Haiti Aid – What the Media Didn’t Tell You!

In the wake of January 12, 2010, a massive earthquake occurred in Haiti. There was a huge crash in the economic activity of the country. They lost over 8 billion dollars as their GDP (gross domestic profit) which impacted negatively on both small and large businesses in the country. Foreign aid flew in mass from developed countries to lend out helping hands to a falling nation. They did try their best, but their help still came with unintended consequences. Gradually, the foreign aid eroded opportunity for small and large businesses to thrive in Haiti. Doctors outside Haiti came in with facilities, set up their tents and started offering free health care for the injured. There was a newly completed private hospital before the earthquake, but it quickly went out of business because the foreign doctors failed to synergize with the local ones.

A local soap company in Haiti controlled by a friend was a family business that makes locally made soap completely crashed due to foreign aid’s $ 50 million worth of soap and soap substitutes in the soap market in Haiti all at once. Another businessman who sells over the counter drugs planned on producing hand sanitizer, but all that hope went down the drain when foreign aid agencies made hand sanitizer available for free. Any product that comes to mind was made available by an NGO for free. You can’t compete with free!!!

Reasons Why the NGO Failed to Partner with Local Business:

• They complained local business were too expensive
• The quantity and quality were lacking in the products of a local manufacturer, so they want to buy more quality products from outside the country.
• They thought that business owners were not communicating enough.
• That their delivery time was inappropriate and it’s not meeting up to standard.

It graduated to a point where the opinion of people about the foreign aid became polarized, with some people becoming a proponent for the international assistance while others castigating the idea of having foreign aids in Haiti.

In the heat of the earthquake, developed countries made a contribution of over 234 billion dollars to be used by developing countries. But unfortunately, only 1% of this donation was able to trickle down. The USAID donation for relief materials and economic aid, only 1.65% got to Haiti. Already a proof that foreign aid is limited to achieve its goals since most of its resources never made it to the intended countries. Those are facts; not opinions.

Effects of Private Investment

In the last 20 years, the lives of over 1 billion people have been improved in various developing countries mainly business of private investment while countries like Haiti are still attached to foreign aid. A relentless and deadly strategy. Let’s do a quick comparative exercise between Haiti and the Dominican Republic – a neighbouring country on the eastern part of one island.  When Haiti suffered a substantial economic downturn due to the colossal hit of hurricane Hazel that occurred in 1963, the red cross came to lend their support. This brought about the influx of NGO from various parts of the world and Haiti saw it has modelled for survival in the wake of natural disasters. The Dominican Republic is also not immune to these disasters, but they went back into their boardroom and made concrete plans on how to survive and awaken their economy. So they developed their local businesses through private investment, which later bear good fruit in the development of their economy. In 2017, Haiti released a budget of 2 billion dollars while the Dominican Republic released a budget of 17 billion dollars. What an enormous difference. Haitians now are looking for work in the Dominican Republic, a clear sign that Haiti’s choice to hang on to foreign aid failed while the DR succeeded. Carefully considering the situation of these two countries, they both faced disasters. Just two different paths, two different strategies, and two different results. Simply their choice of economic development is different.

The moral of the story; business and private investment work while foreign aid doesn’t.

With this similar report, the question that keeps coming from NGO is: What can we do?

Here are some answers to this question that will duly guide them on how they can help resuscitate local business operators in Haiti.

1. Embrace the local system by buying as much as possible from local businesses.
2. They should share information regarding the lessons learned during their transactions; the difficulties, the challenges but most importantly let them know it is achievable and allow other people to learn, grow, and also make a financial contribution to Haiti
3. Help build infrastructure where businesses can be easily accessed bids and available opportunities. When I mean infrastructure, I am talking about an online framework, email messages that will help connect actors in the field
4. They should connect them to private investors who will contribute to expanding and growing their businesses.

Haiti is not alone. Many other countries in the world like Guatemala and other countries in Africa are also suffering from the influx of foreign aids which comes in varying forms; this comes with two eventualities. These are casualties to giving away aid.

1. They prevent new business from being created. The foreign aids cluster up the few entrepreneurial spaces in the country.
2. They also compete with the existing business in the country. Leaving no space for indigenous entrepreneurs to be successful.

These facts attest to the reason why, a country like Haiti would not be successful, owing to the fact that they have much of these obstacles and challenges in their economy.

Traveling to different countries around the world, help me identify three country killers around the world:

• Political instability

There is no country that has made it successfully through political instability.

• Corruptions

Poor countries such as Nigeria, Haiti, and Iran are corrupt, scoring the worst in the corruption index. This shows that there is a thin line between corruption and economy development.

• Foreign aid

Foreign aid is not a long-term plan for economic development, it primarily serves as a short-term plan that helps country gets back on track after a natural disaster, economic drought. It was never meant to be a measure to restore a poor country in the long run. No country has made it out of foreign aid nor that has existed or will ever exists.

How can NGOs help?

Since they have a lot of resources at their disposal, and they are here. The first thing they should do is stay away from the entrepreneurial space and give an opportunity for a local entrepreneur to gain ground and experience.

Four primary categories describe an entrepreneurial opportunity.

1. Need:

A demand follows the need. People need a purchasing power, to buy the goods and services they want.

2. Frequency:

There must be enough frequency for the product you’re selling, that is when people will consume your product and thereby sustaining private investment.

3. Cost per unit

The cost per unit of the product made needs to be inferior to the price of the product.

4. Opportunity Cost

This occurs when the gain from making a product is lower when an individual is pursuing other things.

When all these measures are present, NGOs need to move out of the entrepreneurial space and allow private investment to come into the picture and acts profitably and satisfactorily. One more thing NGO should watch out for is the fact that, if these four criteria is not met they should come in and offer help in that particular sector and get out as soon as those conditions are met.

The blatant truth is that most poor countries like Haiti are jobless; 70 % of people with Haiti are jobless and this problem will continue to fester when we don’t make use of our local market, goods, and manufacturers.

Countries like the United Kingdom made the highest earning in foreign direct investment this past year. The European countries also made a 21% increase of the foreign direct investment. The OECD countries made 6% jump in foreign direct investment. The Dominican Republic also did well in the area of foreign direct investment compared to Haiti. When we compare these statistics for the two system (i.e., Haitian and the Dominican Republic), it is obvious something is wrong here. Latin American countries knew that creating more private investment will increase the living standards of their citizens. It is essential to remember that private investment leads to business creation and business creation brings forth job creation and income generation. That leaves us the developing countries with the question, how do we create more jobs? Pretty simple bring in more foreign direct investors who will build more businesses and in the end there will be enough jobs for everyone. Former US president Ronald Reagan said that “the best Aid a country can get is JOB!; that reality still pervades today, especially for developing countries like Haiti.

From Aid to Trade: Lessons Learned from Haiti

January 12, 2010, Haiti collapsed under a deadly earthquake 200,000 people lost their lives on top of that between 8 to 12 billion dollars where lost in cumulative GDP, when the international community saw that, they came to the ‘rescue’ of Haiti. Between the multilateral organizations, the bilateral organizations, and foreign governments, a total of 12 billion dollars was pledged to rebuild Haiti. Former President of USA Bill Clinton and the former Prime Minister of Haiti Jean Marc Bellerive were in charge of these funds; and you would think with 12 billion pledged, Haiti should at least be at the same place it was prior to the earthquake.

What they didn’t see coming in all those aids was the unintended consequences of all that aid that comes in the form of donation and the negative impact it had on local businesses and also the economic situation of Haiti in general.

Foreign Doctors

For instance, a brand-new hospital that was inaugurated a couple of months before the earthquake, when the foreign doctors came in, instead of partnering with this brand-new hospital they went around and start their tents and started providing health care. Don’t get me wrong; it was a well-needed service. It was entirely overwhelmed when I was in the streets of Port au Prince to see so many people needing so much help. So, these foreign doctors were helping, but they did so without the corporation of the local hospitals.

Klamer

My co-author, Jacqueline Klamer and myself interviewed a delightful gentleman. His family owned a soap company, and after the earthquake the United Nations brought in over 50 million dollars of soap and soap substitute all at once, and in just a few months his company went out of business, with massive job loss. Another friend of mine who manufactured over the counter medicine in Haiti had a brilliant idea to start a hand sanitizer line into his business, well when all the free hand sanitizers were starting to come into the economy he had to shut down that line; more lost in job for Haiti. And you name it: backpacks, medicines, school supplies any product you can think about, those NGOs were bringing them for free and distributing them into the economy. Who can compete with free?

The NGOs invoked many reasons they didn’t buy more from the Haitian businesses:

• The first reason: they thought the local products were too expensive, they wanted to buy more for their bucks, so they choose to import.
• The second reason: they thought the quality and quantity were not there and they wanted to bring more quality goods from outside the country.
• The third reason: they thought the businesses were not communicating enough
• And the fourth reason: they felt the delivery time was inappropriate and were not up to standards.

Well, when you think about this, the discussion about foreign aid is very polarizing: on one side you have a lot of different people advocating for foreign assistance like Bono; and on the other hand, you have people who think that foreign aid doesn’t work. Well, there is a reality in between.

In the year 2010 when the earthquake hit Haiti there were over 230 billion dollars that came from the developed countries to the developing nations. Out of that 230 billion dollars only 1% made it to the developing countries. After the earthquake, of all the USAID money only 1.6% made it to private businesses in Haiti. Even President Bill Clinton admitted in the media that 50% of foreign aid never leaves the United States.

The sad reality is many developing countries like Haiti and many others in African countries like the Republic Democratic of Congo etc, are using aid as a strategy for economic development.

In the meantime, over 1 billion people have been risen out of poverty in the last 20 years mainly because of entrepreneurship and private investment. For instance, when you compare two countries: Haiti and Dominican Republic. After the hurricane Hazel in the 50s the American Red Cross moved into Haiti with the intent to help people rebuild their lives and since then it was a floodgate of NGOs that come and install their operations in Haiti. Well that model of NGO became the default model of Haiti for the long term. Whereas the Dominican Republic, our eastern neighbour, went on to rebuild their lives and focus on rebuilding infrastructure and a conducive environment for more businesses to be create toward long term economic progress and job creation.

Two different paths, two different strategies two different results. Just last year the budget for Haiti, the total budget for the country was 2 billion dollars in the Dominican Republic it was 17 billion dollars. What is the difference?

Businesses and private investment work, foreign aid doesn’t. That has been proven over and over. So, the questions that can be asked today is what can we do?

There are four different things that NGOs can do to help the economy:

1. The first thing they have to embrace the local system and buy from businesses. They cannot create a parallel system and bypass the economic structure that exists in those countries. They have to embrace it and make more transactions to create economic values into the countries they operate. They must buy as much as they can into these countries.
2. The second thing they must do is to share the lessons learned from those transactions. Let other people know that it is possible and share the difficulties or the challenges encountered when they do such transactions.
3. The third thing they should do is to help these countries build infrastructure to help spread those messages. I am talking about the online network system and onsite system and different email messages that need to be built to share and connect the different actors into the economic framework.
4. The last thing they should do and need to do this is to help connect local businesses with private investors; this is the only and best way they can run themselves out of business. And I know countries like Guatemala and different countries of Africa suffering from the influence of foreign aid that comes in different kinds and forms.

When they don’t embrace the local economy, it prevents new businesses from being created because the foreign product that has been donated to the economy makes it impossible for businesses to pursue opportunities by cluttering the entrepreneurial space.

The second thing they do is they compete with existing businesses within the economy. No wonder why the economy of Haiti would not progress because there are too many obstacles.

There are top 3 three country killers in the world present in all of the countries I have studied and have travelled to all over the world.

The number one is political instability; no country that has political instability has made it to progress. That hasn’t existed, and I don’t think it would exist.

The second country killer is corruption; sessions are organized in the Haitian Parliament in Haiti about the Petro Caribe money being ill- managed by the leaders back then and you will see immediately when you travel to different countries that the countries that are poor are also corrupt and I am talking about the countries that made it last to the corruption index and you would see countries like Nigeria, Haiti, Iraq. Demonstrations are being organized regularly to demand explanations of how the money has been spent.

So, the relationship between corruption and economic development is very close. The last thing that was identified as a top country killer is foreign aid. No country has made it out in progress with foreign aid; that doesn’t exist and is not sure it will ever exist because foreign aid is not an economic long-term plan. Foreign aid is simply a tool to help in the short term. It’s not a financial plan designed to take a country out of poverty.

How can NGOs help because they are here, they have the most amount of resources, and they are well connected. The first thing they can do is to stay away from the entrepreneurial space.

There are four different reasons/categories describe a complete entrepreneurial opportunity:

• The first one is there is a need with purchasing power to buy those products and services that they need. That is the first criteria for an entrepreneurial opportunity to be complete.
• There needs to be the right purchasing power, so people have to consume those products enough that would sustain private investment.
• The other aspect is the consumption frequency. When studies are made it has to verify whether or not that the cost per unit to make those products are inferior to the price plus the profit margin for each transaction.

The last aspect to complete an entrepreneurial opportunity is if the opportunity cost of individuals when pursue other endeavour.

When the entrepreneurial check points is completed, NGOs should stay away from that as much as possible and leave the way for private businesses that have been proven to get countries out of poverty to move in and pursue those opportunities profitably and satisfactorily.

When these criteria are not met, and the entrepreneurial opportunity is not completed they can go and help in that sector but they have to get out as the sector has become more viable. And there are some specific tests, and studies that can be done to prove these facts.

I don’t know why people don’t understand it, this is so obvious. People need work. In Haiti, over 98% of the people you interview will tell you they need a job. I can attest to you in all of those “poor countries” I visited, people need work, and the foreign aid has not proven to provide that, and until today I will tell you something even the developed countries that want to help Haiti, they focus on their private investment, foreign direct investment.

The United Kingdom last year was the largest recipient of foreign direct investment in the world. Haiti previous year only received 104 million dollars of foreign direct investment, Dominican Republic 2.5 billion. No wonder why the contrast is, there is more jobs, more businesses in the Dominican Republic because they attract foreign investment and there is less opportunity in Haiti because we draw more foreign aid. In the Dominican Republic again, the amount of FDI existed in there increased by 9.2% last year. The comparison is unbelievable, the contrast that exists within these two systems cannot be denied ignored.

European Union countries

The European Union countries, for instance, they increased their foreign direct investment last year by 21%. The OECD countries increased their foreign investment by 6%. And all through Latin America, the countries realized that to improve their GDP, to improve the living condition of their citizens, they have to attract as many private investments as possible.

Private investment leads to business creation; business creation leads to job creations and that result help increase and improve income situation.

What does that leave us “the poor countries”? What lessons can we learn from those? We want jobs, jobs come from businesses, businesses are the result of private investment, but we don’t have that, we have foreign aid. So that’s why today we started all these movements in Haiti. We started the 100k Jobs Haiti movement as a way to bring the attention of all the communities, the government to focus the attention of what is the most needed: jobs. There are no better things in the world than jobs. President Ronald Reagan said that ” the best aid in the world is a Job.” You cannot help someone indefinitely. So, we have to think innovatively of how we will transform that foreign aid that is a liability into ways that will support the private sector and businesses instead of derailing and destroying it.

Corruption Problems

The second strategy we need as in the developing countries is to find a way to tackle the corruption problems and that requires a lot of different approaches, a lot of different actions.

So, when we started the 100k jobs, it was a way to bring together all those actors to think strategically how we can combine all these resources to bring an improvement in the condition of living of the citizens in Haiti.

We also started a movement called ” Buy Haitian, Restore Haiti ” to help the NGOs understand that they cannot operate into the country by ignoring the economic system and also there has to be understanding of the difficulties of the challenges and work with different actors to solve them.

No country has ever gotten better on foreign aid. All the countries that have done better so far, they have done so with the help of private direct investment.

So, today, when you think about developing countries, I am challenging you to think of them in the sense of private investment. When you travel to the developing countries, I challenge you to see what business opportunities will grow there; I challenge you to understand and learn about economic realignment and economic progress.

We are in crossroad in our history where we need the developed world to understand that we want something else, we want something more, and we will not rest until the unemployment comes down to less than 20 % in Haiti for the betterment of the people and of all the people in the developing world.

Changing the Aid Narrative: It’s time to act

Changing the Aid Narrative, One of the most influential writers of our time, Robert Kiyosaki, author of Rich Dad, Poor Dad said: Poor people will remain poor because they’re not trained to recognize entrepreneurial opportunities.

I rolled these words over in my head, and after some time, I concluded that Kiyosaki was right.

There’s a reason why developed countries are developed and developing countries even after many years will remain poor. Debates have been held about transforming impoverished nations to become global actors and forces overcoming poverty to wealth. And a recurring answer keeps popping up in my head during those intellectual conversations.

Foreign Aids

The calamity in increase in foreign aids!

As much as I see it as part of a solution, it is NOT the lasting solution in ending poverty, starvation and economic decadence. Time and time again, donor countries keep donating foreign aids to recipient countries, and we have not seen any real change.

Africa, as a continent, receives over $70 billion in foreign aid every year but a visit to these countries will reveal to you that the situation is worse, and keeps getting worse.

Third world countries are known to be extremely corrupt, their economy in a deep recession, and their local entrepreneurs driven out of business. This is because these countries depend on a large scale on foreign aid while adopting policies unfit to impress donor countries to continue to enjoy grants from them.

Desperate Hope

We can now see that foreign aid are not the answer we had desperately hoped for.

So, where do we go from here? I have asked myself this question, and after some self-evaluations, I have come to the conclusion that we, the third world countries have the answers. It has been within us for years, but we remain numb to it. Like Kiyosaki had rightly said, we fail to recognize these opportunities and we remained poor for it.

We need to start thinking of a world beyond grants and assistance. And all third world countries can make this a reality if we adopt these catalysts.

The first catalyst to employ is quality education.

Infographic by UNESCO

According to an infographic by the UNESCO, 774 million people between the ages of 15 and above in the world are illiterate, and most of these numbers can be found in these impoverished nations. Fact is, no nation can be able to stand on its own, transformed, if her people are not first liberated from the shackles of illiteracy. It is of utmost importance to note that education is one of the evident factors that make developed countries to remain developed, and that is why these countries hold G-7, G-20 meetings and decide the fate of the world because they’re seasoned professionals who have been better placed by education. Whereas, third world countries are lacking in this aspect. When the citizens of a country are educated, they are equipped with skills and knowledge to tackle crisis as they come.

Education is best Policy

Education is the best policy a country can ever make for its people. Education in all sectors—from kindergarten through to the higher institutions should be established—which will increase skilled manpower which will steer developments from the grassroots to the state and federal levels. A nation can only be self-sufficient and dependent if her people are fully equipped, and we need to do that now by upgrading our facilities of learning to standard. We also need to start holding various awareness initiatives in our rural areas, to make our people see education as a tool to better their lives. Also involve more women in education is natural and effective as they spend the most amount of time with children. They are also naturally endowed with entrepreneurial abilities; we see it in the way our mothers, daughters and sisters take care of our homes. But women and the female children should not be limited to functioning at our homes. That ideology must change. A woman’s place is not in the kitchen anymore.

Empower Women

Our governments should be able to set up policies to empower our women, which will transform a male-dominated society to an equally dominated country. Women should be more involved in deciding the fate of our nations because their perspectives matter in the strategic and sustainable development of our economies.

I have earlier discussed above that foreign aid is a short-term solution which brings me to the last catalyst for a dependable, sustainable economy: Foreign direct investment, in place of Foreign Aid. This is a more practical approach developed countries can help out developing countries, not by donating Aid and grants.

FDI

FDI, instead of foreign aids, is of utmost importance to third world nations and their economies. Not only would it help increase productivity which will develop their export sector, but creates jobs for their people, thereby reducing unemployment issues that have afflicted impoverished nations. Foreign direct investments will also bring about the transfer of innovative technologies to host countries which will, in turn, make our people be more skilled.

Instead of waiting in line to receive aid from donor countries, why not encourage them to invest in our textile industries, our agriculture and other natural resources we have in our grasp?

Third world countries need to be global partners, not just donors. And I believe we can make this happen, if we free ourselves from mental slavery, follow through and through with these catalysts I have discussed, and only then can we truly begin to sing our Redemption Song.

Killing Entrepreneurship in Haiti

Haiti as a nation has been troubled with natural disasters all of its History but has been exacerbated by earthquake and hurricanes in the past few years which has led to an accelerated rate in the loss of lives and properties.  The impact of these unfortunate events has been daunting on the economics of the nation as a whole because of the immense loss that has been encountered. Economists have proven that entrepreneurship is the way out of the poverty problem; although a market economy, Haiti has, nonetheless, plunged into chronic economic decline despite the effort put in trying to restore it back to how it was before. Foreign aid has increased and so did poverty. This sharpe contrast has led me to a deeper study suggesting that perhaps foreign aid has an adverse effect on entrepreneurship of Haiti as well as other third world countries.

The harsh reality of the Haitian economy

Economic Watch publishing shows a low economic growth of Haiti with over 80% of their population living below the poverty line, which means that Haiti is faced with an economic dilemma as a third world country. Statistics put out by World Bank has served as a harsh awakening to us Haitians on the economic toll these disasters have had on them, the statistics includes a 1% economic growth rate and a 1.2% GDP growth rate in 2017, down from 1.5 % the year before, a full display of how the economy of Haiti has fared from 2013 to date is available on Global Finance.  Haitians are forced to ponder on factors that may be causing the poor economic performance as well as means to pull their economy out of that deep economic depression.

On this quest, two of the suggested strategies by World Bank to tackling the problem are to generate economic opportunities outside the nation’s capital as well as to strengthen human capital, these go in line with the opinion of economist since entrepreneurship is indeed a way to apply these strategies. However entrepreneurship in Haiti faces another problem which is foreign aid, a deeper look into how entrepreneurship has been challenged by foreign aid.

Entrepreneurship and Foreign aid in Haiti

A 2016 study by Vanessa Gowreesunkar and Hugues Seraphin highlights that in Haiti 47% of the labour market are in the private informal sector with 39% involved in agriculture, these numbers go to show how largely dependent the Haitians are on entrepreneurship and this is inevitable a high driver of the economy.

Since entrepreneurship is an intrinsic part of the Haitian community, it is expected that the economic growth of the country as a whole should be better than it is today considering that entrepreneurship is seen as one of the major players in achieving a thriving economy. Focus on these contrasting facts about entrepreneurship and national economic growth as existing in Haiti and other third world countries has been brought up in several statements.

Haiti as a nation has received high figures in form of foreign aid, these aids are not limited to money but extend to labour, services and goods in a bid to help the nation but the economy of the nation remained crippled.  In one of my lectures titled ‘from Aid to trade’ I provided a deeper insight on how this has been happening.

My research, published in my book ‘ From Aid to Trade’  shows that only about 1.6% of funds donated from foreign aid after the 2010 hit reached Haitian businesses. The discrepancies of foreign aid to economic growth has been an issue manifested in third world countries and has brought about suggestions on how to get out of the dilemma and focus more on entrepreneurship like with Dominican republic. It is important to point out that foreign aid is meant as a temporary solution to economic problems of a country with a view that the country will eventually find a way out of their challenges and become more independent and self- sustainable.

How foreign aid kills entrepreneurship

1. Impossible competition: Haiti already exists as an economy highly dependent on informal economic sector, which means there are social entrepreneurs that cater to the needs of the population by providing goods and services to them and at the same time employing a good number of that population. These goods and services naturally come at a price which consumers have to pay, while foreign intends to make some of these things more available to the general population by providing it free of charge they are creating a competition in the market for these entrepreneurs. This competition however is not a healthy competition because entrepreneurs struggle to sell their products to a market that already gets similar products free from foreign aids “who can compete with free?”, it is practically impossible. The entrepreneurs who employ a good number of the population as labour force are then thrown out of business by this crushing and impossible competitive environment created from the foreign aid which creates a ripple effect on their suppliers also running out of business as well as their retailers. In the end, higher number of dependants are created and more foreign aid is brought in to continue to make the poverty problem even worst.
2. It does not actually increase income: to boost the economy of a nation, there has to be an increase in income which increases the spending power as well as the GDP per capital of that nation. Foreign aid is not generating income of the nation and since it does not generate sustainable employment to the population, it therefore does not boost the income of the people resulting in a dependent community and does limited economic activities to boost the spending power and the GDP growth of the community.
3. They make struggling and helpful entrepreneurs appear to be a rip-off: when foreign aid provides aids without helping the local economy, they parallel them at an impossible price to compete with and they create a perception that entrepreneurs are ripping off the population. To fix this they have to buy from those entrepreneurs and make the people learn that it is a reasonable fro them to pay a price to fulfill their needs.
4. It is one of the three killers of a nation’s economy: Foreign aid as the third killer of a nation’s economy and this is because foreign aids often operate without the cooperation of local labour, this is in no way to discredit the intention of help from foreign aid but when the local labour of the people are replaced rather than demanded, establishments run out of business and jobs are lost and new businesses do not come up. Short term missions need to be replaced by long term coaching, investors and experts to help the local economy grow and create sustainable employment opportunities in the long term.

In conclusion, foreign aid although, with good intention hinders the growth of entrepreneurship and job creation in Haiti and throughtout the developing world; therefore create a bigger problem of economic growth. In order to fix this, foreign aid has to collaborate with local entrepreneurs rather than replace them; that means to function as foreign partnership rather than hanging out aid and to support the entrepreneurial space by purchaising local products and establish long term partnerships so that they are helping local entrepreneurs rather than destroying their businesses.

References are found in My book From Aid to Trade. Click here to read the book.

Economic Opportunities and Health Care in Haiti

Health Care in Haiti

The health care industry in Haiti presents a great opportunity for job creation and economic
development. The health care industry can engage different professionals or trade and crafts
within the country. From the architect who draws the hospital building plans to the structural
engineers that develop them. In the above process, the electricians, plumbers, the material
and transporters will be fully engaged to bring about the hospital buildings. Not forgetting to
mention the pharmaceutical industries that produce drugs and also those who will build
medical equipment and laboratory machines.

Economic Opportunities

Economic opportunities abound within the Haiti health care industry, because not only is
health care necessary but it is not an option. Health care has to be embraced and developed
and can also be used as a wonderful medium for job and wealth creation. Of course, the
healthier our people, the wealthier our society.
Health care is an essential aspect of every nation. The necessity of a functional health care
sector cannot be overlooked. Each step of the way in setting up a hospital provides numerous
opportunities for business to start, grow and flourish. This makes it a reason why Haiti health
care industry is not just a choice, but mandatory for economic growth as stated above.
The health care sector operates in a chain like entity. Just look at it from this point: from the
hospital buildings, though it is not just about buildings, installations and every process
needed to bring about a health care facility.

It is worthy to note that health care needs a lot of
resources and workforce for this chain like system to function effectively. The synergy
required from different vital players is not what that can be toiled with. Of course, bringing
together these resources will create an opportunity for job creation for Haitians. This may
stem from individuals to business, then from business to health care and then the virtuous
circle goes on. This appears simple, but they are a lot of wealth to be created for everyone.
This process embraces government and private participation, a kind of public-private
partnership.

Haitian Healthcare Industry

The Haitian healthcare industry can as well attract foreign direct investment from
multinational corporations that are interested in investing in the medical sector to private
equity ventures. Being a developing nation, the Haitian health care sector can create
employment for its citizens as the industry sees expansion and growth. When such investors
bring in their monies, it will go through the banks, that means our financial institutions will
have more capital in their hands, they will also import equipment and machines which they
will have to pay customs duties, that again is money for our government. All these processes
will require both skilled and unskilled labor to ensure success.

Quality health care services are expensive, so we need to create jobs for our people so they
can afford excellent health care services for themselves. We need to generate disposable
income for our common citizen. Our greatest obstacles of creating disposable income for the
people are political instability, corruption, and foreign aid. These three hindrances have
plagued Haiti for too long. The global solution to excellent health care services remains the
creation of job opportunities for people, so they can work and raise income for themselves.

Quality Health Care Service

Then use these revenues to pay either private companies or the government (in the form of
taxes) to access proper health care services. Now quality health care services depend on the
functionality of the different sectors of the country. Health care services are linked to jobs
and necessary infrastructures such as good roads, electricity, transportation system, banking,
supplies and importation, pharmaceutical/drugs manufacturing, building developing, etc. It is
all linked to each other to have a capable health care system. How would you build a hospital
in a rural area if they is no electricity there? The medical equipment will not function
without power supply. Of course, the basis of lack of those structures starts with the lack of
employment and job opportunities, lack of economic opportunities, lack of investment, and
lack of decency. To show that we are patriots of Haiti, that we love our country and people,
we will provide the necessary systems and incentives for economic activities start, for the
people to work and live with dignity so that they can afford themselves their health care
systems.

The health care industry is interrelated to all other industries

The health care industry is interrelated to all other industries, the health care sector cannot
function in isolation, health care cannot be separated from economic development. Any
attempt to do that will result to an ineffective and failed health care system. Also, health care
cannot be removed from political decisions, good, and sound legislative decisions. Any
attempt to isolate health care by itself as a standalone entity will further compromise its
ability to solve the health care crisis and would be suicidal. The health care industry can be
compared to the human anatomy, where several small systems working together and
interlinked to each other for the human to survive. The health care system also needs other
systems for it to function effectively.

Finally, what is the solution? Firstly we need good leadership. A leadership that sees the
health care needs of the society as paramount and places the welfare of the society above
itself. Not only do we need leadership, but we also need collaboration from the private sector,
the NGO communities, and the government. Everyone needs to come together to bring about
decency, workable and effective health care systems to our citizens. Until then, we won’t
achieve much.

How Haiti can be More Open for Business: Building a More Attractive Business Climate

Around the world, the biggest responsibility in government officials and policymakers’ jobs is to spur economic growth, create jobs, and increase the economic and social welfare of the society in which they govern or exist overall. A country’s ability to attract and keep foreign direct investment has a tremendous impact on jobs, economic growth, and welfare of the citizens. However, this is not something that Haiti has historically been able to hang its hat on. According to the World Bank, in 2017, Haiti was the 181^st country out of 190 when it comes to the ease of doing business. Forbes’ annual The Best Countries for Business ranking which ranks which countries are most inviting for capital investment ranked Haiti 3^rd from the bottom out of 153 countries. It is time to change that.

The Forbes ranking is compiled using data on the following: property rights, innovation, taxes, technology, corruption, freedom(personal, trade, and monetary), red tape, investor protection, and stock market performance. Understanding what kind of data and information actually goes into these indexes and rankings helps us begin to think about how we ca create change piece by piece at a more granular level. How do you attract business and encourage foreign direct investment in a developing country like Haiti that has a poor development record and is fighting a seemingly uphill battle? Think about it; Haiti does not even have a stock market to begin with.

There are many different steps that can be taken to foster an environment that attracts investment, retains business, and enables valued domestic businesses to thrive, and it is important to understand that it takes a combination of individual and collective initiative to improve some of the aforementioned parts of what we define as “a place where it is good to do business”.

Where better than to start than with education? A young, educated workforce something that firms look for and is a crucial piece of the decision-making process that firms go through when deciding where and how to direct investment in the private sector, which makes it important for a country to have. Not only does a more educated workforce create more competition for jobs (where as the best of the best rise to the top), but the baseline pedigree for what gets you in the door in the private sector in Haiti challenges and incentivizes the next wave of workers to rise above that to be competitive. Just as the high-school education as a proxy for entry level jobs used to be prevalent in the U.S., a college education is now assuming that role, leading to more and more people going on to specialized programs,graduate school, etc. to stay competitive; this makes the labor force more educated and it ultimately benefits the economy as a whole.

A young, educated workforce not only makes companies more productive, but young workers are more connected to what the world needs,especially when it comes to innovation and tech. Building on this idea, I think that investing in infrastructure ahead of the demand will be crucial to attracting timely investment and businesses into Haiti. When competing with developed countries in high-skill or low-skill sectors, you have to realize that companies looking to invest have an agenda, and you have to be ready when they come knocking. They have a product or service, and their goal is to get the ball rolling to fill a need and get it to market. The response time would take too long unless you have educated, entrepreneurial, and business-minded people of credibility making the call on where to allocate resources that will lead to Haiti being prepared.

There is also a space for country-wide education and NGO cooperation to occur in terms of talking about what the demands of tomorrow and the future of the labor force will look like, because there are people from other countries in NGOs that have grown up in a business-friendly business climate and/or are keen to what the labor market might look like in the coming years.

Another way that Haiti can attract more foreign direct investment and be more open for business is to work towards political stability. Not only is instability a deterrent for mission teams, tourists, and other visitors that would come to Haiti, who at the very least benefit the economy by coming in and spending their money, but it causes lower productivity levels in-country and discourages things like entrepreneurship, extension of capital, human capital accumulation, etc. because of the heightened risk that instability brings.

Building on the point that stability is crucial to economic growth and increased social welfare, it is also important for people of credibility and high pedigree to be in positions of power and leadership, so that businesses trust who they’re doing business with and so that they will be confident moving forward that they will be have the support structure and assistance needed to succeed and navigate doing business in a new country.

Countries should strive to not just poor free money into Haiti to put a band-aid over the problems, but to facilitate a marketing campaign or engage in direct investment that will cause people to come down and spend their money and create more jobs. The Haitian people want to work, and they want to be able to do business. It’s up to the country to decide if it wants to turn the corner once and for all in order to make it up to the rest of the world to invest rather than give.

Click here to read my book ‘ From Aid to Trade’ for more analysis of how Haiti and other developing countries can get out of poverty. 

References

How the Haitian Crisis Could Have Been a Blessing to Small Businesses

A lot of people don’t seem to know so much about Haiti and the country’s many prospects, other than the fact that the country has undergone enormous unfortunate climatic events that have plagued its recent history. But even so, Haiti has always produced hard working and enterprising men and women who have set up businesses in various locations across the country. Although the disasters affected many of those businesses, leaving the remaining few to the face of possible extinction, it didn’t look like small businesses in Haiti would ever  cease to thrive, considering the tenacity with which the people seemed to be bringing back their source of livelihood. The confronting issue however, is the fact that these efforts may be short-lived, considering the underlying cause of the businesses’ demise still exist.

Unfortunately, virtually all of the nations who showed support for Haiti, did not really realize the best ways to help the country out of its woes. There are important things to consider when helping a country with foreign aid, and the best effect would be achieved when these things are put to play. These would have made the Haitian crisis look like a blessing in disguise for small businesses.

Events and opportunities that should have been leveraged on.

After the crisis when the foreign aids came, the population was appreciative of the many kind gestures channelled towards meeting the immediate needs, which ultimately came in various forms of relief materials, and other useful products and services.

But then, more developmental prospects could have been brought to the people- especially regarding raising them up to a level where they can rebuild the ruins of its present economic downfall, through the activities of small-scale businesses and the availability of ingenious enterprising individuals. Hence the inflow of resources into the country because of the foreign aids could have been channelled in such ways that could help the local indigenous small businesses. There are some ways this would show significance, and thus improve on the business sector of the economy; even to such extents, it had never achieved.

First, the foreign aid sources would have been of help to the small businesses if donor countries and organizations had actively involved them in the production of goods and services needed for emergency. This is because a great amount of the foreign aid materials that entered the country were items that could be effectively produced by the indigenous businesses. However, this was not so, as the bigger percentage of the products were already finished goods before they came. Hence, the small businesses would have had an opportunity to produce, and consequently expand and incorporate more innovations to their activities. This would also imply that the country is benefiting both from the foreign aid that came as a result of the crisis, as well as gaining massive foreign direct investments imputed into the country’s businesses, which is of enormous importance to the country’s economy at large.

Aside the opportunity to sell more of their products, businesses would have been able to source for raw materials from other local businesses to trigger a ripple effect in both supply and distribution. Foreign aid activities could incorporate some form of business rehabilitation for people who had businesses before the crisis. Another valid way to help Haiti was to provide startup incentives for businesses that wanted to start up again after the crisis, or for those who were just attempting to enter the markets. By this, there is every possibility that the business scene would take such a good form that would see it transform into an economic asset for the country’s economy. This could also open doors for a viable export network for the country.

Also, considering the fact that most of the people are self-employed- involved in small and medium scale enterprises, the crisis situation should have provided an avenue to have more businesses to be funded. Hence, instead of spending the bulk of the donated funds in procuring goods externally, a lot more household could then be provided with an opportunity of trading their share of products directly within the home country. By this, the funds are made to actively remain in circulation within the country.

Current situation of the nation’s small businesses

Since the end of the crisis, Haiti’s economy has continued to remain on the very low situation, with more and more people living below international average standard. Most of the businesses consumed by the earthquake are yet to get back on their feet, let alone the creation of new ones.

The major problem plaguing the establishment of business in the country, among many others, is largely traceable to financial constraints. Hence, people with business ideas have continued to nurse their dreams with no present means to see them through. Those who could make something out of the meagre resources they can access, are trying to keep things moving, but there are serious limits to how much productivity can be brought out.

Haiti had always benefitted immensely from revenue generation obtained from small-scale local manufacturers and business enterprises. Hence, If the country would see significant economic development in the next few years, then the small-scale business enterprises must be brought back to life; and the way to do this is to have a framework that provides the funding, know- how and the connection needed.

The way forward

As much as foreign aid may continue to find its way into the country, this would not have any benefiting effect on the small businesses, except specific actions are put in place. Any further aid coming from any country or organization at all, should be able to address the real needs of the Haitian population and offer solutions that would benefit the country- both at the immediate time and in the future.

• Foreign organizations must create an active relationship with the local businesses. The importance of involving small businesses in production cannot be overemphasized, as it would help economic situations of families, which should be the very aim of the donors.
• Government must invest more in helping people set up businesses as much as it can, since it would also be a source of generating income tax for government spending.

If the many enterprising individuals and opportunities in Haiti would amount to anything substantial, then there must be proactive measures adequately put in place to bring about the required turn around. As it stands, the country may still need the rightly directed support of the outside world.

References to this article are found in my book  “From Aid to Trade”. Click here to read it.

How Haiti Can Create Wealth and Enjoy a More Prosperous Future

What is “creating wealth”?

The main goal of macroeconomists and policymakers is to create sustainable economic growth and create wealth, which is the process of making the “economic pie” bigger, so that everyone, in theory, can benefit and be better off. Economic growth is the process of a country increasing its productivity and the market value of what is produces over time. When solid, sustainable economic growth happens, consumers benefit in transactions, more people find work, and society becomes better off. For context, Haiti’s GDP (in 2017) 8.408 billion (in current U.S. dollars), according to the World Bank, which is about 4 times lower than Vermont’s GDP (in 2017), the state with the lowest GDP in the U.S. Some countries are centuries ahead of other countries in terms of its levels of human capital, capacity, technology, etc., but the recipe for creating wealth is relatively unchanged (wealth creation is the same thing as economic growth).

How do countries become wealthy? The best way to make decisions about the future is to look at the past. How did a world of tribalism lead to things in history like the Dynasties of China, Mesopotamia, the Middle Ages, the Industrial Revolution, and to where we are today? How did we get so far and how do countries like Haiti catch up?

Trade

The first, and arguably the most important factor to look at is trade. Long ago in the beginnings of civilization, growth started to occur because of trade, and this is probably the most important reason why society has grown from tribalism to what we know it as today. Trade is a natural phenomenon, an action by which two parties exchange a good, service, idea, or medium of exchange for another, where both parties become better off. Trade is good, and it applies on large scales for countries just as it does between two individuals who might trade a coin for a pack of cookies.

How does trade create economic growth?

When countries trade, they are taking advantage of something that can produce of value and are able to offer it for something that they need. Comparative advantage, the process of a country being able to produce something more efficiently than other countries, is something that all countries have. For example, Haiti might be able to produce the cheapest mangoes or textile products, while they couldn’t match Canada’s oil production or U.S. pharmaceutical products production. Haiti needs to find and exploit its comparative advantage. It also needs to be easier to export products and easier to attract more business. Creating this economic openness and a more market-based economy is crucial to allowing trade to benefit the country. Also, because the reservation wages (the lowest wage an individual would be willing to work for) of individuals in a country with high levels of unemployment are generally low, Haiti is a good sell in the global marketplace for producing products with a cheaper cost of production. Freer trade and a more open economy also lead to more competition domestically, because the incentive to invest, to start a company, and to make a product to export increases. In terms of imports, the ability for Haiti to create policies that make it easy and attractive to import inputs and raw materials reduces the cost of final products exported that will eventually leave the country. Basic economic principles and history are showing us that trade is beneficial.

Becoming “Better” at Trade

In my book, From Aid to Trade, you can already assume that trade is good, because we talk about moving Haiti from “free money” (aid)… to trade. We can all agree that free trade is good and that it works. But, how does a country become “better”, more “inclusive”, or more “free” in the international trade environment? It is a lot easier to learn something that already exists and adopt it or improve on it than it is to come up with it something new out of thin air. That is why advanced economies do not grow at rates of 7% or higher and why lagging economies have the ability to catch up. There is opportunity for Haiti because there is a lot of room for growth. But, it will be important to invent and learn. Haiti can learn more by attempting to attract people with knowledge that have knowledge and ideas. Focusing on the human capital aspect, both domestically and foreign, is going to be crucial to bringing up the next generation of entrepreneurs and thinkers that can overcome Haiti’s challenges. Since the 1990s, Haiti has started to privatize some of its largest State-Owned Enterprises (SOEs) which is a good opportunity to let this knowledge osmosis occur. Hopefully our government will continue to look for opportunities to improve public-private partnership and foster this flow of knowledge from more developed economies through allowing foreign investment to take up equity positions in current State-Owned Enterprises. An important component to attracting foreign direct investment, creating entrepreneurs and the spaces for them to operate, and attracting foreign workers to operate in Haiti is to stabilize the business environment and the political environment. Why would workers with credibility, knowledge, and ideas want to go to a country where prices are rising, crime is rampant and unpredictable, and the currency is being devalued more and more with each passing day? Greater stability will lead to more partnerships with the U.S. like HOPE, HOPE (II), and HELP, that can ultimately benefit the Haitian economy. To strike up more partnerships like these it is important that Haiti is seen as relatively stable and safe. Attracting and keeping investment in Haiti is the goal, so creating incentives and an environment that get it to Haiti is key.

Technology and Human Capital

Harnessing technology is another way to create more wealth in Haiti. Technology has increasingly interconnected the world, because of the ease of access and availability of information. Harnessing technology and supporting technological innovations that can make life easier is another important part of not getting left behind. This is applicable for trade (up-to-date and timely information), job creation, and a more transparent government. In terms of jobs in a solid sector, there is potentially a large market for web and application developers in-country that can design easy-to-use applications for things like infrastructure for customers to order and restaurants to be able to deliver, to hail moto drivers from a non-high-traffic area, or other things that make the already-present gig economy more efficient. On a larger scale, improved technology also helps provide a more secure and accurate system of storing data for things like property rights or judicial system records. Technology is something to be harnessed to create economic growth. For to supplement these ideas and to learn more on how technology and innovation can impact Haiti read my recent article Technology and Innovation in Haiti: Recognizing the Challenges and Taking Advantage of the Opportunity.

Economic growth can happen in Haiti by taking advantage of Haiti’s comparative advantage(s) and engaging in trade, creating economic openness and engaging in discussions to privatize SOEs, creating a more stable government that attracts human capital and leads to stable prices, harnessing technology to be a bigger player in the global business environment, and using technology and innovation to make business activity more efficient.

***Below is a chart showing the GDP annual growth rates from 1997-2017. Studying this chart allows you to see the somewhat unpredictable nature of growth rates for the Haitian economy and see the most recent downward trend since 2011.***

[iframe src=”https://data.worldbank.org/share/widget?indicators=NY.GDP.MKTP.KD.ZG&locations=HT” width=’700′ height=’300′ frameBorder=’0′ scrolling=”no”]

Click here to read my book ‘ From Aid to Trade’ for more analysis of how Haiti and other developing countries can get out of poverty. 

References

https://data.worldbank.org/country/haiti

https://www.export.gov/article?id=Haiti-State-Owned-Enterprises

https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=HT

The end of Haiti’s problem is not for tomorrow

Haiti’s economic and social unrest are not close to ending. The reason is simple: the underlying causes of the trouble have not been resolved. As it turns out, people’s quest for justice is linked to their aspirations for economic development and personal betterment. Something consistently ignored by our leaders, which is a real shame. The same cause produces the same effect. Doing the same thing over and over and expecting a different result is insane, Einstein said. His adage makes sense in most situations and in most countries today, except it doesn’t for Haiti and the other developing countries that are as poor or poorer than Haiti.

In my interview – click here to watch in Kreyol – with Louis Henry Mars last week, he brought up the issue of resources to explain why violence is not ending in our culture. He explains that there is fierce competition for resources, therefore scarcity is driving unrest. Because of the lack of resources, people are in survival mode and resorting to violence. I found this a great way to explain the problem.

Louis Henry Mars’ explanation is true. Haiti’s gross domestic product (the total finished products available) is valued at $8.40 billion in 2018. Per person that equals about $729, a change from $700 from the 1960s. Only thirty more dollars have been added to the GDP per capita in the last 50 years! Other countries that started at about $700 in the 1960s have added up to $ 6,000 worth of value. When the $729 is divided by 365 days, it comes out to be $1.99 on average per day worth of products per capita for the entire economy. This simply means that Haitians were still living in extreme poverty in 2018, just a month ago.

Extreme poverty

Extreme poverty, as we define it today, has been reduced across the world from 36% to less than 9% since 2000. By the year 2050, 50% of the population living in extreme poverty will live in only two countries: Nigeria and Republic Democratic of Congo, both in Africa. Extreme poverty is no longer a problem around the world, unless you live in countries like Haiti and Congo. Wealth creation is no longer an issue for most countries around the world today. Click here to watch my keynote on this subject.

Another trait common to Haiti and other countries that produce fewer resources and wealth is their consumption level. The population increases faster than their wealth creation. It’s like adding $10 to the $20 already in the bank, but withdrawing $35. The net result is negative $5, which like spending $5 more than you have. This discrepancy is called poverty creation. When the population grew in Haiti at 1.31% in 2018, the GDP per capita grew at 1.5%, a net positive. But when compared over, say, 10 years, the rate of population growth far outgrows the rate of growth of the economy. This discrepancy creates poverty and puts upward pressure on the resources available per person.

How much poorer are we talking about

In nominal terms, Haitians gave birth to 152,210 more Haitians in 2018 at the same time GDP growth was, also on nominal terms, at $126 million. This translates to about $828 per year per capita, which is about $ 2.20 a day, a grossly insufficient amount to sustain anyone financially by any standard. It is a very small increase in GDP growth per capita, considering it went from 1.2% to 1.5% and is still peanuts compare to the need. Let’s agree, for argument’s sake, that the minimum wage set by the government at $ 5.50 per day is sufficient (though we know it isn’t) for the average Haitian. This would mean that the average Haitian is netting a deficiency of $3.30 a day, thus causing them to live in poverty by a greater amount than they actually bring in. They have more unfulfilled needs than they have satisfied ones. In simple terms, most Haitians are living in abject poverty and are creating more poverty by the day.  

The problem of Haiti is not fancy economic indicators, barriers to entry, the diaspora, or fancy graphs shown by non-productive NGO executives to raise more money. It is simply that we have more mouths than food, bodies than clothes, and feet than shoes. A lot of the symptoms we see daily are the products of a much more fundamental cause that is not so obvious: Resources available are not enough for the number of people living here and we Haitians are not taking any concrete and real steps to create more resources. That’s the real root of the problem.

How exactly do they do it

Chaos and mass casualties are happening now as we fight each other to get to the available resources first; there are not enough for everyone. And the real reason we don’t have adequate resources is because the political and economical status quo remains the same as our leaders encourage instability and corruption to maintain their illicitly accumulated wealth, even as most Haitians continue to live unproductive lives close to peril. Political and economic elites collide to keep this situation as is. The political elite become rich overnight collecting kickbacks from made-up projects, while the economic elite stay wealthy by agreeing to keep prices of staples and most imported commodities high. This runs against every rule of market competition in Haiti. If we can break this cycle, we will help prevent a civil war and restore dignity to the Haitian people. Otherwise, the end is not for tomorrow.

Click here to read my book ‘ From Aid to Trade’ for more analysis of how Haiti and other developing countries can get out of poverty. 

References

1. https://tradingeconomics.com/haiti/gdp
2. https://www.cia.gov/library/publications/the-world-factbook/geos/print_ha.html
3. https://tradingeconomics.com/haiti/gdp-growth-annual
4. https://www.worldbank.org/en/results/2018/06/26/understanding-the-future-of-haitian-cities