The magnitude 7.0 earthquake that struck Haiti on January 12, 2010 significantly deepened existing challenges and created massive reconstruction needs for a country that was already the poorest in the Western Hemisphere.
In spite of the enormity of the task, three years after the earthquake, much has been done by Haitians and the Haitian Government, in partnership with CSOs, the private sector, and the international community.
Of the 1.5 million internally displaced people, nearly 1.2 million have left the camps and relocated. Reconstruction programs are repairing and building safe housing and upgrading neighborhoods.
Most of the 11 million cubic meters of debris has been removed, making Port-au-Prince's roads passable.
Many schools have been reconstructed and for the 2012/2013 school year, the government has committed to pay fees for 900,000 children while donors finance free access to education for another 230,000 children for six years of primary school. Through a national school feeding program, 2 million children receive a hot meal every day.
Nevertheless, much remains to be done to reduce poverty and improve the lives of Haitians.
The political situation has been relatively stable with the Government, led by Prime Minister Laurent Lamothe, trying to accelerate government-led efforts for reconstruction, work “vite et bien” (quickly and well), and address longstanding service delivery gaps. The government has adopted a pro-active private sector development agenda, highlighted by a “Haiti is open for business” campaign aimed at promoting foreign investment and links with the diaspora. The government is taking action to combat extreme poverty in Haiti by bringing all stakeholders together and launching social safety initiatives for the poorest.
Haiti remains the poorest country in the Americas and one of the poorest in the world (with a GDP per capita of US$ 725 in 2011), with significant needs in basic services. Over half of its population of 10 million lives on less than US$1 per day, and approximately 80% live on less than US$2 per day. It is also one of the most unequal countries, with a Gini coefficient of 0.59 as of 2001 (poverty statistics are currently being updated through a new household survey).
The Haitian economy has been recovering since the earthquake. After a contraction of 5.4 percent in FY2009/10, GDP grew by 5.6 percent in FY2010/11. Growth was driven by manufacturing, construction and services, which picked up significantly after the earthquake. The macroeconomic situation is stable with domestic revenue rising to 13.5 percent of GDP in FY2011/12 - up from 11.9% of GDP in FY2009/10 - largely due to intensified tax collection efforts by the Tax Directorate.
However, the momentum of economic recovery slowed in 2012. Economic growth is expected to slow significantly in 2012, to around 2 percent, due to drought-induced declines in agricultural output and higher food prices, and slower construction and transportation activity tied to the slower than anticipated public investment spending following delays in budget approval, as well as damage from Hurricanes Isaac and Sandy.
The World Bank strategy balances reconstruction needs with long-term economic development. Reconstruction work focuses on housing (neighborhood reconstruction approach that includes infrastructure improvements in neighborhoods to facilitate return of displaced persons from camps) and housing subsidy, as well as electricity (increasing access and quality of service, improving management of public electricity utility, and reducing Government transfers).
Beyond reconstruction, the World Bank Group supports government efforts to reduce its vulnerability to natural disasters, reconstruct critical infrastructure, build human capital, promote decentralized and inclusive growth, and strengthening governance.
Investment operations in disaster risk management are complemented by strategic use of trust fund resources (Global Facility for Disaster Reduction and Recovery), which has led to building codes for public building as well as a multi-hazard assessment following the earthquake. The Bank also finances the building of human capital through tuition waivers and school feeding. It also leverages trust fund resources for analytical work on nutrition and a household development agent pilot, which provides referrals and waivers for health services to vulnerable people in remote areas.
To help revitalize the economy in a way that incorporates inclusive growth and decentralization, the Bank finances improved agriculture public services to increase yields and rural incomes, small scale rural infrastructure using a community-driven approach, and is investing in regional growth poles and working closely with the IFC to improve the business environment and create jobs.
Through budget support, the Bank has helped the government close its fiscal deficit and reform public financial management, increasing the transparency and efficiency of public spending.
Improving governance and building government capacity is a cross-cutting theme of the World Bank program. All of the projects focus on strengthening the role of the State, including building capacity to set effective public policies and deliver services to the people. The Bank program also contributes to this objective by providing all of its financing to the State.
In response to the earthquake of 2010, the International Development Association’s (IDA), the part of the Bank that gives grants and loans to the poorest countries) allocated a total of US$ 500 million in grants to Haiti for the period of 2012-14 from its Crisis Response Window. On September 27, 2012, the World Bank’s Board of Executive Directors approved the Bank’s 2013/14 Second Interim Strategy Note (ISN 2) for Haiti, programming US$245 million in grants. This second strategy note builds on the previous ISN of US$ 255 million that was approved for calendar year 2012. All of the World Bank’s financing goes through the Government of Haiti.
As part of the ISN 2’s envelope, the Board of Directors also approved US$ 125 million for the following two projects: Rebuilding Energy Infrastructure and Access (US$ 90 million), which will increase access to electricity and improve the commercial viability of the electricity sector;and Additional Financing for the Infrastructure and Institutions Emergency Recovery Project (US$ 35 million), which will finance critical infrastructure and strengthen public financial management.
The Haiti portfolio consists of 15 projects for a total commitment of $635.7 million, of which $230.1 million have been disbursed. Since the earthquake, the Bank has disbursed an average $8.3 million per month and the disbursement ratio at 11.1% is higher than the regional average of 6.5%.
Support for the private sector
The investment climate in Haiti is hampered by a number of challenges including business environment, land availability and ownership rights, access to basic infrastructure, logistic and financial services, and access to skills.
IFC’s strategy in Haiti is twofold:
Creating immediate jobs, access to basic infrastructure, and income opportunities by making catalytic investments that demonstrate to others that Haiti is open for business despite remaining challenges
Supporting the development of a sustainable and inclusive economy through advisory programs that help address challenges and foster a more conducive environment for investors and for micro, small, and medium enterprises.
Since the January 2010 earthquake, IFC has committed six new investment transactions and significantly scaled up its advisory operations. To date, IFC’s portfolio in Haiti amounts to $55 million, including $15 million mobilized from others.
The most recent was IFC’s investment of $10 million in Leopard Capital’s Haiti Fund, to support SMEs, which are crucial for job creation, in sectors such as low- and medium-income housing, construction, agribusiness, and hospitality. This was IFC’s first private-equity transaction in Haiti.
IFC also structured the largest foreign direct investment since the earthquake, a $100 million investment by Viettel in Haiti’s TELECO, to upgrade the telecommunications system.
IFC’s combined investment and advisory projects are helping create 5,000 new jobs and safeguard 5,000 existing jobs.
Haiti Reconstruction Fund (HRF)
The HRF has emerged as the largest source of flexible finance for the reconstruction. The World Bank serves as Secretariat and Trustee for the multi-donor fund (HRF). Since its inception in June 2010, the HRF has mobilized 14% of all reconstruction finance for Haiti ($396 million), of which $274 million has been allocated for 17 activities requested by the Government. HRF-financed projects are appraised and supervised by one of four Partner Entities (IDB, IFC, UN, and WB) and 89% of allocations to date are implemented by GOH agencies. The total size of the HRF portfolio is $551 million, i.e. every dollar of HRF investment has leveraged another dollar in co-financing.
HRF-supported activities have begun to generate significant results, e.g. 11,000 families have been supported to leave over 50 camps and return to neighborhoods, 720,000 cubic meters of debris have been removed from hard-to-access areas, 105,000 students have received scholarship subsidies, more than 19,000 jobs have been created in affected communities, over 250 small and medium-size enterprises have received credit to restart their operations, and 14 emergency evacuation shelters have been built or restored.
In the immediate aftermath of the earthquake:
World Bank financing housed and equipped the Ministry of Economy and Finance and Tax Office (500 staff), allowing salaries to be paid, revenues to be collected and economic governance efforts to continue.
Set up the first environmentally and socially sound debris management site in Haiti, with capacity sufficient to treat bulk of debris from Port au Prince.
Conducted building assessments of Port au Prince (400,000 buildings); developed and disseminated building guidelines for reconstruction housing and public buildings.
Since the earthquake:
The Bank has also financed school fees for 290,000 children in primary school, school meals for 70,000 every day and compensation grants for 2,824 schools in earthquake affected areas.
Reached over 1.5 million people through targeted cholera and health/sanitation, education and prevention training; supported more than 100 cholera treatment units and oral rehydration posts with personnel and/or supplies; provided water treatment products and/or soap to nearly 600,000; and trained over 4,000 health and hygiene agents and medical personnel.
Repaired the road from Port au Prince to Jacmel, enabling half a million people to remain connected to the capital.
Completed six water supply systems, benefitting 37,000 people in rural communities.
Provided 25,000 short-term cash-for-work jobs, including debris sorting and canal clearing in Port au Prince, which was critical to avoid flooding of one of the largest camps (Champ de Mars camp) during the hurricane season.
And, is supporting the return of over 60,000 people to safer housing through housing grants. Is working to provide upgraded neighborhoods with wider roads, better lighting, and fortified ravines for 125,000 people.
IFC projects support close to 10,000 jobs, of which 4,000 for women. 5,000 new jobs were created or preserved by IFC investment and advisory activities since January 2010. E-Power generates electricity for 3.3 million customers.
IFC Advisory Services in Haiti has supported disbursement of over 450 MSME loans, valuing over US$14 million since January 2010. As part of the AS project, IFC client (Sogebank) initiated and continues to grow its MSME portfolio, with US$6.5 million in 337 loans outstanding as of June 2012.