The Role of the Haitian Diaspora in Building Haiti Back Better
June 14, 2011
The peaceful transition of presidential power to Michel Martelly on May 14, 2011, marked an important moment for Haiti. After months of uncertainty surrounding a turbulent electoral process, a window of opportunity has opened for the Western Hemisphere’s poorest nation to attract badly needed foreign investment. Along with a host of multilateral, bilateral, and private players, the Haitian diaspora has a critical role to play in growing the country’s economy, both as investors and customers. The challenges should not be underestimated. Even before last year’s devastating earthquake, Haiti ranked near the bottom of almost every development index. But it retains the foundations of a multisector economy and enjoys proximity to large international markets. The opportunities for growth are tangible, and the diaspora is uniquely positioned to help Haiti realize its full economic potential.
Historically, the relationship between the diaspora and their compatriots in Haiti has been fraught with difficulties and mutual suspicion. Given the country’s extraordinarily high levels of corruption, not to mention political instability, the diaspora has largely refrained from employing its much needed skills in Haiti. As anyone living in Haiti will tell you, it isn’t easy to build a business there. Steps are being taken to ease restrictions across the board, but it also takes some insider know-how to really get a business off the ground. The new government has recognized the investment potential of the Haitian diaspora and has already implemented reforms that will allow it to become a much stronger economic partner going forward. More than any other group, Haiti’s diaspora can mobilize now to make a difference in laying a strong foundation for other investments that Haiti will need in all sectors.
Q1: Why is the diaspora so important to the Haitian economy?
A1: With only about 10 percent of Haitians formally employed, the Haitian economy is dependent on remittances from members of the diaspora. Calculations for total annual remittances place the figure in a range of $1.5 to $1.9 billion, or between 23 and 30 percent of gross domestic product (GDP) in 2010 (official development assistance (ODA) to Haiti only accounts for around 10 percent of GDP). This pool of resources has become the cornerstone of Martelly’s ambitious education agenda. If Haiti is to have a sustainable recovery, then it must change the fact that most Haitian children, who make up more than a third of the total population, do not have access to education. By taxing wire transfers and international calls, as Martelly has proposed, it is estimated that the government could collect anywhere from $50 to $180 million, which could be used to bring the responsibility for educating Haitians back under the government’s purview (NGOs have assumed that responsibility recently). Our recent trip to Haiti made it clear that the people support Martelly, but he will need to show quickly that money that otherwise would be going to Haitian families is producing some public benefit. Absent such results, his political support will erode, and the diaspora will find ways to send remittances outside of taxed channels.
Haitians need access to capital, enterprise development, and investment, and the Haitian diaspora can help. Haiti suffers from the most severe “brain drain” per capita in the world. Eighty percent of Haitians with university degrees do not live in Haiti. Of the more than 2 million Haitians living abroad, up to 1 million of them reside in the United States. Haitian-Americans are among the more successful immigrant groups in the United States. In the week before Martelly was sworn in as president, Haitian lawmakers changed the constitution to grant dual citizenship to Haitians living abroad, which among other things will make it easier for them to invest in Haiti.
For years, many have recognized the diaspora as a critical part of any durable solution to Haiti’s problems. But now more than ever, the group must be tapped for its technical and intellectual capacity and investment capital. Martelly’s choice for prime minister, Daniel Gérard Rouzier, is a cause for optimism. A successful businessman prior to political life, Rouzier was the driving force behind an electricity generation company deal that was largely the result of investment capital from Haitians and Haitian-Americans. He has also publicly stated that this government will begin to deliver on the slogan “Haiti is open for business.”
Q2: What initiatives are being taken to grow Haiti’s economy and use the power of diaspora funding to demonstrate progress?
A2: Even if Haiti is open for business, Rouzier has acknowledged that the country needs improved infrastructure to attract investment. Agriculture is a good place to start given its importance to the Haitian economy. For example, a Coca-Cola Company initiative designed to diversify its supply for the Odwalla beverage Mango Tango will also serve as a much needed catalyst for related infrastructure projects and investment deals. With TechnoServe providing technical assistance to grow the crops more efficiently, Coca Cola is working with the U.S. Agency for International Development (USAID), the Inter-American Development Bank (IDB), the Clinton Bush Haiti Fund, and local and international actors to provide the financial underpinning for the project. Given the scale of this project, infrastructure improvements will be necessary for it to succeed. Even though it will be quite some time before Haiti’s mangos, some of the sweetest in the world, make their way into Mango Tango, the project is expected to double the income of 25,000 farmers over the next five years and connect important supply lines that will make investments in the agricultural sector as a whole more attractive. The project’s long-term view of development and return on investment is a critical step in the right direction.
Public-private partnerships are essential to restoring the economic potential of Haiti. The Leverage Effective Application of Direct (LEAD) Investments is an example of where the U.S. government is engaging the diaspora’s investment potential to target a significant engine of economic growth: the development of small and medium-size enterprises (SMEs). The program will combine USAID grant money with funds from U.S. investors. Because of the program’s stated goal of working with investors who understand the risky dynamics of starting or growing a business in Haiti, it is actively targeting the U.S. Haitian diaspora.
In 2010, Haiti exported an estimated $530 million worth of goods, with nearly 80 percent shipped to the United States. Although its previously vibrant manufacturing sector is a shadow of what it once was, it is nonetheless responsible for the bulk of Haitian exports. U.S. legislation such as HOPE I and II and the more recent Haiti Economic Lift Program (HELP) Act enhance trade preferences for Haiti, providing Haitian apparel exports with duty-free access to the U.S. market. As a result, the Korean apparel firm Sae-A Trading, providing fabrics to Gap, Walmart, Target, and others, is set to become the largest private-sector employer in Haiti. Working with the U.S. government, multilateral and bilateral organizations, and private players, a new industrial park on Haiti’s north coast will become operational in 2012. The project, which includes transportation infrastructure construction, will create tens of thousands of jobs and make Haiti more attractive for investors.
The tourism industry in Haiti is also expected to expand, in part due to IDB efforts to carve out a tourism hub in the northern region, with its beautiful coastline and mountains and cultural attractions like the Citadel. The government of Haiti, with local players, is pushing forward with a private-public management model to turn the northern region into a “world-class tourism destination,” and it needs the diaspora’s help to do so. A visible example of promise in this sector is the Oasis Hotel in Pétion-Ville. Perched at the top of a hill on a busy avenue in Port-au-Prince’s wealthiest neighborhood, the hotel’s multistoried façade is a monument to the business creation potential of investment capital provided by development finance organizations, nongovernmental organizations, and private individuals, including members of the U.S. Haitian diaspora.
Ashley E. Chandler is a research associate, and Hardin Lang a senior fellow, in the Defense-Industrial Initiatives Group at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Johanna Mendelson Forman is a senior associate with the CSIS Americas Program.
Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
© 2011 by the Center for Strategic and International Studies. All rights reserved.