Social demands in Haiti are immense and the Haitian economy cannot generate, in the short nor medium term, the income required to adequately address those demands. Rapid economic recovery is therefore an urgent priority. As a solution is found to the political crisis, the Haitian decision makers must design and implement in the short run an economic program guaranteed to achieve rapid and sustainable growth. The challenge remains in choosing priority sectors and regions which can have a significant spill over effect on the whole economy .
Material factors that currently hinder or restrain economic activity are countless. The following major structural impediments to growth should be noted:
(i) the low level of income combined with uncertainty and political instability limits the opportunities to create new or expand existing business.
(ii) the deterioration and lack of basic infrastructures (transport, communication, energy and water supply) lead to high production costs, thus low competitiveness and limited choice of sectors to invest in.
(iii) the limited or lack of access to financial resources particularly by small businesses operating in the informal sector constitutes a real constraint to development and growth. Interest rates in the banking sector are high and small business often have to turn to the informal credit market and face prohibitive interest rates.
Economic recovery requires the immediate rehabilitation and construction of basic infrastructure and expanded access to credit for the private sector, particularly for SMEs. Considering, however, the low level of economic development of the country and the scarcity of financial resources , instead of financing small projects here and there, it appears more productive to concentrate resources on economic sectors and geographical regions where those resources could have a catalytic role in attracting private investment, both foreign and national.
Many areas can serve as development poles in Haiti. They can be selected on the basis of their comparative advantage. Major development poles in Haiti include the region of Plateau Central around the pentagon formed by Hinche, Maissade, St-Michel de l?Attalaye, St-Raphael and Pignon; the South East, including all the areas comprised between Bainet, La Vallée, Jacmel, Marigot and Grand-Gosier; the Grande-Anse area from Pestel to Anse-d?Hainault, through Corail, Beaumont, Roseaux, Jeremie, Abricots and Dame-Marie; the NorthWest Region from l?Anse à Foleur to Môle St-Nicolas, through St-Louis du Nord, Port-de-Paix, Jean-Rabel, Bombardopolis and Plaine des Moustiques, etc. It is up to the authorities to fix the selection criteria and evaluate the opportunity cost of choosing one area over another. The availability of pre feasibility and feasibility studies could facilitate the scaling of each development pole and the final selection process.
For illustrative purposes, let us consider briefly the potential of the economic centers of the North of Haiti, as we know it now, or the Grand Nord, as our Cap-Haïtien Friends dream about it, and the South of the country, around the area of les Cayes. The economic expansion of those two centers, combined with the agricultural development of the Artibonite Valley could generate, in the medium term, an important part of the resources required to finance the much needed social progress in the country .
What about the Port-au-Prince region, one could legitimately ask? Even though this may provoke negative reactions, it is proposed to exclude temporarily that region for the following reasons: The area of Port-au-Prince is overpopulated and has accumulated so many problems due, among others things, to insecurity and lack of investment in basic infrastructure that it does not seem capable to attract foreign investments in the short term. Except for the social sectors, any new investment in infrastructure in Port-au-Prince, if not included in an integrated rehabilitation program, would have a limited multiplier effect and will very unlikely be able to attract substantial private and particularly foreign investments. Prioritizing the area of Port-au-Prince means accepting to make massive investments the country cannot afford presently. Furthermore, it would also imply exclusion, because the rest of the country would have to continue to be completely neglected. Achieving development goals means establishing priorities and making choices, and very often, tough choices. The choice to make is to invest outside of Port-au-Prince.
Having said that, it is still the responsibility of the Haitian authorities to make sure that basic infrastructures are rehabilitated in the Capital and that the well being of the population is improved.
Public investments outside P-au-P in the development poles identified earlier would have in the medium and long term a higher social return and a greater impact in attracting private investments. Job creation in those new development poles would contribute also to reduce the population pressure on Port-au-Prince and improve the living conditions of the population of these regions. It is obvious that if the port and airport of Cap-Haitien were expanded and rehabilitated, local businesses would have known a greater expansion and earned higher returns for their investments. The deterioration of those facilities as well as the lack of adequate roads/routes connecting to the P-au-P international airport have limited the growth and development of Cap-Haitien and the Northern region at large.
The same could be said about the South of the country which has as much as the North a promising agricultural and agro-industrial sector but also with its unspoiled beaches can attract tourist industries. The combination of local business community and investments in infrastructures could create the conditions for investment attraction in the short term in agriculture and in the medium term in tourism.
What is proposed here is not to leave Port-au-Prince to its ill fate, but to stop always putting it blindly on the first priority list for everything. The rest of the country should be at least given this time around a fair chance to compete with Port-au-Prince for the scarce available resources.
In a nutshell, as a first step, priority should be given to the promotion of economic activities outside Port-au-Prince in one of the development poles selected. It implies :
(i).-Providing these regions with the required infrastructure (energy provision, transport facilities, potable water) and planning a real development of the urban infrastructure .
(ii).-Strengthening local public institutions as well as creating new institutions that could embody the public and private partnership (PPP) required to promote regional development.
(iii)- Preparing a competitivity study for the tourism sector in both regions while promoting a real dialogue between the public and private sectors.
This study would be followed by programs tailored around improving the provision of non-financial services required for the growth of businesses, particularly in the area of professional and technical training. Resources should be devoted to promote SME access to credit by encouraging private banks in implementing initiatives to promote micro-credit, including for housing . Haitian private banks are willing to increase their investments outside P-au-P . A government strategy based on regional development will encourage these initiatives.
Within the framework of the transition strategy, the government should submit to its international partners (multilateral and bilateral) an Emergency Infrastructure Rehabilitation Program (EIRP) to deal with the most pressing infrastructure needs.
If a sound regional development strategy is designed, our partners will probably respond positively, and the Haitian private sector will be fully willing to contribute to its realization. Indeed, we should not forget that, in Haiti no, we are presently witnessing the emergence of a new class of entrepreneurs who are trying to manage their business differently and with a strong desire to distance themselves from the bad practices of the past. This new entrepreneurship should be encouraged and supported.
Ericq Pierre is currently Senior Counsellor at the Office of the Executive Director for Argentina and Haiti at the Inter-American Development Bank’s Board.