Haiti's Informal Sector Needs More Micro-Lending Programs

President Martelly met with 54 business associations to seek solutions to informal sector challenges. The central need for small and mid-size enterprises (SMEs) is for credit at favorable interest rates.


Also present were ministers of Women's Affairs, Economy and Finance, and Crop Production, along with custom officials and Central Bank's CEO.

The Haiti informal sector is a non-aggregated group, and they account for 80% of the workforce. Underdeveloped SMEs have been ignored until the 2010 earthquake forced the issue of growing the economy.

The government of Haiti (GOH) has developed an agenda for SMEs, some of which includes:

• Creation of non-regulated enterprise zones.
• More designated foreign investment.
• More employment opportunities.
• More development of tourism industry.

The international community's agenda includes:

• Investment in non-regulated trade zones.
• Transparency in business regulatory policies.
• Advancement of foreign and domestic partnerships.
• Reformation of prohibitive policies for starting and / or doing business in Haiti to attract private investment.

Obstacles to Change in the Informal Sector

Investment Security. Difficulty of ascertaining property domains and lack of commercialized tourist zones.

Tax Collection. Informal sector is not subject to taxes and large industries' bookkeeping practices get around tax laws.

Underdeveloped Infrastructure. The road system, utilities, healthcare services, and education is ignored by GOH and private investors, who see no investment opportunties.

Credit Climate. No credit bureau exists so SMEs creditworthiness can be assessed. This affects the banking industry, which is wary of making loans to them. Also the non-existence of SME business administration programs to act as SME's mentors and liaisons to lenders.

Diaspora Non-Involvement. The Duvalier dictatorships created a dearth of educated professionals, who migrated to the U.S. and Europe, and are difficult to lure back.

Corporate Corruption. The negative effect of unscrupulous company practices has hurt Haiti's potential for attracting foreign investment, especially in the tourism industry.

Informal Sector's Improvised Struggle to make Ends Meet

Haitian street vendors have created their own job opportunities, by selling whatever goods they can in street markets. This essentially jobless population ekes out a living selling food and household items, of every imaginable type: personal toiletries, clothing and clothing accessories, dishware, kitchen appliances, baby furniture, tech gadgets, even coffins. Most of the merchandise is obtained from warehouses, importers, and the black market. Another source of goods is provided by family members living in the U.S. where coveted items are available at more affordable prices, to be sent back home. International drug trafficking is yet another way to earn a living, for impoverished Haitians. They run drugs coming from South America to the Dominican Republic, just across Haiti's border.

Micro Loans Needed for SMEs

The informal business sector desperately needs loans for capital and inventory. Some foreign finance entities have offered credit to SMEs. At the same time Haiti's Unibank has partnered with the International Finance Corporation to inaugurate a micro-lending program. The Aristide Foundation for Democracy operates a SME loan division as an option against securing loans from loan sharks at usury interest rates.

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