Tuesday, March 9, 2010

Rebuilding economy is next Haiti challenge


By James Melik
Business reporter, BBC World Service

After the Haiti earthquake on 12 January, the first priorities were medical help and housing, and feeding the victims.

Ruined buildings in afermath of Haiti earthquake
People must begin from scratch after homes and businesses were destroyed

Money has been forthcoming, but aid agencies say it is simply one of the worst disasters they have ever had to handle.

There has been severe criticism of the lack of cooperation between aid agencies, and the slow pace of getting emergency aid to victims.

"Everybody wants to be the co-ordinator, and nobody wants to be co-ordinated," says Professor Paul Collier at Oxford University, who acted as a United Nations advisor on Haiti's recovery after it was hit by a hurricane in 2008.

"The way out of that trap is to have a single temporary authority, jointly Haitian and international, to actually make decisions," he says.

But for the long-term future of the country, thoughts must now turn to reconstruction and building a viable economy.

Fighting spirit

In the midst of the devastation the entrepreneurial spirit remains strong.

"My business is completely destroyed. I lost everything," says Fritzner Alexander, as he surveys the rubble where his bathroom accessories store once stood.

I lost my business and members of my family but I am still alive
Fritzner Alexander

"But I am ready to restart again. I can always reach my goal again if I work hard for it," he asserts.

He cannot count on friends to lend him money because they are in the same situation, but undaunted, he says he has some merchandise which was in a separate building which he can use as building stock.

"The knowledge is still there, I'm going to use my brain," he says.

"I am sorry because I lost my business and members of my family, but I am still alive."

Lessons from Indonesia

A multi-donor fund, managed by the World Bank, was set up in Indonesia to manage the reconstruction effort in Aceh after the Indian Ocean tsunami of 2004.

Ms Khan heads the fund in Jakarta and her advice is being sought in Haiti.

People digging for salvagable goods
People have been digging in the ruins for any salvagable goods

"We are providing feedback to our colleagues in the Latin American region to look at some of the things that worked for us," she says.

"Like-minded donors cooperated with the same processes, the same requirements, the same reporting, the same monitoring, and with just one channel of communication."

There were some disagreements between the 15 principal donors, such as how much was spent on capacity building - providing staff to manage and monitor projects, training accountants and procurement training - and how much on investment.

"In the initial period more emphasis was needed for reconstruction and recovery - in the later phases institutional capacities had to be strengthened so the government could manage all the assets that were being built," she says.

Aid 'problematic'

There are critics however, who do not believe Haiti can solve its problems simply by being the recipient of foreign aid.

"Large aid flows going into an economy is not a good idea," says economist Dambisa Moyo, who argues that aid which has been given to Africa has done more harm than good.

We have enough experience to know that just shoving money into an economy is not good enough
Economist Dambisa Moyo

"There is a difference between emergency aid and long-term aid," she says.

She points out that even before the current crisis, Haiti was facing a number of challenges in the political and economic spheres.

"Having a situation where the bulk of development financing comes from aid is problematic," she says.

She maintains that there is a plethora of examples on how to "do development right", and that the most important part of any form of development is creating jobs.

"We need things like private sector investment, creating trade, microfinance, creating stability and transparency so you can attract foreign investment," she says.

"Very often I am quite astounded at the arrogance of the developed community," she says.

"We have enough experience to know that just shoving money into an economy is not good enough," she adds.

"That creates corruption, creates inflation, increases debt burdens, disenfranchises the citizens, kills entrepreneurship, and fuels civil wars," she argues.

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