The Inter-American Development Bank is helping the government to reduce obstacles, including corruption and red tape
BOGOTA (AlertNet) - The Inter-American Development Bank (IADB) is Haiti’s largest multilateral aid donor, and next week it’s hosting a forum in the Haitian capital, Port-au-Prince, for some 600 investors, hoping to spur the economy and create jobs.
Last year, Haiti received a record $117 million from the Washington-based bank to help reconstruction efforts following the massive January 2010 earthquake.
The IADB has pledged over $2.3 billion in aid - around $200 million every year - to the Caribbean nation until 2020. The money will be spent on building new schools and roads, and improving agricultural output, energy supplies, health, water and sanitation.
Increasing foreign investment in Haiti is crucial for the country’s future economic development, the IADB says. But corruption, sporadic power supplies and red tape are just some of the obstacles facing potential investors.
Peter Sollis, senior advisor to the IADB’s Haiti Response Group in Washington, spoke to AlertNet’s Latin America correspondent about what the bank is doing to ensure money is well spent on the ground, what anti-corruption mechanisms are in place, and the challenges to doing business there.
Q: What is the IADB doing to prevent corruption and ensure aid is being spent properly on the ground?
A: Corruption is a risk in doing business in private and public sectors in all parts of the world. What we’ve done is to substantially increase the number of people we have in our field office in Haiti, including procurement and sector specialists.
Today, the Bank has 52 positions supporting the Haiti programme, up from 22 in 2009. We have four procurement and financial specialists looking at procurement of goods, works and services, closely watching that procurement procedures comply with Bank rules.
Procurement and sector specialists make visits constantly to the offices of government counterparts to ensure the procurement process is undertaken according to IADB bank procedures. We try to ensure we have sufficient people in situ to do a correct and in-depth inspection. One has to be on top of things all the time.
Q: What is the Bank doing to check that projects are properly completed?
A: We need to follow through and we need to ensure we know who the people in the procurement process are, in order to send a signal that we are being vigilant. The follow-up is most important. Otherwise things fall through the cracks.
The money spent has to be justified. There are follow-up processes. The Bank auditors went to Haiti at the beginning of 2011, and we have asked that they return to Haiti annually to audit the programmes.
Haitian government agencies have a responsibility to follow Bank rules on procurement since Haiti, as a member of the Bank agreed the rules, and it’s our responsibility to help them follow the rules.
Q: What are the main challenges of doing business in Haiti?
A: We think the private sector needs to play a bigger role in facilitating and promoting development in Haiti.
It’s incredibly slow to get building permits and set up businesses in the private sector. Currently it can take three years to get a building permit, and 180 days to register a new business. Reforms are being discussed that would bring the former down to three months and the later to 10 days.
Access to credit, especially for small and medium-sized businesses, is difficult and costly. There is little support for new business creation.
To address these issues, the Bank is putting together “Productive Haiti”, a programme that will blend access to credit at substantially lower rates, business training and an incubator project to support new enterprises, particularly in the north.
Q: Who is investing in Haiti?
A: The new industrial park planned in northern Haiti, in partnership with the Haitian and U.S governments and the Bank, is a sign that Haiti is open for business. There will be a ceremony next week to launch officially the construction. Factories should be operating there by the second semester of 2012.
Sea-A, the South Korean garment company, will be the anchor tenant in the industrial park and provide over 20,000 jobs. It’s about jobs, jobs, and more jobs.
Q: What does the Bank hope to achieve in Haiti?
A: The underlying premise in all of this is that we need to jump start virtuous cycles. If you get people working and more people paying taxes, they will start to demand a better government - a more responsive government that will meet increasing expectations from an electorate. That’s the big bet and it will take time to get it up and running.
One has to take the long-term view. Part of the frustrations among Haitians is the stop-go engagement by the international community. It’s not a sprint, it’s a marathon.
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