Robert B. Zoellick at Conference on Haiti’s Social and Economic Development

Remarks by Robert B. Zoellick
President-The World Bank Group
Conference on Haiti’s Social and Economic Development
Inter-American Development Bank

April 14, 2009, Washington DC

Introduction
• President Luis Alberto Moreno, Prime Minister Michele Pierre-Louis, Distinguished Representatives of the Haitian Government, international governments and development organizations, Ladies and Gentlemen:

• I would like to start by thanking the Government of Haiti and the Inter-American Development Bank for organizing this conference.  As President Moreno stated this morning, it is most encouraging to see the growing interest across Latin America in helping their Haitian neighbors. 
(Watch full video of his remarks)

• Haiti is at a turning point. Under a democratically elected President, Haiti has an opportunity to break the cycle of violence and under-development.

• Before it was hit by food and fuel crises and four hurricanes and storms that destroyed some 15% of its GDP, Haiti’s economy was beginning to show the first signs of a turnaround.  But the results hadn’t yet reached critical mass or visibility.  Now, set-back once again by global recession, there is a real danger that we fail to seize the moment of Haiti’s promise.

• I have suggested that over the long-term Haiti Fatigue may prove more devastating to the country’s future than natural disasters.  Today, we are here to prove that prediction wrong – on both counts – as we also work to strengthen Haiti’s resilience to natural catastrophe.

• Competition for international resources is intense.  Why Haiti, many may ask? Why now?

• Through the leadership of Brazil, the UN security operation has laid the critical foundations.  But it is not enough.

• Haiti’s stability and prosperity matter – for Haitians, for Americans, and for a world where G20 leaders committed just two weeks ago in London, to ensure that financial rescues do not come at the expense of human rescues.

• We must replace Fatigue with Opportunity and with practical actions to realize it.  That means doing development differently.  It has to start with country ownership.  No well-meaning outsiders will succeed unless a country decides to succeed. 

• With political will and international support, I believe this challenge is doable.  Haitian authorities working with the private sector and the international community have developed a clear and prioritized strategy based on 3 main pillars – job creation, private sector growth – to take advantage, in particular, of the potential of Hope II, and basic services.  This practical and targeted approach, drawn from the National Growth and Poverty Reduction Strategy, deserves our support.  I also want to thank Professor Paul Collier, working on behalf of the UN, for his practical policy recommendations.

• Meeting here in the US capital, Haiti’s plan also deserves the support of the US Congress.  Congress took a big step through the passage of Hope II and can now play an important role in facilitating its implementation.  In that regard, I would like to commend Chairman Rangel for his work to bring together prospective investors in the textile sector.

• Doing development differently also means a new partnership with the international community.  To catalyze the Haitian political and development process, donors must unite much more effectively: better co-ordination around priority areas, and – working with the Haitian authorities – better tracking of results and accountability.

• Improving co-ordination also means reducing the administrative burden donors impose on a weak Haitian state, channeling more support through the budget, and aligning resources to priority projects and sectors

• The average developing country hosts 260 visits from donors each year.  This overload is a huge burden for any developing country’s reform team; in a post-conflict state it can overwhelm a small team.

• We need joint assessments that reflect a much better integration and rebalancing of security, governance, and development, so that these three are not seen as separate endeavors but can go hand in hand, mutually reinforcing.  We need joint benchmarks to encourage convergence of strategies.  We need donors to create greater interoperability – for example, the UN and the World Bank, and the World Bank and the EU.

• And we need joint action to recover stolen assets.  I’m pleased to note, as a start, that working with the Haitian and Swiss Governments, we are helping recover $6 million of Duvalier assets under our Stolen Assets Recovery (StAR) initiative.  There is more.

• At present, a significant portion of aid to Haiti flows outside the national budget.  This frustrates the implementation of a coherent national plan.  Increased reliance on the national budget should be combined with stronger public financial management, efforts against corruption, investment in human capacity, and a common understanding on results to be achieved.  The Haitian authorities have taken important steps in these areas.  Donors must now respond.

• Haiti is changing, and we must change with it.

• The World Bank Group has aligned its assistance behind the country’s national strategy. 

• Last year, we approved $45 million in emergency grants for Haiti, in addition to the country’s regular allocation of $30 million in grants from the International Development Association, or IDA. 

• This extra funding included:
o $10 million of budget support to the Government in May 2008:
o A $20 million additional IDA project to rebuild bridges and strengthen disaster management systems after the storms; and
o A $5 million grant from the State and Peace Building Fund for rural water and sanitation.

• We have also responded to the crisis by reprogramming resources, for example, doubling the size of the Bank-financed school meals program, to cover 45,000 children, and to expand ongoing community-driven development support in hard-hit rural areas.

• Of particular importance will be measures to help Haiti take advantage of the HOPE II Act, and the preferential access that it provides to US markets for the textile sector.  Throughout the hemisphere, the US needs to see free trade as the friend of free peoples and freedom.

• 200 miles from these shores, Haiti offers a win-win opportunity.   Jobs and development for Haitians, opportunity for American and international manufacturers.  This will also require infrastructure and energy investments and Haitian action – by the Government and the Parliament – to improve the investment climate.  It will require our ingenuity to ensure that we help catalyze investment opportunities, new and innovative approaches to energy generation.

• As in so many fragile states, we must not make development perfection the enemy of the good and practical.  Private sector players currently perceive high risks in embarking on some of the needed investments and will need risk mitigation to move forward.  This can be facilitated by directing some donor support to private sector initiatives.  The Haitian leadership and Parliament must also ensure that steps are taken to enact and enforce property rights, cut red-tape, and boost investor confidence.

• Both the Bank and IFC, the Bank Group’s private sector arm, will promote improvements in competitiveness and the business environment.  We will support the development of industrial parks and export processing zones, particularly in the context of HOPE II.  The IFC-financed CODEVI textile zone in Haiti already directly employs 3,500 people. 

• IFC is advising Haitian garment companies to become more competitive.  With its Business Edge program, IFC is providing much needed business learning skills to small and medium sized enterprises, strengthening financial institutions and improving access to finance, particularly for microentrepreneurs and small and medium sized enterprises.

• IFC invested with private sector partners to establish Micro Credit National, Haiti’s first private sector microfinance institution.  By the time IFC closed this investment in 2006, Micro Credit National had extended a total of around $40 million in small loans to Haitian micro entrepreneurs and SMEs – and continues to be a leading microfinance lender today.

• IFC will also work directly with lending and advisory services to individual investors, as it has done in the past with its $30 million financing to support Digicel – on FDI promotion, and increased availability of industrial space to attract investors.

• Since 2005 the Bank has approved $273 million in IDA resources for Haiti, in addition to around $20 million through the trust funds the Bank administers. 

• In addition, I am pleased to announce that the World Bank plans to provide a further $20 million of additional grant assistance to Haiti, above what had already been programmed. 

• This additional allocation will raise to $80 million the new funding that the World Bank Group expects to approve for Haiti for the next 2 years.  Though we channel our IDA monies directly to the Government, we will continue to ensure that at a minimum over a quarter of funding is in the form of direct budget support.

• We are also working closely with the authorities and the IMF to help expedite debt cancellation while ensuring that monies released go directly to support poverty reduction.  Next month we will send documentation to our Executive Board so that Haiti can reach its completion point under the Heavily Indebted Poor Countries' Initiative in June.  I hope very much that our shareholders, many of whom are in this room today, will support this.

• I have also proposed that developed countries allocate 0.7 percent of the stimulus packages to a Vulnerability Fund for poor developing countries, such as Haiti.  This money can be allocated through the Bank where we have created a new Vulnerability Financing Facility, the Regional Development Banks, or the United Nations.  This is important and deserves support.  We must not accept a world where summits are called for High Finance and there is only silence for the poor.

Conclusion
• When, I visited Haiti last October, after the hurricanes, I saw the scale of the devastation and flooding, particularly around the port city of Gonaives.  I know that the task of recovery and reconstruction is a huge and daunting one.  But I was impressed by the resilience and determination of the people I met: The teachers and nurses saving the lives of malnourished infants in Cite Soleil, and giving them the education they need for a better future.

• I am confident that Haiti as a whole can do the same.

• Development is not a quick-fix. Support needs to be for the long-haul. But what is significant about this conference and this moment is that with political consensus and leadership at home and support internationally, Haiti can emerge from the shadows of its past, into the sunlight of a better future.

• I wish the authorities success in today’s deliberations and assure you of the World Bank Group’s support.

• Thank you very much.