Financial Crime World

Haiti’s Financial Services Lacking: A Roadblock to Economic Growth

Port-au-Prince, Haiti - Haiti’s financial services are severely lacking, with only a small percentage of the population having access to digital financial solutions (DFS). This is evident from recent reports that show domestic credit to the private sector by banks accounted for just 10.4% of GDP in 2019, far below the regional average.

Challenging Financial Landscape

  • The country’s financial cooperatives have experienced a significant drop in deposits due to the COVID-19 pandemic, threatening liquidity.
  • The crisis has highlighted the need for secure, low-cost, and contactless DFS tools, but these services are underused in Haiti.
  • Only 5% of the population holds e-money accounts, despite 60% of adults using mobile phones.

Barriers to Accessing Finance

  • Experts point to several reasons for the lack of access to finance for small and medium-sized enterprises (SMEs).
  • The country’s financial sector is dominated by state-owned banks, which are often inefficient and unresponsive to SME needs.
  • This limited access to finance hinders SME growth and job creation.

Energy Sector Challenges

  • Haiti’s electricity grid is outdated and unreliable, with frequent power outages causing significant economic losses.
  • Private-led minigrid development has emerged as a viable solution, providing electricity to rural communities and commercial and industrial customers.
  • However, pioneer operators face several challenges, including unclear contractual arrangements and limited institutional capacity at the municipal level.

Way Forward

  • The report concludes that Haiti’s financial services sector must be transformed to support SME growth and job creation.
  • This can be achieved through:
    • Greater private sector involvement
    • Improved regulatory frameworks
    • Increased access to finance for SMEs

Quick Wins in Apparel Sector

  • Haiti’s apparel sector, which employs nearly 53,000 people, could offer quick wins if key constraints were removed in the short to medium term.
  • The sector accounts for 82% of Haiti’s goods’ exports and 6.8% of GDP.
  • Sustained political stability, improved security, and renewal of expiring trade preferences are necessary conditions for the sector’s growth.

Conclusion

Haiti’s financial services sector is severely lacking, with significant implications for SMEs and job creation. The country must transform its financial sector to support economic growth and development.