Of the many cruel ironies of last week's deadly earthquake in Haiti, this one is the cruelest: In the months before the disaster, international officials were optimistic that the outlook for the Western Hemisphere's poorest country was starting to improve.In response to outrage the horrendous working conditions in Haiti's garment industry, the Haitian government in June raised its minimum wage from 70 gourdes to 200 gourdes a day (roughly $5.50), still paltry by U.S. standards. The move was opposed by Haitian industrialists who warned that it would cost tens of thousands of jobs.
Improving Conditions At Garment Factories
Haitian authorities also began to implement a program under the auspices of the International Labor Organization to improve conditions at the country's 25 garment factories that employed more than 24,000 workers, mostly women. It was a $500 million industry, a small fraction of what it had been during the 1980s, but one of the few private sector employers working in the country.
Several years ago, Congress passed the HOPE (Haiti Hemispheric Opportunity Partnership Encouragement Act), which eased tariffs on goods produced in Haiti. Former President Bill Clinton hosted a trade mission to Haiti in October of companies interested in taking advantage of Hope. Even amid a worldwide economic recession, the Haitian apparel industry was growing.
"The image of Haiti improved significantly among investors who attended a recent trade mission to Haiti led by former President Bill Clinton, according to a survey of participants by the Inter-American Development Bank," according to the Miami Herald.
Companies Were Talking Of Investing
Walt Disney Co. (DIS), which quit doing business with Haiti in 1997, was considering permitting its licensees to use sewing contractors based in the Caribbean country. Other companies including Gap (GPS), Levi Strauss, Hainesbrands (HBI), American Eagle Outfitters (AEO) and Wal-Mart (WMT) also have ties to Haitian factories. None of the companies would speak publicly about Haiti, beyond their donations to earthquake relief.
Several South Korean textile firms were also interested in investing in Haiti as well, according to Andrew Samet, a U.S.-based consultant to the Haitian government and textile industry. These companies were planning to spend $100 million adding new capacity to accommodate growing demand from San Francisco-based Gap, he said.
"The Haitians were showing tremendous leadership," he tells DailyFinance. "They do not want to let go of the sense of optimism."
Corruption Remains A Problem
To be sure, not all observers of Haiti were as optimistic. James Morrell, executive director of the non-profit Haiti Democracy Project, points out that there were "good elections" in 2006, but the Haitian government began spooking investors when it tried to "get rid of the constitution" to abolish presidential term limits. Corruption, as always, remains a serious problem.
Yet even with the largess of the international community, health care, education and the environment were a mess before the earthquake. Most of the population lived in grinding poverty. Oftentimes, the U.S. was seen as less of a help and more of a hindrance by the Haitian people.
"Haiti is such a poor country," says Charles Kernaghan, executive director of the National Labor Committee, which issued a critical report on Haiti's garment industry in the 1990s. "There has not been much attention paid to the development of a middle class."
Though the focus now on the ground in Haiti is tending to the needs of the sick and prevent the spread of diseases, officials are already starting to contemplate rebuilding Haiti, a multi-billion dollar effort expected to be shouldered mostly by U.S. taxpayers. Since January 2005, the International Development Association (IDA), the World Bank arm that provides interest-free grants to the world's poorest countries, has provided $308 million for Haiti. Trust funds administered by the World Bank have given more than $55 million since 2003.
Haiti's problems, though, cannot be fixed with money alone.
"There is only so much you can do without a functional semi-rational government," Morrell said. For instance, the government has received millions in aid for the police force only to hire "gangsters," he says.
Forex for Beginners
Learn about trading currencies and foreign exchange transactionsView Course »