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Haiti: The Challenges of Poverty Reduction

Haiti FY99 PA

Main Report (3.3Mb PDF)

Technical Papers (19.4Mb PDF)

Haiti is the poorest country in the Western Hemisphere and one of the poorest countries in the developing world. Its per capita income — $ 250 — is considerably less than one-tenth the Latin American average. About 80 percent of the rural Haitian population lives in poverty. Moreover, far from improving, the poverty situation in Haiti has been deteriorating over the past decade, concomitant with a rate of decline in per capita GNP of 5.2 percent a year over the 1985-95 period.

The staggering level of poverty in Haiti is associated with a profile of social indicators that is also shocking. Life expectancy is only 57 years compared with the Latin American average of 69. Less than half of the population is literate. Only about one child in five of secondary-school age actually attends secondary school. Health conditions are similarly poor; vaccination coverage for children, for example, is only about 25 percent. Only about one-fourth of the population has access to safe water. In short, the overwhelming majority of the Haitian population is living in deplorable conditions of extreme poverty. In the face of this daunting reality, Haiti's population continues to grow at a high rate estimated at almost 200,000 people per year.

What accounts for the dire extent of poverty in Haiti? Over time, numerous observers have given many and diverse answers to this difficult question. This report points to a number of key factors:
  • Political instability, woefully poor governance, and corruption. Fundamental to the pervasive problem of poverty in Haiti is the long history of political instability and the lack of governance. Corruption and misuse of public funds have resulted in a decline in the quality of all public services, including fundamental areas of traditional governmental responsibility, such as the police, the justice system, and the provision of basic infrastructure. While the restoration of democracy in Haiti is highly welcome development and one, which has resulted in some encouraging progress, the basic problems of governance remain and are at the core of the country's poverty problems.
  • Inadequate growth, as a result of distortions at the macroeconomic level and inadequate levels of private investment. The political factors just enumerated have had a severely negative impact on private investment, both domestic and foreign. The investment/GDP ratio in Haiti is only about 10 percent — on the order of one-third, for example, the ratio in Chile. This report estimates that Haiti would require annual growth rates of at least 5 percent to achieve significant progress in poverty reduction. Instead, as noted above, the country has experienced negative growth of about that magnitude in recent years, and prospects for meaningful improvement on the growth front are not in sight.
  • Underinvestment in human capital and the poor quality of the expenditures that are made. In the public sector, still only 20 percent of resources go to rural areas, where approximately two-thirds of the people live. Per capita health spending, both public and private, is about $21, compared with $38 in Sub-Saharan Africa and $202 in Latin America.
  • A "poverty trap." The interaction of these various factors, including high population growth, produces a downward spiral, a "poverty trap" from which there frequently appears no exit nor hope. Some aspects of that trap discussed in this report include: highlands; rampant environmental degradation, especially in rural areas; an increase in crime and violence, systematic abuse of human rights and outward migration from the country to escape a life of misery. In short, the lack of good governance, the low levels of growth and investment, the lack of attention to basic human needs, and a set of understandable, if lamentable, behavioral consequences interact in numerous and complex ways, all with one outcome: an increase in poverty and the associated human, physical, social, and environmental degradation.

If the foregoing are the causes of the Haitian poverty dilemma then what, if anything, can be done to alleviate matters and improve living standards for the general population of the country? The report that follows lays out the elements of a recommended approach but in doing so urges modesty and caution. Poverty will not decline in Haiti overnight. There is no "magic bullet." The road ahead is paved with pitfalls, and progress will at best be incremental and slow. Nevertheless, the return of democracy, the manifest aspirations of the Haitian people for a better life for themselves and their children, the lessons learned from a number of program and project initiatives already underway, as well as the determined and sustained support of the external donor community and non-governmental organizations offer grounds for guarded optimism concerning the prospects for poverty reduction in Haiti.

The challenge for all those concerned with Haitian development is to identify a coherent, mutually consistent set of priorities around which efforts can be planned and effective implementation pursued. Of the priorities discussed, none is more important than reforms aimed at overcoming the historically endemic political, institutional, and governance obstacles to a better life for the Haitian poor. In the absence of such fundamental reforms, the other proposed reforms — as important as they are in their own right — are likely to prove ineffective and inadequate.

What, then, is to be done?

  • Strengthen essential public sector institutions, improve coordination and consultation within government, and reestablish and consolidate political stability. Given the limited capacity of the state, refocusing the government's role in critical areas is urgent. These include maintaining public order and economic stability, securing property rights, building a regulatory role for some sectors, and designing a framework to help increase provision of primary health and education services and for investment in and maintenance of infrastructure. The modernization of the Central Bank, and the achievements in the creation of the Haitian Police Force with improvements in the penal system can serve as reference points for the modernization of the state. The latter will also require enhancing the role of the private sector in providing services and ensuring the full integration of civil society in sector planning and policymaking. On that front, good progress is being made through the government's education strategy. Achieving political stability will require more open communication between the executive and parliament and a genuine will to succeed.
  • Strengthen macroeconomic stability and reduce distortions in order to encourage private sector investment and increase productivity. Boosting private investment will provide the underpinnings of Haiti's future economic growth. An important first step will be implementing the capitalization program, in particular of telecommunications, electricity, water sector, ports and airports. Privatization of these sectors will increase the productivity of the economy and demonstrate the government's commitment to redefine the role of the state and set the economy on a modern course. The government has made significant efforts to maintain macroeconomic stability, which needs to be continued and strengthened.
  • Improve the quality of government spending, invest in the provision of basic human needs, and raise the level of human capital. A huge challenge for the Haitian government will be increasing resources allocated to financing social services. In education, health, water and sanitation, and family planning, the government should continue to leave the delivery of these services to NGOs and the private sector to the maximum extent possible, while it strives to improve the regulatory framework and coordinates its own activities, those of private actors, and the poor themselves. Limited government resources should be directed at programs targeted to the very poor, particularly those in rural areas that have been neglected in the past. Until the benefits of these longer-term investments in human capital are felt, the existence of targeted transfers and social safety net programs will continue to be important to the survival of the Haitian population.
  • Rationalize the assistance provided by external donors. External support remains crucial to Haitian economic recovery and efforts to reduce poverty, accounting for about 15 percent of GDP in 1997. But there are serious problems of donor coordination that hinder the effectiveness of the aid provided. The multiplicity of donors and programs in almost every sector complicates both government and donor efforts to coordinate planning and implementation. In some sectors donors have formed working groups that can contribute to harmonizing the provision of external assistance, yet these groups have not been very active since the onset of the June 1997 political crisis. Moreover, it is doubtful that these efforts will be effective in the absence of a stronger coordinating role from the government.

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