overseas haitians and the haitian economy patrice backer promocapital international development...

Overseas Haitians and The Haitian Economy

Patrice Backer PromoCapital

International Development Research Centre

Ottawa, CanadaApril 8, 2005

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• Haitian Diaspora

• Remittances & Investment

• Impact on Haitian Economy

• The PromoCapital Example

• Areas to Explore

Agenda

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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

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Geographic Distribution

CANADAQuebec82,000 (1st & 2nd)

TRI-STATE AREANY, NJ, CT200,000

FLORIDASouth Florida250,000

BAHAMASNassau, Freeport60,000 DOMINICAN REPUBLIC

Border, Santo-Domingo500,000 (1st & 2nd)

MASSACHUSETTSBoston, Waltham50,000

FRENCH DEPARTMENTSGuadeloupe, Martinique, St Martin, Guyane75,000

FRANCEParis50,000

TOTAL – SELECTED LOCATIONS: 1,267,000

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• Haitian Diaspora

• Remittances & Investment

• Impact on Haitian Economy

• The PromoCapital Example

• Areas to Explore

Agenda

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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

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Comparative Data

 (millions of USD) 2000 2001 2002 2003 2004Remittances (official) 578 624 649 811 931y-o-y growth (%) 8.0% 4.0% 25.0% 14.8%

Exports (FOB) 331 305 273 330 373Service exports 172 137 164 131 132Total Exports 503 442 437 461 505

Comparison (%) 115% 141% 149% 176% 184%

Dev. Assistance 221 161 135 137 113Comparison (%) 262% 388% 481% 592% 824%

Source: SOGEBANK

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… 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

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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

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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

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• Haitian Diaspora

• Remittances & Investments

• Impact on Haitian Economy

• The PromoCapital Example

• Areas to Explore

Agenda

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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

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Initiatives from the Diaspora: Numerous but Small

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Investor

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TRANSPORT

IMPORT/EXPORT

LIGHT MANUFACTURING

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DIASPORA INVESTORS HAITI COMPANIES

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• Haitian Diaspora

• Remittances & Investments

• Impact on Haitian Economy

• The PromoCapital Example

• Areas to Explore

Agenda

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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

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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

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PromoCapital: US Partners

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Channeling Diaspora Investments Differently

Collective Investment Vehicle

Investments

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PROMOCAPITAL FUND

TRANSPORT

DISTRIBUTION

LIGHT MANUFACTURING

FOOD PROCESSING

US OPPORTUNITIES

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• Haitian Diaspora

• Remittances & Investments

• Impact on Haitian Economy

• The PromoCapital Example

• Areas to Explore

Agenda

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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

MèsiAnpilThankYou

MerciBeaucoup MuchísimasGracias