Nickson Toussaint returned to Haiti from Washington, D.C., with dreams of opening a small hotel along the shimmering coast north of the country’s capital. He bought 2.6 acres of land for $70,000 and looked for a loan or investors.
But like other expatriates and people of Haitian descent who glimpsed opportunity in helping rebuild the impoverished country, Toussaint received a rude awakening. A Haitian development group that offers financing to first-time entrepreneurs hasn’t given him a loan.
The U.S. citizen also ran into a thicket of red tape and others laying claim to the land. The project has been stalled for almost two years.
“It’s been just a gigantic headache,” Toussaint said.
New businesses have opened throughout Haiti since a January 2010 earthquake devastated much of the country, and the government promises more development is coming. The administration of Haitian President Michel Martelly has made attracting foreign investment a top priority, using the motto “Haiti is open for business.”
But the experiences of Toussaint, 28, and others demonstrate the struggles that would-be business owners face even as Haiti’s government courts businesses.
Nigel Fisher, a former U.N. envoy in Haiti, said in February that the country was not yet “open for business,” infuriating Haitian officials. Fisher said a nearly two-year delay in organizing legislative and local elections had created too much uncertainty for some investors. Martelly has said voting will happen before year’s end; if not, he will rule by decree when the terms of 10 Senate seats expire in January.
Corruption has been another hurdle. A U.S. State Department human rights report said Haitian law “provides criminal penalties for official corruption; however, in practice corruption was widespread and endemic.”
The same study noted that in 2012 Martelly issued a decree allowing officials to “procure goods and services below a specified value through sole-source and closed bidding processes, as well as no-bid contracts.” The World Bank and the Inter-American Development Bank said the new law would discourage government accountability and transparency. But administration officials defended the new procurement measures as necessary for speeding up reconstruction projects and basic government operations.
For Toussaint, the snags he’s hit reflect a system that favors big, multinational companies such as Best Western, which recently opened a hotel in the country, or Marriott International, which has one in the works.
He failed to secure his $248,000 loan, with an interest rate of 10 to 12 percent, from Sofihdes, a Haitian development finance institution that the U.S. Agency for International Development helped create in 1983. The lender is among several in Haiti that award loans to startups with fewer than 100 employees and less than $1.25 million in assets.
Toussaint said he offered the land he bought as collateral, but “I don’t think they saw us as significant investors.”
Sofihdes spokesman Serge Richard Petit-Frere denied that Toussaint’s application was rejected. He said the letter described the loan as “postponed” and cited problems with Toussaint’s business model and “lack of relevant experience.”
“The door is still open,” said Petit-Frere. However, Sofihdes was among several Haitian lenders criticized in a USAID audit this year for not adequately awarding loans to first-time borrowers or small businesses in the countryside. Sofihdes calls itself a “success story” given its 30-plus years in Haiti in “such a difficult financial subsector.”
Entrepreneur Steven Giese said he was ensnared in the country’s red tape when he and his 27-year-old son tried to set up an import-export seafood company two summers ago. They left Haiti three months later, $49,000 lighter and without a business.
Giese said he paid $12,000 to ship a 40-foot container filled with Styrofoam coolers from Miami to Haiti, including a $5,000 “handler’s fee” to prevent it from being held in customs up to six months.
“They had exhausted our financial resources,” said Giese, 54, of Mount Pleasant, South Carolina. “At almost every juncture you’re dealing with corruption, serious corruption.”
The government has made some strides to improve life for businesses.
It’s launched a Presidential Advisory Board with the support of former U.S. President Bill Clinton and a $250,000 grant from his foundation. Co-chaired by Clinton, the panel and its 35 members advise Martelly on business issues, while members serve as mini-ambassadors for the country.
A public-private outfit called the Center for the Facilitation of Investments also reports that 33 businesses have either invested or committed to investing $693 million in Haiti, creating almost 23,000 jobs, since Martelly took office in May 2011. Those projects range from a $3.4 million hotel at the northern edge of Haiti’s central valley to a proposed railway that would connect the different districts making up traffic-mired Port-au-Prince.
“We’d like to see a lot of cranes in the sky and buildings going up,” said Georges Andy Rene, CFI’s general director, which reports to the Commerce Ministry.
Created in 2006, the center has also proposed six investment laws that, among other things, would nix a time-consuming requirement that a notary sign off on all deals, Rene said. Already, an anti-money laundering bill the center backs has passed one chamber of Haiti’s parliament. Officials place more hopes on an investment law offering 15-year tax breaks to hotels.
Despite those efforts, the World Bank still ranked Haiti among the last 10 countries in its annual list of best places in the world to do business. Haiti came in at 174, among 183 countries, based on measures such as the ease of winning construction permits, obtaining electricity, securing credit and registering property.
“There’s definitely a recognition that we need to do better,” said Gregory Mevs, a prominent businessman who co-chairs the advisory panel with Clinton. But, he said, “we shouldn’t be trapped by a World Bank ranking.”
Rene said the center is “reaching out to people who don’t take the report as a Bible.”
Toussaint is clearly among them, and for now he’s not giving up.
Although he didn’t get the loan, he and his Haitian-American wife are pressing on with their dream of opening a boutique inn. He has met with three potential investors, and is hopeful all of them will support the project.
“I’m committed to it,” Toussaint said. “It’s really important that we create a Haitian-owned, and -operated hospitality brand.”