With less aid, a stronger Haiti will emerge

TATE WATKINS
Contributed to The Globe and Mail
Earlier this year, Haitian filmmaker Raoul Peck released Fatal Assistance, a documentary that eviscerated the international response to the January, 2010, earthquake that struck his home country. The gist of Mr. Peck’s argument is that most of the $11-billion in pledged aid went to foreign contractors who, along with international diplomats and celebrities, tripped over themselves to undermine local authority and capacity.
In one scene, Haitian officials complain to then-president René Préval about bottled water donations that had come into the country and undercut local water producers. Mr. Préval says that while he’d love to stand up to the unenlightened foreigners who had descended upon the country, Haiti is a weak state. Sometimes it has to sit by and let outsiders call the shots, he says, or else it might scare them – and their funding – off for good.
The scene sums up a dilemma about foreign aid just as the Canadian government considers significant cuts in funding to Haiti. Countries deliver aid to meet pressing needs today, but they might be undercutting chances for a recipient to stand on its own two feet tomorrow.
Haitian officials have bemoaned its “Republic of NGOs” label for years, and since his inauguration speech in May, 2011, President Michel Martelly has preached “trade, not aid.” His administration’s mantra: “Haiti is open for business.”
But the “open for business” cliché is openly mocked in a country with exorbitant energy costs, a regulatory environment and judicial system perceived as inefficient and corrupt, and one of the worst reputations for ease of doing business in the world. And while the administration shouts about its preference for trade, it hasn’t turned down the billions in offered aid. As long as the aid flow remains on full blast, there’s little incentive for the Haitian state to effect fundamental change required for progress.
Foreign aid helps thousands of Haitians – especially funding that provides access to health care – and cutting it would hurt in the short term. In recent years, aid from Canada has focused on providing health care for women and children, feeding schoolchildren and increasing economic opportunities for Haitians through financial services such as microcredit.
But whether it’s from Canada or any other donor, aid hasn’t led to the kind of economic development that would allow multitudes of poor Haitians to help themselves. As economist Michael Clemens of the Center for Global Development has noted, 82 per cent of Haitians who have escaped poverty have done so not by receiving direct aid but by migrating to the United States. And it’s conceivable that donors can curtail aid gradually and prioritize cuts in ways that avoid disastrous shocks for the Haitian families who, for better or worse, rely on aid for subsistence.
Because external funding remains more important than internal revenues – foreign aid has accounted for more than half of the country’s budget in recent years – Haitian officials continue to be more concerned with wining and dining the likes of Bill Clinton than providing the institutions that will help Haiti’s people flourish. One manifestation of the misguided priorities is the manner in which the government raises the small amount of revenue it does collect itself: Tax revenues come mainly from consumption, not income, a regressive system that punishes low-income Haitians, who wind up handing over much larger portions of their earnings than the well-off.
Haitian officials say that by 2030, they want the country to be known as an emerging market, rather than as the hemisphere’s top aid recipient. If Haiti truly wants to transform from the weak state Mr. Préval described into one that has a strong and productive economy in 20 years, someone has to take the first step in turning down the pressure from the aid hose.
Tate Watkins is a freelance economics journalist in Port-au-Prince.
http://www.theglobeandmail.com/commentary/less-aid-for-a-stronger-haiti/article14112209/