Microfinance Horizon

29 November 2010 [FTBlog]

It’s very hard to be upbeat about Haiti at the moment. Lurching from crisis to crisis, it is in the thick of a cholera epidemic, which the UN now thinks could affect double the amount of people – 400,000 – than it had previously thought. Worse, the outbreak could undermine elections this Sunday, and consequently the legitimacy of the resulting government, which is so crucial if the reconstruction process is to succeed.

But occasionally there are positive developments, however small.

The announcement this week that Digicel and Scotiabank are launching a new mobile banking service is one. It means Haitians will be able to carry out cash withdrawals, deposits and transfers through a mobile phone, without needing a traditional bank account; it will also be a way for workers to be paid – something the NGO World Vision, as well as some local companies, plans to do.

In a country where scarcely a tenth of the population had used a commercial bank before the January 12th earthquake, but where mobile penetration stands at more than a third of the population, the introduction of mobile banking is significant.

It is also essential for Haiti to attract strong flows of foreign direct investment (FDI) if it is ever to haul itself out of the ditch. While the $10bn or so that donor countries pledged earlier this year is welcome, even if it does all arrive (and it is doing so disappointingly slowly), it is nowhere near enough – quite apart from the fact that Haiti needs eventually to be able to ween itself off the charity of richer countries. One spokesman for the local business community recently estimated that Haiti needs to attract at least $40bn in FDI over the next few years.

Digicel, which arrived in Haiti in 2006 and now has 2.4m customers (about a quarter of the population), is the single largest private investor in the country, and also accounts for a significant proportion of the government’s tax revenue. Hopefully more companies that are willing to make productive investments in Haiti and provide decent employment opportunities will follow before too long.