Rebuilding Haiti - A Caribbean priority

Below is an excerpted address by P.J. Patterson, CARICOM's special envoy to Haiti, to the Jamaica Stock Exchange Investments and Capital Markets Conference last Wednesday.

THE rebuilding of Haiti has to be a priority of the Caribbean. There are some fundamental and mutually reinforcing reasons for this. The first relates to Haiti and the people of Haiti in their historical and current contexts. The second springs from the potential to drive Caribbean development.

As a full member of the Caribbean Community (CARICOM), positive developments in Haiti can create the potential for positive growth across the entire region. On the other hand, instability in Haiti has the potential to represent instability in the rest of the region. Social and economic unrest in Haiti can, therefore, impact negatively on the entire region.

The earthquake wreaked havoc on the population, economy and ecology. Today, we need no further reminder than the loss of lives of more than a quarter of a million persons, that 1.6 million people have been displaced to temporary shelter and nearly every public building destroyed. We assess the economic losses at US$8 billion, with 70 per cent suffered by the private sector - mainly micro, small and medium-size businesses; and massive infrastructural, institutional and administrative-capacity losses, including schools, hospitals and clinics.

To these losses of January 2010, one should add the damage caused by hurricanes and tropical storms in the previous five years to appreciate better the economic condition of the population and take into account the trauma and psychological state of the citizens. We need not only to rebuild, but build back safer and better.

There is an overarching sentiment of the need for a rebirth, a rejuvenation, redevelopment, physical reconfiguration of Haiti.

There are those of us in the Caribbean and the diaspora who look to the second renaissance of Haiti - a rebirth of hope and self-confidence among Haitians; a rebuilding of institutions of health, education, social services and justice; and a Haiti that is sustainable, just and equitable.

That rebirth will require substantial investments in Haiti over the next 10-20 years, but without this we will never break the cycle of human tragedies which that nation has suffered throughout the ages.

Potential to drive Caribbean development

The prognosis for the global economy over the next two to three years is, at best, guardedly optimistic. It is accepted that production and employment will stagnate or decline in relation to 2010.

The Organisation for Economic Cooperation and Development in November projected a 2.4 per cent growth in the gross domestic product of its members and the United Nations Conference on Trade and Development projected 3.1 per cent growth for the global economy in 2011. These projections would have been made without taking fully into account downside risks such as rising energy and food prices; the increasing pressures in the eurozone as more and more members are forced to adopt tight fiscal policies; the backlash against austerity measures in an increasing number of countries, including the Arab world, Africa and Western and Central Europe; and the extensive flooding in larger countries such as Australia and Brazil. These risks are encouraging some to project a continuation of the severe crisis - a reversal of the modulating movement felt in 2010.

Whatever the global projections, however, Caribbean economies will remain in crisis for the next two to three years. The exceptions might be Guyana and Trinidad and Tobago, the latter if oil prices continue to increase. Ironically, that could worsen the situation for all the other states.

The international economy has moved structurally against the small, primarily resource-based and petroleum energy-dependent economies in the Caribbean.

The Caribbean, therefore, needs a game-changer. Haiti could be that game-changer. The immediate challenge is how to realise that possibility.

More than US$11.5 billion needed

Haiti's Action Plan for National Recovery and Development of March 2010 had estimated that approximately US$11.5 billion would be required for the public-sector side of the reconstruction process. The work currently under way in the Ministry of Planning to refine the action plan, in fact, puts the estimates much higher. The private-sector requirement will be even greater if recovery and growth are to proceed at an acceptable rate.

The private sector in Haiti, complemented by the private sector in the rest of CARICOM, needs to have the institutional and human capacity to generate and allocate billions of United States dollars.

The action plan identifies and prioritises investment opportunities in agriculture, light manufacturing, including garments and textiles, tourism and other services, construction (housing, physical infrastructure such as schools, hospitals and clinics), energy and transportation, social infrastructure and facilities for education and health, as well as cultural and sporting activities.

These investments are not just for the Haitian market but for the CARICOM and international markets. Haiti has been given duty-free and quota-free access for a list of products which it requested from CARICOM. Haiti also has special access for certain products to the US market under the HOPE programme and the European Union market under the 'Everything but Arms' programme. These are open opportunities not only for Haitians but other CARICOM investors.

The challenge is for CARICOM investors to take advantage of these opportunities.

The Caribbean private sector's responsibility and opportunity

From the very beginning, the regional private sector showed interest in partnering with their Haitian counterparts but found it difficult to find bases for action. In that regard, a CARICOM private-sector delegation participated in a CARICOM-Haiti Private Sector Forum in Haiti last July.

The participants were overawed by the potential opportunities but concerned about critical gaps, such as the absence of:

Mechanisms to facilitate networking and partnering among potential investors in Haiti, in the rest of CARICOM, and in the diaspora;

Mechanisms for mobilising capital - in particular, loan funds and export credits and guarantees on terms that would make CARICOM investors, service providers and suppliers competitive with counterparts from developed economies with governmental support mechanisms; and

Arrangements for generating systematic information on business opportunities, including for technical services and consultancies.

In respect of loan financing, the prime minister of Haiti requested I, as the CARICOM special representative, should coordinate the development of a CARICOM-Haiti Fund to facilitate Caribbean private sector investment in Haiti. A technical group is in the process of designing an open-ended, not-for-profit entity to mobilise and manage funds in a sustainable manner. The fund will be directed primarily to small and medium-size enterprises investing in the priority sectors identified in the action plan using a variety of investment instruments.

The fund will operate in partnership with other bodies such as development banks and export-import banks. It will concentrate its resources on interventions of less than US$20 million.

The fund has a target of US$1 billion but can commence operation with US$100 million. It will garner resources through contributions from CARICOM states, bilateral and multilateral agencies, global funds, public and private foundations and individuals, including the diaspora.

In light of the volume and types of financing required, I can see major possibilities for our commercial banks, our development banks, export-import banks, and the stock exchanges.

We will need to collaborate in finding creative ways of making the financing available to facilitate trade and investments. The CARICOM/Haiti Fund is an ideal vehicle to be considered in that regard.

Moving ahead

The region needs a major thrust forward.

The rebuilding of the new Haiti will create opportunities in virtually all areas and could provide that thrust of which we speak. It will require new systems and new technologies. And, most important, it will require strategic alliances and partnerships among all actors - those in Haiti, those in the Caribbean and those who belong to the Caribbean diaspora.

My challenge to Caribbean investors and facilitators is to organise themselves to take advantage of this opportunity.

That others are lining up to do just that is no secret.

Right now, CARICOM is allowing the undertakers to commence the preparation for the burial of the single market rather than inviting the skills and energies of those who can nurture the infant.

The disaster in Haiti and the huge sums which have been pledged for its reconstruction open wide the doors of opportunity for the entire Caribbean spectrum - businesses, academia, consultants, entrepreneurs, construction, creative artists to escape from the tunnel and emerge into the light of growth, prosperity and the social well-being of all those who occupy the land, who traverse the seas and who breathe the refreshing air of our Caribbean space.