "people to people" contact between Haiti and CARICOM would be improved, with Caribbean politicians visiting that country regularly.

Ambassador Ramdin also said OAS is seeking to send a mission to Haiti by September, which will include representatives from several multilateral organizations, as well as Caribbean leaders. He shared that the OAS would also take members of the media in an effort to show Haiti's positive aspects.

He then added that the OAS is also planning an inter-American programme to create a framework to help Haiti, after United Nations forces pull out.  He also disclosed that the OAS was considering a proposal from Trinidad and Tobago to establish a hemispheric development fund.  The CARICOM Central Bank Governors met in Haiti last month to discuss how best to stimulate their economies during the global economic downturn.  The Committee will meet in Port au Prince again in November.

Promisingly, the Chambers of Commerce for both Haiti and the Dominican Republic met last month to discuss investment opportunities and technological exchanges.  The Haitian government also opened talks with Panama on promoting trade.

Remittances from the Diaspora have traditionally provided an economic safety net for those with family members abroad. Now, however,  remittances are down due to the global economic downturn.  Remittances in April reportedly totaled 82 million, down 16% from March.  So far this year Haiti has received 590 million in remittances which is 4 million less than this time last year.

If the Haitian Diaspora has less money to give, they will need to be smart in how they give it.  A recent video conference entitled "Dollars and Diaspora: A Haitian Community Financial Literacy Dialogue," linked Haitians in New York, Miami, and Boston  with the Ministry of Haitians Living Abroad in Port-au-Prince. The conference was sponsored by the Haitian American Business Network (HABNET), the Haitian Students Association of Long Island University, the Latin American & Caribbean Center (FIU), Ministere des Haitians vivant a l'Etranger, Alianza International, Moneygram International, Alternative Insurance Company in Haiti, New York Appleseed, City National Bank of New Jersey, and the University of Massachusetts.

Participants discussed ways in which the community could work within the U.S. to improve the financial literacy of Haitian immigrants, many of whom contributed significantly to the US$1.8 billion sent back home in 2008.  With greater financial literacy, Haitian immigrants can be empowered to both increase and protect their assets, while identifying more cost effective and productive ways to send money home -- spurring the growth of Haiti's economy.

A number of community leaders participated including Jimmy Toussaint, a candidate for New York City Council.  Other participants included Jackson Rockingster, leader of the Haitian American Business Network.  Father Joseph Philippe (Dounder of Fonkoze) and Anne Hastings (Director of Fonkoze), and Kathleen Felix (Fonkoze Project Director/NYC), moderated the four-city workshop. Under the leadership of Anne Hastings, the institution has grown from two volunteers in one location to over 750 full time staff in 40 branches, serving 190,000 clients -- including 55,000 borrowers.

According to Father Joseph, "The Diaspora is the driving force for the economic development of the country...but in order to reach that objective, overseas Haitians need to be organized locally, state-wide, and nationally."  Father Joseph told the participants that his goals were two-fold: to draft legislation for the Haitian government to allow for dual citizenship, and to include a $1 surcharge with all money transfers to Haiti to provide for public services and investment in Haiti.

Organizing the Haitian community, for the most part, involves three states: Florida, Massachusetts, New York.  But that having been said, there are sizeable populations of Haitians in the Washington DC metropolitan area as well as Chicago.  Some interesting statistics: There are about 400,000 Haitians living in the New York area, with about the same number living in South Florida, and 100,000 in Boston.  According to the 2000 U.S. Census, about 58% of Haitians work in a professional capacity.  An estimated one third of black doctors in New York State are Haitians and there are around 1,100 Haitian doctors in the New York Metropolitan area alone.  There are over 2,000 Haitian-American engineers working for the MTA in New York City alone - more than the number of engineers in Port-au-Prince.  Almost 40% of Haitian-Americans own their own homes.

Fonkoze has partnered with a local insurance company, Alternative Insurance Company S.A (AIC), to provide credit and life insurance to all Fonkoze borrowers.  This insurance protects clients so that upon a clients' death, their debt is not passed onto family members.  It also provides a cash payout to their beneficiaries much like traditional term life insurance.  The next challenge will be to sell "micro-insurance" that offers additional coverage such as funeral and weather insurance to clients.

Economic recovery was a major theme during an interesting discussion last month at the United States Institute of Peace entitled "Will Diplomats and Donors Bring Economic Recovery to Haiti?"  Speakers included David Harland (UN Department of Peacekeeping Operations), Dora Currea (Inter-American Development Bank),  Belinda Bernard (USAID), Ambassador Albert Ramdin (Organization of American States), and moderator Robert Perito (USIP).

Ambassador Ramdin opened his remarks by stating that no, of course diplomats and donors could not bring economic recovery to Haiti.  However, they can support the Haitian government and civil society in people in bringing about recovery.  Assistance should facilitate, assist, help, but never take over the responsibilities of the Haitian government.  He noted that labels such as "the poorest country in the Western Hemisphere" do not help Haiti, which is a country of opportunities.

He then noted that Haiti can no longer exist in isolation. Integration into, and solidarity with, other countries in Latin America and the Caribbean is making a real difference and will help Haiti's private sector develop.  He closed by emphasizing that education and health were key to sustainability - with an educated and healthy population the rest would fall into place.

David Harland stressed that legitimate political space and physical security go hand in hand.  He went on to state the oft cited Collier report is just that - a report but not a plan.  Instead he encouraged all parties to closely examine and coordinate their activities with the Haiti's National Poverty Reduction Strategy.  He noted hopelessness can be self perpetuating and emphasized the importance of visible, demonstrable improvements.

Dora Currea described the outcomes of the Haiti Donors' Conference, but reminded the audience that conferences are just events in an ongoing process.  Haiti needs assistance in  reinforcing government institutions and improving fiscal transparency.  She also highlighted the massive number of jobs that could be created through infrastructure works and watershed management alone.

Belinda Bernard noted that rule of law and infrastructure, and in particular electricity and ports, were key to making Haiti competitive again.   Above all, she stated, that Haiti needed predictability – no economic, social, or political upheavals and consistent support from the government. 

So is Haiti open for business?  The pieces seem to be falling into place.  The country is more stable than it has been in a long time.  Digicel has proven that a company can do very well in Haiti by providing much needed services at reasonable prices.  President Preval, Prime Minister Louis, and Special Envoy Bill Clinton have all prioritized foreign investment.  Haiti's neighbors and partners in the Western Hemisphere are demonstrating that they are committed to Haiti's economy recovery. 

The missing piece is the Diapsora.  Remittances are nice but their investment would be better.  How to empower the Diaspora to invest in Haiti? First, make dual citizenship possible.  Then let them vote in national elections.  Allow them to compete for government positions.  Finally, the government should streamline the process for establishing businesses in Haiti and be as supportive as possible to Haitian entrepeneurs.

There are better economic times ahead for Haiti.  If you have ideas for how Haiti can strengthen its private sector, please post in the comments section below.  Thanks!

Bryan