The country’s poverty is in marked contrast to the relative affluence of its neighbours. It needs access to finance beyond disaster relief. But can banks make a business case for a nation in such poor repair?
It’s an understatement to say that the island of Hispaniola in the Caribbean is one of contrasts.
The land mass contains two countries – the Dominican Republic and Haiti. The former has been one of the fastest growing economies in Latin America for 20 years – GDP growth averaged around 5% during that period – and it has a strong business and finance community.
The international investment community has followed its international bond deals down in yields, out in tenors and even into local currency-denominated transactions.
Meanwhile, Haiti is the poorest country in the western hemisphere. Per capita GDP is $1,800 (the Dominican Republic’s is $17,000), putting the country 213th in the world, according to US government statistics. Some 60% of the populations lives under the poverty line, while 40% are unemployed. Remittances are worth 25% of the country’s $20 billion GDP. Haiti has always been poor.
A dysfunctional political system has stood in the way of any economic and physical development. In addition to the man-made problems there have also been natural disasters.
In 2010, an earthquake killed an estimated 300,000 people and wrecked the capital and many other towns – leaving 1.5 million of the 10 million population homeless. Six years later, Hurricane Matthew – the fiercest Caribbean storm in a decade – made landfall in Haiti with 140 mile-an-hour winds. It affected more than two million Haitians and almost destroyed the country’s subsistence agriculture and basic infrastructure.
Given the continually dire situation in Haiti, most of the international financial community’s engagement with the country has been in the form of relief: after the 2010 earthquake, creditor countries wrote off the country’s debt. Unfortunately the financial breathing space was squandered – debt is again approaching $3 billion, much owed to Venezuela through the Petrocaribe oil programme (and of which up to $2 billion has disappeared).
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