Business & Finance

Denis O'Brien, Irish billionaire and owner of cellphone company, Digicel was the first private investor to penetrate Haiti, the poorest country in Western Hemisphere. He introduced Digicel into Haiti in 2006. There was no shortage of skeptics about this move made by him but six years later in 2012, Digicel turned out to be the largest private sector investor in Haiti with a total user base of 4.8 million.

The cellphone entrepreneur is a true visionary and when everyone looks at the gloomy side of Haiti, he says that there is not even one Haitian problem that cannot be fixed. He says that all it takes is implementing the right project skills at the right place. He is right! He revolutionized the cellphone industry in Haiti by making cellphones available at rates as low as $7 per unit and call rates are fixed to be as low as it is practically possible.

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Haiti is today standing at the crossroads. One path leads to complete humiliation and dependence on foreign countries and the other is of economic independence and sustainable growth. Several factors will together determine the fate of Haiti in the long run. Let us take a quick look at the aspects that can lead to development of Haitian economy.

• Haiti requires entrepreneurial revolution and for that the first step will be to build roads, improve electrical grids and develop other national infrastructure. Simultaneously, Haitians should be trained to maintain these new developments. Once the infrastructure is developed, the path for private investment opens up. This basic framework development is possible only with foreign aid. Haitian government on the other hand has to work closely with foreign investors and accept strict foreign vigilance at initial stages and prove that it is capable of managing FDI with minimum impact of corruption. The strict vigilance will gradually decrease and the government will have more flexibility to manage FDI that suits Haiti's needs.

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Minister of Commerce and Industry, Mr. Wilson Laleau, attended the ceremony of the installation of SONAPI's new Director General, that was held at the headquarters of SONAPI (National Society of Industrial Parks) located at the Metropolitan Industrial Park. Mr. Bernard Schettini was appointed as the new Director General in place of Mr. Georges Barreau Sassine. Honorary Minister of Commerce and Industry, Mr. Wilson Laleau presented a speech during the installation ceremony in which he said that SONAPI is the institution that should be regulating, promoting and looking after the development of industrial parks throughout Haiti.

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Mobile banking has played an important role in rebuilding after the earthquake. Called the 'mobile wallet' the Haiti Mobile Money Initiative (HMMI) got its jumpstart in June 2010. Though it was initially met with distrust by some who had trouble investing in a purely electronic system it soon caught on with the more than 85% of mobile users in Haiti after the temporary but immobilizing devastation of many traditional banks. Fast forward a few years and Haiti is leading in mobile phone payments in the region.

The mobile banking services include deposits, withdrawals, enumerated records of accounts and funds transfers all done over phone. And the statistics given from one service, TchoTcho Mobile, made available by Scotiabank, Digicel and YellowPepper show 6 million transactions for 2011 alone. Other mobile wallet providers show promising gains as well. Voila, through Mercy Corps, has served over 6,000 Haitians living in rural communities.

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Microfinance has a long history in Haiti. Even in the 1990's the method was given considerable push from Sogebank's Chief Economist, Pierre-Marie Boisson, who was able to convince the bank's board of directors of its financial and social promise, eventually leading to Sogesol, their affiliate dedicated to microfinance.

While struggling to operate under the high administrative costs of running a microfinance institution (MFI), Sogesol has to meander the microfinance world, all while operating under Sogebank's bank regulations. There are no formal regulations governing microfinance and this leaves bank-run MFI's on shaky ground; if their umbrella organization finds the high-risk nature of giving loans without collateral, a staple of microfinance, unfeasible, their affiliates might face a shut-down. They must also deal with the very real competition from institutions that are not bank run, and, in some cases, are more established in the rural areas, where microfinance finds its biggest audience.

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Since garnering recognition after the 2006 Nobel Peace Prize it afforded creator Muhammad Yunus, a Bangladeshi economist, and his Grameen Bank, the advent of microfinance is said to be in demand from more than 600 million people. Offering financial services to low-income earners, mostly without collateral, this practice is considered a vital step towards economic freedom for the world's poor. Here are some facts on microfinance.

• Services offered include small business loans, mortgages, tuition, insurance, or other more traditional banking services like income earning savings accounts. These are accessible to the poor or those without credit or who live in remote areas without access to other institutions.

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The inconvenience of traveling, long sequestered lines that bring out the claustrophobe in most people, the sometimes frosty greetings from a teller and the ludicrous fees attached to doing business in-branch; these are some of the many factors driving people towards mobile banking--not the least of which is its convenience, considering how accessible and versatile mobiles have become (3.3 billion users reported, triple the number of internet users). But before you make the switch permanently, know the facts and weigh your options.

• Not all your banking transactions can be completed as dialed: Though mobile phones have perhaps made the leap into being magic wands, there are still some banking services it can't yet offer.

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The banking system in Haiti saw rapid growth during the 1970's, the recorded yearly growth at nearly 10%, on the heels of development in the tourism, assembly manufacturing and construction sectors. However, this decade long boon went into a downward spiral in the 80's because of problems in the political forum. As a result, the banks' footing on the stock market suffered. Of the nine main commercial banks operating at the end of the 1980's five were local and four international.

The BRH (Bank of the Republic of Haiti) is the bank of issue and government depository for Haiti. Recently, it's been described as 'well-capitalized' in a statement released by bank officials. Charles Castel, governor of the bank, gives their capital-to-assets ratio as far exceeding the 5% minimum requirement at 6.23% and reports a positive balance of about $113.5 million USD. This is a considerable share of the overall capital of Haiti's banking system, reported at $433.11 million up to June 2012. Further to that, the bank had a 1.35% return on assets up to June 30, with a 21.69% return on capital during the same period.

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Free-trade zones are a way for underdeveloped countries to incentivize manufacturing of products and their exportation to foreign shores. A zone is designated as a staging area for raw materials, or manufacturing parts used to assemble new products or refurbish recycled ones. Within these zones, no customs officials operate to assess duties, making it attractive for companies to do business, thus providing jobs for local residents.

Free-trade zones are set up at major transportation hubs such airports, seaports, and international borders. They cover the globe in major developed nations and minor emerging ones. Within the Caribbean region, they operate in Jamaica at the Port Authority and in Kingston and Montego Bay.

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With an annual inflation of 6.5%, the capital city of Haiti, Port-au-Prince is the most expensive place to live in the country. Converted to US currency, a pack of 20 cigarettes costs $5, 330ml international beer costs $1.50, 500 ml domestic beer costs $1.25 and a mid-sized wine bottle costs $3. International brand clothes and shoes in Haiti's capital can range anywhere between $38 and $60. For mobile tariff, the benchmark is $0.26 for every minute while the monthly subscription for a basic internet plan can cost $36.

Primary school expenses are as high as $20,547 each year and High School costs $24,865. These figures do not include the extra costs. Grocery expenses are extremely high and can range between $1 and $4 for a dozen/Kg/liter of different consumables. For accommodation in a 3 bedroom house in a central location, the price can be $2,435 per month and suburbs can cost $1,332 each month.

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