South Haiti Business Development

Strategic Initiative

South Haiti Business Development

An Unsuccessful Attempt

Through an investment of US $300,000 over a three year period, this Initiative was expected to support women micro-entrepreneurs (WMEPs) through the production of organic foods and products for export to the US, Europe and Canada. It sought to establish market links based on market research and to train entrepreneurs in packaging and acceptable safety standards that meet international market requirements.

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SECTOR

Economic Empowerment

TOTAL INVESTMENT

US$ 100,000

LOCATION

Haiti

LIVES CHANGED

700

SOCIAL IMPACT INDEX

41.6 (out of 100)

AVERAGE COST PER LIFE

US$ 142.86

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SI Breakdown:

Key Achievements

Women trained in business management – FED trained 675 Women Micro Entrepreneurs on better business management and product value-add processes. These members principally produce fruit jams from locally available fruits such as mangoes, oranges and lemons.
Women entrepreneurs provided opportunity to exhibit products – FED organised an annual exhibition where WMEPs and other small traders displayed their products and services to potential buyers from Canada, the US and Europe.
Market study on business climate completed – This study revealed that the region’s artistic knowledge and indigenous fruits and vegetables can be exported to Canadian and US markets where Haitians are living. These studies enabled FED and the WMEPs to better understand market opportunities and the challenges they need to address to engage in profitable product promotion.

The Problem

Remittances are the primary source of Haiti’s foreign exchange, equalling nearly a quarter of GDP and more than twice the earnings from exports. Haiti suffers from high inflation, a lack of investment because of insecurity and limited infrastructure, and a severe trade deficit. About three hours by road from Haiti’s capital city of Port–au–Prince lies Jacmel, a southeastern city that was once a thriving tourist destination. The 1980s saw the departure of tourists after a scare that the HIV virus had originated from Jacmel. The lack of tourists, followed by trade embargoes against Haiti and political instability, led to the economic downfall of the city. Jacmel remains a rural town where the majority of people depend on agriculture and micro-entrepreneurial activities for their survival.

Solution

Through an investment of US $300,000 over a three year period, this Initiative was expected to support WMEPs through the production of organic foods and products for export to the US, Europe and Canada. It sought to establish market links based on market research and to train entrepreneurs in packaging and acceptable safety standards that meet international market requirements.

Through an international trade fair held annually in Jacmel, Canadian and European merchants were expected to order products, giving the producers a ready market. This Initiative engaged in a funding partnership with the Inter-American Development Bank (IDB) and an implementation partnership with the Haitian organisation Femmes en Démocratie (FED). The programme’s objective was to enable WMEP groups to receive training in business development; access capital to increase their productivity, processing and packaging capacities; and extend loans as capital to expand their businesses. Through FED, the Initiative aimed to train Haitian private and public sector leaders and local government officials to support the identification of markets for WMEPs and promote business best practices through an improved business climate free of corruption and inefficiencies.

Critical Analysis

This Initiative’s goal was to promote small business development using WMEPs. Co-funding obtained from IDB also represented a significant investment into the organisation and the sector in Jacmel. The total amount of funding, when combined with US $765,000 from IDB, would have amounted to US $1,065,000 over a three-year period. While the availability of this amount of funds was an opportunity for FED and the WMEPs, it seemed to overwhelm FED’s capacity.

FED continued to operate behind schedule and activities were postponed every month. FED seemed to lack clarity with respect to the complexities of the industries in which it sought to promote WMEPs’ products. In addition, the organisation was unable to report in a timely manner, further complicating our review and reporting schedule. The lack of communication and poor road infrastructure continued to create problems throughout the duration of the project. Thus, at the close of the first year, it was not evident that it would attain its objectives as detailed in the programme logical framework.

Based on performance at the end of year 1, the designated funding commitment for year 2 and year 3 (US $200,000 in total) was allocated to the more effective North Haiti SI and FED was allowed to continue implementing Year 2 activities with the remaining funds until the end of 2009. This reallocation allowed the North Haiti Environment and Economic Empowerment Initiative to expand its economic, health, and environmental activities and still impact the lives of Haitians, in a more effective manner.

Lessons Learned

Successes:

Partnership funding – This Initiative attracted partnership funding from the IDB, a positive indication of the strategy’s potential to create market linkages and develop businesses in Haiti using WMEPs. The technical capacity of the bank provided much needed guidance to FED, which had little experience with a project of this size.

Leaders trained on supporting women entrepreneurs – Training and sensitising leaders and government officials to support WMEPs and reduce impediments such as corruption, red tape and inefficiencies in processing permits created support for the Initiative and engaged local leadership.

Challenges:

Organisational weaknesses – FED faced several challenges as an organisation, including risks highlighted during the due diligence process, such as lack of experience with this project size. In addition, the organisation’s high reliance on consultants due to very few full-time employees led to delays in reporting as FED needed to wait for the consultants to compile their reports.

Lack of affordable capital for investment – Most of the groups and their members were unable to invest in technologies that would reduce their packaging costs and time and potentially increase their production capacity. FED had identified two local microcredit organisations to partner with them and manage a loan portfolio for their clients but the 5 percent interest rate they would have charged was too high for the WMEPs, who were used to a 2.5 percent interest rate on loans from their cooperatives.

Economic and natural crises – As of last year, the country continued to face slow economic growth and high inflation rates that caused the prices of fuel and basic food commodities to sharply increase. In addition, this Initiative lies in the southeastern coastal region of Haiti, which was affected by the four hurricanes that devastated large parts of the country. FED and the three WMEP groups’ member activities were also affected by these hurricanes.

Poor infrastructure – Haiti’s infrastructure remains underdeveloped, making it costly and time consuming to transport goods to local markets. This poses another challenge to producers who seek to sell their goods in the capital city’s markets or supermarkets.

Low literacy levels among women – Low literacy levels of some of the group members posed a challenge, as the Initiative sought to train them to develop and apply best practices in business development and management without simultaneously engaging in literacy training.