A new World Bank Group report released today examines key opportunities and constraints to faster sustainable and inclusive growth in the country. Based on analysis and a series of consultations with key stakeholders, the report highlights that faster economic growth alone will not be enough to improve the living standards of most Haitians and proposes key priorities for rebuilding the social contract between Haiti’s state and its citizens.
- Despite substantial economic opportunities in agribusiness, light manufacturing and tourism, economic growth has been too slow and has not favored the poorest.
- Decline in donor assistance and a lower level of concessional financing, calls for mobilizing more fiscal revenues, improving public financial management, and setting priorities for spending.
The diagnostic “Haiti: Towards a New Narrative” notes the progress made in reducing extreme poverty and maintaining macroeconomic stability. With a growing young labor force, proximity to the US and other major markets, Haiti has great economic opportunities in agribusiness, light manufacturing and tourism.
“Following the earthquake, Haiti experienced its best performance in decades with a real growth rate averaging 3.3% from 2011 to 2014, partly spurred by high levels of reconstruction aid. However, this growth is faltering and will not be sufficient for Haiti to achieve its vision of becoming an emerging economy by 2030 and improve life for its poorest citizens,” said Mary Barton-Dock, World Bank Special Envoy in Haiti. “Haiti is at a cross road and this diagnostic identifies key priority areas for action to generate opportunities for all Haitians”.
The authors highlight that on one hand the state struggles to provide adequate services for its citizens or a favorable climate for business, and on the other hand few pay taxes. In the absence of the state, non-state actors have stepped in: in health, about 50 percent of health expenditures are provided by NGOs and 80 percent of primary and secondary schools are run by private institutions or NGOs.
As Haiti is in the midst of legislative, presidential and municipal elections five years after the 2010 earthquake, the report aims to promote a debate around the social contract. Additional priorities include:
- Maintaining the stability of the macroeconomic environment: Haiti’s macroeconomic environment has significantly improved over the past decade, with inflation and debt remaining under control. With tighter budget constraints, greater revenue mobilization, prioritized spending, and improved management of public finance will be key to balancing macroeconomic stability with development needs.
- Supporting the creation of more and better jobs: This means not only increasing the number of formal jobs, but also improving incomes, mostly in the informal and agriculture sectors and providing more livelihood opportunities outside Port-au-Prince. In many sectors, more competition would allow new companies to enter the market and would lower prices for consumers.
- Reducing vulnerabilities and building resilience: Urban areas have experienced an explosive expansion in the past two decades. With growing migration and limited urban planning, this rapid sprawl has increased Haiti’s vulnerability to natural disasters, fed greater violence, and hampered investment and growth. In the face of recurring shocks, the Government and its partners should prioritize better risk management strategies and improve targeting in social protection.
This diagnostic is a new instrument to help identify and inform priorities for the World Bank Group’s engagement in each country. Based on the evidence, a new country partnership strategy will be discussed by the Board of Directors of the World Bank Group on September 29.