Overseas Haitians and The Haitian Economy Patrice Backer PromoCapital

1
Overseas Haitians and The Haitian
EconomyPatrice Backer PromoCapital

• International Development Research Centre
• Ottawa, Canada
• April 8, 2005

2
Agenda

• Haitian Diaspora
• Remittances Investment
• Impact on Haitian Economy
• The PromoCapital Example
• Areas to Explore

3
Significant Migration Patterns

• 1930s, 40s and 50s
• Cuba, French Guyana, Dominican Republic
• Primarily rural population, field laborers
  sugar cane cutters
• 1960s and early 1970s
• US (Northeast), Canada, French-speaking Africa,
  France (later to US or Canada), Bahamas
• Professionals ? brain drain
• Late 1970s and early 80s
• US (Florida), Bahamas, Turks and Caicos
• Economic migrants primarily from the North
  (Cap-Haitien, Port-de-Paix, La Tortue) and
  vicinities
• Late 1990s/Early 2000s
• Siphoning off by Canada of our best and
  brightest
• Age range between 25 and 40
• Professionals ? brain drain
• Middle management in private sector affected

4
Geographic Distribution
TOTAL SELECTED LOCATIONS 1,267,000
5
Agenda

• Haitian Diaspora
• Remittances Investment
• Impact on Haitian Economy
• The PromoCapital Example
• Areas to Explore

6
Remittances are Critical to Haitian Economy

• 28 of GDP (Est. 2004) ? 17 in 1999
• More than USD 1 billion annually (formal and
  informal) ? mostly from the US
• Primarily geared towards consumption
• Living Expenses (groceries, clothing,
  rent/mortgage)
• Education
• Gifts for special occasion
• Medical expenses
• New home constructions

7
Comparative Data
Source SOGEBANK
8
But There Are Issues

• Large percentage goes right back to donor
  countries due to purchase of imported products
• Remittances/Investments are sometimes
  counter-productive or mismanaged
• Assisted mentality
• Waste/theft by family members or recipients
• Long-term
• Haitian migration has slowed to a trickle
• Expected tapering-off of remittances in 15-20
  years

9
Overseas Haitians Also Invest Through SMEs

• Lack of products and services provides
  opportunities, especially in food exports
• Trade conducted primarily out of Florida
• Proximity
• Entrepreneurial spirit of local Haitian community
• Businesses are small and face same challenges as
  their US counterparts
• Lack of financing
• Deficient management skills
• Competition and lack of growth opportunities

10
Portfolio Investments Not Common

• Trust factor ? scams, cooperative scandal
• Priority is family or community
• Securities laws in the US ? major issue !!!
• PromoCapital ? new approach at the issue

11
Agenda

• Haitian Diaspora
• Remittances Investments
• Impact on Haitian Economy
• The PromoCapital Example
• Areas to Explore

12
Impact of Overseas Remittances

• Lack of reliable statistics other than Central
  Bank data
• Regional impact?
• Job creation?
• Empirical evidence
• SMEs in provinces, especially in the North
• New constructions and home improvement in
  low-income areas
• Local tourism flow, especially during holidays
  ? stability of currency

13
Initiatives from the Diaspora Numerous but Small
14
Agenda

• Haitian Diaspora
• Remittances Investments
• Impact on Haitian Economy
• The PromoCapital Example
• Areas to Explore

15
PromoCapital Overview

• History
• Washington, DC Workshop June 2003
• Incorporation Fall 2003
• Launch January 1, 2004
• Structure
• PromoCapital Haiti S.A. SFD
• PromoCapital USA, Inc. Wholly owned subsidiary

16
PromoCapital Overview (cont.)

• Capital Structure
• 400,000 shares sold
• Raised USD 1 million
• 50 owned by Haitian Americans and US residents
• 50 owned by Haitians and Haiti residents
• There are 67 shareholders
• 36 in the US
• 31 in Haiti
• Focus on larger investments
• Infrastructure
• Real Estate larger scale
• National production / Export oriented

17
PromoCapital US Partners
18
Channeling Diaspora Investments Differently
19
Agenda

• Haitian Diaspora
• Remittances Investments
• Impact on Haitian Economy
• The PromoCapital Example
• Areas to Explore

20
Real Estate

• Leveraging credit to facilitate real estate loans
• US residents have built credit record
• Real Estate financing in Haiti constrained by
• Scarcity of credit
• High downpayments
• Possible solution
• US resident as guarantor/co-payer
• Agreement between US and local banks
• Application from local relative

21
MèsiAnpilThankYouMerciBeaucoup
MuchísimasGracias