Connect to share and comment

GlobalPost's continuing effort to answer an elusive, multi-billion-dollar question: "After Haiti's devastating earthquake, where did the aid money go?"

The Multiplier Effect: Driving Haiti’s recovery by spending aid dollars locally

Just a small fraction of foreign aid has gone to Haitian businesses, but an NGO network is trying to change that.

“When big international organizations like the UN get tasked with responding to an earthquake, their job and their first priority is, ‘How do I respond to this crisis immediately?’” Loxley said. “They’re trying to do this as fast as possible, and they don’t have time to try to find out who are the reliable suppliers.”

But by seeking out local businesses, verifying and certifying their work, and publishing them in an online directory, Building Markets essentially does that for them.

The NGO has facilitated $32 million in contracts between Haitian companies and buyers, and more than 500 Haitian companies have already received contracts with more than 100 international organizations. The organization’s online directory now includes 3,500 Haitian businesses, one-fourth of which are in the construction sector.

The result is more foreign aid dollars going the way of companies like Carribex, which many NGOs don’t know exist or don’t believe are reliable, often deciding it’s simply easier to stick with the American companies they know.

Brandt, the owner of Carribex, said Building Markets is forming a line of communication between businesses like his and large foreign organizations that never existed previously.

“Both parties have their negative parts,” Brandt said. “We have never gone to the NGOs to tell them ‘Here we are, this is what we’re producing in case you’re interested.’ We didn’t’ make any sales approach to them. For their part, they didn’t care to ask any government entity if there was anyone here producing a particular product.”

*****

Sari Kaipainen, reconstruction manager for the NGO Finn Church Aid that designs and builds schools in Haiti, says often NGO procurement officers don’t approach Haitian businesses because of the assumption that foreign-produced products are of superior quality or because contracting locally can be more complicated.

“Dealing with Haitian businesses, in the commercial sense it’s still a very young culture,” Kaipainen said. “Things like financing and invoicing are still very basic, and we’ve been trying to help them organize that. We’re trying to help them understand that a contract is a legal document they must abide by.”

Kaipainen says the biggest challenges are ensuring the company delivers exactly what was ordered at a reasonable price.

“Sometimes prices have no reflection on reality at all, or [local companies] think ‘because you’re a foreign NGO we can charge whatever we want.’” She says Building Markets reduces that price gouging by introducing what she calls “reasonable competition” into the market.

One of the largest obstacles to Haiti’s long-term development is the lack of jobs and its inability to produce many goods or services that can infuse wealth into its ailing economy. Studies over the past decade have estimated Haiti’s unemployment as high as 70 percent — a figure many say is kept high by Haiti’s reliance on foreign-manufactured goods.

“Not only was I giving them the soap they really needed in the timing they wanted, but also the deal would help me keep my [workers],” Brandt said.

Haiti’s government has often called on NGOs to spend more aid dollars on contracts with Haitian companies.

“We also want to encourage NGOs to simplify their procurement procedures to facilitate greater participation with local suppliers,” said Marie Pascale Theodate, member of the cabinet of Haiti’s Ministry of Commerce and Industry in an April speech commending female entrepreneurs in Building Markets’ program. “The course was clearly set at the Ministry on the need to free the country from its dependence on international assistance and boost growth through coherent public policies.”

But having nearly exhausted its three-year grant from the Canadian International Development Agency (CIDA), Building Markets communications officer David Einhorn said the organization is planning to end its Haiti operation at the end of June.

We applied for additional funding and it wasn’t available,” Einhorn said. “Thanks to CIDA we were able to facilitate a lot of local transactions in Haiti. These organizations can’t fund projects forever — we’re grateful for the support they’ve given us.”

Einhorn said Building Markets is in the process of transferring its online directory and some of its other services over to Haiti’s Ministry of Commerce and Industry, which has been collaborating closely with the organization. For months, Building Markets employees have worked at the Ministry office to help Haiti’s government make it easier for foreign organizations to contract with Haitian businesses.

“This was the original intent,” said Einhorn of the hand-over. “We’ve tried to plant a seed of this idea here, and they’ve received it very enthusiastically.”

“A lot of NGOs are pulling out of Haiti now,” he added. “We’ve helped Haiti through a difficult time and we believe that this kind of project could continue to help Haiti — the need is still there.”

 

http://www.globalpost.com/dispatch/news/regions/americas/haiti/120510/haiti-aid-economy-private-enterprise