Overseas Haitians and The Haitian Economy Patrice Backer PromoCapital International Development Research Centre Ottawa, Canada April 8, 2005

2 Haitian Diaspora Remittances & Investment Impact on Haitian Economy The PromoCapital Example Areas to Explore Agenda

3 Significant Migration Patterns 1930s, 40s and 50s –Cuba, French Guyana, Dominican Republic –Primarily rural population, field laborers & sugar cane cutters 1960s and early 1970s –US (Northeast), Canada, French-speaking Africa, France (later to US or Canada), Bahamas –Professionals  “brain drain” Late 1970s and early 80s –US (Florida), Bahamas, Turks and Caicos –Economic migrants primarily from the North (Cap-Haitien, Port-de-Paix, La Tortue) and vicinities Late 1990s/Early 2000s –Siphoning off by Canada of our “best and brightest” –Age range: between 25 and 40 –Professionals  “brain drain” –Middle management in private sector affected

4 Geographic Distribution TOTAL – SELECTED LOCATIONS: 1,267,000

5 Haitian Diaspora Remittances & Investment Impact on Haitian Economy The PromoCapital Example Areas to Explore Agenda

6 Remittances are Critical to Haitian Economy … 28% of GDP (Est. 2004)  17% in 1999 More than USD 1 billion annually (formal and informal)  mostly from the US Primarily geared towards consumption 1.Living Expenses (groceries, clothing, rent/mortgage) 2.Education 3.Gifts for special occasion 4.Medical expenses 5.New home constructions

7 Comparative Data (millions of USD) Remittances (official) y-o-y growth (%)8.0%4.0%25.0%14.8% Exports (FOB) Service exports Total Exports Comparison (%)115%141%149%176%184% Dev. Assistance Comparison (%)262%388%481%592%824% Source: SOGEBANK

8 … But There Are Issues Large percentage goes right back to “donor countries” due to purchase of imported products Remittances/Investments are sometimes counter-productive or mismanaged –“Assisted” mentality –Waste/theft by family members or recipients Long-term: –Haitian migration has slowed to a trickle –Expected tapering-off of remittances in years

9 Overseas Haitians Also Invest Through SMEs Lack of products and services provides opportunities, especially in food exports Trade conducted primarily out of Florida –Proximity –Entrepreneurial spirit of local Haitian community Businesses are small and face same challenges as their US counterparts –Lack of financing –Deficient management skills –Competition and lack of growth opportunities

10 Portfolio Investments Not Common Trust factor  scams, “cooperative” scandal Priority is family or community Securities laws in the US  major issue !!! PromoCapital  new approach at the issue

11 Haitian Diaspora Remittances & Investments Impact on Haitian Economy The PromoCapital Example Areas to Explore Agenda

12 Impact of Overseas Remittances Lack of reliable statistics other than Central Bank data –Regional impact? –Job creation? Empirical evidence: –SMEs in provinces, especially in the North –New constructions and home improvement in low-income areas –“Local tourism” flow, especially during holidays  stability of currency

13 Initiatives from the Diaspora: Numerous but Small

14 Haitian Diaspora Remittances & Investments Impact on Haitian Economy The PromoCapital Example Areas to Explore Agenda

15 PromoCapital Overview History –Washington, DC Workshop – June 2003 –Incorporation – Fall 2003 –Launch – January 1, 2004 Structure –PromoCapital Haiti S.A. – SFD –PromoCapital USA, Inc. – Wholly owned subsidiary

16 PromoCapital Overview (cont.) Capital Structure –400,000 shares sold –Raised USD 1 million –50% owned by Haitian Americans and US residents –50% owned by Haitians and Haiti residents –There are 67 shareholders: 36 in the US 31 in Haiti Focus on larger investments: –Infrastructure –Real Estate – larger scale –National production / Export oriented

17 PromoCapital: US Partners

18 Channeling Diaspora Investments Differently

19 Haitian Diaspora Remittances & Investments Impact on Haitian Economy The PromoCapital Example Areas to Explore Agenda

20 Real Estate Leveraging credit to facilitate real estate loans –US residents have built credit record –Real Estate financing in Haiti constrained by: Scarcity of credit High downpayments Possible solution: –US resident as “guarantor”/co-payer –Agreement between US and local banks –Application from local relative

MèsiAnpil ThankYou MerciBeaucoup MuchísimasGracias