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Source:
The World Bank Organization
Report No.
17242-HA
HAITI: The Challenges of Poverty Reduction
VOLUMES I and II
August 1998
Poverty Reduction and Economic Management Unit and
Caribbean Country Management Unit
Latin America and the Caribbean Region
Executive
Summary
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 live 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
to 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 are 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 such fundamental areas of traditional governmental
responsibility as the police, the justice system, and the provision of basic
infrastructure. While the restoration of democracy in Haiti is a 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,
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 to $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: high unwanted fertility; 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 which interact in
numerous and complex ways, all with one outcome: an increase in poverty and
associated human, physical, social, and environmental degradation.
If
the foregoing are the causes of the Haitian poverty dilemma, 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 innumerable 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. Among 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--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, a refocusing of government's role
to areas where it is critically needed is urgent. Among these areas are
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 and for investment
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 policy making. On that
front good progress is being made through the Government's education
strategy. Achieving political stability will require an improved dialogue
and 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. A first important step will be the implementation of the
capitalization program, in particular of telecommunications, electricity,
water sector, ports and airports. Privatization of these sectors would
increase the productivity of the economy, and provide a clear signal as to
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 need 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 state will be increasing resources
allocated to the finance of social service provision. In education, health,
water and sanitation, and family planning, Government should continue to
leave the delivery of these services to the private and/or NGO sectors to
the maximum extent possible, while the government itself strives to improve
the regulatory framework, facilitate coordinated efforts among its own
activities, those of private actors, and the poor themselves. Limited
government resources should be directed at programs that are targeted to the
very poor, particularly those in rural areas which 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 at
poverty reduction, 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 Government.
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