Approximately 85 percent of Haïtians households own a mobile phone, but very few have access to banking or lending services. On December 3, 2010, wireless operator Voilà, a subsidiary of Bellevue, Washington-based Trilogy International Partners, and Haïti-based Unibank has launched T-Cash, Haïti’s first mobile money solution. The press release says that this service is a “first-of-its-kind service in Haiti” serving hundreds of thousands of the unbanked Haïtians in regions unreached by traditional financial service providers. Accessible through their Voilà mobile phone, Haïtians will now have access to a full suite of banking and m-commerce services. “By leveraging Unibank’s nationwide network of merchants and tapping into Voilà’s base of over 1 million subscribers, this partnership creates a valuable financial ecosystem with the potential to impact millions of Haitians throughout the country. In partnership with applications service provider MoreMagic, Voilà and Unibank have delivered their mobile payment solutions in a secure, hosted, and fully managed environment.”
With T-Cash, Voilà subscribers throughout Haïti now have the ability to complete domestic peer-to-peer money transfers, bill pay, payroll services, and expanded mobile commerce capabilities. An initial and unique feature of the T-Cash service will be a ‘mini wallet.’ The mini wallet allows Voilà subscribers to immediately activate the T-Cash service and store up to 2500HTG (US$62.50) by entering a code on their Voilà mobile phone. This easy to use, mini wallet feature will allow for rapid, widespread adoption and access nationwide. By January 2011, Voilà and Unibank are preparing to establish over a thousand affiliated merchants and cash in/cash out locations throughout the country.
In a country that has been ravaged by natural disasters such as hurricanes and flooding, and the devastating earthquake on January 12, 2010, I am very encouraged to see the private sector implement a solution to provide banking services for Haïtians through mobile technology. Households with access to savings accounts are more likely to invest in education, increase productivity and income, and reduce vulnerability to illness and other unexpected events. Through a mini wallet and other m-commerce services, Haïtians have access to safe and affordable savings accounts, credit facilities, and the ability to conduct commercial transactions, which are necessary to achieving sustainable development.
The U.S. Agency for International Development (USAID) is an independent agency that provides economic, development and humanitarian assistance around the world in support of the foreign policy goals of the United States. The Washington, DC-based agency provides assistance in sub-Saharan Africa, Asia and the Near East, Latin America and the Caribbean, and Europe and Eurasia. Many people, for justifiable reasons, criticize the effectiveness of USAID’s programs and policies aimed at helping the world’s most underserved population. While I can write a book about many of USAID’s failures, and several have been written, I wish to discuss an initiative that has the potential of being one of USAID’s successes.
On August 11, 2010, USAID announced the opening of the Haïti Apparel Center (HAC). The new facility will help Haïti grow its private sector workforce by training more than 2,000 professionals per year to help meet the need for skilled workers in Haïti’s garment industry. In addition to providing vocational training, the center will further enable Haïti to maximize the benefits of the Haïtian Economic Lift Program (HELP) Act signed into law in May 2010, which improves U.S. market access for Haïtian apparel exports.
According to the USAID announcement, “In the 1980s there were about 150,000 garment workers in Haïti; now there are around 20,000. The value of Haïtian apparel exports to the United States in 2009 amounted to roughly $512 million, employing more than 25,000 Haïtians. The HELP Act, which has been widely supported by Congress, significantly expands Haïti’s trade preferences to the U.S. It also promotes investment in Haïti and supports the rebuilding of the garment sector which was significantly damaged over the years due to political unrest and more recently by the earthquake. According to a Congressional Research Service report issued in June, rebuilding costs for the industry are estimated at $38 million to refurbish damaged buildings, replace machinery and train new employees.”
The HAC is part of “Konbit Ak Tet Ansanm” (KATA), a four-year, $104.8 million USAID designed and financed job-creation initiative. In partnership with CHF International, it provides training and improves manufacturing skills of workers involved in the textile industry -- including sewing machine operators and mechanics and quality-control supervisors. The facility also offers executive seminars to senior managers, factory owners and leaders in the business community.
All applicants take a test on dexterity, color blindness, basic literacy and numeracy. Students who are accepted as sewing machine operators are then enrolled for a six-week course that includes training on how to work in a formal work environment and a curriculum developed by [TC]2, one of the leading associations that represents garment buyers. After graduating from the program, students will be highly sought after by employers. In advance of its formal opening, the HAC has trained more than 50 sewing machine operators, and 13 operator trainers have already graduated. All of these students are now employed -- and the operators now rank among the top performers in local garment assembly plants.
The more than 6,000-square-meter HAC facility was provided by the Government of Haïti and renovated and operated by USAID partner CHF International-Haïti. It is located in the SONAPI industrial park -- minutes from the garment factories in and around Haïti’s capital of Port-au-Prince and close to workers’ residential neighborhoods.
When people ask me about Haïti, I often respond that the Caribbean country possesses a great uniqueness in its history (gained independence as a free slave nation in 1804), language (Creole) and culture (art, religion, fashion, etc.). While I can never claim to be an art critic, I certainly have an appreciation for the different art genres that make each country unique and the art I have seen during my visits to Haïti are some of the most unique pieces I have encountered during my travels around the world. (Photo: Maggie Steber for The New York Times)
Ms. Kate Taylor wrote an article for The New York Times about restoring murals in the Episcopal Holy Trinity Cathedral, which is located in Haïti’s capital of Port-au-Prince. “Haitian artists and cultural professionals have been conducting informal salvage operations for the past four months,” explains Ms. Taylor. “But the Americans are bringing conservation expertise — there are few if any professionally trained art conservators in Haiti — and special equipment, much of it paid for by private money.”
Conservators “visited the ruins of the Musée d’Art Nader, a private museum that before the earthquake housed 12,000 paintings and sculptures by 20th-century Haitian masters like Hector Hyppolite and Préfète Duffaut, thousands of which were either destroyed or badly damaged when the museum collapsed. They also saw what was left of the Centre d’Art, a workshop where many of those artists trained in the 1940s and 1950s, which also collapsed. In the weeks after the earthquake, volunteers pulled thousands of paintings from the wreckage, which were stashed inside two storage containers parked in the sun in front of the ruined building.”
A recent news-magazine program, “UN 21st Century,” also highlighted the earthquake’s impact on Haïtian artists. Not only did thousands of dollars worth of art get destroyed in the January earthquake, but the ability to export the art to global markets has greatly diminished. You can watch the episode in its entirety below:
However, all is not lost and there is an opportunity for you to help Haïtians by purchasing their unique artwork. My friend, Alyssa Johnson, wrote an entry on this blog about the uniqueness of Haïtian art and how artists are able to sell their work and generate income. Alyssa is owner of Splash of the Caribbean, a Seattle-based Caribbean art import company that purchases art directly from artists located in Haïti and throughout the Caribbean. (Photo: Alyssa Johnson)
Through the efforts of the Florida Association for Volunteer Action in the Caribbean and the Americas, Inc. (FAVACA), a Florida-based nonprofit organization serving the needs of the people in Haïti and throughout the Caribbean for over 25 years, I had the pleasure of attending the Social Venture Capital/Social Enterprise Conference Miami (SVC/SE, Miami 2010), which was held in Miami Beach, Florida from March 17-19, 2010. Part of the SVC/SE, Miami 2010 conference was the Sustainable Haïti conference, referred as a “conference within a conference,” which brought together social entrepreneurs and social investors, U.S. government officials, nongovernmental organizations (NGOs), Haïtian Diaspora, Haïtian government officials, faith-based groups, and corporations with a presence in Haïti. The purpose of SVC/SE, Miami 2010 was to promote economic development within Latin America and the Caribbean by utilizing social venture capital and social enterprise. Over 700 people attended from 30 plus countries and approximately 240 speakers participated on 110 panels and workshops during the three day event. I participated on two panels: Social Entrepreneurship in Post-Earthquake Haïti and Social Venture Capital as a Tool for Growth.
Several excellent discussions that took place as a result of well-planned presentations or side conversations during session breaks. I made several points during my two presentations, but the one that garnered the most responses is the failure of NGOs’ ability to achieve long-term solutions. (I recognize that not all NGOs are ineffective, but those operating with clearly defined deliverables and benchmarks for success are too few in the world.) While many NGOs attending the conference agree that the aid model is largely ineffective, I find their reluctance to reform their respective operating model very disturbing. To become effective in eradicating poverty in the developing world, NGOs should partner with the private sector in implementing a long-term sustainable solution. For small and medium-sized enterprises (SMEs) with operations in a developing country, I recommend that NGOs collaborate with these businesses by providing job training, education, health and essential life skills that will ensure that workers remain healthy and properly trained to participate in a formal economy. These skills will pass from generation to generation, thus breaking the cycle of poverty.
While I have addressed my criticisms of the microfinance model implemented by most microfinance institutions (MFIs) in this blog, I focused my presentations in Miami on the need for job creation in addition to supporting entrepreneurship through microfinance. I recognize there are several benefits of microfinance in some of the world’s most undeveloped regions, but there are not enough measured results to justify the amount of money invested into MFIs. Microloans provide short-term debt financing, but does not necessarily create long-term enterprises. In addition to providing working capital to entrepreneurs, investments in developing nations should focus on job-creation through equity financing (microcapital). Moreover, I recommend that MFIs work with businesses in industrialized markets by creating a partnership strategy to open an office or plant with local populations in developing nations, thereby establishing a partnership that many underserved entrepreneurs. (Photo of Marc Roger (left) and Aaron Rose (right): Benjamin Wilkinson/HAITI ONWARD)
SMEs in industrialized markets should receive microcapital from MFIs to help stimulate business expansion into developing nations. Three conditions must be stipulated with these investments: SMEs must use local populations and provide fair compensation, implement microsavings mechanisms for the employees, and establish a health insurance program with NGOs or for-profit insurance providers. The number of employment opportunities in developing nations will grow exponentially with strategic partners located in industrialized markets.
I also discussed my experience of being presented with an investment opportunity to revitalize a factory located outside of Les Cayes, Haïti that produces vetiver oil. My visit to the factory was a side trip during my time serving as a consultant to evaluate Haïti's strategy to utilize tourism for social and economic development (see "Haïti: Pearl of the Caribbean" and "Haïti: Using Tourism as a Means for Sustainable Social and Economic Development").
Distilled from the roots of vetiver grass, the aromatic oil is widely used to scent household products to everything from detergents, soaps, and cleaners, to window coverings, baskets, and matts. It may be used to treat skin problems. And as a natural anti-inflammatory it is recommended to remedy arthritis, muscular aches and pains, rheumatism, sprains, swelling, muscle or joint stiffness, and similar problems.
During my visit to the dilapidated factory, I was provided details on how my investment would be used to modernize the distillery. The pitch, however, failed to address a key questions such as: How will the oil be transported to the port in Haïti's capital of Port-au-Prince, which is located several hours away (assuming that gangs do not steal the barrels off the trucks)? Is the sea port in a condition that allows for rapid loading of products on cargo ships? (I should note that while we were not stopped by gangs or corrupt police during the drive between Port-au-Prince and Les Cayes, a bridge over a major river was out and there was a wait of several hours to drive through the river.)
In addition, while France was once a leader in the production of products that uses vetiver oil, most of these products are now manufactured in Asia. Do the factory owners have the resources to connect with Asian buyers? Answers to these questions can be done through better collaboration between NGOs, governments, and the private sector. After some consideration, I passed on the opportunity to invest in the vetiver oil distillery.
Other speakers at the Miami conference talked about the need to establish a bond market in countries like Haïti to finance infrastructure development, credit ratings for investment instruments to help developing countries modernize their financial systems to compete in a rapidly global economy, and establish full currency convertibility measures.
A fellow panelist, Marc Roger, a consultant based in Port-au-Prince, noted that every developing country has a blue-chip company. More collaboration among the governments of developing nations, NGOs, and the local population should take place to attract additional blue-chip enterprises. Furthermore, according to Mr. Roger, there should be a better focus on establishing business incubators to create small and medium-sized enterprises, and NGOs and the private sector must work together in establishing a legal framework that includes a judicial process for business disputes, fair employment laws, and regulations to protect natural resources.
I want to thank FAVACA for their generous sponsorship of the SVC/SE, Miami 2010 and I wish to express my gratitude and appreciation to John Rosser of DVK L3C for organizing this important event, which was very timely considering Haïti’s devastating earthquake that occurred this past January. I am pleased to be a participant and honored to share the podium with a distinguished group of speakers with a wide array of knowledge and experiences.
And I conclude this post by sharing a video produced at the Sustainable Haïti conference where I and others provide our insights for a new model to promote sustainable development in Haïti.
Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.
It has been one week since a massive earthquake shook the Republic of Haïti, which has killed an estimated 200,000 people and left 1.5 million homeless. It is with great sorrow that this entry follows the previous two entries outlining excellent examples to facilitate sustainable development in Haïti through innovation initiatives. While I am following the rescue and recovery efforts closely, I am also amazed by global response in financial contributions to assist the Haïtian victims. I commend the overwhelming positive response from people worldwide, but we must also be mindful to which charities to support and that our generous donations are properly allocated.
According to The Chronicle of Philanthropy article dated January 18, 2010, donors have contributed more than $210 million to major U.S. relief groups within six days after the massive earthquake struck Haïti. Despite the troubled economy, “The pace of giving for Haiti is running ahead of the amount donated in the same period after the Asian tsunamis in 2004, but slower than the outpouring of gifts after the flooding caused by Hurricane Katrina in 2005. In the six days after the flooding started in New Orleans, Americans gave at least $457-million for relief efforts. In the nine days after the Asian tsunamis, major U.S. relief groups raised $163-million.”
In PBS Newshour’s Ray Suarez interview on January 18th with Stacy Palmer, Editor of The Chronicle of Philanthropy, Ms. Palmer discusses what questions a donor should ask about a nonprofit organization when considering making a financial donation. “One of the most important things to look at is, does the charity have experience working in a place like Haiti? And that's the most important research thing you can do. Have they already done things? Do they have a track record?”
Ms. Palmer then talked about the importance of a nonprofit’s experience and accomplishments. “There are plenty of Web sites that say, how much overhead cost does the charity provide? But, really, you want to look at results. What is it that the charity has accomplished? Have they been there before? This is not a tragedy where people can just come in and parachute in and do good, no matter how experienced they are. They have to have relationships with the community. And that's probably the most important thing that experienced aid workers say to look at.”
Donors should also question organizations who claim 100 percent of your donation goes to the charity. “Sometimes, that is too good to be true,” says Ms. Palmer. “And links in e-mail, people you don't know, go to the Web site, Google it yourself. A lot of people try to do copycat kinds of things. They will play on the name of the charity. So, be very careful about that. Do your research. And if you're being pressured into giving, don't give. That's a sign, again, of a charity that's not doing the right thing.” Ms. Palmer’s interview in its entirety may be found in the video below:
Recognizing my professional experiences in Haïti, many people have asked for my recommendation on which organizations to support. The American Institute of Philanthropy (AIP) posted its top-rated list of charities involved in Haitian earthquake relief efforts. While not on the AIP list, I highly recommend the Florida Association for Volunteer Action in the Caribbean and the Americas, Inc. (FAVACA), a Florida-based nonprofit organization serving the needs of the people in Haïti and throughout the Caribbean for over 25 years. Funds raised will go to support medical programs, disaster assistance, recovery and rebuilding programs in Haïti.
I am pleased to announce that I am participating in a fundraising event on January 21, 2010 hosted by Casuelitas Caribbean Café in Seattle, Washington. Casuelitas will be serving spicy Caribbean bites and Haïtian Rum Punch with 100 percent of the profits from food and beverage sales going to FAVACA for Haïti earthquake relief.
A Splash of the Caribbean, a Seattle-based unique triple bottom line Caribbean art import company that supports artists by purchasing directly and selling online and at restaurants throughout the Puget Sound region, will feature a Haïtian Steel Oil Drum Art Sale with 50 percent of net proceeds going to Haïti earthquake relief. Click here to view the official press release for the fundraising event. (Photo coutesy of Alyssa Johnson/A Splash of the Caribbean)
Why FAVACA? I have a relationship with the organization's executive staff and board of directors and as I stated above, the nonprofit organization has 25 years of working in Haïti. During these years, FAVACA has established a strong track record in delivering tangible results to thousands of underserved people. Having advised FAVACA on fundraising and strategic planning strategies, I am familiar with FAVACA's financial statements and I can attest that the nonprofit organization has kept their overhead expenses to a minimum leaving a large majority of funds raised to be used on effective programming.
For those who reside outside of Seattle, you can donate directly to FAVACA at http://www.favaca.org/?q=node/30. Thank you for your support.
Haïti is full of talented internationally renowned artists and some of the most beautiful artwork found in the Caribbean from paintings and beadwork to steel oil drum sculptures and hand sewn accessories. The innovative recycled steel oil drum sculptures are some of most popular and unique pieces found in Haïti. Used 55-gallon oil drums are purchased from the port and transported to Croix-des-Bouquets, Haïti, a small town with the largest concentration of steel oil drum metal artists resides located just 45 minutes outside of the capitol, Port au Prince. The art form started in the mid 20th century by blacksmith, Georges Liautaud, from Croix-des-Bouquets. (Photo of roadside stand of painted recycled steel oil drum sculptures in Petionville, Haïti courtesy of Alyssa Johnson)
Artists start with old oil drums and remarkably, they use every piece of the oil drum used in different art pieces including the cap and edges. Several homes and workshops in Croix-des-Bouquets are lined with fences made from unused edges of the oil drums. (Photo of Jean Emelie and Jean Pierre Richard negotiating a metal art purchase in Cap-Haïtian, Haïti courtesy of Alyssa Johnson)
The drums are stuffed with straw or banana leaves and lit on fire to burn off the residues. Once cooled off, the flattened drum becomes a rectangular sheet approximately four by six foot wide. They are flattened and designs are chalked out on and then cut out with a mallet and chisel. Different textures sculptures are created by hammering in "bumps" of different heights. Some are finalized with brightly painted designs, others are left in raw form.
In a country where, according to the U.S. Central Intelligence Agency's World Factbook, 80 percent of the population live under the poverty line and 54 percent in abject poverty, this small art industry has allowed families to build their own businesses, export internationally and earn higher wages. Formal unemployment in Haïti, the Western hemisphere's poorest nation is at approximately 66 percent. This labor intensive art form allows skilled craftspeople to earn fair wages in Haïti and makes a direct positive impact of poverty alleviation. (Photo of remnants of the oil drums are used for fencing in Croix-des-Bouquets, Haïti courtesy of Alyssa Johnson)
Alyssa Johnson is founder of A Splash of the Caribbean, a Seattle-based unique triple bottom line Caribbean art import company that supports artists by purchasing directly and selling online and at restaurants such as La Isla and Casuelitas Caribbean Café, among others throughout the Puget Sound region. Ms. Johnson may be contacted at oroazulllc@gmail.com. (Photo of the Musical Mermaid Screen by Atelier D’Art of Croix-des-Boquets, Haïti is courtesy of Alyssa Johnson. In Haïtian culture, the mermaid depicts La Siren, the Vodou spirit or lwa with power under the sea who enchants sailors with the melodies of her trumpet.)
On January 4, 2010, CNN posted an article on its website written by Eliott C. McLaughlin, "Group seeks answers to Haiti's woes in its toilets," about an organization that is implementing a sustainable solution of proper sanitation by composting human waste through public dry toilets. Founded by Sasha Kramer and Sarah Brownell in 2006 and based in Cap-Haïtien, Haïti, Sustainable Organic Integrated Livelihoods (SOIL) is a nonprofit organization dedicated to protecting soil resources, empowering communities and transforming wastes into resources in Haïti. By facilitating the construction of dry toilets that compost human waste to be used as fertilizer, the results include greater access to clean water, greater agricultural output, and reduction of human mortality by preventable diseases.
During my visits to Haïti during the past few years, I have witnessed the impact poor or nonexistent sanitation in the urban areas has on the natural environment and local population. Traveling through Haïti's rural areas, I observed low agricultural output caused by poor soil fertility, soil erosion and lack of fertilizers, which are often cost prohibitive to the impoverished farmer. In identifying the problem further, according to SOIL's website, "16% of rural Haitians and 50% of those in cities have access to adequate sanitation facilities, by far the lowest coverage in the Western Hemisphere. People are forced to find other ways to dispose of their wastes, often in the ocean, rivers, ravines, plastic bags, or abandoned houses."
Why soil? The nonprofit organization explains, "Maintaining soil is the essence of sustainability from both environmental and social perspectives. The basic elements that make up living matter all come from, and return to, the soil. Nutrients from the soil are constantly flowing through all living organisms. Healthy soil retains and cleanses water resources and protects communities from natural disasters. All of humanity is dependant on soil, biologically, economically, socially, and spiritually. Human health, livelihood, and wellbeing are inextricably linked to the soil."
Here is a video that provides additional details about the workings of the dry toilets:
"Toilets are one example of SOIL's outreach," writes Mr. McLaughlin. "The group also holds contests urging children to recycle garbage into something useful and Brownell's husband, Kevin Foos, spearheads a photo empowerment project called 'Looking Through Their Eyes,' which allows children to capture what they love and hate about their communities on film. SOIL also supports special centers in Shada, Milot and Le Borgne where Haïtians can present and test technologies for improving their health, environment and economic independence."
Nicholas Kristof of The New York Times posted a video, "American Ingenuity in Haiti," on his YouTube channel about SOIL's worthwhile efforts to resolve a problem that each individual contributes: human waste.
The blog entry dated December 7, 2009 provided a summary of microfinance and the entry posted on December 20, 2009 outlined microfinance's benefits and provided a few success stories. The focus of this post is to discuss microfinance's shortcomings and begin a discussion on how the service that offers poor people access to basic financial services may be improved. (Photo of an outdoor market was taken during my visit to Pisac, Peru in June 2009)
I appreciate the way microfinance provides an opportunity to individuals whom seek to improve their lives and become better providers for their family through entrepreneurship; however, I am concerned that microfinance fails to achieve its primary objective of eradicating poverty for millions, perhaps billions, of people worldwide. Additional problems I have observed of microfinance operations in the developing world include little or no access for goods or services produced by entrepreneurs to reach global markets, debt rather than equity financing, exorbitant interest rates for loans, and lack of scalability and sustainability.
Microfinance institutions (MFIs) should take a more proactive role in assisting borrowers (entrepreneurs) gain access to lucrative markets for their services or products. During my extensive travels to developing nations, I observed recipients of microloans manufacturing small crafts or clothing items. The consumer market for these entrepreneurs is limited to nearby villages or passing tourists and MFIs should help rural entrepreneurs gain access to large population centers. Furthermore, I recommend that MFIs take a more proactive role in assisting borrowers to gain access for their goods in lucrative industrialized markets in North America or Europe. To facilitate liberal access to the United States market, the U.S. government enacted legislation such as the African Growth and Opportunity Act (AGOA), Haiti Hemispheric Opportunity through Partnership Encouragement (HOPE) Act or the Central America-Dominican Republic-United States Free Trade Agreement (CAFTA-DR).
Microloans create a revolving door of debt by requiring entrepreneurs to take subsequent loans in order to grow their business operations. In the preceding blog entry, I use Bayamma Neerudi's experience to highlight the benefits of microfinance. Not to diminish the impact microcredit has made on Ms. Neerudi or individuals like her worldwide, but Ms. Neerudi has obtained three loans in order to grow her business. Where is the savings or reinvestment mechanism? While I recognize this information may be missing from Ms. Neerudi’s story, too many MFIs are not working with borrowers in implementing savings strategies. Technically, microfinance includes microsavings, but the latter is often missing when it comes to the operations of MFIs. I encourage MFIs to make a stronger effort to incorporate savings as a means to promote business scalability.
I propose a different type of microfinance model. As stated above, traditional microfinance models support debt rather than equity financing. I recommend that MFIs reevaluate their lending model by providing private equity financing to entrepreneurs. An equity "fund" should operate similarly to a traditional microlending operation with one of the objectives to provide initial or early development funding to a variety of private enterprises to stimulate social and economic development. The differences between my recommendation and traditional microcredit vehicles are: (1) Rather than immediately repay the principal and interest, entrepreneurs are required to save a portion or reinvest initial revenue to maximize sustainable growth opportunities, (2) entrepreneurs are required to implement a revenue-sharing plan for all employees, (3) entrepreneurs are required to operate with complete transparency including providing every employee a copy of the business plan and the opportunity to provide input regarding the business strategy and operations, (4) all recipients of the fund will receive support and technical expertise from MFIs and their contributors, and (5) the size of the loans should range from $5,000 to $500,000. $100 loans will not eradicate poverty.
When I taught my first seminar on entrepreneurship at the CFDE University in Port-au-Prince, Haiti in 2007, my students’ greatest need to become successful entrepreneurs was access to capital. I was astonished to learn that lending rates from the black market, MFIs, and government-owned banks were 15, 18, and 20 percent respectively. I have met with MFIs in Africa that charge borrowers up to 30 percent interest for loans. I understand that MFIs incur vast costs in administering small loans to several borrowers, but charging high interest rates is wrong. While I am not an expert in finance, I know from my experience as an entrepreneur in developing markets that through a different lending model, borrowers will no longer need to be punished with excessive interest rates.
With the current model, entrepreneurs find it difficult to scale or sustain their business operations. I see an immediate need to change to microfinance model. In principle, I support microfinance and the positive benefits realized by people striving to break the bonds of poverty. However, how does a MFI define success? Increased gross domestic product? Increased per capita income? Increased personal spending? Can we say that the results of microfinance are reflective of the hundreds of millions of dollars invested? Microfinance is mostly a good thing as it often helps keep borrowers from even greater catastrophes. However, microfinance fails if judged by the number of borrowers whom overcome the barriers of poverty.
On May 25, 2009, The New York Times published an editorial, "Trade and Hard Times," which accurately explains the importance of supporting foreign trade and avoiding pitfalls of protectionism. The editorial says, "Today, trade is collapsing, one more casualty of the global financial crisis. That is especially bad news for countries that are dependent on trade for economic growth, including many developing nations that had nothing to do with the financial mess." I completely agree. Foreign trade is important for developing nations in getting access to outside markets for their goods. While many developing nations have a service sector that contributes to their respective gross domestic product (GDP) and provides an income for families, developing nations need access to outside markets in order to have a viable chance to truly realize GDP growth and move in a positive trajectory from developing to industrialized status. (Picture of the vocational student who made the bowl is from one of my trips to Uganda)
The Times editorial correctly explains, "Foreign trade has been a potent force for good over more than half a century. It propelled Japan's emergence from the ashes of World War II and helped it become an industrial powerhouse. It is the cornerstone of development strategies from China to Brazil. It is what links countries all over the world in a network of production that underpins global prosperity." Many industrialized countries that enjoy the benefits of a thriving economy (despite a contrary perception during our global economic recession) would not have grown from a destroyed foundation caused by conflict or natural disaster. In addition to Japan as noted above, Germany, with the financial help of the United States, Canada, and European nations, relied on foreign trade to rebuild socially and economically after World War II.
Moreover, according to the Times, "Exports from the United States declined 30 percent and imports 34 percent in the first quarter of the year from the previous three months. Imports into countries that use the euro from outside the area were down 21 percent compared with the first quarter of last year. At this rate, the World Trade Organization’s dire projection in March that global trade would decline 9 percent this year will soon start to look outright boastful. The drop in trade is spreading economic weakness across the world, as one country’s drop in imports translates into a fall in exports, and production, in another." Here in the United States, protectionism will muddle the situation further by restricting trade and reducing economic growth opportunities. Certainly the Ugandan girl pictured above can sell her goods on the local market to her neighbors and passing tourists, but the real potential lies in helping her gain access to outside markets such as Europe, Canada, and the United States.
The New York Times editorial notes that governments of the 20 biggest economies committed $250 million of trade finance over the next two years: "They should keep those pledges, and they may have to do more." While increasing funding may be necessary in the short-term, long-term solutions in achieving sustainable economic development lies within crafting a comprehensive private sector development strategy that facilitates access to markets through foreign trade. This is true in many developing nations such as Afghanistan, Iraq, and Haïti.
I strongly support United Nations Secretary-General Ban Ki-moon's appointment of former United States President Bill Clinton as the United Nations Special Envoy for Haïti. I agree with Mr. Ban when he said Mr. Clinton "will bring energy, dynamism and focus to the task of mobilizing international support for Haïti's economic recovery and reconstruction." President Clinton has a clear understanding of the challenges facing Haïti and he will bring a fresh perspective in creating a viable strategy that will enable 8.6 million Haïtians to rebuild their country and achieve long-term results in sustainable social and economic growth. (Picture of Ban Ki-moon (fourth from right) and Bill Clinton (fourth from left) visiting a "Multiwear" Factory at the Sonapi industrial park in Port-au-Prince, Haïti is courtesy of the United Nations/Eskinder Debebe)
Although there is a need for additional financial assistance from donors, one of the results of a comprehensive development strategy is to reduce the dependency of foreign aid and increase Haïti's gross domestic product (GDP) by investing in the country's private sector. According to the United States Department of State, Haïti's GDP by sector in 2006 was agriculture (27%), industry (8%), services (40%), and other (25%). Increasing Haïti's industry sector including textiles and other manufacturing should be a priority to the country's economic development strategy.
The Haïtian Hemispheric Opportunity through Partnership Encouragement Act (HOPE), which allows duty-free treatment by the United States for certain products from Haiti, was an important piece of legislation to stimulate Haïti's trade with the United States. More efforts should be made to allocate international aid to projects that focus on private sector development including public-private partnerships. Many of the students who participate in my Entrepreneurship and Business Development seminars at CFDE University in Port-au-Prince, Haïti have the knowledge on how to rebuild and strengthen Haïti, but they require the necessary tools to implement their ideas.
In the area of trade, the Haïtian government has made efforts in increasing trade relations along their shared border with the Dominican Republic. In my discussions with Haïti's government officials regarding commerce and trade development, the conversation focused on increasing trade opportunities with the DR. However, Haïti needs to develop bilateral trade relations with other nations. Haïti needs trade agreements similar to the HOPE Act with other industrialized nations to import Haïtian goods without punitive tariffs or customs duty. With globalization, Haïti must position itself better in a competitive global economy. For example, regardless of the future status of Cuba's political system, Cuba's economy will soon create foreign direct investment opportunities. How will Haïti benefit from a growing Cuba economy? How will Haïti compete with Cuba? Furthermore, despite the HOPE Act, exporting Haïtian-made goods is increasing difficult considering the strength of Chinese-made goods and import channels into the United States and European Union.
Haïti has great resources to build a sustainable tourism industry, which I addressed in my blog post, "Haïti: Using Tourism as a Means for Sustainable Social and Economic Development." Using tourism, particularly ecotourism, Haïti has good resources to implement its ecotourism strategy. I reiterate my call for the Haïtian Diaspora to take an active in the recovery and reconstruction of Haïti. The Haïtian government must make it a priority to create opportunities for active Diaspora engagement. The Diaspora holds valuable resources (intellectual, financial, professional, charitable, etc.) to develop solution-oriented strategies to aid Haïtians at home and abroad.
Mr. Clinton's strategy should include using technology to modernize Haïti's education, health care, capacity building in the public sector, public infrastructure, restoration and protection of natural resources, and private sector. Great platforms and products exist in information and communication technology (particularly in mobile solutions), renewable energy, and clean technology to stimulate and facilitate social and economic growth. Again, the success of any initiative requires a systematic collaborative approach with measured benchmarks and defined accountable results.
Historically, international aid agencies and nongovernmental organizations have made uncorroborated efforts to rebuild Haïti. While some efforts have yielded great successes, many organizational efforts have resulted in failure either by the lack of a comprehensive strategy that includes a defined deliverables, value proposition, implementation benchmarks and measurements for success, or organizations were too busy funding their internal operations. As UN Special Envoy for Haïti, Mr. Clinton will bring a systematic approach to Haïti's economic recovery and reconstruction efforts including defined, achievable goals and realistic implementation timelines. (Photo of Ban Ki-moon (fourth from left), Bill Clinton (second from left), and Wyclef Jean (third from left) visiting a Cité Soleil School feeding scheme in Port-au-Prince, Haïti is courtesy of United Nations/Eskinder Debebe)
A donor conference on Haïti organized by the Inter-American Development Bank (IDB) was held in Washington, D.C. on April 14, 2009 (see "Donors pledge support for Haiti's economic recovery plan"). According to the IDB, "Donors pledged to provide $324 million in additional aid to Haïti over the next two years, of which $41 million is for budget support in 2009. This fresh assistance complements the financing previously committed by international community partners, who are currently supporting projects totaling $3 billion in Haïti."
One of Haïti's greatest challenges is the lack of a comprehensive development plan that encompasses essential components such as education, health care, private sector, capacity building in the public sector, public infrastructure development and maintenance, and protection and restoration of natural resources. Haïti is an example of how a economic recession can send an already impoverished nation into a deep long-term depression and perhaps this new aid package will provide the necessary support to prevent Haïti from becoming a completely failed nation. The challenges are large since 80 percent of the people residing in the Maryland-sized nation live on less the $2.
Perhaps Haïti is embarking on an opportunity to change its downward spiral into a positive trajectory. The IDB said, "The recovery program, donors agreed, could generate as many as 150,000 jobs over the next two years. Delegates welcomed the Haïtian government's plans to capitalize the opportunities opened by the HOPE II Act, a U.S. trade legislation that grants Haïtian exports preferential access to U.S. markets. They also encouraged authorities to work closely with the private sector to improve Haïti's business climate."
Although the IDB's press statement notes that "besides Haïti's traditional partners from the international community, the conference attracted representatives from civil society organizations that either run programs in Haïti or have been strong advocates for the Haïtian people." I am unsure if the private sector was represented at the donor conference, but these conferences shall serve as a reminder that the private sector must take an collaborative role alongside governments, nonprofit organizations, and local citizens to acheive sustainable long-term results in socio-economic development. Donor conferences should also address foreign direct investment facilitation.
However, I am pleased to learn that during United Nations Secretary-General Ban Ki-moon's recent visit to Haïti, "He asked all 'friends of Haiti' to work with the government and the private sector to create jobs and spur economic growth by taking full advantage of openings to international markets" (see "Haiti: Ban challenges donors, investors to create 100,000 jobs").
In addition, according to The Washington Post article, "Impoverished Haiti Slips Further as Remittances Dry Up," United States Secretary of State Hilary Clinton's visit to Haïti on April 16, 2009 included a visit to a garment factory. Secretary Clinton "strolled through a huge factory in Port-au-Prince where rows of young men and women ran jeans and khaki slacks through sewing machines. Clinton noted that the nearly 500 workers earned two to three times the $2-a-day minimum wage."
Lastly, debt relief will provide Haïti with another tool to change course. The IDB notes, "The heads of the International Monetary Fund and the World Bank appraised the conference on Haïti's progress towards reaching the completion point of the Enhanced Initiative for Heavily Indebted Poor Countries, which will enable Haïti to benefit from debt relief. The process may be finished by the end of June, after which the IDB, the IMF and the World Bank stand to provide Haïti with $1 billion in immediate debt relief. IMF Managing Director Dominique Strauss-Kahn said debt cancellation could free up to $40 million a year for poverty-reducing and pro-growth spending in Haïti."
A significant change I have seen businesses make in their operation strategies over the past few years is incorporating a corporate responsibility program to become better global citizens. Starbucks (Shared Planet™), Microsoft (Corporate Citizenship), and Intel have each introduced a corporate responsibility program. (Photo is from one of my Entrepreneur and Business Development seminars at CFDE University in Port-au-Prince, Haiti.)
For example, the Starbucks™ Shared Planet™ program focuses on three goals:
Ethical Sourcing: By 2015, 100 percent of Starbucks coffee will be responsibly grown and ethically traded;
Environmental Stewardship: By 2015, 100 percent of the company's cups will be reusable or recyclable; and
Community Involvement: By 2015, the company will contribute over one million community service hours per year.
As the business world has become more global, entrepreneurs should make global citizenship a priority. Each business or entrepreneur, whether located in the industrialized or developing world, should create and adhere to a corporate responsibility program that includes ethical standards in their business governance, operations and relationships, minimizing environmental impact, and engaging the local community through volunteering and financial support.
The United Nations created the UN Global Compact, which offers a platform for participating businesses with at least ten employees to advance their commitments to sustainability and corporate citizenship. The Global Compact has two objectives: (1) mainstream the ten principles in business activities around the world and (2) catalyze actions in support of broader UN goals, including the Millennium Development Goals.
According to their website, "The UN Global Compact is a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption. By doing so, business, as a primary agent driving globalization, can help ensure that markets, commerce, technology and finance advance in ways that benefit economies and societies everywhere."
"Structured as a public-private initiative, the Global Compact is policy framework for the development, implementation, and disclosure of sustainability principles and practices and offering participants a wide spectrum of specialized workstreams, management tools and resources, and topical programs and projects -- all designed to help advance sustainable business models and markets in order to contribute to the initiative's overarching mission of helping to build a more sustainable and inclusive global economy."
Here are the ten universally accepted principles:
The UN Global Compact's ten principles in the areas of human rights, labour, the environment and anti-corruption enjoy universal consensus and are derived from:
The Universal Declaration of Human Rights
The International Labour Organization's Declaration on Fundamental Principles and Rights at Work
The Rio Declaration on Environment and Development
The United Nations Convention Against Corruption
The Global Compact asks companies to embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labour standards, the environment, and anti-corruption:
Human Rights Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights; and Principle 2: make sure that they are not complicit in human rights abuses.
Labour Standards Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining; Principle 4: the elimination of all forms of forced and compulsory labour; Principle 5: the effective abolition of child labour; and Principle 6: the elimination of discrimination in respect of employment and occupation.
Environment Principle 7: Businesses should support a precautionary approach to environmental challenges; Principle 8: undertake initiatives to promote greater environmental responsibility; and Principle 9: encourage the development and diffusion of environmentally friendly technologies.
Anti-Corruption Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.
As explained in post, Haïti: Pearl of the Caribbean, despite the ongoing problems in Haïti, there are several beautiful destinations for visitors in this unique country. Growing a viable tourism sector could provide Haïti the economic and social tools to resolving many of its development needs. As part of my assessment project, I visited key locations the Haïtian Ministry of Tourism designated for tourism development and was provided with several documents and a presentation that collectively provided details to Haïti's tourism strategy.
The Tourism Ministry's impressive 94-slide presentation provided details of the vision and objectives of the tourism strategy. The presentation included statistical data of the number of tourists who visited Latin America, Central America, and the Caribbean, both as a region and by a few selected countries. According to the statistics provided from the presentation, in 2005, Haïti had 110,000 visitors compared to 3.9 million, 3.7 million, 2.26 million, or 1.5 million in Dominican Republic, Puerto Rico, Cuba, and Jamaica, respectively. Regarding the number of hotel rooms, Dominican Republic (60,000), Puerto Rico (13,500), Cuba (50,000), and Jamaica (22,500) compared to Haïti's 800 rooms available to house its visitors.
Photo of the Port of Jacmel: Marc Roger
Haïti's tourism strategy is based on three components: history, experience, and the environment, which provide a strong basis for establish an ecotourism industry. Other strengths to the tourism strategy include establishing a partnership between the Haïtian parliament and municipalities; strengthening private enterprises including private-public partnerships; drafting regional and international cooperation agreements; recognizing the need to train tourism professionals and create a national branding and marketing strategy; and developing channels for research funding.
The tourism development plans I reviewed are very comprehensive regarding urban planning and land use issues, but based on my assessment lack a realistic implementation timeline with measured benchmarks and defined clear accountable results. In addition to defining and establishing benchmarks, I recommend establishing a collaborative partnership among the other Haïtian governmental departments and integrate the tourism development strategy into a national strategy to ensure that tourism is balanced with broader economic, social, and environmental objectives at national and local levels. In other words, the tourism development strategy should serve as an anchor to rebuild and strengthen Haïti's education, health care, private sector, capacity building in the public sector, public infrastructure development and maintenance, and protection and restoration of natural resources.
This national strategy should be based on the knowledge of environmental and biodiversity resources and integrated with national and regional sustainable development plans. It should also enhance prospects for economic development and employment while maintaining protection of the environment.
To achieve maximum success, the planning and implementation process should be completely transparent to all stakeholders including government agencies, civil society, private business, and the general population. Moreover, the Haïtian government should encourage the development of partnerships with primary stakeholders and provide stakeholders with ownership shares in projects and a shared responsibility for success.
Photo of Ile à Vaches: Marc Roger
Branding and marketing is essential in promoting tourism in Haïti. The first step is defining a "corporate image" to promote a positive view for Haïti, in particular in terms of safety and security for travel and tourism. In addition, marketing various activities as part of an ecotourism package will provide value for the visitor.
Another hurdle the government will have to overcome is financing the strategic plan. By partnering with international aid agencies, foreign governments, the private sector, and most importantly, the Haïtian Diaspora abroad should engage in financing the implementation of the tourism plan. I recommend creating a foreign equity fund that will allow the Diaspora to collectively contribute and participate in developing and implementing the tourism strategy. Through this fund, the Diaspora will have an opportunity to take an active role in their home country's development while receiving a financial return to their investment.
The Diaspora would contribute up to 70 percent of the fund's assets while the Haïtian government, whether through financial reserves or foreign assistance, contribute the difference. A financial holding corporation would be formed with government officials and representatives from the Diaspora community serving on the board and third-party managers managing the assets.
Photo: Marc Roger
Despite the ongoing crises in Haïti, there are several great places to visit. I am impressed that the Haïtian government has a vision to grow an ecotourism industry and I appreciated the opportunity to assess their strategic plan. With the right tools and tactics, this strategic plan should serve as the centerpiece to a national sustainable development strategy.
Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.
When you hear the word "Haïti," many of you may think of a country full of poor and starving people or the violence that has plagued the country for several years, but seldom do people associate Haïti with beautiful beaches or ecotourism. Sponsored by the Florida Association for Volunteer Action in the Caribbean and the Americas (FAVACA), I had the opportunity of working in Haïti in September 2007 to assess a tourism development strategy prepared by the Haïtian Ministry of Tourism. Ecotourism, specifically, was the focus of the strategy and I was able to visit Jacmel, Port Salut, and Cap-Haïtien, which the Tourism Ministry designated as key development locations. I am in the process of updating my assessment report, but I will summarize in two blog entries. This entry will focus on my one week visit and the subsequent entry will discuss the challenges of building a viable tourism industry in Haïti and using tourism as a catalyst to developing education, health care, public infrastructure, capacity building in the public sector, environmental protection policies, and a sustainable private sector.
Haïti has some of the world's most beautiful beaches. Surrounded by the Caribbean Sea, Port Salut is a small town in southern Haïti where local Haitians and tourists seek relaxation and tranquility. I stayed at Auberge du Rayon Vert, owned by Mr. Christian Barriere, is located approximately 100 yards from the beach (although not always enforced, it is illegal to construct a dwelling on Haïti's beaches). This small hotel provided me with impeccable service including a full service restaurant (grilled lobster and shrimp!!) and a small bar serving fine French cognac. If you are like me and need to stay connected with the outside world, the hotel, as many of the hotels I visited in Haïti, had wireless Internet access.
Jacmel, the capital of the department of Sud-Est, is known as Haïti's cultural capital. It is a port town with an estimated population of 40,000. Jacmel's unique architecture is similar to what one would find in New Orleans consisting of cast iron pillars and balconies. Jacmel boasts an active art scene with small galleries dotted throughout the city and has hosted successful film and music festivals. I stayed at the very modern Cap Lamandou Hotel, which offers a breathtaking view over the bay and surrounding mountains.
Photo of the Citadel: Aaron Rose
The northern port city of Cap-Haïtien has an estimated population of 130,000 and serves as the capital of Haïti's Nord department. Approximately 12 miles south of Cap-Haïtien will you find the historic Haïtian town of Milot and the remarkable Citadel, which is the largest fortress in the Western Hemisphere built by King Henri Christophe with the hard labor that may have cost up to 20,000 lives lost at the beginning of the 19th century to defend against invaders. Although it took thousands of slaves to construct the Citadel, it serves as a reminder of Haïti's long history of a nation created by free slaves on January 1, 1804, making Haïti the second oldest democracy in the Western Hemisphere.
Photo: Royal Caribbean International
Just a few miles west of Cap-Haïtien is Labadee®, Royal Caribbean's Port of Call, which provides a private oasis for visitors to experience Haïti's natural beauty. I was impressed with the services Royal Caribbean offers in Labadee® providing parasailing rides, kayak tours of the surrounding water, and the chance to purchase gifts from local merchants. Haïti's tourism strategy calls for the development of another Port of Call in Jacmel. As of October 25, 2008, Royal Caribbean is the only major cruise line making a Port of Call in Haïti.
Regarding security in Haïti, I felt safe traveling around the country, but there is a strong presence that security is very fragile. Roads throughout most of the country are in poor condition as Haïti as very few financial resources to regularly maintain them, but funding from governments like the Republic of China (Taiwan) has been used to construct a new road through Port Salut. I traveled by airplane from Port-au-Prince to Cap-Haïtien, but the airports are in need of vast improvements if Haïti is to welcome visitors from around the world. (I often heard of a development plan to modernize the airport in Cap-Haïtien, but no one could provide me with a timetable to implement this plan.) Similar to most markets, the cost of energy (fuel) is high, which creates it own challenges in tourism development, and electricity is unreliable and often absent except through diesel generators.
Even with the high level of poverty prevalent throughout the country, Haïti has the potential to building a vibrant tourism industry focusing on its unique culture, history, and environment. Given the myriad of development challenges Haïtians face, however, tourism should serve as a catalyst to developing education, health care, public infrastructure, and capacity building in the public sector. With the right strategy and implementation drivers, Haïti could be the Pearl of the Caribbean.
Aaron Rose is a board member, corporate advisor, and co-founder of great companies. He also serves as the editor of GT Perspectives, an online forum focused on turning perspective into opportunity.
Approximately 85 percent of Haïtians households own a mobile phone, but very few have access to banking or lending services. On December 3, 2010, wireless operator Voilà, a subsidiary of Bellevue, Washington-based Trilogy International Partners, and Haïti-based Unibank has launched T-Cash, Haïti’s first mobile money solution. The press release says that this service is a “first-of-its-kind service in Haiti” serving hundreds of thousands of the unbanked Haïtians in regions unreached by traditional financial service providers. Accessible through their Voilà mobile phone, Haïtians will now have access to a full suite of banking and m-commerce services. “By leveraging Unibank’s nationwide network of merchants and tapping into Voilà’s base of over 1 million subscribers, this partnership creates a valuable financial ecosystem with the potential to impact millions of Haitians throughout the country. In partnership with applications service provider MoreMagic, Voilà and Unibank have delivered their mobile payment solutions in a secure, hosted, and fully managed environment.”
