erstwhile economics journalist in Haiti @tatewatkins
Jun 26, 20135 min read
OSM Marks the Spot
Haitians use a crowdsourced map to chart their own country, and its development
In 2004, Steve Coast started biking around London carrying a backpack with a GPS unit in it. Since 1791, the Ordnance Survey had been providing the UK government with excellent maps of the island country, but the data wasn’t freely available and was subject to a lot of license restrictions. Coast decided that he would map the world with open data, starting by cycling the street he lived on.
In the month following the January 2010 earthquake in Haiti, 600 volunteers from around the globe helped put Port-au-Prince on the map, literally. There had been no detailed and accurate digital map of the city. The Google Maps’ rendering of Haiti still lacks detail – national highways sometimes disappear into thin air – and its mapping of the capital’s side streets is riddled with errors. OSM contributors used satellite imagery from Yahoo! and out-of-copyright maps of Haiti to chart the metropolitan area, and search and rescue teams and humanitarian organizations relied on it for emergency and relief response.
Three years later, Haitians are working with the Humanitarian OpenStreetMap Team (HOT) to map the rest of the country. Samuel Alce served as adjunct coordinator of a spring 2012 project funded by USAID’s Office of Transition Initiatives (OTI) that mapped Saint-Marc, a coastal town about two hours north of the capital. In addition to populating the town’s map with government buildings and business locations, “It was a project to help 30 people learn how to do mapping,” he says. Now, Alce and others with HOT are working on a second USAID-funded venture, to fill in the country’s so-called Northern Development Corridor and train 60 young mappers in the process.
As a side project, Alce used OSM to create an online map of stations and routes used by tap-taps, the vibrantly-painted trucks and minibuses that ferry Haitians around the country. But less than 10 percent of Haitians use the internet, and map-literacy is low in a place where half the population can’t read and most people get directions from the mouths of friends or family.
“I’ve seen dispatchers of large NGOs and international organizations,” says Jaakko Helleranta, “who don’t know how to read a map.” Helleranta is senior coordinator of HOT and a self-proclaimed “map geek” who has lived in Haiti for the past three years while also consulting on a variety of development projects. The Finn says that training local mappers is just as important as improving the OSM map of Haiti itself.
In Haiti, much of HOT’s work with mappers has been in disadvantaged communities – the Cité Soleil shantytown was one of the first areas they focused on in Port-au-Prince. “I think it’s just mind-blowing and completely amazing, if not miraculous,” Helleranta says, “to see that HOT has been able to get a group of people, given the reality of their background, to actually create useful geo-information.” Mapping techniques are “challenging to explain to people who haven’t gotten a very good basic education,” he says, let alone people who have no experience with maps.
Alce was in Washington, D.C. last year for a crisis mapping conference. “I needed to find a place to eat,” he says, “and I looked on a map. I needed to find a place to buy a saxophone reed. I looked on a map. I knew how to read a map because of OSM.” That type of lasting change is what the projects’ funders hope to see.
Jessica Bryant, program advisor at USAID’s Office of Transition Initiatives, writes in an email that the Haiti mapping projects combine novel technology with “some basic, traditional development principles: projects work better when information and agency are in the hands of local community members, they are more successful when participants can see tangible results from their work, and ownership is key.” The project to map Saint-Marc ended more than a year ago, but it spawned a local group of mappers who still work together on mapping projects and to inform communities about OSM. “The areas where they have worked have become the best mapped cities in Haiti,” Bryant writes.
The goal of the current project to map Haiti’s North, she says, is to “enable communities to benefit as fully as possible from the investment headed their way.” The U.S. Government-backed Caracol Industrial Park opened last October and is the area’s, and country’s, largest post-earthquake investment. Henri Christophe University stands a few miles down the road in Limonade, a $30 million post-quake gift from the neighboring Dominican Republic. Recent mining exploration of potentially $20 billion in precious metals is concentrated in the northern region of the country. USAID and the Inter-American Development Bank have also committed tens of millions of dollars to four- to five-year agricultural projects in the region.
“With OSM,” Alce says, “we’re putting everything on the map in the North. You can look at the map and see we’ve got all this infrastructure being developed, commerce being developed, a university”
“For the North to really develop,” he says, “everything needs to be mapped.”
erstwhile economics journalist in Haiti @tatewatkins
Sep 23, 20132 min read
On Doing Business in Haiti
‘The people in Haiti don’t want handouts. They want economic opportunity and good jobs.’
I recently helped report a Bloomberg Businessweek piece about Industrial Revolution II, a new garment assembly company operating in Haiti that aims to set a higher standard for working conditions in the sector. “The people in Haiti don’t want handouts,” CEO Rob Broggi rightfully points out in the piece. “They want economic opportunity and good jobs.” The company is aiming to provide those opportunities for a few Haitians.
After writing stories about these sorts of efforts, I’ll sometimes see banal criticisms of them on Twitter or via email. The critiques often ignore the story for the most part and fixate on some structural problem – ‘How can you write about Made-in-Haiti tablets when the country’s education sector is a mess?!’ Other times, they’ll lambast a tiny but worthwhile venture for failing to transform its sector, or the entire Haitian economy. Industrial Revolution II has only 42 assembly operators. Haiti is a country of 10 million people, and about three-quarters of them are unemployed or scrape by in the informal sector.
At times, often ones that involve afternoon Prestige with friends at a Haitian bar, I can be plenty pessimistic about Haiti’s prospects, and about some of the fundamental issues that will probably have to change before the country can ever take off. A seemingly permanent dependance on so-called development aid is one I’ve written about recently.
But when I do a story on touchscreen tablets being made in the country, or a company trying to improve the garment sector on the margin, the takeaway for me frequently is that people are trying these sorts of ventures here at all. Despite what some sunshine-pumpers might say, people aren’t exactly lining up to invest in Haiti, even at the site of the biggest and most top-down of investment pushes.
That’s not to say that everyone who steps out and invests in Haiti should be automatically lauded, or that they’re not acting for themselves first and foremost. But critiquing something because it’s not a panacea is not much of a criticism.
The first thing people on Port-au-Prince streets usually ask me and other blan for is not pocket change, it’s a job. Economic opportunity and good jobs are two things this country could use a lot more of, on the margin. And a change that’s imperceptible from 10,000 feet can be transformational for some on the ground.
Next Story — Chávez’s Oil for Haiti, No Strings Attached
Currently Reading - Chávez’s Oil for Haiti, No Strings Attached
erstwhile economics journalist in Haiti @tatewatkins
Sep 21, 20135 min read
Chávez’s Oil for Haiti, No Strings Attached
Venezuela has given Haiti tankers of oil under preferential financing terms for years. What’s not to love?
When Venezuelan President Hugo Chávez passed away earlier this year, Haiti announced a three-day period of national mourning for the man who had become “a great friend of Haiti.” One month later, President Michel Martelly’s administration announced that it would name Haiti’s second largest airport after the late Venezuelan leader.
The fêting wasn’t out of the blue. Back in 2007, thousands of Haitians spilled into the streets to welcome Chávez during a state visit that marked a new agreement with then-president René Préval. That deal has brought 26 million barrels of oil and other petroleum products to the country under preferential financing terms, which has also allowed Haiti to fund a host of other development projects. The conspicuous power plants and roads funded by the program are one reason that Haitians champion Chávez and his country so much.
Venezuela started PetroCaribe – part regional alliance, part bulwark against U.S. influence in Latin America – in 2005. The program now gives 18 countries access to oil under preferential financing terms. In Haiti’s case, it works like this: Venezuela sends the country petroleum products – a total of $2.8 billion-worth as of July 2013. (The oil accounts for 11,000 of the 12,000 barrels of oil Haiti uses each day.) Haiti then sells the fuel to local energy and petrol companies. The exact terms depend on international oil prices, but Haiti pays Venezuela for about 40 percent of the fuel imports up front. The remaining 60 percent is payable over the next 25 years at 1 percent interest, with a two-year grace period. In the meantime, that chunk of money can be used by the central government for other projects.
It’s a significant source of revenue. During a June visit from Nicolas Maduro, Venezuela’s new president, Martelly said that the program funded 94 percent of all current infrastructure, agriculture, and education projects. “The majority of reconstruction projects,” he said, “such as roads, housing, hospitals, squares, and public buildings currently running in the country are financed from PetroCaribe funds.” An airport runway in Cap-Haïtien was one such project, hence the Hugo Chávez International Airport moniker.
The de facto aid that comes via PetroCaribe goes straight into government coffers and can be used however the state sees fit. That sort of unrestricted and direct funding is a far cry from most external money Haiti receives. In the two years following the January 2010 earthquake, donors sent less than 1 percent of the billions in aid money to the Haitian government. Almost 80 percent of money sent by the U.S. government was awarded to contractors in the Washington, D.C., area.
Because the loan on the PetroCaribe money will ostensibly come due one day, the funds are supposed to be used in ways that will provide a return – “growth-enhancing investment projects,” as the International Monetary Fund puts it (p. 13). That’s one reason Parliament demanded an explanation from the Prime Minister’s office in May when it suspected mismanagement of the oil funds. But even setting aside those worries, the structure underpinning Haiti’s PetroCaribe system may be another cause for consternation.
Once local energy companies pay for the imported fuel, they transform it into power and then sell it right back to the state through Électricité d’Haïti (EDH), the national utility. EDH then distributes electricity to Haitian homes and businesses. But its grids have deteriorated over decades of neglect, its offices lack effective billing and collection systems, and thousands of DIY connections siphon electricity away illegally. The consequence is that EDH collects revenues for only 19 percent of the electricity it provides, Prime Minister Laurent Lamothe has said. The Haitian government has covered the shortfall with subsidies, recently to the tune of about $200 million in annual losses.
Not all Venezuelan fuel imports are burned to produce electricity. Some go to gas companies and, eventually, to power the vehicles of the drivers who clog Port-au-Prince streets nearly every hour of every day. Others wind up running the diesel generators that power pockets of the country during blackouts. The prices at the pump for gasoline, diesel, and kerosene haven’t changed in more two years (p. 12), even though world fuel prices and shipping costs fluctuate regularly. The pump-price stability is no accident; the Haitian government adjusts excise taxes and customs duties on fuel – it forgoes revenues, and sometimes provides outright subsidies – to keep the prices stable.
Giving electricity to people who would otherwise have none and cheap gas to everyone is good politics but terrible economics. The IMF notes that energy and fuel subsidies are expensive and inefficient ways to help the poor – and that every subsidy must be paid for by someone, somewhere, eventually. The rich use much more energy than the poor and therefore benefit the most, energy subsidies can crowd-out the very sort of ‘growth-enhancing’ public investment PetroCaribe is supposed to support, and fuel subsidies encourage overconsumption and increase pollution. Haiti’s years-long Venezuelan-fuel bender is more than enough to give pause to anyone whose parents ever told them not to buy gas or groceries on a credit card.
Perhaps the Haitian debt that is slowly snowballing under PetroCaribe will never actually come due. Venezuela already canceled the $395 million that was owed under the program after the 2010 earthquake. Haiti has accumulated more than $1.1 billion in PetroCaribe debt in the three-plus years since the quake, but as the least-well-off country in the program, it may receive more grace than the other 17 members. Or, with a joint Venezuela-Haiti entity in the works that will soon assume responsibility for the account – and its debt – maybe the Haitian government will be able to distance itself from the fallout of any possible future default. In the meantime, Haiti’s administration has asked to pay part of its bill with crop exports, including coffee and mangoes. They will amount to an estimated $12 million yearly, perhaps enough to cover a month’s-worth of oil repayments.
Haiti has deep ties to Venezuela; heads of state from the two nations can hardly meet without rehashing the story of early–19th-century Haitian President Alexandre Pétion providing Simón Bolívar with sanctuary and military aid in his quest to win Latin American independence from Spain. The destiny of the oil deal and its aftereffects may write the next chapter of the two countries’ relations – and determine how Haitians ultimately view Chávez and his legacy to their country.
erstwhile economics journalist in Haiti @tatewatkins
Sep 17, 20138 min read
One Tablet Per Haitian
Surtab’s Made-in-Haiti touchscreen tablets may help blaze a trail back to electronics manufacturing in the country
Marise Fils-Aimé sits at a work table in a brightly-lit, air-conditioned room with hardly a speck of dust to be found. She’s wearing white-coveralls over her clothes, a hairnet, and light-blue booties that cover her Crocs. In front of her lay a pair of wire clippers, a roll of tape, a small electric soldering iron, a glue gun, and a blue tub that contains the plastic parts and electronic components required to assemble a 7-inch touchscreen tablet, which no company has produced in Haiti before.
“I’ve never used a tablet,” Fils-Aimé says. “I think all Haitians would like to have one.”
ONE TABLET PER HAITIAN
In a country with a manufacturing sector known for producing cheap t-shirts, tablet-maker Surtab is a small effort at producing a big-value product. “We really want to re-establish Haiti as a destination for appliances and electronics manufacturing,” says Maarten Boute, Surtab’s 38-year-old Belgian CEO. “We put the bar very high doing tablets.”
For three years, Boute ran the Haiti division of cell phone giant Digicel, the largest company in the country. In 2005, the year Digicel acquired a license to operate in Haiti, there were 500,000 total mobile phone subscriptions. Today, there are 6 million, and Digicel dominates the Haitian telecom landscape. Boute sees huge potential to sell affordable tablets to a growing local consumer class as well as people in other developing countries. In Haiti, the education sector, government, and thousands of NGOs working in the country are also attractive potential customers.
Surtab filled its first order in August—600 Wi-Fi-only tablets for a Kenyan law university whose students will carry around one device instead of reams of legal documents. The company makes two versions of its 7-inch tablets, both of which run the Android operating system. Almost all of the components come from China. The wholesale price of the lower-end Wi-Fi model will be about $70*. The other version, which Boute estimates will wholesale for $129, has 3G capability, dual SIM cards, and runs on a much faster dual-core processor. The company is currently working on an order for a Haitian university and has garnered interest from the Prime Minister’s office, other local schools and companies, and a handful of foreign organizations.
Boute sees tablets as the perfect device for markets like Haiti, where PCs are too expensive for the masses and programs like One Laptop Per Child never lived up to expectations. “Many of the developing world countries have increased their data coverage almost nationwide,” he says, “and it’s the same case in Haiti. It gives an opportunity for connectivity to get out there, to get improved devices.
“Smartphones are a bit small,” he adds. “These mini tablets—the hybrid between a phone and a tablet—are definitely a way to go for this market.”
NOT HAITI’S FIRST ELECTRONICS ASSEMBLY GO-ROUND
In the 1980s, electronics manufacturing was the fastest-growing assembly industry in Haiti. Puerto Rico had begun to phase in the U.S. minimum wage in the 1970s, and the lowest-cost jobs—once manned by Americans, and then by Puerto Ricans—began to move to Latin American countries. There was no cheaper destination than Haiti.
Some manufacturers set up “twin plants”—a factory in Haiti would handle labor-intensive assembly work, then send products elsewhere for final assembly. GTE-Sylvania, TTI Industries, and Westinghouse were among the foreign companies that used factories in the country. But political turmoil followed the 1986 ouster of dictator Jean-Claude Duvalier, and many companies fled. Economic sanctions and a U.N.-backed embargo aimed at removing a military junta further hampered industry in the early 1990s.
Most U.S. firms had simply contracted with Haitian companies that handled everything on the ground. “They didn’t have to worry about importing and exporting, paying electricity, paying rent,” says American Lance Durban, who owns and runs Manutech, an electronics manufacturer that has operated in Haiti since 1984. “It was easier for them to leave when the going got tough, which they did.”
Today, Haitian manufacturers are known for making t-shirts, and low-value garments account for 92 percent of the country’s exports. As the only sizable electronics company that weathered Haiti’s periods of instability, Manutech stands out from the textile manufacturers. “Although we had incorporated in the States,” says Durban, “all of our operations were essentially in Haiti. We had a little more incentive to try to make it work.”
Manutech may not make touchscreen tablets, but the transformers, inductors, and wire harnesses it produces for American and European vendors are a clear step up in value from garment production. And while Surtab’s tablet-assembly might be too ambitious for most companies that would consider doing business in Haiti, it could help demonstrate the potential that exists for other electronics manufacturers. “If you have the technology and ability to put something together,” says Durban, “the other ingredients are here.
“There are a lot of little labor-intensive niches in electronics that could be of interest,” he says. “The big problem is that it’s not a very complete economy. You have to import everything.” But as labor prices increase in China,he adds, manufacturers there are searching for lower-cost alternatives. “Haiti could conceivably be attractive.”
HAITIAN MANUFACTURING AS MORE THAN LOW WAGES
Producing Android tablets flies in the face of the low-value, low-cost theory of manufacturing associated with Haiti, which says that one of its biggest advantages is very cheap unskilled labor. If you’re a company trying to compete in the uber-competitive global textile industry, low-wage labor is a big draw.
“We’re not [just] trying to look for a cheaper place with cheaper labor,” says Surtab CEO Boute, “we’re trying to find a location with a different way of assembling the product, with more respect for the workers.” The company’s 3,000-square-foot facility, with A/C throughout, is a retrofitted section of a larger factory operated by the Coles Group, a Surtab investor and long-time Haitian garment manufacturer. “Currently in Haiti, the minimum wage is roughly $100 a month,” Boute says. “We will be paying slightly more than double that minimum wage, but it’s still below the labor costs that are in China.”
Yet Boute says the effort is as much about finding skilled workers as it is finding cheap ones. “Haitian laborers and assembly operators are actually extremely highly-skilled,” he says. “We were surprised—we put them through vigorous dexterity tests and I.Q. tests, logic tests, basic assembly procedures. Everybody is extremely surprised by the quality of workers that exist here.”
“I didn’t have any other experience in assembly or factory work before,” says Fils-Aimé, 33. “In fact, it surprised me that we could learn a trade in which we didn’t know every detail in such a short time,” adding that it took just a week to learn multiple techniques for soldering electronic boards.
Jean Roody Salomon, 24, says he “didn’t have a real job” when Surtab hired him—he split his time trying to learn English on his own and making beats with friends on a laptop. “Before, I had no [formal] experience in electronics,” he says, “but I was trying to tinker all the time.”
Salomon says that the Surtab job has been a boon for him, and he hopes it will be for his country as well. “I think it’s a very good thing for Haiti,” he says. “I don’t know if there are others who will do this, but I know that here, we’re high tech.”
DOING—AND NOT DOING—BUSINESS IN HAITI
So what keeps more companies, electronics or otherwise, from operating in Haiti? Boute cites logistical challenges to doing business in the country as one drawback, which include an expensive port in Port-au-Prince and dreadful road infrastructure. Surtab, situated in an industrial park near the capital’s airport, avoids some of those downsides because it uses air freight for most shipping.
“Energy costs are very high in Haiti,” Boute adds, describing a challenge that every business in the country faces. Per-kilowatt electricity prices are about three times higher in Haiti than in the United States, and that’s only when grid electricity is available. “This park is one of the only ones that receives energy from the utility from roughly 8:00 a.m. to 4:00 p.m. every day,” Boute says, “but outside those hours we have to run our own generators, which obviously have a much higher cost.”
A handful of tax incentives and other advantages also helped. Like many companies that set up in Haiti, Surtab received an exemption on customs duties and employee taxes – five years, in its case. Boute’s time running Digicel and the Coles family’s generations of Haitian business experience also meant there was much less friction to starting Surtab than there would be for someone brand new to the country. But there was still friction. One example was a delay in the initial production test run because the Chinese engineer who trained employees was denied a U.S. visa. Surtab eventually found a flight that took him from China through Moscow, Havana, and finally to Port-au-Prince.
Still, Diderot Musset is optimistic. Musset, 31, is Surtab’s production manager. Born and raised in Haiti, he studied industrial engineering at a local university and has 10 years experience working in the Coles Group’s garment assembly operation. He believes that the country will still need textiles in the future – the industry can employ thousands people relatively quickly, he says, in a place with massive unemployment. “But in terms of added value to the country as a whole,” he says of Surtab, “to the employees and how we can get them more skills … this is a better deal.
“I think there’s a lot of opportunities that will come from this project,” he adds, “at least in terms of how people see us as a country.
“People always think that conditions are not good, we can’t do this, or we can only do that. I think that this project will show that, actually, we can do anything.”
*An earlier version of this article misstated the estimated prices for Surtab’s tablets. The prices quoted are wholesale, not retail, and can vary order-to-order.
Next Story — Poverty and the Capacity to Manage Life’s Shocks
Currently Reading - Poverty and the Capacity to Manage Life’s Shocks
erstwhile economics journalist in Haiti @tatewatkins
Sep 13, 20134 min read
Poverty and the Capacity to Manage Life’s Shocks
An insurance company looks to help transform the way Haitians think about — and prepare for — risk
“If every time you start something,” says Olivier Barrau, “and then take a hit and can’t face it, you become poorer. It’s simple.”
Insurance premiums represent just 0.5 percent of GDP in Haiti, a significantly lower level than its regional neighbors. “Until we increase that penetration rate of insurance in Haiti,” Barrau says, “the path towards getting out of poverty is going to be super rocky.” When it comes to the amount spent on insurance per person, the gap is greater. Haitians spend an average of $3 per capita on insurance each year; in the neighboring Dominican Republic, it’s $64 per person.
Until the early 1990s, anyone providing insurance in Haiti was a broker representing a foreign company – Barrau’s own grandfather was Royal Insurance of London’s representative in the Caribbean country. But when the foreign companies left amid political turmoil, they also left a dearth of people with capacity to run an entire insurance company, rather than simply broker deals. “There was little innovation,” says Barrau, “little product development.” The industry concentrated on the top 2 percent of the market, he says. “I was frustrated a bit with products that were available, services that were available, which to me didn’t fit the needs and the social strata of the market.”
So Barrau, who had studied insurance in college in the United States, began to develop a business plan and look for local investors. With the help of university contacts who were involved in the U.S. reinsurance industry, he started Alternative Insurance Company (AIC) in 2001.
“Poverty is directly related to the capacity you have to manage or face shocks in life,” he says as he sketches a line graph of ups-and-downs on a yellow legal pad. Without the assurance of a safety net to catch you before you hit rock bottom, he says, the downs might completely wipe you out.
AIC focuses on the “middle of the pyramid” – small- and medium-businesses and the middle class – which has waned in recent decades, particularly as hordes of professionals have emigrated from Haiti. Barrau believes that strengthening the middle of the pyramid will help “bring up the lower part,” too. AIC has also been involved in efforts to provide micro-insurance to Haiti’s rural poor, but it’s a challenge to sell insurance to people with extremely limited financial capacity. “People don’t have much disposable income to be putting into something longer-term,” Barrau says. “Most of their income is going into survival issues.”
Jaki Gardner, a long-time insurance regulator from Minnesota, visited Haiti in 2011 as part of a team that assessed the insurance sector following the January 2010 earthquake. She explained to Minneapolis’ Star Tribune that three of Haiti’s eight insurance companies didn’t have adequate reinsurance. “The problem was they had a high concentration of risk because they were only insuring in Port-Au-Prince,” she said. “If all your claims come due on one day, which is the day of that earthquake, that’s it. You don’t have the cash on hand.”
One Haitian company had purposefully not purchased adequate reinsurance. “The U.S. regulators wouldn’t allow that,” Gardner said. “That’s how you protect your own capital, by reinsuring the losses and spreading that risk out.”
Even though there’s not yet Haitian legislation that requires companies to adhere to international insurance standards, AIC has operated according to them from day one. The company also paid every one of its post-quake claims. Barrau cites both as reasons AIC was able to attract capital after the disaster, which included a $1 million investment from the Clinton Bush Haiti Fund and a $2 million loan from the Inter-American Development Bank.
Johanne Day, AIC’s director of marketing, talks about a recently-launched campaign – “Haiti, the richest country” – aimed at changing Haitians’ mindsets about the future. She and Barrau describe a streak of fatalism that many Haitians exhibit: God will prevail – so why spend too much time preparing for tomorrow’s risk.
“While there is a long path ahead for Haiti to achieve better indicators of social progress such as education and health,” the campaign states, “at AIC we believe that it is time to start framing the communication about our country with a forward-looking aspirational eye.”
“The only reason that you’d want to protect anything is because it has value,” Day says, adding that value isn’t measurable in terms of just GDP and purchasing power. “Why would you want to protect anything if you felt that you didn’t have value?”
“If the wealth is the people,” Barrau adds, “let’s insure the people.”
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