The Diaspora Investor: Between opportunity and challenge

  • Posted by Marina Vatav
  • May 20, 2013 5:22 PM EDT

Last month Haiti celebrated the second edition of the Diaspora Day. The Government has invited Haitians living overseas to travel to their homeland, enjoy its beauties, and learn about the business opportunities in Haiti.

The Haitian Government has reiterated its message to the Diaspora calling them to "Invest in Haiti" because “Haiti is open for Business”. Economists, The Haitian Government, non-profits and other players have stated numerous times that Haiti can develop only through the development of the private sector.  Their short term hopes, however, rely on the involvement in business of the estimated 4.5 million Haitians in the Diaspora, also called the 11th department, that have the knowledge, education, and funds to do so. But what kind of support system do they have in Haiti?

Last year, the Haitian Diaspora has sent to Haiti almost $2 billion, according to a study published by the International Monetary Fund (IMF) this week. This amount represents a quarter of the annual GDP of Haiti, and it is by far the highest rate in the region.

Generally, this flow of money is being used to cover day-to-day expenses of millions of people in Haiti. It represents an important source of income that allows Haitian families to purchase consumer goods, invest in education, health and housing, and improve their quality of life overall.

"Has it not been for that contribution from the Diaspora, the balance of payment in Haiti would be in trouble. The Diaspora is making significant contribution to the economy of Haiti and significant contribution to helping the country import food and fuel, etc. Haiti's exports is pretty low and it is those transfers from the Diaspora that is allowing Haiti to have that level of import to satisfy local demand in Haiti," said an official of USAID, an organization that has been focusing more and more lately on encouraging the Diaspora to invest in Haiti.

However, when it comes to sustainable development, spending money on consumer goods is not the best approach. "Unfortunately most of that money is used for consumption," said the USAID official.

"The Diaspora is very much involved in a lot of the social development in Haiti, whereby they put a lot of money right now in Haiti but not so much in business," said a USAID official.

How can the Diaspora get involved in businesses in Haiti and what support systems are out there?

Shifting gears from humanitarian aid to sustainable development some players focus their efforts on boosting business in Haiti, particularly through the Diaspora.

In an interview to the Caribjournal on April 23rd, the Prime Minister of Haiti, Laurent Lamothe, encouraged once again for the Diaspora to come to Haiti and spend their vacations in Haiti, open businesses and think of Haiti as their primary investment or tourist destination.

Asked by Caribjournal what is the best way to attract investment from Haitians abroad, the Prime Minister said: "To create basic infrastructure for the Diaspora to feel welcome. One thing we have done is the dual national law, so they can feel more at home. Two, we improved the security of the country — if you look at the statistics, Haiti’s violent crime rate is exactly the same as Long Beach, California. The kidnapping has gone down, or nearly disappeared. The cholera epidemic has really declined. So we’re creating the basis right now."

The Government is also working on reducing the number of days necessary to register a business, which according to the latest Doing Business report by the World Bank is 105 days, one of the longest process among all countries.

In terms of support systems, the Government has the Center for Facilitation of Investment, which is an institution that provides information on doing business in Haiti. Some of the CFI's services are: Assisting local and foreign investors; Providing reliable legal, economical and regulatory information that is relevant; and Liaison with public sector agencies and administrative entities.

In terms of concrete government programs for the Diaspora, the CFI does not have any listed on their website, and has not been responsive to our interview inquiries.

The new Minister of Haitians Living Abroad, Bernice Fidelia, also stated the importance of the Diaspora involvement in the development of the country, but have not yet announced any concrete programs that would help engage Haitians living abroad in economic activities in Haiti.

USAID is an organization that has been focusing more and more on encouraging the Diaspora to invest in Haiti. This year they plan 10 "Investing in Haitian Progress" road shows to Diaspora communities in the US, Canada, and Dominican Republic, to let Haitians know about their programs.

"We don't foresee any durable and sustainable development in Haiti without the involvement of the DIaspora. The Diaspora is definitely a determining factor in future economic development in Haiti," said the USAID official.

Some of the USAID programs that target local Haitian companies, as well as Diaspora founded companies in Haiti include:

LEVE (Local Enterprise and Value chain Enhancement) - a program that will start within a month, it would provide technical assistance to small and medium enterprises and business development services, including training for employees. The project aims to improve the competitiveness of specific sectors for which there is growth potential (construction, apparel and textile, and/or agribusiness).

LEAD is another USAID program implemented by PADF that provides matching 1:1 grants of between $50,000-$200,000 to qualifying small and medium enterprises in Haiti. It's a four year, $12 million program, that continues through June 2015. So far four companies have received LEAD grants.

"We have all kind of mechanisms in place to help the Diaspora to move along," said the USAID official.

IFC, a member of the World Bank, is another active organization in Haiti that focuses on catalyzing the private sector development by providing investments and advisory services. IFC country Director for Haiti and Dominican Republic, Ary Naim, stated:

"We do not have programs that specifically target the Diaspora. However, we are always available to support sustainable investments in Haiti, including those sponsored by people from the Haitian Diaspora. Like for any investment project we are considering, we mostly require the following ingredients: a business case backed by a solid market study, sponsors who have a proven track-record in the proposed area for investment and take risks with their own cash equity, strong development impact, and commitment to the highest governance, environmental and social standards."

IFC has made some significant investments in companies in Haiti such as Sogebank, the industrial park Codevi, and E-power among others.

The Haitian Diaspora has expressed its interest to invest in Haiti by participating in investment forums and other conversations around the development of Haiti’s private sector. Some of them have also moved to Haiti and opened businesses there. They are considered as the "Foreign investors" that know the terrain better, that are more atuned to the cultural differences, and are willing to put up with the system gaps and take the extra risks. However, many Diaspora members have expressed the need for a stronger support system in Haiti as they seize opportunities, but also have to face challenges such as limited access to readily available information, bureaucracy, a lack of highly educated workforce, limited access to funding, and underdeveloped infrastructure that adds to operating costs.