Haiti - Back to life

Haiti - Back to life

Published: October 15, 2009

Foreign Direct Investment

(Read the original article here)

The violence, poverty and corruption that has blighted Haiti over the past few years has given way to an air of peace, efficiency and optimism. Michael Deibert reports.

Politically aligned gangs warring across the ramshackle capital of shanty towns and gingerbread houses are a thing of the past in Port-au-Prince, the capital city of Haiti, and visitors cannot help but be struck by the feeling of change in the air.

An airport previously staffed by political cronies, where passengers sweated in boiling halls, is now a model of air-conditioned efficiency. Streets once deserted after sunset now teem with life, with upper-class restaurants in the hillside Petionville district and the kerosene-lit roadside stands of the ti machann (vendors) downtown luring customers late into the evening, something unthinkable only a few years ago.

Peace has been brought to this Caribbean country of 9 million people through the work of president René Préval’s government, and the 9000-member United Nations Stabilization Mission in Haiti, known as MINUSTAH.

Haiti was previously ruled by the erratic priest-turned-president Jean-Bertrand Aristide from 2001 until his ousting in February 2004. This was followed by turmoil under an interim government that ruled until President Préval’s inauguration in May 2006.

From a police force of just 3500 at the start of Minustah’s mandate, Haiti now boasts 9200 police officers, a number projected to grow to 10,000 by the year’s end, and to 14,000 by the end of 2011. Recent mid-term parliamentary elections passed largely peacefully – no small feat in a country where ballots often threatened civil order.

In addition, the World Bank, the Inter­national Monetary Fund and the Inter-American Development Bank (IADB) collectively cancelled $1.2bn of Haiti’s debt in June, erasing almost two-thirds of the country’s outstanding debt in one stroke. The IADB went even further, approving an additional $120m in grants to help Haiti improve its infrastructure, basic services and disaster prevention plans.

“Haiti has a lot of potential,” says Michèle Pierre-Louis, the country’s prime minster and a respected civil society leader before she joined President Préval’s government. “But we have a very fragile civil society, and we’ve never thought of social mobility and prepared for a middle class.”

Positive outlook

Many observers and investors feel a guarded optimism about the country’s political and economic prospects.

“The investment climate in Haiti is far better now than it was during the [interim] period or the days of President Aristide, that can be said without any doubt,” says Lance Durban, a US businessman who first arrived in Haiti in 1979 and now runs Manutech, an electronics manufacturing company employing about 450 people. “You’re close to the US market, you have a lot of people who speak English and you have the lowest wages in the Americas.”

Last year, Haiti boasted modest-though-respectable GDP growth of 2.3%, and at the beginning of 2009, President Préval created the Groupe de Travail sur la Compétitivité, a body designed to increase Haiti’s competitiveness in attracting global businesses.

Beyond the manufacturing sector, new avenues in Haiti’s potential for investors are also opening up. The garment industry, once a lynchpin of Haiti’s economy, could help the country’s economic revival, if given the right incentives and support. In the US, the Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2008 (HOPE II) built on a 2007 measure that provided certain Haitian textiles with duty-free status when entering the US. Mining is another area of interest (see In Focus, below).

Tourism targets

Also on Haiti’s business landscape is the OTF Group, a competitiveness consulting firm credited with breathing new life into Rwanda’s tourism, coffee and agro-industry sectors following the genocide in the country in 1994. OTF has found encouraging evidence that Haiti might be ripe for a similar renaissance.

“In terms of the business opportunities, I am amazed by what I think is possible,” says OTF director Rob Henning. “And our role is to facilitate a process by which the Haitians, both the public and private sector, take ownership over industries and try to create a prosperous Haiti where poverty is reduced through wealth creation and the creation of businesses.”

Though Haiti currently ranks 154 out of the 180 countries covered by the World Bank’s Doing Business Index, substantial improvement has been made in cutting down the red tape that once made investing in the country an inexplicable maze for foreign capital.

It generally now takes a maximum of 40 days to incorporate a company in Haiti, as opposed to the 202 days that it took as recently as 2003.

However, the challenges the country faces remain substantial. Weak infrastructure, environmental degradation and deforestation contributed to conditions which saw a trio of hurricanes kill at least 600 people in 2008. After Haiti’s Senate passed a measure in May raising the country’s minimum wage to a rate of about $4.90 a day, a 300% increase from its current level, President Préval balked at signing the measure, fearing that it would jeopardise Haiti’s already fragile employment sector.

In unison

Despite this, however, Haiti’s business class and its poor majority have learned some hard lessons about working together.

In the once-violent Port-au-Prince neighbourhood of Saint Martin, member’s of Haiti’s private sector and local community leaders have been meeting with the support of the Irish charity Concern Worldwide since 2007. A ‘peace and prosperity’ committee in the district boasts three members from Haiti’s private sector and 12 representatives from the community of Saint Martin. A recent general assembly to address community concerns attracted nearly 150 people.

“You can no longer put a business in a community where it is built against the community,” says Ralph Edmond, the president of Farmatrix, which has manufactured pharmaceutical products in the district since 1994, and who is active in the debate. “If we are to live in this country, then we have to live differently than our fathers did before.”


COUNTRY PROFILE

HAITI

Population: 9.03 million
Pop. growth rate: 1.84%
Area: 27,560 sq km
Real GDP growth: 1.3%
GDP per capita: $1300
Current account: -$611m
Largest sector (% of GDP): Agriculture 66%
Labour force: 3.64 million
Unemployment rate: na
Source: CIA World Factbook, 2009

IN FOCUS

MINING INDUSTRY TO STRIKE GOLD?

Eurasian Minerals, a Colorado-based mining company, in association with Newmont Mining Corporation, has initiated exploratory prospecting procedures at several sites in the north of Haiti, where there could be substantial gold and copper deposits.

In the neighbouring Dominican Republic, the Pueblo Viejo gold deposit has proven to be one of the largest in the Western Hemisphere, with proven and probable reserves of 570,000 kilograms of gold, 3.3 million kg of silver and 192 million kg of copper.

“Mining could represent a substantial investment in the country, its economy and its infrastructure,” says Eurasian Minerals CEO David Cole, noting the potential for “very large” gold deposits in Haiti that have never been properly explored.