Tuesday, March 2, 2010

Businesses Destroyed in Haiti--not by the Earthquake but by Emergency Aid...HUH???

Global Aid Is No Relief for Small Haitian Businesses (WSJ)
The unintended effect of the massive aid to Haiti has been a negative impact on local businesses that have not been able to sell goods because the same goods they could provide are given away by aid agencies...
Business for Ilia Alsene, one of Haiti's ubiquitous "marchands"—or merchants—who sell food and beverages at curbside stalls here, is a lot worse since the country's devastating earthquake. But Ms. Alsene doesn't blame the quake so much as the international relief effort that followed. "I have fewer customers now because they are handing out free food down the street," says the 52-year-old, pointing to the nearby Champs de Mars plaza where aid organizations regularly hand out food to tens of thousands of people camped there in tents....After the Jan. 12 quake, which killed as many as 300,000 people, the world launched a massive relief effort to bring food, water, medicine and other supplies to needy Haitians. The U.S. alone has spent more than $665 million, official figures show. But only a tiny fraction of that money is being spent in Haiti, buying goods from local businesses. Worse, the aid is having the unintended consequence of making life harder for many businesses here, because of competition from free goods brought in by relief agencies. The damage to Haitian companies is making it harder for them to get back on their feet and create the jobs the country needs for a lasting recovery.

This has been a necessary evil, but can be rectified if purchasing of locally made goods picks up quickly, but historically this is not likely to happen:
In most disaster relief, only a tiny fraction of aid money goes through the local government. And as little as 5% of the budgets of humanitarian agencies is spent locally in the countries they help, according to Peace Dividend Trust, a Canadian nongovernmental organization.
Any rebuilding of Haiti is going to require reform of private property rights to encourage MORE people to be productive and retain the right to gain from their labor.  Encouraging entreprenuership and helping them market their goods will be the best thing we can do for them. Recovery will be much faster and sustainable...
View My Stats