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Keith Bocian Josh Ho Kate Kennedy Paul Marshall Stacy Roth Haiti Extreme Poverty 149th of 182 countries on Human Development Index Nearly 80% of population lives on $2 a day or less Devastated by earthquake on January 12, 2010 230,000 people killed, 300,000 injured, 1 million homeless 250,000 residences and 30,000 buildings collapsed or severely damaged Trilogy International Partners Bellevue, WA based company Holds a portfolio of international cell phone companies Pioneer of introducing wireless in emerging markets Purchased Voila, the second largest cell phone provider in Haiti in 2005 Wyclef Jean, Voila Spokesperson Project Overview “Create a copper-free Haiti” Invest $100 million to rebuild Haiti’s telecom infrastructure No landlines to be built – network to be entirely wireless Project success is contingent on government acceptance of key conditions Undo previous mobile phone privatization efforts Allow Trilogy to obtain majority rights to the available mobile spectrum Put a moratorium on new licensing Return on Investment Potential Market Growth Only 32% of Haitian have cell phones 10% use internet regularly = Lots of room for growth Economic Growth International aid and private investments may help revive Haiti’s economy Abundant low-cost labor may make Haiti one of the “last frontiers” for manufacturing investments Cumulative Return Over Time If Investment Was in United States 40,000,000.00 30,000,000.00 20,000,000.00 10,000,000.00 - 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 (10,000,000.00) (20,000,000.00) Project Value Over Time (30,000,000.00) Risk Project Risk Need Power, but Infrastructure is severely damaged Construction might be delayed Political Risk Widespread corruption; Ranked #168/180 countries Consistent history of violent uprisings and natural disasters Regulatory Risk Regulatory changes likely and unpredictable Time inconsistent preference problem How valuable is a guarantee from the Haitian government? % Change GDP, as Correlated with Events Haiti Percent Change GDP, constant prices 15 10 USA & UN Sanctions due to coup Political turmoil Natural Disasters destroy 80% of crops 5 -5 -10 -15 19 80 19 82 19 84 19 86 19 88 19 90 19 92 19 94 19 96 19 98 20 00 20 02 20 04 20 06 20 08 20 10 20 12 0 Risk Currency Risk Consistent Devaluation of Haitian Currency (Gourde) ○ 2000-present: 17 Gourdes/USD to 40 Gourdes/USD High inflation ○ Central Bank: Targets Price Stability & 10% inflation ○ But: Actual inflation averaged 20% from 2002-2007 Economic Risk Despite recent debt forgiveness: Consistent twin deficits Limited Opportunity for foreign investment: Low Productivity: Infrastructure Destroyed Low Purchasing Power Adjustment to GDP Recommendation Upsides Opportunity to leverage existing investment and grow market share Lots of room for growth in the Haitian market Possibility of Haitian economy recovering and growing Risks: Political - Unstable Regulatory – Time Inconsistency Project – Construction/Infrastructure Currency – Consistent Devaluation Economic – Few Signs of Improvement We recommend that Trilogy does not make this additional investment in Haiti