Haiti's Governance Problems Require Tough Love from Donors
By Dan Runde | APRIL 17, 2015
Why is Haiti poor? Haitians proclaimed independence in 1803, more than a century before many Francophone West African nations and its neighbors in the Caribbean. Today, Cote d’Ivoire which suffered from civil conflict as recently as 2011, has a GDP per capita of $1,529, and Jamaica, another Caribbean country that has suffered from political violence, sits at $9,000. Haiti, though, remains at a GDP per capita of $820. Certainly, each nation had different challenges to overcome, but why does Haiti, a country in the Western Hemisphere, remain the outlier? The long answer involves a series of historic and geographic challenges, many of which are not the fault of Haiti’s leadership or its people, and centuries of often terrible relations with the United States and France. However, blaming all of Haiti’s problems on history and its relation with other nations shortchanges national mismanagement. The reason why Haiti is poor, in today’s context, boils down to one word: Governance.
Haiti garnered unprecedented attention and funding following the 2010 earthquake, but the nation and its people have long suffered challenges ranging from brutal dictatorship to hard-hitting tropical storms. The catastrophic earthquake in 2010 was not the start of Haiti’s problems, but it certainly changed the course of its future. According to many indicators, Haiti is back to where it was before the earthquake and is ready to confront its deeper structural challenges—and has the international support to do so.
I visited Port au Prince last month and three points struck me. First, there is now little rubble in the main areas of town, and there are few physical signs of the earthquake that nearly leveled Haiti’s capital. A few tent camps remain outside of the main city, but roads are paved and signs of new development are everywhere—most notably in the world-class Marriott hotel that just opened downtown. Second, Haiti has enormous potential in the sectors of agricultural, energy, mineral resources, and tourism. Finally, while Haiti still struggles with immense poverty and around 75 percent unemployment, its business leaders, citizens, bureaucrats, and visitors (mainly consisting of ex-pat aid workers) don’t talk about the country’s lack of wealth. Instead, they focus on Haiti’s lack of governance, strong institutions, or rule of law.
Though the international community gave nearly $6 Billion to recovery efforts in Haiti, many question how or where the international money was spent. Non-governmental organizations (NGOs) in Haiti suffered from a severe coordination problem, in which there was essentially no central government to direct funding or organize the roles of various international actors. For this reason, the Interim Haiti Reconstruction Fund (IHRC)—led by President Bill Clinton—vetted projects in accordance with the Haitian government’s recovery plan. The Haiti Reconstruction Fund (HRF), which featured leaders from the Inter-American Development Bank (IDB), World Bank, and United Nations then stepped in to coordinate the disbursement of funds in lieu of a functioning Haitian government. In addition to multilateral engagement, Haiti was host to anywhere between 3,000 and 10,000 non-governmental organizations (NGOs) following the earthquake.
Haiti became known pejoratively as the “Republic of NGOs,” but NGOs do have an important role to play in implementing both relief and development programs. As funding sources have shifted away from relief and toward long-term capacity building, NGOs in Haiti must be able to specialize in their strongest sectors, and also have a legal framework in which to operate in Haiti. Haiti’s NGOs, much like many of its businesses, still operate in a legal gray area. Legal institutions in Haiti are lacking, and allegations of corruption are rampant. Wealth is concentrated in the hands of a few families, and these families are invested in keeping Haiti’s socio-political structure as it stands today, what economist Douglass North would call a “limited access order.”
While conditional aid, or assistance tied to meeting certain governance or anti-corruption metrics has largely gone out of style, Haiti presents a strong case for bringing back conditional assistance. Until the United States and other donors are willing to take on Haiti’s governance issues and the individuals that benefit from corruption and mismanagement head on, Haiti will not see substantial economic growth or improvements in quality of life for the majority of its citizens.
While many think of Haiti as a country as a poor country that lacks resources and agricultural potential, everyone I spoke with raved about potential in Haiti’s agricultural sector. Haiti is a mountainous country with a number of microclimates, giving it diverse terrain suitable for a range of agricultural products. In particular, parts of Haiti are well-suited for growing cocoa and coffee. With a coming global cocoa shortage, and limited areas around the globe where cocoa can be grown, smart companies should be taking Haiti’s potential seriously. There are also rumors of significant gold deposits in Haiti, and its potential for wind and solar energy are a given with its diverse terrain and tropical climate. In light of growing demand for energy, and the significant likelihood of a Petro Caribe downturn, Haiti will need “all of the above” energy options to power its progress going forward. Haiti will only truly be “open for business” if it can provide reliable power to industry and its residents. Complaints over corruption and inconsistency of Haiti’s power utility remain a major burden to companies wishing to operate in Haiti.
With abundant land and labor, many also see Haiti as having significant potential in the realm of manufacturing. One major U.S. funded initiative following the earthquake, the Caracol Industrial Park, aimed to spark an industrial revolution in Haiti’s largely rural north. Reviews of the park’s success are mixed, as its currently operating at less than 50 percent capacity, and debates over powering the park’s operations and housing its workers remain unsettled. Regardless, many are still hopeful that Caracol will continue to attract investment, as promoting development outside of Port au Prince is key to promoting economic growth in Haiti.
Despite this vast potential, progress in Haiti is undercut by ongoing political turmoil. In December, Haiti’s Prime Minister Laurent Lamothe resigned following a disagreement and eventual stalemate over electoral laws between the Administration and its parliamentary opposition. Unfortunately, in Haiti’s multiparty system, many believe that opposition parties focus more on taking down existing leadership than what they will do if they gain power. Local elections have finally been scheduled for August, but parliament remains dissolved and current President Michel Martelly still rules by de facto decree. Haiti needs clean leadership with a clear vision going forward, and the upcoming elections could provide this opportunity. For now, the reality is that a frontrunner is unlikely to emerge anytime soon.
Keep in mind that Port au Prince is located only 708 miles from Miami, and holds a geographically strategic place in the Caribbean. For this reason and many others, a functioning and prosperous Haiti is in the best interest of the United States. The Haitian diaspora also remains strong in the United States. At the same time, large-scale, unplanned migration to the United States spurred by political instability, like that which occurred twice in the 1990s, could present a future humanitarian crisis that both the United States and Haiti would prefer to avoid. A weak Haiti also leaves the door open to continued drug trafficking, organized crime, and other transnational threats. The United States and other donors must support improved governance and a functioning democracy in Haiti, and should more tightly condition its aid to give leaders greater incentive to implement and follow through on desperately needed reforms.