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Overseas Haitians and The Haitian Economy Patrice Backer PromoCapital International Development Research Centre Ottawa, Canada April 8, 2005 Agenda • • • • • Haitian Diaspora Remittances & Investment Impact on Haitian Economy The PromoCapital Example Areas to Explore 2 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 3 Geographic Distribution CANADA Quebec 82,000 (1st & 2nd) FRANCE Paris 50,000 MASSACHUSETTS Boston, Waltham 50,000 TRI-STATE AREA NY, NJ, CT 200,000 FLORIDA South Florida 250,000 BAHAMAS Nassau, Freeport 60,000 DOMINICAN REPUBLIC Border, Santo-Domingo 500,000 (1st & 2nd) FRENCH DEPARTMENTS Guadeloupe, Martinique, St Martin, Guyane 75,000 TOTAL – SELECTED LOCATIONS: 1,267,000 4 Agenda • • • • • Haitian Diaspora Remittances & Investment Impact on Haitian Economy The PromoCapital Example Areas to Explore 5 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. 2. 3. 4. 5. Living Expenses (groceries, clothing, rent/mortgage) Education Gifts for special occasion Medical expenses New home constructions 6 Comparative Data (millions of USD) Remittances (official) y-o-y growth (%) 2000 578 2001 624 8.0% 2002 649 4.0% 2003 811 25.0% 2004 931 14.8% Exports (FOB) Service exports Total Exports 331 172 503 305 137 442 273 164 437 330 131 461 373 132 505 Comparison (%) 115% 141% 149% 176% 184% Dev. Assistance Comparison (%) 221 262% 161 388% 135 481% 137 592% 113 824% Source: SOGEBANK 7 … 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 15-20 years 8 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 9 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 10 Agenda • • • • • Haitian Diaspora Remittances & Investments Impact on Haitian Economy The PromoCapital Example Areas to Explore 11 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 12 Initiatives from the Diaspora: Numerous but Small DIASPORA INVESTORS $ $ $ $ $ $ Investor Investor Investor $ $ $ $ HAITI COMPANIES $ Investor TRANSPORT $ $ $ Investor Investor Investor $ $ $ $ $ $ IMPORT/EXPORT Investor Investor Investor $ $ $ $ Investor $ Investor $ Investor LIGHT MANUFACTURING $ $ Investor $ $ Investor $ $ Investor $ $ Investor 13 Agenda • • • • • Haitian Diaspora Remittances & Investments Impact on Haitian Economy The PromoCapital Example Areas to Explore 14 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 15 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 16 PromoCapital: US Partners 17 Channeling Diaspora Investments Differently Collective Investment Vehicle Investments TRANSPORT DISTRIBUTION $ $ LIGHT MANUFACTURING FOOD PROCESSING PROMOCAPITAL FUND US OPPORTUNITIES 18 Agenda • • • • • Haitian Diaspora Remittances & Investments Impact on Haitian Economy The PromoCapital Example Areas to Explore 19 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 20 MèsiAnpil ThankYou MerciBeaucoup MuchísimasGracias