A Solution in Haiti: Try Freedom - Essay Example

Questions. Poverty in Haiti. Introduction. Six questions regarding poverty reduction in Haiti are answered in this paper. Those questions are the following: 1.- What is the current situation regarding poverty in Haiti 2.- What challenges have to be met in order to reduce poverty in Haiti 3.- What are the phases of the poverty reduction strategy 4.- What is the scope of the three pillars of the poverty reduction strategy 5.- How effective have been the microfinancing efforts 6.- How can property rights laws help in reducing poverty in Haiti In order to find relevant and viable answers to these questions it is necessary to critically analyze some of the most successful initiatives that have been implemented as part of the efforts of reducing poverty and inequality in Haiti. 1.- Current Situation of Poverty in Haiti. It is necessary to evaluate the current situation of poverty in Haiti in order to find pertinent answers to this issue. Haiti needs concrete solutions to its problems. Poverty is a very serious problem that must be addressed with viable and quick initiatives. Haiti is the poorest country in the Western Hemisphere. The level of extreme poverty is very high, and it has been a matter of great concern. During the last four years, there have been some positive changes like the restoration of political stability in 2006, the establishment of a better macroeconomic framework, the reduction of insecurity, and a slight economic growth (IMF, 2008:8). In spite of these positive signs, the country faces many challenges. In 2001, 4.4 million persons (56 percent of the total population of 8.1 million) were living below the extreme poverty line (US$1 per person, per day), and 7.6 persons out of 10 were poor (less than US$2 per person, per day) (IMF, 2008:8). At the same time, 40 percent of the poorest population only had access to 5.9 percent of total income, while 68 percent of this income belonged to the most affluent 20 percent of the population. (IMF, 2008:8). This means that 80 percent of the population was in control of only 32 percent of the total income. It has been calculated that 2 percent of the richest group in Haiti was in control of 26 percent of this income. (IMF, 2008:8). This is a clear picture of a high level of poverty and inequality. Besides that, Haiti fell from position 146 in 2000 to 153 in 2005 regarding the indicator of human development. There have been a gradual increase of deforestation, very low life expectancy at birth, and a deterioration in living conditions due to the annual average decline in real per capita income and average consumption. (IMF, 2008:8). Lack of education and the prevalence of ignorance and superstition keep many Haitians in a state of underdevelopment. For many Haitians survival is the most important issue that they face day by day. Both economic and human development have to be addressed with quick and effective solutions. 2.- Challenges Ahead. Challenges have to be identified accurately in order to tackle them in a proactive way. Haiti's Government and the International Monetary Fund (IMF) have been implementing the guidelines established in the Growth and Poverty Reduction Strategy Paper (DSNCRP) in which four key challenges have been identified: achieving more meaningful social development in order to overcome the lag regarding the Millennium Development Goals (MDGs), creating a modern, competitive economy to align Haiti with other Caribbean economies by rebalancing its competitiveness at the regional level, modernizing the State so it can really be at the service of all citizens by reshaping the public management system, and using at the fullest the country two comparative advantages (its cultural creativity and historical heritage, and the economic resources from the Diaspora). (IMF, 2008:9). Since poor Haitians struggle to survive desperately day by day, the most critical challenge of immediate survival must be considered as the highest priority problem to be solved in a viable, concrete way. 3.- Poverty Reduction Strategy. The poverty reduction strategy that it is currently under implementation in Haiti has to be as sound as possible in order to successfully address the challenges that have been identified. The Growth and Poverty Reduction Strategy Paper (DSNCRP) is comprised of two phases. The first phase (from 2007/08 to 2009/10) covers the period of implementation of economic and financial commitments established on the IMF's Poverty Reduction and Growth Facility (PRGF) based on maintaining the current macroeconomic framework that has been built around solid management of the economy, the modernization of agriculture and transport infrastructures, improving the supply of electricity, developing telecommunication services, and 'the promotion of greater social equity through education and health' (IMF, 2008:9). The second phase (from 2010 to 2015) will be centered on striving to achieve accelerated growth and greater control over social development by making emphasis on reducing monetary and human porverty. In that phase the macroeconomic framework will be reoriented in order to prioritize the agricultural sector, agro-industry, tourism, and the textile subsectors of the manufacuring industry. The Central Bank will also focus on growth and job creation as well as lowering inflation. 4.- Pillars of the Poverty Reduction Strategy. The Priority Pillars of the Growth and Poverty Reduction Strategy implemented by the Government and the IMF are focused on growth vectors (agriculture and rural development; tourism; and infrastructure), human development (education and training; health; water and sanitation; persons with disabilities; childhood poverty; young people; HIV/AIDS; and gender equity), and democratic governance (the Justice system; security; modernization of the State; territorial development; and the macroeconomic framework) IMF, 2008:10-13). These pillars should be integrated as a harmonious system keeping in mind that integral education should focus on eliminating or reducing the negative effects of superstition that are pervasive among a great segment of the Haitian population. 5.- Microfinance. Microfinancing has been a very effective strategy of poverty reduction in Haiti (World Relief, 2007; Sami, 2008). A significant number of poor people in Haiti survives due to the operation of the 'informal economy' as Hernando de Soto calls this way of survival (Sall, 1990). In the 'informal economy' 'participants pay no taxes, pass no regulatory guidelines for sanitation or market-stall location, and exist by their own efforts' (Sall, 1990). The Trickle Up Program, or TUP, has been implemented in Africa, South America, Asia, and the Caribbean. It works by providing grants to selected groups of five or more people who present a business plan. Sall points out that 'the maximum grant is $100, and recipients must pledge to reinvest at least 20 percent of their profits in their businesses' (1990). This program is called 'Trickle Up' since 'funds aren't lavished upon government entities in poor countries with the hope that a small portion will somehow "trickle down" to the very poor' (Sall, 1990). According to Sall, microfinancing is much more effective than the traditional forms of international cooperation. Sall explains that if 10% of the $320 billion dollars donated by members of the Organization for Economic Cooperation and Development (OECD) were used implementing microfinance programs like the Trickle Up Program then it would directly benefit 1.5 billion people who could invest those donations in 206.5 million businesses and the poorest persons benefited by those programs would end their involuntary unemployement (Sall, 1990). Indeed, microfinance is really a very powerfull tool that can be implemented in Haiti on a higher degree making that way a significant change in the living conditions of the poorest people in this country. 6.- Property Rights. In Haiti it is extemely difficult to register a property. Hernando de Soto explains that in order to get a legally recognized title in Haiti 'takes over 11 years and 111 bureaucratic steps involving 32 separate offices and countless forms to be filed' (Hernando de Soto paraphrased by Glass, 2004). De Soto also estimated in 1995 that the total value of untitled property was over 5.2 billion dollars in Haiti (Hernando de Soto paraphrased by Glass, 2004). Glass explains the importance of having property rights for establishing 'a system of accountability and trust that makes trade, finance, and commerce possible' (2004). Modernizing the legal system is a high-level priority for helping reduce poverty and inequality in Haiti. Conclusion. The poverty reduction strategy implemented by Haiti's Government and the International Monetary Fund (IMF) is helping poor people in this country to find valid solutions in order to tackle the challenges ahead. Among the poverty reduction efforts the microfinancing initiatives have proved to be very effective. Haiti needs integral solutions to its problems, and the area of spirituality needs to be addressed since ignorance and superstition are very common in this country. Reducing poverty can be of great help for getting higher levels of human development in Haiti. Works Cited. Glass, Garrett. (2004, Mar 3). 'A solution in Haiti: Try freedom'. Digital Freedom Network. 20 November, 2008. . IMF. (2008, Mar). 'Haiti: Poverty reduction strategy paper.' IMF Country Report No. 08/115. International Monetary Fund (IMF). 20 November, 2008. . Sall, Barbara. (1990, Apr). 'Trickle Up: A solution to third world poverty.' The Freeman: Ideas on Liberty. Vol. 40, No. 4. Foundation for Economic Education (FEE). 20 November, 2008. . Sami, Samira. (2008, Sept 7). 'Heifer International: Long-Term Solutions'. 20 November, 2008. . World Relief. (2007). 'Haiti. Poverty: Is there a solution' 20 November, 2008. . 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