7562 COHA Report, Money, Money, Money: Remittances and Microbanking in Haiti

Haiti, along with the greater Caribbean, has experienced a substantial decline in remittances following the 2008 global economic crisis.  Fortunately, remittance flows to Haiti increased significantly in the aftermath of January 2010’s earthquake.  That year, Haiti received USD 1 billion in relief funds, with a significant portion coming from the Haitian diaspora. While these contributions helped many individual Haitian families to recover from the devastation, it is demonstrably clear that remittances do not pose a long-term solution for the country’s economic woes.  In spite of relatively high remittance rates, Haiti suffers from pervasive unemployment.  Many small island specialists seem to feel that only growth in small businesses and microlending operations can stimulate an independent and self-sufficient Haitian economy.

The Quake

On January 12, 2010, a 7.0 magnitude earthquake struck ten miles west of the Haitian capital, Port-au-Prince, leaving over three million people in need of emergency assistance.  The earthquake displaced at least 1.3 million people, and as of January 1, 2011, an estimated 810,000 remained in the 1,150 refugee camps still in operation. That same month, Nigel Fisher, the United Nations Humanitarian Coordinator for Haiti, commented, “In retrospect I think we can say that by and large the initial response to the earthquake was a success.”  Remittances were a critical component of the total relief efforts; more than one million members of the Haitian diaspora increased the amount of money they send to relatives in Haiti after the calamity, resulting in a USD 360 million surge in remittances during 2010.  World Bank economist and remittance expert Dilip Ratha explains that, “Financial help in the form of remittances from family members is always the first to arrive in times of distress.”  Though remittances provided much needed support to the earthquake’s survivors, it is unclear if these funds will permanently reduce poverty and bring about necessary infrastructural change.

This analysis was prepared by COHA Research Associate Jennifer Nerby.