USAID CBJ FY 2002: Haiti

Summary: This strategic objective aims to induce growth in the Haitian economy, especially at the farm and micro-enterprise levels. It targets the rural and urban populations who fall below the poverty line -- the majority of Haitians -- and addresses the root causes of poverty through four intermediate results: 1) Increased environmentally sustainable agricultural productivity; 2) Small and micro-entrepreneurs economically empowered; 3) Investment climate improved; and 4) Strengthened zones of high potential growth. Specific activities are reinforced by the Mission's P.L. 480 Title II Program.

USAID programs are helping to build the foundation for long-term, environmentally sustainable growth in Haiti. During FY 2000, agricultural production and marketing of high-value crops, as well as increased delivery of microfinance services to small and micro-entrepreneurs, exceeded expectations. While a number of USAID-sponsored activities were successful, especially those in microfinance, the overall investment climate remains highly unfavorable. Improvement in the investment climate and economic growth will require political stability, government commitment to economic reform, and a reliable judicial system that protects property rights and due process. Given these constraints and the limitations on USAID's support for the Government of Haiti (GOH), USAID activities will focus on helping small farming communities in ways that promote domestic and export markets and improve access to microfinance opportunities.

Key Results: Increased Environmentally Sustainable Agricultural Productivity: Increases in the value of selected export crops exceeded the target by almost 20%. Since 1993, more than 246,000 farmers have received assistance from USAID-financed agricultural programs. Of this total, more than 30,000 farmers are directly involved in the export marketing of coffee, cacao, or mangoes. The other 200,000-plus farmers are increasing their productivity in subsistence crops. Efforts begun in FY 2000 to preserve and enhance the Haitian Bleu coffee trademark have paid off -- quality has improved and export volume, though still small, has doubled. Mango exports reached a record high in FY 2000, making mangoes Haiti's number one agricultural export crop. The Hillside Agriculture Program is establishing successful linkages between local producers and regional buyers for future sales, while institutional development of community-based farmer organizations is resulting in many farmers making informed, market-based decisions on crop selection. P.L. 480 Title II-funded irrigation rehabilitation has resulted in irrigation of over 1,300 hectares of agricultural land.

Small and Micro-Entrepreneurs Economically Empowered: The number of outstanding loans totaled 12,983 at the end of FY 2000, a 19% increase over FY 1999. This increase exceeded the FY 2000 target of 12%, despite the cessation of lending activities of two partners, the restructuring of a third, and increased caution on the part of micro-credit lenders as a result of the slowing economy. The value of outstanding loans this fiscal year increased by 47%, compared to a 28% increase in FY 1999, a reflection of the higher average size of repeat loans.

Significant advances were made during FY 2000 in developing sustainable micro-finance institutions (MFIs) and the infrastructure to support them. As a precursor to a national credit bureau, eight MFIs formed a credit information exchange that publishes a monthly bad-debtors list that now has more than 3,000 names. A national census of nearly 100 MFIs with 58,000 borrowers and 122,000 savers has been compiled. For the first time, this type of microfinance information will be included in the annual reports of the Central Bank of Haiti. A resource center with permanent access to the library and the Internet is available to the public.

Investment Climate Improved: During FY 2001, the Consortium of the Haitian Center for Free Enterprise and Democracy and the Peru-based Institute for Liberty and Democracy (CLED/ILD) vetted draft real estate formalization legislation with the legal community, private and public financial institutions, civil society organizations, and the Haitian Government. The draft legislation is being revised to reflect their recommendations. In order to dialogue on numerous business development challenges, USAID's "FORUM 2000" Program organized a number of conferences on a broad range of critical economic reforms. The exchange of opinions was intense and press coverage was highly favorable.

Strengthened Zones of High Potential Growth: The value of export sales by Haitian artisans through the USAID-financed Aid to Artisans program exceeded its target by about 40%, generating over $95,900 in sales (FOB Haiti). In addition, 58 new product lines (encompassing more than 379 individual designs) were created along with approximately 1,100 temporary jobs. The program works with 60 artisan enterprises employing 888 artisans, of whom almost 50% are women. Marketing activities over the past 12 months have included placing Haitian products in well-known U.S. catalogs such as Garnet Hill, Sundance, and Home Décor.

Under the P.L. 480 Title II Program, construction of the Jacmel port infrastructure is almost complete. This port can handle import/export trade movement as well as cruise ships. Encouraged by the port's potential, investors are developing plans for the construction of an industrial park in the Jacmel region. In addition, over 81 kilometers of roads have been constructed in the region, linking its rich agricultural production with Jacmel and Port-au-Prince markets. Due to political instability, insecurity, and reduced funding levels, the Secondary Cities Program has been restructured into a lower-cost regional initiative.

Performance and Prospects: Preliminary estimates indicate that revenues of beneficiaries in target rural areas rose by 20%, confirming the importance of sustainable management of natural resources, improved crop germplasm, access to rural credit, and the development of marketing linkages. With increased sales of coffee, cocoa, pumpkins, mangoes, and other commodities, farmers' incomes should increase further in FY 2001.

In response to the current political and economic situation and the resulting reductions in USAID's overall budget in Haiti, the mission recently conducted an assessment to determine the approach and mix of activities most likely to achieve the U.S. Government's overall economic growth objectives in Haiti. The assessment concluded that USAID's work in developing micro-finance and village banking had been its primary success and should thus be expanded. The success of these initiatives has clearly surpassed expectations. Large, for-profit, non-USAID assisted financial institutions are now active in microfinance. Three of the four leading commercial banks have established microfinance subsidiaries on their own initiatives, and a fourth bank is now setting up a microfinance division. During FY 2001, USAID will help to strengthen the institutional sustainability of the non-bank MFIs. A key challenge will be managing the transition of each organization from "start-up and implementation" to the "growth and consolidation" phase effectively. Many MFIs are at the point of failure or stagnation as a result of the current economic downturn. The task will be to identify and provide appropriate technical assistance to those with high potential. Over the next year, USAID will establish performance standards, seek to improve MFI staff competence, and assist in identifying capital to finance the growth of the promising institutions.

The recent assessment also noted that efforts to improve the investment climate and strengthen zones of high- potential growth have had limited success. New legislation related to informal real property, streamlined business registration, and financial institutions would all improve the investment climate. However, given the current political context and restrictions on assistance to the central government, the prospects for the passage of new legislation and the potential effect of such laws are reduced. FORUM 2000 will continue to organize public discussion and debate around economic and structural reform issues, and encourage specific policy reforms. In FY 2001, the mission will also continue to promote handicrafts through technical support to handicraft organizations, creation of new product lines, and development of new markets.

During FY 2001, approximately $6.8 million will be used to increase environmentally sustainable agricultural productivity; $2.55 million will be used for financial services and regional initiatives to support small and micro-entrepreneurs; and $350,000 will be used to improve the investment climate.

During FY 2002, approximately $6 million will be used to increase environmentally sustainable agricultural productivity and $2.1 million will be used for financial services and regional initiatives to support small and micro-entrepreneurs.

Possible Adjustments to Plans: Due to a reallocation of resources to more productive areas for FY 2001, the Secondary Cities Program activity (which contributes to Strengthened Zones of High Potential Growth) was restructured into a regional initiative to support small and micro enterprises and help build synergies among programs. Due to another strategic reallocation of resources for FY 2002, USAID will be considering the possibility of merging this strategic objective and Strategic Objective 2 (Environmental Degradation Slowed) into a single strategic objective. Because of the GOH's failure thus far to support needed economic reforms, no new activities are planned for Investment Climate Improved. Future ESF obligations through the end of the strategy period in September 2004 will be adjusted to reflect current budget levels and revised activities.

Other Donor Programs: The United Nations Development Program (UNDP), the European Union, and Canada continue to provide support to hillside farmers through the GOH or through NGOs, building on past USAID successes. USAID remains the major hillside donor, while other donors such as Germany, France, and the Inter-American Development Bank (IDB) support lowland agriculture. Following USAID's lead over the last few years, other donors in the micro-finance field now include UNDP, the World Bank's International Finance Corporation, and IDB.

Principal Contractors, Grantees, or Agencies: Principal contractors implementing activities under this objective include the South-East Consortium for International Development (SECID), Pan American Development Foundation (PADF), CARE, Development Alternatives Inc. (DAI), Nathan Associates, Haitian Development Financing Society (SOFIHDES), Foundation for International Community Assistance (FINCA), Aid to Artisans (ATA), Center for Free Enterprise and Democracy (CLED), and CLED/Institute for Liberty and Democracy (CLED/ILD).

Haiti: 521-001

U.S. Financing

(In thousands of dollars)

	Obligations		Expenditures		Unliquidated
Through September 30, 1999	2,991	DA	2,977	DA	14	DA
	0	CSD	0	CSD	0	CSD
	45,639	ESF	23,304	ESF	22,335	ESF
	0	SEED	0	SEED	0	SEED
	0	CACEDRF	0	CACEDRF	0	CACEDRF
	0	0	0	DFA	0	DFA
Fiscal Year 2000	0	DA	0	DA
	0	CSD	0	CSD
	12,853	ESF	14,846	ESF
	0	SEED	0	SEED
	0	CACEDRF	0	CACEDRF
	0	DFA	0	DFA
Through September 30, 2000	2,991	DA	2,977	DA	14	DA
	0	CSD	0	CSD	0	CSD
	58,492	ESF	38,150	ESF	20,342	ESF
	0	SEED	0	SEED	0	SEED
	0	CACEDRF	0	CACEDRF	0	CACEDRF
	0	DFA		DFA	0	DFA
Prior Year Unobligated Funds*	0	DA
	0	CSD
	1,105	ESF
	0	SEED
	0	CACEDRF
	0	DFA
Planned Fiscal Year 2001 NOA	0	DA
	0	CSD
	9,704	ESF
	0	SEED
	0	CACEDRF
	0	DFA
Total Planned Fiscal Year 2001	0	DA
	0	CSD
	10,809	ESF
	0	SEED
	0	CACEDRF
	0	DFA
			Future Obligations		Est. Total Cost
Proposed Fiscal Year 2002 NOA	0	DA	0	DA	2,991	DA
	0	CSD	0	CSD	0	CSD
	8,100	ESF	16,200	ESF	93,601	ESF
	0	SEED	0	SEED	0	SEED
	0	CACEDRF	0	CACEDRF	0	CACEDRF
	0	DFA	0	DFA	0	DFA

Haiti

Activity Data Sheet

Haiti: 521-001

U.S. Financing