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Following the Money in Haiti

Aid money leads to substantive growth in Haiti, not costly waste, says Ainsley Butler.

By: /
7 August, 2012
By: Ainsley Butler
Chief Investment Officer at Building Markets

Thirty-one months after the devastating earthquake in Haiti, many questions remain about how international aid dollars have been spent in the country. Up until now, a lack of data with which to address these questions has frustrated efforts to evaluate the impact of humanitarian and development projects on the daily lives of Haitian people and the long-term reconstruction process.

Since the earthquake, 1,332  contracts worth US$28.7 million have been awarded to Haitian companies through market-linkage services funded by the Government of Canada through the Canadian International Development Agency (CIDA). Today, we share a report about the effect these contracts have had on Haiti. The data we collected marks a serious contribution to untangling the twists and turns of the aid-money trail. Although these contracts represent only a small fraction of overall spending in Haiti (which has been reported to have been as much as $843 million in 2011) our analysis provides insight into the positive impact that business activity can have on local firms and the people they employ. Our report reveals a trail that leads to substantive growth, rather than to costly misallocation or waste.

A rare glimpse into the Haitian marketplace

This report, and the unique data it contains, demands the attention of Haiti’s political officials and G12 partners, who can take immediate action to increase economic growth in Haiti.

Building Markets asked the hard questions in order to provide political leaders and the public with some much-needed information on the situation on the ground. For example, in exploring how more jobs can be created now, we found that small businesses are increasingly participating in procurement and creating work opportunities, especially for women.  

Some of our other findings include the following:

  • 56 per cent of the contracts went to businesses with fewer than 20 employees

  • 34 per cent of all contracts identified were awarded to businesses owned by women

  • Women held nearly one-third of jobs created or sustained by these contracts

  • Nearly 80 per cent of contracts identified led to other contracts

The next steps

Our report is a critical step, but it is only one of many that need to be taken if Haiti’s reconstruction process is to continue moving forward in a way that benefits Haitians. Much remains to be discovered about economic activity in Haiti. One area worthy of further study is how much it costs to create jobs through international spending. We’ve discovered the high cost of creating jobs in Haiti in the context of our own work there, which started in June 2009. 

Government and development don’t create large-scale employment opportunities. Entrepreneurs such as Ernst Charles of Sonac-Agricole do.

Future studies need to draw on the knowledge of larger businesses such as Digicel and Voilà in the telecommunications sector, and Prestige in the beverage sector, as well as smaller exporters in agribusiness such as Sonac-Agricole. These businesses are significant employers whose understandings of the workings of the local marketplace should be harnessed to ensure that the development dollars are “spent twice” – first, by creating both business and employment opportunities for Haitians, and second, by simultaneously contributing to reconstruction and development.  

Something to be proud of: local business success stories

There are encouraging stories about business in Haiti throughout our report. Since learning how to participate in procurement opportunities, MGR Papeterie owner Marly Nadine Michel, a single mother of five, has been able to win contracts from UNICEF, the French Agency for Development, and Haiti’s Ministry of Education to provide office supplies and furniture. Meeting the demands of those contracts meant hiring extra workers. Every story like Marly’s translates into more Haitians finding work. 

A Haitian engineering firm, SECCA, was contracted to restore one of the Haitian capital’s parks. “Place St. Pierre has always been a place for people to relax and socialize. To be able to re-create that atmosphere is an important step for Haiti’s recovery,” explained SECCA Director-General Erold Exilus. “The park is very bare right now, with very little vegetation and lots of broken concrete. Restoring its clean and green wide walkways and shady enclaves will be a big accomplishment.” Contracts like this one translate into more Haitian firms becoming stakeholders in the reconstruction process.

Ernst Charles, owner of Sonac-Agricole, who directly employs 20 people and works with co-operatives representing up to 100 people, has said, “At the end of the day, I’m just one piece of the puzzle in Haiti. But it’s also much bigger than that. Multiply the effect of what my firm is doing and see what the numbers tell you. This is a winning formula for foreign aid.” Developing a better understanding of the ingredients in this formula is the core aim of our report. 

A winning formula for foreign aid: buy local

Something to aspire to: a “Republic of Entrepreneurs”

Entrepreneurs in the developing world create 86 per cent of jobs. Policy-makers and politicians have a long way to go to support Haiti’s private sector while high levels of development assistance continue to enter the country. When funding dries up, it will be too late. Time is of the essence.

With the Ministry of Commerce and Industry firmly focused on improving the ease of doing business and providing market-linkage services, a dynamic cabinet of ministers, and a long list of inspirational business owners, Haiti is poised for some good news stories. The positive case studies in our report should only be the beginning. We look forward to the day when the “Republic of NGOs” becomes a “Republic of Entrepreneurs” in a prosperous, stable, and tourist-friendly state.

Photos courtesy the author

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