Finally, Good News from Haiti

Haiti has been independent for 209 years, but Haitians don't have much to show for it economically. The country is plagued by poor infrastructure, political instability and violence, an inefficient and corrupt bureaucracy, and low standards of education. These are all factors that make it increasingly vulnerable to shocks from natural disasters and now barely able to support its growing population. While there have been some moments of optimism over the years, they've usually been short-lived. Over the past decade, hurricanes, floods, a devastating earthquake, and an outbreak of cholera have repeatedly derailed an already struggling economy.

Though Haiti has attracted vast amounts of aid and disaster relief, there are few signs of tangible improvements in the lives of most of its people. Donors and the government pledged that economic aid after the 2010 earthquake would be used to "build back better," but the sad reality is that, even if donors keep their pledges, the funds needed for this task are much higher than what has been committed.

The country has suffered negative economic growth in three of the last four decades. As of early 2013, roughly three-quarters of Haitians were either unemployed or trying to make ends meet in the informal economy. Big foreign investors, worried about the political risks, are reluctant to make major commitments. The inability of poor Haitians to exploit opportunities that could lead to growth fuels a vicious circle of high unemployment, persistent poverty, aggravated inequality, and the mass emigration of skilled workers. Today, roughly 82 percent of Haitians with a college education have left the country.

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Yet Haiti may be about to make a turn for the better. And the reason has a great deal to do with technology.

Haiti's long record of dysfunction has promoted the creation of a huge overseas diaspora, mostly in the United States and Canada. These emigrants are increasingly affluent, and new information technology is allowing them to play a more active role in Haiti's economy. Until recently the main contribution of overseas Haitians came in the form of remittances to family members back in the homeland. Roughly a third of the country's population depends on income from remittances, which run from $1.5 billion to $2.0 billion annually. But while money transfers certainly help, they aren't as useful as actual investment in Haitian products and services, which would not only create jobs and infrastructure, but also bring in much-needed management expertise and know-how.

Now improvements in communication technologies are causing a surge in diaspora investment in the Haitian economy. The key component is the growth of a highly creative sector of grassroots organizations in Haiti that are committed to helping the poor and eliminating poverty. The two best examples are Zafen and Fonkoze, web-based crowd-funding platforms that are helping focus investment opportunities.

Zafen provides interest-free loans to Haitian entrepreneurs who are unable to find funding from traditional banking sources. The loans are then distributed through Fonkoze, the country's largest (and phenomenally successful) microfinance institution. Between 1996 and 2011, the organization has grown from two volunteers in one location to 899 full-time staffers in 46 branches that serve 333,212 primarily rural-poor clients. With the advent of ventures like Zafen and Fonkoze, members of the successful Haitian diaspora now have a viable mechanism for sharing share their knowledge, expertise, and financial resources with promising local entrepreneurs.

One way or the other, mobilizing the diaspora is likely to be key to the future of Haiti's economy. Back in the late 1970s and 1980s, few outsiders in Europe or the United States were willing to take a chance on the first opportunities for investment in post-Mao China. Chinese leader Deng Xiaoping, understanding this only too well, specifically targeted investors in the ethnic Chinese diaspora, who understood the language, mentality, and bureaucratic culture of the mainland. Deng's government set up the first Special Economic zones directly opposite the thriving capitalist outposts of Taiwan and Hong Kong -- and investment from investors there soon started flooding in.

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