ECONOMIC REBUILDING

The economic renewal is based on the close collaboration between the private sector, which will be the engine of wealth, and the State, which will take all the necessary measures to provide Haiti with the legal and regulatory framework that can meet the requirements of a modern country open to investments.

The State will also make available the necessary service infrastructure to stimulate these investments. In addition, access to credit is a key element in this renewal. Necessary measures need to be taken so that the financial system can respond to needs.

 

Agricultural Production

Challenges to agriculture, livestock farming, fishing and food weigh heavily on the social and economic situation and the country’s future. Today, agriculture remains the most important sector in terms of the number of jobs in Haiti: it accounts for more than 50 percent of the workforce. It is there-fore one of the pillars of the country’s stability, an essential axis of its development. In the past, Haiti fully met the food needs of its population. This is no longer the case today: Haiti uses about 80 percent of its export earnings just to pay for food imports. There is less food security, which makes the country and the population in general very vulnerable to natural disasters and just as vulnerable to fluctuations in the price of basic commodities on international markets.

The wide range of environments in terms of altitude, soil type and climate, means that a large variety of crops are grown in Haiti. This variety is an asset. The coastal plains give way to plateaus and then hills that do not have the same potential or the same constraints. Overall, erosion of the fertile soil layer is quick and occurs when tree or shrub cover is not replaced. Land tenure is not well defined and farms are usually small, which further adds to the difficulties faced by farmers.

Some agricultural practices and farming choices motivated by the dynamics of market prices lead to a reduction in wooded land, which in turn increase erosion, reducing the quality of the soil and of coastal fishing zones, raising the rate and scale of flooding, which in turn regularly destroys facilities and transport infrastructure that is vital for agriculture and the economy in general. This also leads to the destruction of houses and crops and a significant loss of agricultural land.

Agriculture and marketing structures for agricultural products therefore have a significant impact on the country’s environment, the vulnerability of the land, and the population. These environmental impacts threaten the very viability of the Haitian national space. Some fishing practices encourage the overuse of sites and ultimately deplete their stocks. Farmers and fisherman usually work with rudimentary tools. The modernization of equipment, when requested by the farmer or fisherman, requires funding that is currently not easily accessible. Irrigation systems do not always work efficiently and are far from meeting the needs of arms. Floods damage or destroy boundaries, canals and protective walls. Difficulty in accessing electricity is another constraint felt by most sectors. The network is almost nonexistent in rural areas. The lack of good-quality penetration roads and of storage and processing units for products are also major constraints to the regular supply of well preserved products in the markets. Many social and economic problems are related to these agricultural problems. The rural economy is largely a subsistence economy, mainly because trading opportunities are limited by the difficulty and cost of road travel and the lack of opportunities for storage and processing. Post-harvest losses are substantial. It is not only the most sensitive fruits that are affected by bad conditions, but also vegetables, tubers and cash crops for export. This is also the case of livestock and fishing products, the distribution of which suffers from the same structural weaknesses.

 

 

The earthquake caused an immediate exodus of population from the Port-au-Prince metropolitan area, with numerous families moving to their original villages in rural areas. As a result, many already impoverished host families bear an additional burden by receiving displaced families that are completely destitute. Agriculture, livestock farming and fishing together form one of the primary forces of economic revival as well as regional and local economic recovery. The plan to boost national production should provide support for these products.

The plan main objectives are: (i) increasing the supply of agricultural food products in the country, by making agricultural inputs available in the various production areas and by improving distribution channels, (ii) defining strategies to integrate displaced persons, (iii) improving access to food by increasing the circulation of money through job creation in rural areas, (iv) integration of national production and food aid, (v) preparing for the next hurricane season with a wider perspective.

 

Five Programs Are Planned: 

•The first will provide funding to purchase and distribute fertilizers, seeds, plowing equipment and tractors to farmers, as well as tools and fishing equipment for fishermen at reasonable prices in order to increase productivity.

•A second program will provide funding to dig catchment ponds and build irrigation networks for water management, which is vital to increase productivity on farms.

•A third program will fund the building of rural roads to open-up agricultural areas and enable the number of speculators to be reduced, which also benefits fishermen and the population in general

•A fourth program will fund the recapitalization of farms by giving producers access to credit under acceptable conditions and at reasonable rates. It will also fund the development of SMEs in order to increase the added value of production, limit losses incurred during the processing of products that cannot be sold fresh, and raise farmers’ income.

•A fifth program will fund the improvement of conditions for slaughtering and for the preservation of animal, livestock and fishing products, which will guarantee the quality of the products and thus increase the profitability of these operations.

Budgetary information over 18 months:

1. Support for the production and distribution of agricultural inputs
2. (fertilizers, seeds, tools): $80 millions
3. Drainage basins: $130 millions
4. Irrigation: $15 millions
5. Other support: $35 Millions

Total support: 260 millions USD

 

The Private Sector

The private sector agrees that the Haitian economy needs to focus first and foremost on agriculture and decentralization, supported by hundreds of thousands of small and medium businesses in geographic centers of development and production that will benefit from the support of the Haitian Government and the international community. These development centers will concentrate on five key sectors identified by the Presidential Commission on Competitiveness, agreed by the President of the Republic and its government : agriculture, farming, textiles, tourism and urban housing/development. These priorities,identified before the earthquake, have not been altered by the disaster and remain the preferred sectors for the country’s development.

According to a recent study, more than 75 percent of the private sector losses, estimated today to close to USD 2 billion, concern medium and small sized businesses. These businesses, mainly in the informal sector, were already decapitalized by the lack of access to credit at manageable rates. Haitian businesses need support to overcome their losses. This will be done, among other things, by providing them with palliative loans to cover their immediate obligations. This assistance must also include an effort of formalization to widen the fiscal basis of the country and increase State revenues.

First, the private sector plans to create an estimated 500,000 jobs, in particular through the strengthening and creation of small and medium businesses, including in the construction and agricultural sectors. To achieve this objective, the rebuilding of Haiti will need to be inclusive and to favor local labor and businesses, as well as local production, irrespective of the financing source.

To favor local businesses and to help them face the reconstruction challenges, a guarantee fund must be established for small and medium businesses to provide them with short- and medium-term credit at manageable rates.

 

 

The creation of development centers is critical. Otherwise, the overdevelopment of Port-au-Prince is likely to not only continue but its rate will increase. The development of regions and businesses throughout the territory is necessary for a balanced development of the country. The development centers, in addition to Port-au-Prince, have been identified as follows: in the North, the axis between Cap Haïtien and Ouanaminthe for tourism, textile and agriculture; the region around Gonaïves for agriculture and tourism; the South for agriculture, textiles and tourism.

The Government will need to facilitate the creation of these centers through commercial agreements and a supportive monetary policy. In addition, the necessary infrastructure, in terms of roads, ports and airports will have to be built as a backbone for the development of these centers. Labor laws will need to be modernized; and the ongoing efforts on the modernization of the business and investment sectors will need to be accelerated.

The lack of clarity on the land titles is a major obstacle to private investment and discourages bank loans. The creation of a registry is a condition sine qua non for a massive influx of investments.

The Government and the private sector will need to undertake immediate efforts to widen the fiscal base so that fiscal revenues go from the rate before the earthquake of 9 percent towards a 16-18 percent rate.This will only happen if a strengthened dialogue between public institutions and the private sector takes place where the private sector has a bigger participation in decision-making, including in the creation and management of the development centers. 

 

Access to Electricity

Access to electricity is a major constraint for economic development and the quality of life of the Haitian population. Considerable progress has been made during the last four years, mainly in pro-viding electricity to Port-au-Prince.

 

 

Following the earthquake on 12 January, the generation, transmission and distribution capacity of existing power has been greatly reduced in the affected areas, increasing an already considerable need. The restoration of electricity production, transmission and distribution infrastructure was quickly launched following the earthquake so that many affected areas could be reconnected. The priority is to restore power stations that have been hit and to repair the transmission and distribution network.

After restoration, the country’s development requires access to electricity to be more widespread in regional centres for the growing population and for economic development requirements.

Subsequent investment is needed to increase electricity generation, to integrate the national transmission network and to improve the distribution network in major departmental town and industrial and tourism. 

 

 

 

The restoration and development of generating capacity will be undertaken on several fronts. The requirements and projects already identified include: restoring the Péligre power plant, building the Artibonite C-4 hydroelectric dam, and restoring the power plants at Sault-Mathurin and Caracol-Nord.

Power stations must be built and put into operation in areas where hydroelectric power is not available and to meet requirements trigged by economic development activity, especially in exempt areas and development centres.

Increased capacity and efficiency of power transmission is based primarily on the restoration of existing networks damaged during the earthquake and on the development of a national power transmission network. Network restoration must give priority to affected zones in the Port-au-Prince area, the Léogâne/Petit-Goâve axis and the Sud department, whereas development should be directed to-wards promoting the supply of power to current and potential growth areas. In the Port-au-Prince area, building

the Tabare substation is undisputedly a tool in the strategy for increasing energy transmission capacity.The restoration of electricity distribution networks in the main areas affected by the earthquake should be carried out in the short-term. However, in order to contribute towards relaunching regional economic activity, developing regional  and local economies, and creating jobs throughout the country, various local networks must be set up for the distribution of electrical energy to expanding sec-tors and sectors where customer profitability levels are favorable and to meet the population’s basic needs.

A significant effort should be made to properly manage the distribution network. The issue of illegal connections must be tackled and reduced to a minimum, and network maintenance should be adequate in order to reduce technical losses. Increased generating capacity and some improvement in transmission and distribution have, however, had significant repercussion on the national budget, which must accommodate a large proportion of petroleum costs required to generate energy. It is essential to review electricity generating costs to balance them with industrial, commercial and tourist consumers’ ability to pay, as well as with individual consumption. Here too, public-private partnerships and BOT systems must be used for a large part of the necessary investment.

Budgetary information over 18 months:

1. Restoration wok: 57 million USD, of which 20 million USD is budgetary support
2. Capital: 100 million USD, of which 70 million USD is budgetary support

Total 157 million USD, of which 90 million USD is budgetary support