Disaster in Haiti: When the Rebuilding Begins

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Secretary of State and Haitian presidentFed up of hearing their country described as ?the poorest country in the Western hemisphere? and ?one of the world?s poorest and least developed countries,? Haitian-Americans are hoping that a brand new image of Haiti will emerge when it rebuilds from the devastation caused by the earthquake of Jan. 12.

Achieving that image will require a rebuilding campaign that addresses not only the country?s physical infrastructure, but also the productivity of its people and policies that govern entrepreneurial activity.

?This [earthquake] is a clean-up,? declared one resident of East Flatbush, the heart of the Haitian community in Brooklyn, N.Y. ?There was too much poverty, too much stealing of the aid that comes to help the country. So now the president is homeless and the homes of the rich people are gone. I am praying we will see a new Haiti now.?

A confident U.S. Secretary of State Hillary Clinton went beyond hoping and praying. ?You have been severely tested. But I believe Haiti can come back even stronger and better in the future,? she said on Saturday in Port-au-Prince, Haiti?s decimated capital, after meeting with Haitian President Ren? Pr?val.
The Jan. 12 earthquake, which measured 7.0 on the Richter scale, was the worst to hit the region in more than 200 years. The dead are said to number more than 100,000 and the injured in the tens of thousands with many not expected to recover. No one has yet attempted to put a firm dollar figure on the physical damage.

Haiti?s poverty statistics are startling indeed: 80 percent of the population live below the poverty line — on less than $2 a day — and 54 percent live in abject poverty. The fact that Haiti is also the least polluting country in the hemisphere — emitting zero metric tons of carbon dioxide per person even with a population of 9.8 million while tiny St. Kitts and Nevis, with only 50,000 people, emits two metric tons per capita — is of little comfort to Haitians who yearn for more robust indigenous economic activity on the island.?

Two-thirds of all Haitians depend on the agricultural, agrarian, fisheries and farming sectors. They engage in mainly small-scale subsistence farming that too often is disrupted by natural disasters. In 2008, for example, four tropical storms caused nearly $1 billion in damage, the bulk of it to the transportation infrastructure that moves people and goods to market and to the agriculture sector.??

With little evidence of a genuine commitment to capacity building for the country?s human resources and the indignity of an over-reliance on international charity to stay alive, Haitians for decades have fled the country for better economic opportunities.

Fleeing does not mean abandonment, however.

Remittances from the nearly 1.5 million to 2 million Haitians toiling in foreign countries sent home $1.8 billion from their earnings in 2007, up from the $108 million they sent back in 1995. Remittances are now Haiti?s primary source of foreign currency exchange, accounting for nearly a quarter of the country?s gross domestic product (its total output of goods and services) and more than twice its revenues from exports.

More than a gesture of compassion, the Obama administration?s decision on Friday to temporarily grant legal status to the tens of thousands of Haitian immigrants who were living in the United States illegally before the earthquake is one way to keep remittances flowing.??

For many, the earthquake is a chance to start afresh and regain the dignity of being the first independent nation in Latin America, the only nation in the world to earn its independence as part of a successful slave rebellion, and the first Black-ruled nation in the post-colonial era. Harnessing the entrepreneurial spirit of Haitians at home and abroad would be a step in that direction. But Haiti does little to encourage entrepreneurial activity, even though such activity is recognized as a primary contributor to economic advancement.

Of the 155 countries tracked in the World Bank?s 2010 Doing Business report, the island ranks 151st when it comes to implementing regulations and procedures to enhance business activity. Among its most onerous practices, it requires entrepreneurs to comply with a whopping 13 procedures before they can operate a business. It takes 195 days to start a business, the cost to do so amounts to 227.9 percent of income per capita and the minimum capital entrepreneurs must first deposit amounts to 22.4 percent of income per capita.

Obtaining a construction permit requires 11 procedures, 1,179 days and cost the equivalent of 569.5 percent of income per capita. Registering property requires five?? procedures, 405 days and cost 6.4 percent of the property value.

Entrepreneurs must make 42 tax payments a year, which take 160 hours. The total tax rate is 40.1 percent of profit. Those who wish to export must produce eight documents. Export procedures take 35 days and it cost $1,005 to ship a single container. On the import side, 10 documents are required, procedures take 33 days and the cost to import a container is $1,545.

It takes 508 days to recover a commercial debt through the courts, at a cost of 42.6 percent of the claim. Going through an insolvency process takes 5.7 years and cost 30 percent of the value of the estate. The recovery rate after an insolvency process is a mere 2.7 cents on the dollar, compared to 92.5 cents in Japan, which ranks first in this category.

When the rebuilding begins in Haiti, policymakers hopefully will have a blueprint for eradicating such impediments to vigorous local entrepreneurship and for building capacity.

Rosalind McLymont is the executive editor of The Network Journal.