Feature Article: Sometimes the Widow and the Orphan Own a Business

–       Daniel Jean-Louis and Jacqueline Klamer

Three Ways to Help without Hurting Haiti

PORT-AU-PRINCE, Haiti — Following the earthquake on January 12, 2010, thousands of people traveled to Haiti to assist in the recovery of the capital cityand neighboring regions, bringing food, water, medical supplies, and free services provided by foreign medical professionals and construction workers.

And thousands of Haitians lost their jobs.

In the weeks following, local corner store pharmacies couldn’t compete with the donated pain relievers, hydrogen peroxides, and vitamins imported and distributed by international non-profit organizations. Many shops that usually have a consistent client-base were wiped out. Other small businesses, including corner stores that filter water in 5-gallon buckets, couldn’t compete against free water distributed throughout the temporary tent camps and houses intact.

Yet, it wasn’t just the corner stores that were impacted by the influx of free donated products. It was also the Haitian hospitals and Haitian doctors, nurses and therapists. Months later, when non-profit organizations argued that the Haitian clinics needed to continue providing their services for free (even though patients were no longer coming in for emergency care, but rather normal annual check-ups or a mild sore throat), many doctor’s offices and even hospitals went out of business.

People around the world chose to help Haiti through aid. But these efforts produced many unintended consequences that hurt Haitians.

It’s important to note here that we are not aid-bashers. Aid is not a problem in itself. In fact, Christians are called in Scripture to care for their neighbor, the weak, the widow and orphan. The issue is the way current aid models are practiced in Haiti’s market-based economy. After all, sometimes the widow and orphan own a business.

In the Past, Haiti Helped Itself

Following its independence over 200 years ago, Haiti operated as a market-based economy that encouraged free enterprise and small businesses. The entrepreneurial spirit was alive. Small farms sprouted throughout the country as post-colonial property was redistributed to families as subsistence farms and a means to achieve ownership, economic stability, and perhaps even grow a small business.

Haitians also invested back into the country, developing sectors such as agribusiness to feed its own nation staples including rice, beans, plantains, and an assortment of enriching vegetables and fruits. Businesses in Haiti also expanded in manufacturing products such as baseballs and textiles that were often exported to the United States and other developed nations.

As a ripple effect, the nation’s economy grew slowly but surely through business growth in the private sector. But whether in the marketplace, restaurant, or store front of the factory, it all took an exchange of currency for products or services—the sustainable business model within the market-based economy.

Today in Haiti, the same economic structure still remains. For example, business owners and their employees have to get to work each day. To do so, a person might pay the driver of a public transportation tap-tap vehicle to get from house to marketplace, factory, or office. The driver of the tap-tap might then purchase gasoline, put some money in the bank, pay tuition at the local school, and give the rest to his spouse to purchase fresh foods at the local market for the coming week. The ripple effect of local purchasing continues: teachers, bankers, farmers, and gas station workers all earn an income for their work, and on it goes.

This simple example of one day’s transactions indicates that products and services cost something in Haiti. Yet, when aid doesn’t fit the current market-based model, the implications have a downward spiral effect.

The Spiral Effect is Often Unseen . . . Until too Late

Following the earthquake in January 2010, Haitian medical professionals (who were also aiding the injured—it wasn’t just expatriates) knew that at some point they needed to pay the electricity bill to continue providing medical services at their clinics. They needed to pay their personnel working day and night to care for the well-being of patients. They needed to purchase pharmaceutical goods and medicines from local suppliers, especially as the flood of free products would soon run out or wouldn’t fit their needs—a typical case with donated goods.

Ultimately, when the dust had settled and the trauma and emergency relief was no longer needed, Haitian medical professionals knew they needed customers to pay. They needed a profit. Yet when they proposed to transition their businesses and clinics back to a profit-based model, many were roundly criticized by the non-profit sector: How could a clinic stop providing free services? Haiti needs our help!

More so, Haiti’s entire private sector was under siege by free aid.

Whether producing pasta, peanut butter, coffee, mango juice, vitamins, backpacks, or solar-paneled streetlights, many business owners we spoke with following the quake simply stated that they hope the NGOs’ methods wouldn’t detrimentally wound the local economy. All these businesspeople wanted was to tackle the current situation from a business standpoint; to protect the jobs of their employees and staff (many of whom returned to the workplace the day following the quake); reach out and employ a neighbor who had lost her home or family member; and, at best, to identify new opportunities to meet the needs of their community through a new product or service.

It’s what business owners still want for their communities today. If you are listening to the voices of these Haitian businesspeople and would like to align your personal mission, your church, your NGO, or your government with this vision for self-development through business, here are three ways that your help can more effectively help.

 1.               Purchase Locally Across Sectors

A market-based economy needs local transactions, which are often inhibited due to the donated goods and services that many non-profits offer. Yet, to connect the dots, we propose that aid is not the problem in itself. As many of us believe, Christians are called by God throughout Scripture to care for others. In the book of Ruth, harvesters were not to gather everything on the field, but instead offer an opportunity for the poor to glean behind them, working and gathering what remained. Yet, according to Evelien de Gier, owner of cabinetry production company Maxima S.A. in Port-au-Prince, “Many people these days tend to work the whole field, bag the excess, and then hand out the bags to the poor.”

The problem of aid is oftentimes in the methodology.

Around the globe, common aid models today are incompatible with the market-based economic structures in which they operate—structures that are designed to function as a result of supply and demand and a price mechanism through transactions. In fact, in those market-based countries life is sustained through daily transactions. In other words, utilizing aid as a central mechanism in a market-driven economy is like utilizing human blood in an automobile, or petroleum gas in the human bloodstream. It’s not the petroleum or human blood that is bad in itself. It’s that neither is suitable when used in the wrong context.

In a world of well-intended donors, ministries, and non-profit organizations (of which there are over 10,000 registered in Haiti alone), those transacting locally are few and far between. When aid pours in and undermines an existing economic structure—in the case of Haiti, a market-based economy established over two centuries ago—it deflates the potential that Haiti’s economy has to grow.

Now, here’s the redemptive twist. Non-profits using donated funds can redeem themselves by purchasing goods, services, and general labor within the existing structure of the local market. That simple decision, in turn, stimulates the local economy as purchase prices and wages become capital in the hands of the local population. Though aid is harmful when used unsuitably, aid itself is harmless and even beneficial for the long term when used in the appropriate way. Through transacting locally, non-profits will achieve their mission; businesses will meet their bottom line; and oftentimes, contracts such as these lead to more jobs created that directly impacts the lives of employees, their families, and communities!

Furthermore, one local transaction between an NGO and business typically leads to a multitude of additional transactions. For example, workers rarely hide their income under the mattress or bury it in the ground. Instead, they might pay their child’s school tuition, pay rent or daily transportation, or purchase the services from their doctor or food at the local market. The sustainable impact of one local purchase is the potential that aid holds. By spending wisely and locally, aid can redeem itself.

Evelien de Gier goes on to say that the first year after the earthquake was a crash course. In the first three months, her cabinetry production company saw the need for over a million people homeless, and innovatively began producing transitional housing. Starting with 59 employees, the company grew to employ 275 Haitians full-time, fulfilling contracts with non-profit organizations who adapted to local purchasing, totaling more than 7,000 transitional housing units distributed throughout Port-au-Prince and Leogane, a small town west of the capital city most severely affected in the quake. Today, the company has stabilized around 150 employees, returning to their specialty product line of cabinetry and venturing into interior design, a perfect fit for the growing market as Haitians rebuild and renovate their companies, businesses, and homes throughout the city.

Mission of Hope, a nonprofit organization that equips local Haitian schools through capacity building of Haitian teaching professionals and school administrators, is another example of aid being redeemed. Since it began in 1998, Mission of Hope has purchased as much of its food supplies locally as possible, namely the whole grain rice and beans from local Haitian farmers. Seeking to also strengthen the Haitian economy, the organization has committed to increase its local purchasing strategically from its current 5% of supplies to over 25% by 2025, equipping Haitian rice farmers to grow their businesses and eventually compete once again on the market against cheap imported white rice from the United States.

Local purchasing, which leads to local capacity-building, is essential. And, with results like these, it’s evident that businesses play an essential role in the sustainable recovery and long-term development of the country. Even more, market-driven innovation through local business plays a psychological role in restoring Haiti’s culture, including the sense of independence, dignity, and ownership of the process.

 2.               Advocate for the Local Economy

Haitian President Michel Martelly recently stated that no country has ever pulled itself out of poverty through charity. Additionally, support for local businesses is not effective if consumers (much of the client-base being non-profit organizations in Haiti) are not purchasing locally. In line with that, according to the IMF’s mission chief for Haiti, Boileau Loko, many authorities and donors are prioritizing efforts to improve the health of the business environment and to attract investors—not just donors—in order to continue building the growth rate of the GDP.

Already, Haiti’s GDP has successfully grown from 3.5% prior to the earthquake, followed by a negative 5% immediately after the earthquake, to a positive 5.5% growth rate this year, thanks to the local purchasing and tapping into the local market. With a population growth rate of only 2%, the per capita GDP is increasing! Yet advocating for these sustainable steps forward must continue. Input and output are essential recurring steps in operating a profitable business—and a healthy national economy.

Even in the midst of unfair trade, inappropriate economic policies, and a flood of charity, an economy can grow. It’s critical, however, for international and national non-profit organizations and for-profit businesses to not only to adapt and collaborate through contracts—as Maxima and Mission of Hope have both done—but also to advocate for local balanced transactions in which customers are satisfied and businesses make a profit. Failure to support local businesses will perpetuate deep problems. When local businesses are not viewed as worthy—or even capable—of competing, the floodgate of NGO opportunists opens wide.

Here are some ways to consider how you can use your voice to advocate Haiti’s sustainable development and wellbeing:

— Advocate on behalf of the “orphans” in Haiti. Estimates of 80% of “orphaned” children in Haiti have at least one living parent who simply can’t provide for their family financially  because they are unemployed or under-employed. Find and share a story of a Haitian parent who ound a job at a local business and was able to bring their child back home.

— Advocate alongside the Haitian business sector. Share the story of Haitian peanut farmers and local “mamba” peanut butter businesses who cannot sell something for free—the way boxes of tons of peanut butter donated from other countries is distributed for free. This event has occurred many times following the earthquake. People need to make a profit to keep a business running, and to employ others from their community. Advocate that not just fair trade, but free trade, is an essential element for a country to grow its economy and overcome poverty.

— Advocate just policies and procedures that have true sustainability in mind. Aid “dumping” undermines local purchasing, and did so in 2010. Undermining local businesses, most NGOs in Haiti can distribute food and products with 0% taxes required upon entry. They also face no restrictions on the quantity donated. Because of these policies, many non-profits flooded the country to satisfy people’s natural need for food, clothing, sandals, medicines, and everything you can imagine following the earthquake–preventing the marketplace from satisfying those same needs. And for the thousands of Haitians who typically sell items such as food, clothing, sandals, and medicines for an income each day, their client-base was no longer purchasing from them as usual.

But those in the retail sector weren’t the only ones affected. Of the more than sixty percent of Haitians who rely on the agricultural sector for their livelihood, many mountainside subsistence farmers traveled to Port-au-Prince the day following the earthquake to sell their vegetables. Yet, that day and for many months to come, they found that most of their customers were consuming free donated food from their non-profit competitors.

In addition to today’s non-profit methods, various trade policies have been undermining the agribusiness sector, particularly the Haitian rice industry that underwent attack in the 1990s. At that time, import tariffs on rice dropped from 35% to 3%, allowing the farming industry of the United States and countries within Asia to flood the Haitian market with cheap imported white rice. With very little economic protection and an absence of advocacy on behalf of the rural sector, the industry was decimated and still struggles today.

Furthermore, when local industries are damaged, the ripple effect eliminates ancillary and complementary industries as well.

The second implication of the post-quake import policy is that many production companies in Haiti couldn’t even retrieve their own supplies from the harbor when needed. Since donated goods were seen as most urgent, non-profits were given priority to retrieve their shipments.

Within the first months following the quake, many Haitian companies had to lay off employees who were otherwise healthy and ready to work.

— Advocate sustainability to your donors, ministry partners, or organizations you support. Advocating can be as simple as communicating with organizations and charities you respect. For example, write to the organization that equips the child you sponsor and encourage them to purchase locally. Share the issue on Facebook or other social media networks. Don’t cancel the support, but challenge them to realign the support you’re providing to the local market-based economy!

Whether or not you have funds or skills to offer Haiti, the greater need is to ensure the advocacy for supporting local economies proliferates among those who are walking alongside others through a non-profit organization or ministry.

 3.               Affirm Business for Its Own Sake

At its best, business for the sake of business can equip society to grow.

According to Adam Smith, the 18th century philosopher and leading theorist of market-based economics, the rationale behind a butcher’s decision to explore opportunities with the assets he has applies directly to the reform of non-profits and for-profits today. Smith says, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity, but to their self-love, and never talk to them of our own necessities, but of their advantages” (The Wealth of Nations, 1776).

At some point, we have to accept that a butcher doesn’t kill a calf to benefit society. He kills it to benefit himself by ensuring a steady profit from his business, which is his livelihood. Satisfying customers means more will return, and he will make more profit. By lowering the cost per unit and, thereby, prices, his business will likely grow and the butcher will soon need to hire a second hand and purchase more cattle from local farmers. Each balanced transaction has two main components: customer satisfaction and profit maximization. Yet the profit, though beneficial to the butcher himself, also benefits the church he attends and the government to which he pays taxes—both entities are funded by the profit of his business, and then directly impact society with that very revenue his business generated. None of this would happen if it were a non-profit model supplying people’s needs for fresh meat from the butchery. When customer satisfaction and profit maximization are both valued, businesses create wealth.

This is vital in the development of any society. But these principles need vocal champions and to be taught to emerging generations. Unfortunately, too many well-intentioned people and organizations are operating from an aid and charity point of view, and too few understand and utilize a business approach. This is the focal point of necessary change, and now!

Already at Work

These three ways to more effectively help Haiti over current aid practices may seem overly philosophical or idealistic or even too good to be true. But these practices are already in operation and having a significant impact.

Partners Worldwide has networked hundreds of local Haitian businesses with numerous non-profit organizations that are adapting and committing to local transaction and more sustainable practices. After hosting just three networking conferences since 2010, Buy Haitian, Restore Haiti, hundreds of thousands of dollars have been injected into the local economy through local purchasing by this network. These purchases of locally grown rice, transportation and printing services, pharmaceutical products, building construction, and the infamous Haitian peanut butter mamba, are reciprocated to other local businesses. The result? Hundreds of jobs have been created and businesses are growing.

This focus on Haiti’s market-based economy will empower and lead the next phase in Haiti’s recovery, especially as a country with immense potential to generate employment and growth within the leading industries of tourism, manufacturing, and textiles. We want to encourage non-profits and supporting groups to be active buyers from local companies in Haiti. If all goes well, the Haitian economy will continue to develop itself enough—truly reaching self-sustainability—that someday NGOs will achieve the oft-stated goal of “working ourselves out of a job” because more Haitian businesses and Haitian leaders will be taking care of their own country.

Daniel Jean-Louis is a business owner and professor of entrepreneurship and development at Quisqueya University in Port-au-Prince. He also serves with Partners Worldwide through the 100,000 Jobs in Haiti Initiative that equips NGOs and the Haitian business network of Partners Worldwide through business training, mentoring, access to capital, and advocacy.

 Jacqueline Klamer served with Partners Worldwide for a year in Haiti and today provides global partnership operations support for Partners Worldwide and its affiliates in Ghana, India, Haiti and twenty other countries. Her articles have been published in Sojourners and UrbanFaith.

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2 Comments

Filed under Exchange: The Journal of Mission and Markets

2 responses to “Feature Article: Sometimes the Widow and the Orphan Own a Business

  1. Pingback: Here’s the first issue of Exchange: The Journal of Mission and Markets | Urban Onramps

  2. Pingback: Sometimes the Widow and the Orphan Own a Business: Three ways to help without hurting in Haiti | Urban Onramps

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