HopEconomics: The Travesty of Haitian Entrepreneurs in Haiti
By Marc Saint Clair
Note that there are two types of entrepreneurship; Necessity entrepreneurship and Opportunity entrepreneurship. The focus of this article will be mostly on Opportunity entrepreneurship. Necessity entrepreneurship is the practice of entrepreneurship where the lack of opportunity or employment leads one to start a business to sustain life and the household. Opportunity entrepreneurship is when an entrepreneur sees a problem and a market and creates a solution for the problem.
According to doingbusiness.org, Haiti ranked 180 out of 183 economies in starting a business. There are elements that are unknown to the world that Haitian entrepreneurs face on their journey. As a result, through time, it has become readily easier to become a nation that depends on handouts and donation as opposed to climbing the ladder of entrepreneurial success. Haitian entrepreneurs have a more challenging journey in comparison to their comparables in the Caribbean region and the rest of the world. There are six major areas that I will highlight that are pain points for Haitian entrepreneurs in Haiti.
Hunger is by far the worst weapon that exists on this planet. To prevent your household from falling prey to it, you sell your body and even your integrity. If you are busy hungry, you won’t have time to solve the world’s problem. In order to successfully work on a business, entrepreneurs need to be in an ecosystem where the need for food, shelter and security are temporarily met. Stressors such as eminent need for food and shelter are short term present needs that affect an entrepreneur’s decision to engage in opportunity entrepreneurship. For this reason, would-be entrepreneurs as well as the majority of the Haitian population practice scorched-earth entrepreneurship. This is a condition where the entrepreneur will do anything to get the first payment from you and burn the bridge right after the first payment regardless of the consequences. For this reason, Diaspora and other businessmen in Haiti are weary of going into business with would be untested Haitian entrepreneurs.
Prototyping & Proof of Concept
Businesses that are starting usually need to create a proof of concept in order to get financing. It is also an essential test to find out if the proposed idea has legs to stand on. For Technology Company it is a milder version of the system. For a retail business it is a list of existing customers. For a Hotel business it is a pile of letters of intents and contracts. In order to do that, you must be able to use the bootstrap approach, wit and ingenuity to bring in the various stakeholders to make what seem as a dust in the wind a solid and sure thing. It is hard to reach anyone in Haiti. It is virtually impossible to connect with decision makers for potential partnership. Unfortunately, due to many reasons including security, an entrepreneur can travel to a key decision maker’s office every day for 3 months and not get a chance to talk to anyone. It is impossible to get an engineer with cutting edge technology knowledge to embark on an unsure journey with you for free. Lastly, there is the expertise challenge. Those that would be willing to help probably do not have cutting edge knowledge and technology to help.
Entrepreneurs usually look to family, friends and fools to get money to launch their venture. Given the economic structure and poverty prevalence in Haiti, in my estimation, well over 95% of the entrepreneurs do not have access to family, friends or fools that all together can lend them more than $1,000 to start a business.
Microfinance usually has a ladder system. You borrow between $10- $50 and return the money. Over time they trust you with more in a very calculated ladder system. For most opportunity entrepreneurship initiatives, starting microfinance money is not even enough to buy enough ink to write the idea on paper let alone creating a pilot.
Banks will not lend if you have no cash flow, history, family name, connection or collateral. Since the earthquake, the collateral inventory in Haiti has been significantly reduced.
USAID and grant money are urban legends. For some reason, they all end up doing some training that really add no kick start value to the cycle of opportunity entrepreneurship. Talk to Haitians on the street looking for jobs. They all have 2-7 of these diplomas from these trainings and still cannot create or find a job. Everyone end up with a diploma that is not worth the paper it is printed on.
Business plan competitions help identify great writers and public speakers.The competition is clustered about training (yes more training) and giving a handful of people a check. All of them miss the true value of these competitions. Bringing in key decision makers to give entrepreneurs access to these people ought to be the key components of these event. Instead, they give a check to the better writer and articulator at the end and pat you on the back. No market connection, no pulling strings for the winner to get sales.
Cost to Register
It cost approximately $4,000 just to register your business in Haiti. If you are an entrepreneur earning minimum wage of $5 per day that would like to incorporate, you would need to work for 3 years and 2 months consecutively and save every dollar earned just to have enough money to incorporate the company. Don’t feel bad for Haiti, there is one other country out of all 183 countries in the world that has it worst than us. The Democratic Republic of Congo has a 5.5 year cost of income per capita ratio. Entrepreneurs would have to save all their money earned for 5.5 years just to incorporate. In comparison, an entrepreneur from Rwanda can easily save all his minimum wage earnings for a period of 17 days and have enough to incorporate his company. Rwanda is ranked #45 out of 183 countries in starting a business. Time is a sensitive issue. Opportunity cost does not wait. If the entrepreneur was planning on developing a technology company, by the time the entrepreneur raises the money to incorporate, the technology is probably obsolete. As a result, very few entrepreneurs formally register.
Time to Register
It takes an average of 105 days to register a company in Haiti. In Jamaica, it takes about 7 days to register. Again we are not the worst; there are 5 other countries out of 183 that take longer than Haiti to process a registration. Nevertheless we always find a way to be at the very bottom of every meaningful list. What this means is that if you are the average entrepreneur that finds out about a last minute opportunity such as a business plan competition that requires you to incorporate, then you lose the opportunity because you have to wait over 3 months to register. This is the same for an investment pitch opportunity.
Now that the entrepreneurs overcame all the challenges above, they are rewarded with being on about three different list of kidnapers. For some reason, it is the people close to you or others in the neighborhood watching your slow ascension to success. In the need to capitalize on easy income, they talk to amateurs and established kidnappers to hold the entrepreneur for ransom. After a Kidnapping journey, the next kidnapper realized how much you pay, and then they want to have a turn. Finally the third one.
If you need to feed the family or have eminent need for cash as opposed to develop a venture there are no ways around it. There are simply mild countermeasures.
1) You can focus your search for jobs within the same industry to develop contact list for partnership.
2) Find reliable and resourceful team members to divvy up work
3) Reach out to Diaspora family and friends with a solid plan. Even if you have to pull 20 Diaspora families for $200 from all the team members, you’d raise about $4,000 for your new venture. Make sure you have a contract. They strongly believe in it.
4) Keep your word!
Find Haitian Engineers living outside of Haiti on Linkedin.com or on Facebook. Join Haitian professional groups and ask for prototyping advisers. If you find the right person, you might get more than just advice.
1) Pull together with your church group
2) Start a small investment group with like minded people
3) Ask people with money for advice. They love talking and giving advice. Let them know how you have been progressing. Eventually they will trust you with money. Never ask for money directly, especially if you meet them the first time. Get as much done as possible with limited resources. Be a chess master. If you are in Haiti, partner with a Haitian Organizations outside of Haiti to get them to connect to key decision makers for you in Haiti to drive sales. Attend as many events as possible.
Cost to Register
1) Government registration fees should not be more than $100 US. They will make it up in volume.
2) Government should automate the registration process.
Time to Register
Just cut it down to 15 business days. It is possible.
1) Haitian Government should reverse the abolition of the death penalty in Haiti. This will reduce the inventory of would be kidnappers and future deportees to Haiti.
2) Haitian Government should create a rewards program for people that give reliable tips that lead to a successful conviction of kidnappers.
3) As a successful entrepreneurs, always let others around you know that things are not as well with you as they look. Don’t flaunt your success. Be humble!
Marc Saint Clair is COH Economics Program Director (business & entrepreneurship) and one of the Managing Partners at Haiti Ventures LLC. – Email Marc
HopEconomics – Economics for Hope
Great article. Love the problem and solutions. You guys are doing your thing well and keep it up. You guys eloquently put into focus the issues with Haitian Entrepreneurial pursuits. Though Haiti is one of a prime focus, our focus is on those here that will be needed when ideas like yours finally see the light of implementation in Haiti. Tackling those distant from the community that may one day be willing to be future investors, mover’s and shaker’s, and travelers to Haiti. There is a large number of Haitian American who will not budge on traveling to Haiti. So great what you guys are doing and pointing out. if more did this and focus on the hunger for opportunity among those with no affiliation would make a big difference. I hope you guys are working to be this medium for change in this area. 🙂