Haiti’s financing landscape is severely constrained, with domestic credit to the private sector equal to only 15% of GDP, compared to over 45% of GDP in Latin America and 75% across developing countries. A significant portion of adults turn to informal lenders as a source of capital, with 11.9% of adults in Haiti relying on informal lenders, compared to 4.7% across Latin America. Foreign direct investment (FDI) does not offset the inaccessibility of domestic credit, with FDI totaling US$183m in 2013, equal to just 2% of GDP.
The lack of investment becomes even clearer when Haiti is compared to its neighbor, the Dominican Republic, where FDI in 2013 was US$1.6bn. In 2012, FDI in the Dominican Republic exceeded US$3.4bn, or 6% of GDP. Improved access to finance is needed to catalyze and sustain the country’s economic growth. The Government of Haiti has worked to improve its regulatory environment surrounding foreign investment and eliminate barriers to entry.
According to the World Bank’s “Investing Across Borders” assessment, Haiti allows full equity ownership in entities across most key sectors, including agriculture, manufacturing, and electricity. However, ease of doing business remains low due to challenges including land ownership, access to finance, and access to electricity. Haiti ranks 173 overall in ease of doing business.
Increased access to capital within key sectors, including energy, agriculture, healthcare, housing, manufacturing, Information and Communication Technology (ICT), financial services, and infrastructure, will support growth and generate impact. The agricultural sector represents one of the key sectors of the Haitian economy, contributing 5% to the country’s GDP in fiscal year 2012-2013.
The product mix for export is primarily cocoa, coffee, mangoes, and vétiver (chrysopogon). The country exported US$8.5 million worth of cocoa and US$2.1m worth of coffee in 2014. Financing is needed for processing and storage facilities, equipment, and power generation. However, multiple banks, including SOGEBANK and BUH, will not provide agricultural loans for small and medium-sized agribusinesses, citing increased risk.
Microfinance institutions partly fill this gap, providing small loans to farmers and cooperatives. However, flexibility in lending remains limited, with local microfinance institutions not working with cooperatives due to practical legal issues. Root Capital, a non-profit microfinance organization, focuses on mid-size farming cooperatives, offering short-term credit with average loan sizes of US$75,000.
The Haitian government is working closely with the Centre de Facilitation des Investissements (CFI) to strengthen the Unit for the Promotion of Investment in the Agriculture Sector (UPISA). The Ministry of Agriculture initiative provides technical information and other support to investors and players interested in the sector. Investment opportunities in the agricultural sector include increasing scale and improving farming methods across a number of key products in each department.
The sector benefits from access to the US and Canada as well as Latin American countries, and Haiti also benefits from duty-free access to European markets since it is part of the African, Caribbean, and Pacific Group of States (ACP). The Haitian market is fairly competitive in relation to costs when evaluated against similar markets in the region. Spending trends show that donors have a strong appetite for the agribusiness sector in Haiti. However, the sector continues to face competition from imports of international food products, mainly from the Dominican Republic and the United States.