Haïti: Voies pour répondre aux crises récurrentes et à la fragilité chronique - Mise à jour du Diagnostic Systématique de Pays

HAITI Pathways to responding to recurrent crises and chronic fragility Systematic Country Diagnostic Update June 2022 © 2022 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpreta tions, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. 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Views and opinions expressed in the adaptation are the sole responsibility of the author or authors of the adaptation and are not endorsed by The World Bank. Third-party content—The World Bank does not necessarily own each component of the content contained within the work. The World Bank therefore does not warrant that the use of any third-party-owned individ ual component or part contained in the work will not infringe on the rights of those third parties. The risk of claims resulting from such infringement rests solely with you. If you wish to re-use a component of the work, it is your responsibility to determine whether permission is needed for that re-use and to obtain permission from the copyright owner. Examples of components can include, but are not limited to, tables, figures, or im ages. Table of contents Acknowledgments ii Abbreviations and Acronym iii Map iv Executive Summary v 1. Poverty and Equity 1 1.1 Trends in Poverty Reduction and Shared Prosperity 2 1.2 Livelihoods of the poor 4 1.3 Limited and Unequal Access to Basic Services 5 1.4 Impact of crises and COVID-19 8 2. Growth Challenges and Opportunities 9 2.1 Trends of Growth 10 2.2 Challenges to competitiveness 11 2.3 Quality of governance and institutions 13 2.4 Main Drivers and dynamics of fragility 14 2.5 Transforming crisis into opportunity 18 3. Sustainability 21 3.1 Macroeconomic and Fiscal Sustainability 22 3.2 Social Sustainability 23 3.3 Environmental sustainability and disaster resilience 25 4. Priorities Ahead 27 4.1 Approach to prioritization 28 4.2 Priority areas 29 References 34 Annexes Annex 1: Selected economic indicators 37 Annex 2: Geographic challenges posed by natural disasters and accessing services 39 Annex 3: Gender and Labor market gaps in Haiti 40 Figures Figure 1.1: Poverty has deteriorated since 2018 reversing earlier marginal gains 3 Figure 1.2: School enrollment has increased in past decade, but urban-rural gaps persist 3 Figure 1.3: Child malnutrition rates were declining, but the trend has reverted 6 Figure 1.4: Despite improvements more than a third of Haitians lack access to basic sanitation 6 Figure 1.5: Despite improvements morethan a third of Haitians lack access to basic sanitation 7 Figure 2.1: GDP per capita growth has trailed peers and remains 25 percent below 1982 level 10 Figure 2.2: GDP has contracted, driven by a decline in investment and private consumption 10 Figure 2.3: Growth has been driven by factor accumulation and negative productivity shocks 10 Figure 2.4: Political instability is the main challenge faced by firms 10 Figure 2.5: Institutional quality has deteriorated across most dimensions in the last decade 12 Figure 2.6: ODA has declined steadily 18 Figure 3.1: Energy sector subsidies have been a fiscal drain, crowding out social expenditures 22 Boxes Box 1: Progress despite the odds – preserving Haiti’s development gains 19 HAITI SYSTEMATIC COUNTRY DIAGNOSTIC UPDATE Acknowledgments This Systematic Country Diagnostic Update for Haiti is the work of a team led by Spyridon Demetriou (Senior Operations Officer, GTFS1), Timothy Johnston (Program Leader, HLCDR), and Javier Suarez (Program Leader, ELCDR) under the guidance of Lilia Burunciuc (Country Director, LCC3C) and Laurent Msellati (Country Manager, LCCHT). The SCD team benefited from consultations in Haiti with key public institutions, civil society associations, private sector associations, and academia during the period 2018-2021, including in the context of the preparation of Country Private Sector Diagnostic (2021) and the Risk and Resilience Assessment (2019). The SCD team included the following staff and consultants: Pascal Jaupart, Caroline Tassot, Cornelia Tesliuc (Social Protection); Roy Katayama (Poverty) ; Julie Ruel Bergeron, Nicolas Collin dit de Montesson, Alejandra Mia Garcia-Meza, Angelica Lopez Hernandez, Ludovic Queuille, Marvin Ploetz, Sunil Rajkumar, Isabelle Simeon (Health); Claudia Lopez, Quynh Nguyen, Vincent Perrot (Education) ; Jean Nicolas Arlet, Amadou Dem, Nicholas Smith, Marijana Vijil (Finance, Competitiveness and Innovation); David Cal MacWilliam, Evans Jadotte (Macroeconomics, Trade and Investment); Gustavo Bacarreza, Marlen Botero, Isis Gaddis (Gender); Paula Cadavid, Naraya Carrasco, Sophie Chanson (Disaster Risk Management and Urban); Farah Dorval, Veronique Verdeil (Water and Sanitation); Sophie Anne DeVries Robbe (Climate); Axel Perez, Marolla Haddad (Digital); Jose Francisco Perez Caceres, Dana Rysankova (Energy); Soulemane Fofana, Christophe Grosjean, Benjamin McDonald (Agriculture); Kevin McCall (Environment); Bruce MacPhail (Social Development); Malaika Becoulet, Xavier Espinet Alegre Fabian Hinojosa (Transport). The team would also like to thank the advice and guidance received from Martin Rama (former LAC Chief Economist, LACCE), Denis Jordy (LC3 program leader for Infrastructure and Social Development) and the peer reviewers: Sara Batmanglich (Senior Operation Officer, GTFS1), Xubei Luo (Senior Economist, DFCII), and Maryanne Sharp (Manager, LCROS). ii HAITI SYSTEMATIC COUNTRY DIAGNOSTIC UPDATE Abbreviations and Acronyms CERC - Crisis and Emergency Risk Communication COVID-19 – Coronavirus Disease 2019 DHS – Demographic and Health Survey ECVMAS – Enquête sur les Conditions de Vie des Ménages après le Séisme EMMUS – Enquête Mortalité, Morbidité et Utilisation des Services ENUSAN - Enquête Nationale d’Urgence sur la Sécurité Alimentaire et Nutritionnelle FAO – Food and Agriculture Organization FDI – Foreign Direct Investment GBV – Gender-Based Violence GDP – Gross Domestic Product GNI – Gross National Income GOH – Government of Haiti GVC – Global Value Chains HCI – Human Capital Index HFS – High-Frequency Surveys ICT – Information and Communication Technology IDA – International Development Association IHE – Institut Haïtien de l’Enfance ILO – International Labor Organization IMF – International Monetary Fund IOM – International Organization of Migration IT – Information Technology LAC- Latin America and the Caribbean MINUSTAH – Mission des Nations Unies pour la Stabilization en Haiti MoF – Ministry of Finance MPI – Multidimensional Poverty Index MSPP – Ministère de la Sante Publique et de la Population NEET – Not in Education, Employment, or Training NPL – Non-Performing Loans ODA – Official Development Assistance PEFA – Public Expenditure and Financial Accountability PFM – Public Finance Management SCD – Systematic Country Diagnostic SDG – Sustainable Development Goals SIMAST – System d’Information du Ministère des Affaires Sociale et du Travail TFP – Total Factor Productivity UN – United Nations UNICEF – United Nations Children’s Fund UNDP – United Nations Development Programme UNFPA - United Nations sexual and reproductive health agency US – United States USAID – United States Agency for International Development USD – United States Dollar WB – World Bank WBG – World Bank Group WDI – World Development Indicators WEF – World Economic Forum WFP – World Food Program WGI – Worldwide Governance Indicators WHO – World Health Organization iii HAITI SYSTEMATIC COUNTRY DIAGNOSTIC UPDATE This map was produced by the Map Design Unit of The World Bank. DOMINICAN 20°N 19°N 18°N IBRD 33417R The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. Christi To Monte Christi Christi To Santiago REPUBLIC To San Juan To Lago Barahona Enriquillo To Oviedo 72°W OCEAN To Monte Cap-Haitien Fort-Liberte Fort-Liberte Fort-Liberte Ferrier Ferrier Ferrier Trou du-Nord du-Nord Trou du-Nord NORD - EST T NORD - EST NOR D - ES Saint Raphaël Raphaël Saint Raphaël Saint Michel Saint Michel de l'Attalaye de l'Attalaye de l'Attalaye Maïssade Maïssade Maïssade Hinche Hinche CENTRE CENTRE Lac de Péligre Mirebalais Mirebalais Mirebalais Croix des Croix des Croix des Bouquets Bouquets Bouquets Étang Saumâtre Chaine de la Selle Chaine de la Selle Chaine de la Selle (2680 m ) (2680 m ) (2680 m ) Thiotte Thiotte Thiotte Belle Anse Belle Anse 72°W RD RD Grande Rivière Grande Rivière Grande Rivière du Nord du Nord du Nord Saint Michel Guayampuo yampuo u u t e a t e a UEST UEST SUD - EST T SUD - EST S S D - E Marigot C e n t r a l P l a Limbé NONO Ennery Ennery Gua P l a NITE E NITE Artibonite te Artiboni PORT-AU-PRINCE OO ATLANTIC Île de la Tortue Palmiste Port-de-Paix Les Trois Les Trois NORD - OUEST T Limbé Gros-Morne Gros-Morne Gros-Morne Gonaives Gonaives Gonaives C e n t r a l N I T O ARTIBOARTIBO T I B R A Verrettes Verrettes Verrettes Anse-à-Galets La Cayenne Léogâne Léogâne Léogâne Petit Goâve Petit- Petit Goâve U Jacmel Jacmel Côtes-de-fer Côtes-de-fer Côtes-de-fer Sea 73°W NORD - OUEST NOR D - OUES Môle St.-Nicolas W ni dward Passage Baie de Henne Golfe de la Gonâve Île de Île de la Gonâve la Gonâve la Gonâve Pointe-à-Raquette Île à Vache Cayemite Grande Miragoâne Miragoâne Miragoâne NIPPES Vieux Bourg d'Aquin Vieux Bourg Vieux Bourg d'Aquin d'Aquin SUD SUD Caribbean Les Cayes 73°W 20°N 74°W Jeremie Roseaux E - GRANDE- G GRANDE ANSE M a s s i f d e l a H o t t e H o t t e l a Camp-Perrin Camp-Perrin Camp-Perrin Port-Salut 74°W HAITI NS SELECTED CITIES AND TOW DEPARTMENT CAPITALS NATIONAL CAPITAL RIVERS MAIN ROADS RAILROADS DEPARTMENT BOUNDARIES INTERNATIONAL BOUNDARIES HAITI D N A R ANSE Anse d'Hainault M a s s i f d e Les Anglais Les Anglais Les Anglais 18°N 40 Kilometers 30 20 10 0 30 Miles 20 10 0 JANUARY 2006 iv HAITI SYSTEMATIC COUNTRY DIAGNOSTIC UPDATE Executive Summary v HAITI SYSTEMATIC COUNTRY DIAGNOSTIC UPDATE H aiti’s economic and social development continues to be hindered by political instability, corruption, and fragility. Haiti remains the poorest country in Haiti’s fragility include: recurrent macroeconomic imbalances, low and highly unequal growth, and limited poverty reduction; limited private sector competition, firm growth, and job creation; weak the Latin-American region and among the poorest countries in the world. The persistent legacy of political and economic elite capture, and the inability of the state to guarantee security and the rule of law, compounded by the absence of institutional mechanisms and policy fundamentals essential to inclusive development, have resulted in extreme welfare inequality and socio-economic exclusion of the vast majority of Haitian people, which is fueling grievances and cyclical unrest and violence. The fundamental drivers of fragility in Haiti have remained unchanged for decades and continue to pose significant structural obstacles to development and economic growth. These include: (i) systemic capture and concentration of power and resources at all levels and a patronage based system of governance and redistribution that drives inequality, corruption and grievances and prevents the development of inclusive institutions; (ii) inherently unstable political settlements characterized by recurrent cycles of conflict over power, social mobilization and unrest; (iii) high levels of political and inter-personal violence, insecurity and the absence of effective security and rule of law; and (iv) recurrent destabilizing shocks due notably to natural disasters and climactic events. The lack of progress towards increased shared prosperity and eliminating poverty is a consequence of this fragility, but also exacerbates and perpetuates its dynamics, locking the country in a crisis/fragility trap. The corollaries of and exclusionary institutions; endemic crime, gang violence, and gender-based violence; low human capital development and limited public services; low physical capital accumulation; low agricultural productivity, limited access to markets and food insecurity, environmental degradation; high rates of urbanization and emigration; and high exposure and vulnerability to natural disasters and climate change. Over time, the economic, social and institutional toll of fragility in Haiti have in turn reinforced and exacerbated its dynamics, generating ‘closed’ feedback loops between fragility, crisis and under development. Deteriorating conditions since 2015 and the tragic events of 2021 have brought profound uncertainty and heightened risks of instability and crisis. Following contested national elections in 2015, Haiti entered a cycle of increased social unrest, rising insecurity, and macroeconomic and political instability, which accelerated in mid-2018 against a context of steadily declining Official Development Assistance (ODA) since 2010 and the withdrawal of the United Nations peacekeeping force (MINUSTAH). The assassination of the President in July 2021 epitomizes this continued political and institutional deterioration and has deepened political uncertainty. Escalating levels of armed violence and criminality are also contributing to instability. Recent exogenous shocks, including the COVID-19 pandemic and the August 2021 earthquake, further compound these risks by exacerbating negative growth, increasing poverty, and reducing human vi capital, while fueling social grievances and further eroding trust in government. The international community, despite significant support following major crises, has not been able to help Haiti ‘break’ these closed feedback loops. The international community has responded with significant political, security, humanitarian and development aid following major political crises and natural disasters, spanning the 1998 and 2004 crises, the earthquake of 2010, Hurricane Matthew in 2016 and most recently the 2021 earthquake. This assistance has supported provision of key services and infrastructure, with some notable examples of progress through specific sectoral or local engagements. At the same time, these responses, and development assistance more generally, have not translated into meaningful stability, growth or development due, in part, to the widespread corruption and misallocation of resources, the inconsistency of the engagement, the mismatch between the volumes of aid flow and the absorptive capacities, and the fragmentation and lack of coordination among stakeholders. Recurring disasters (including earthquakes and climate events) have generated repeated crises requiring significant levels of humanitarian assistance which have been maintained over time due to the absence of institutional capacities to reduce acute vulnerability and ensure sustainable recovery. Similarly, security assistance and interventions by the international community (notably the UN peace and justice operations since 20041) have contributed to short term improvements in security but have not resulted in significant strengthening of the state’s capacity to provide security for citizens. Haiti has capacities and resources with which to chart a different path. Despite deteriorating conditions over the past years, Haiti has achieved progress in some key development priorities, including strengthened disaster risk management and civil protection (e.g the 2021 earthquake response) and management of health-related shocks; improved infrastructure at decentralized levels (including roads, water, off-grid renewable electricity); improved digital connectivity; improved local governance, including at the municipal level; progress in developing information systems to improve monitoring and accountability for basic services, including a national social protection HAITI SYSTEMATIC COUNTRY DIAGNOSTIC UPDATE registry; and modest improvements in budget management and transparency. These achievements highlight significant capacities developed in certain institutions at national and local levels, as well the ability of national and international partners to jointly innovate and produce meaningful results despite the challenging context. These achievements and the capacities that underly them must not only be preserved, but also utilized as foundations and examples for reforms and programs in other areas. Haitians have also demonstrated incredible resilience in the face of chronic fragility and recurrent shocks. Although not uniform, elements of civil society, community networks and the private sector comprise capacities, organizations and stakeholders that have been critical over the years in providing services, jobs and livelihoods in the near absence of the state and in a highly unstable and volatile context. The diaspora and the significant flow of remittances to Haiti is another source of resilience, both as a means to help communities and households cope in adverse conditions, but also as an important source of capital for economic growth. Leveraging these sources of resilience within broader systemic approaches to enhancing economic conditions and governance is essential both from the perspective of breaking Haiti’s fragility/crisis trap, and to protect and safeguard what is in essence invaluable, but still fragile, social and economic capital that can be undermined by continued negative stresses and shocks. Priorities have not fundamentally changed since 2015, however the deteriorating environment requires a pragmatic, flexible and risk-informed approach, contingent on whether the situation in the near term stabilizes or continues to deteriorate. The main priority areas are: (i) restoring macro-economic stability and strengthening core governance systems; (ii) preserving basic services and human capital; and (iii) fostering economic recovery and better jobs opportunities. Strengthening resilience against multiple risks is a cross-cutting priority, which encompasses the overall resilience of the economy and institutions; resilience of human capital, households, and basic services to shocks; resilience of physical infrastructure and connectivity; resilience of food production systems, the environment, and water resource to natural disasters and climate change; and strengthening overall disaster risk preparedness 1 These comprise the UN Stabilization Mission in Haiti (MINUSTAH) between 2004-2017, the UN Mission for Justice Support in Haiti (MINUJUSTH) between 2017-2019 and the UN Integrated Office in Haiti (2019 to present). vii HAITI SYSTEMATIC COUNTRY DIAGNOSTIC UPDATE and response systems. Improving security, including through strengthened and sustained support by the United Nations and other international partners to the national police, is a precondition for progress across all priority areas, while sustaining development efforts will require political stability and more inclusive, transparent and accountable governance. In the short term, opportunities for major structural reforms and changes are likely to remain limited. At the same time, entry points exist for mitigating deepening vulnerability and exposure to shocks while also strengthening and building on existing sources of resilience and development gains. The current fast-moving and volatile context in Haiti challenges the preservation of development gains. This is both a challenge and an opportunity requiring thought on how short-term actions can simultaneously serve as anchor points for longer term pathways for reducing fragility and promoting growth and development. Within a fragile context, the “how” is as important as the “what”; in order to increase the chances of successful implementation, the design of interventions needs to overcome weak capacity, entrenched interests, uncertainty, and take into consideration the needs and voice of citizen and communities. The current situation could be an inflection point that may provide opportunities for meaningful dialogue on changes needed to begin addressing core fragility challenges. Times of deep uncertainty, crisis and risk—as temporary disruptions in the political and social status quo— also provide openings and opportunities for dialogue and change, and the emergence of new actors, voices and agendas. Addressing core drivers of fragility and development constraints in Haiti is a multi generation endeavor. Nevertheless, the current context could provide an opportunity for dialogue and building consensus and political will around key priorities for preventing further deepening of vulnerability, protecting essential institutions and preserving hard-won development gains, while also establishing foundations for inclusive institutions and a new social contract and enabling sustainable private sector-led economic growth. This Systematic Country Diagnostic (SCD) Update draws on existing and new analysis, publications, and extensive consultations and ongoing dialogue with public and private sector stakeholders in Haiti. Throughout the discussions, there was broad consensus on the diagnosis of challenges, in particular the country’s weak governance, as well as the priorities ahead. The document is structured as follows: the first chapter examines trends in poverty and shared prosperity in Haiti; Chapter 2 analyzes growth trends and challenges; Chapter 3 identifies risks to the sustainability of development; and the final chapter takes stock of these elements and identifies priorities ahead, building on those identified in the 2015 SCD. viii CHAPTER 1 HAITI SYSTEMATIC COUNTRY DIAGNOSTIC UPDATE Poverty and Equity 1 HAITI SYSTEMATIC COUNTRY DIAGNOSTIC UPDATE 1.1 Trends in Poverty Reduction and Shared Prosperity Haiti remains the poorest and among the most unequal countries in the region. In 2012, the last year for which official poverty data was produced, the overall poverty headcount amounted to about 59 percent and extreme poverty to 24 percent. The estimated Gini coefficient was 0.61 in 2012, with the richest 20 percent of the population holding more than 64 percent of the total income of the country, against barely 1 percent held by the poorest 20 percent. While Haiti made marginal progress in poverty reduction until 2018, the combined effect of the political crisis, the deterioration of the economic and security conditions, and the COVID-19 pandemic and the August 2021 earthquake has reversed this trend and erased earlier gains. Projections based on the trend of per-capita real gross domestic product (GDP) growth suggest that monetary poverty slightly declined over the period 2012-2018, from 59 to about 56 percent of GDP (Figure 1.1). However, adverse conditions for agricultural production, increased inflation—particularly food price inflation—and the deteriorating economic and security situation since mid-2018 have led to a worsening of the living conditions of the population, and the national poverty rate in 2020 is estimated at close to 60 percent. The surge in inflation and depreciation of the national currency resulted in a marked increase in the cost of the national reference food basket (its value in gourde doubled between January 2018 and August 2020), disproportionally impacting the welfare of the poor. Food inflation also contributed to an increase in food insecurity, especially for the poor who typically live in households with larger dependency ratios. Through February 2022, an estimated 4.3 million individuals (more than a third of the population) are expected to experience high levels of acute food insecurity, requiring urgent food aid.2 Reduced employment opportunities and the resultant loss in household income also contribute to worsening food insecurity. In July 2021, nearly 70 percent of households reported a decline in household incomes compared to pre-pandemic levels, and 66 percent of households reported having run out of food at least once in the preceding month.3 Non-monetary dimensions of poverty showed similar trends, with a slight improvement recorded through 2017, followed by a deterioration over the past couple of years. Non-monetary poverty indicators, especially for health, education and access to basic services (water, sanitation, electricity, transport) improved slightly over the period 2012- 2016/17.4 Overall, 41 percent of the population was multidimensionally poor in 2016 according to the global Multidimensional Poverty Index (MPI), against 49 percent in 2012. Serious shortcomings persist in the quality of education and healthcare, contributing to poor learning and health outcomes. Declines in both external and budgetary financing for social sectors—from low levels—together with persistent weaknesses in sector governance and 2 Coordination Nationale de la Sécurité Alimentaire (CNSA) and IPC Technical Working Group (2022). 3 High Frequency Survey (2021). 4 IHE and ICF (2012), IHE and ICF (2018). 2 Figure 1.1: Poverty has deteriorated since 2018 reversing earlier marginal gains 64 HAITI SYSTEMATIC COUNTRY DIAGNOSTIC UPDATE Figure 1.2: Large geographical disparities in spatial deprivation index Poverty rate (%) 62 60 58 56 54 52 50 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Distribution neutral Sector-specific Source: World Bank staff calculation based on ECVMAS 2012 and MPO. spending efficiency and equity, have undermined further progress in service quality and access. The deterioration of the socio-economic and security environment since mid-2018 have led to a worsening of non-monetary poverty indicators, notably with respect to personal safety, education and food security. The proliferation of gangs has led to a surge in abductions and an increase in homicides (1380 reported by the police in 2020). A large number of schools have been shut down during the academic year 2019-2020 because of the insecurity associated with civil unrest. Poverty remains predominantly a rural phenomenon, albeit some urban neighborhoods also have a large share of highly vulnerable populations. About three quarters of the rural population is asset-poor compared to less than one third in Port-au-Prince and about half in other urban areas. The distribution of assets also reveals the large urban-rural gap.5 The poor are typically living in households whose heads have limited education and are working in subsistence agriculture or are self-employed and engage in petty trade. Poor households have larger size and their members tend to be younger, two characteristics that reflect the higher fertility rates among the poor. Non Source: Staff calculation. monetary poverty is also much higher in rural areas. In 2016, the global Multidimensional Poverty Index (MPI) rates were 58 percent in rural areas against 16 percent in urban areas, and spatial deprivation index shows significant geographical disparities (Figure 1.2).6 Moreover, access to basic services is highly correlated with socio-economic status.7 Rural areas fare worse in terms of household income loss, food security, access to health services and education, and access to water and sanitation.8 Over half of people in the poorest quintile lack access to sanitation and practice open defication.9 However, some urban neighborhoods, like Cité Soleil in Port au-Prince, have a profile of food insecurity close to those of rural areas. Women and persons with disabilities remain a particularly vulnerable segment of the population, even if there are some signs of improvements for women. While in 2016 literacy rates were higher for men than for women (83 percent against 78 percent), net enrollment rates are now higher for girls than for boys, particularly in secondary schools (41 percent for men against 51 percent for women). As human capital is key for livelihoods, this trend may help increase women’s bargaining power. Nevertheless, important strides remain to be made in several 5 In 2018, about half the households in urban areas belonged to the richest asset quintile against only one tenth of households in rural areas (ENUSAN 2019). 6 The spatial deprivation index combines five indicators: lack of access to drinking water, electricity and lack of 4G coverage; food insecurity; high travel times to markets; exposure to hazards; and exposure to violence. 7 In 2016, the fraction of live births taking place in a health facility is less than 25 percent in the lowest two asset quintiles against 79 percent in the highest asset quintile, while the population living in a household with electricity is less than 5 percent in the lowest two asset quintiles against 94 percent in the highest quintile. 8 IHE and ICF (2018) and HFS (2021). Note that rural/urban designation in the HFS was self-reported. 9 IHE and ICF (2018). In 2017, 57 percent of the poorest quintile practiced open defecation (no sanitation facilities at all), which increases risks of illness, childhood stunting, etc.), compared to only 1.2% in the highest quintile. 3 HAITI SYSTEMATIC COUNTRY DIAGNOSTIC UPDATE domains, including the labor market where indicators remain lower for females. In 2019, women across all age groups were less likely to be employed and young women (age 15 to 24) were more likely than male counterparts to not be in education, employment, or training (NEET). 10 There is also some evidence that in the wake of the COVID-19 pandemic, females have been more affected by job loss compared to males and they are also more likely to report increased household responsibilities.11 Labor market integration of persons with disabilities is low, with only half of persons with disabilities reporting having ever worked and only one in six currently working, and few working in the formal sector.12 1.2 Livelihoods of the Poor Subsistence agriculture remains a key source of income for a large part of the population. In 2018, about 50 percent of households engaged in agriculture and 27 percent of households reported agriculture as their main source of income, mostly households whose heads were men. Crucially, agriculture is a key source of income for the poor. In 2012, about 80 percent of households who engaged only in agriculture were poor, far above the 57 percent national poverty rate. Agricultural output and productivity have further declined in Haiti over the last decade, increasing the hardship endured by farmers. Key factors contributing to this decline include negative weather shocks (droughts and hurricanes), soil degradation (erosion and landslides), difficulty to access agricultural inputs (fertilizers or improved seeds) and decreasing available land per agricultural worker. Unsustainable farming practices, driven by population pressure and compounded by farmers’ low levels of education and difficult economic conditions, have contributed to the severe degradation of around 85 percent of watersheds, leading to greater risks of food insecurity. Dwindling soil fertility levels continue to have wide-ranging impacts, notably on yields, which in turn further exacerbates pressure on the land, causing more degradation and deforestation. 10 International Labor Organization (2019). 11 High Frequency Survey (2021). Non-farm rural jobs remain scarce, pay little and are often unstable. The SCD revealed that non-farm jobs typically pay more than agriculture, however they are mostly in the informal sector and earnings are often not sufficient to escape poverty. Most non farm jobs are also unstable: in 2018, only 29 percent of households in urban areas reported a member employed with a stable monthly wage (7 percent in rural areas). Persistent poverty is rooted in limited employment and productive opportunities and low human capital. Self-employment in low-productivity sectors such as commerce and construction remain the norm outside the farm sector. Recent data suggest that shrinking employment has been accompanied by an increase in informality. According to the HFS, in July 2021, 36 percent of individuals who had been working in February 2020 were no longer working. Among the employed, about 86 percent reported being in informal employment compared to 79 percent in February 2020 making Haiti the country with the highest reported informal employment rate in the Caribbean.13 Deficits in urban infrastructure and services have hindered the benefits of urbanization. Haiti’s urbanization has not been accompanied by an increase in income levels, largely due to the lack of adequate infrastructure and basic services, which undermine productivity and livability. Poor connectivity within cities hamper access to economic opportunities. Haitian cities are growing in an uncoordinated and unregulated manner, heightening their exposure to natural risks. Rapid urbanization is also feeding greater violence, as migration to urban neighborhoods—associated with poverty, limited economic opportunities, social and political marginalization, and limited access to services—is fueling the formation of gangs that engage at-risk youth and draw them in. Worryingly, several non-monetary indicators have worsened in the metropolitan area since the last SCD. Social programs are limited and uncoordinated. Despite efforts to expand social assistance, programs remain limited, fragmented, and poorly targeted, and 12 . World Bank staff calculations using Social Registry (SIMAST) data including a disability module (based on the Washing ton Group survey) collected in 2021 among 53,783 persons with disabilities in 50 communes. The survey is not representative but represents the largest database on disability in Haiti. Very low rates of formal employment for the disabled persist despite a law requiring firms with over 1000 employees to employ some disabled persons. http://haitijustice.com/pdf/legislation/ loi-sur-les-personnes-handicapees-haitijustice.pdf 13 Reported average for Latin America and the Caribbean was 39 percent pre-February 2020 and 46 percent in July 2021 (HFS, 2021). 4 the vast majority of the poor continue to lack access to formal safety nets. Non-state actors have stepped in and provide a broad range of assistance. These non-state actors remain largely disconnected from the State systems, highly fragmented, and provide uneven services. Recent decreases in external and budgetary funding for social services are threatening to worsen access to assistance for the extremely vulnerable population. Haiti has taken important steps toward establishing a social protection system, including adoption of a national social protection policy and development of a social registry that covers one-fifth of the population. However, most of the households identified as vulnerable do not receive any assistance from government. With additional support the registry could become a platform for improved coordination across programs. Private transfers are the major factor of resilience for Haitians, even more so than a decade ago. In the absence of formal insurance schemes, family and community networks have served as a source of resilience and enforcers of social norms. This is particularly true for rural Haiti, but also in urban settings where, in the absence of public services, communities have developed their own system to help maintain people’s livelihoods, security, and welfare. Migration, both internal and abroad, remains a major avenue for Haitians seeking a better life, as well as a source of private transfers.14 Over the past decade, reliance on private transfers has substantially increased. Over 70 percent of Haitian households receive some kind of private transfers and about a third have access to remittances, which have increased in recent years and represented over a third of GDP in 2020 against less than a quarter in 2012. There is evidence that in the wake of the pandemic, many households have experienced a reduction in remittances. In July 2021, 44 percent of households reported having received remittances prior to the pandemic (before February 2020). Among these, 42 percent reported a decline, while 30 percent reported a total loss. International remittances are typically larger than domestic transfers, but remittances mostly accrue to non poor households, predominantly in urban areas. In July 2021, 49 percent of households in the richest quintile reported receiving remittances compared to 35 percent of households in the poorest quintile, and HAITI SYSTEMATIC COUNTRY DIAGNOSTIC UPDATE households in the poorest quintile were more likely to have experienced a decline in remittances.15 Natural disasters continue to regularly hit Haiti, with particularly adverse impacts on the poor, yet preparedness remains low. Haiti remains one of the most exposed countries in the world to natural hazards and climate change, and these risks appear to be increasing. The main natural hazards risks are hurricanes, floods, droughts, landslides, and earthquakes. Climate change is expected to compound this exposure through increased frequency of extreme weather-related events and rising sea levels. In 2016, Hurricane Matthew affected over two million people and resulted in over 500 deaths and displaced 175,000 people, with damages and losses equivalent to 32 percent of GDP.16 On August 14, 2021, a 7.2 magnitude earthquake struck the Southern Peninsula of Haiti, leaving 2,246 casualties and estimated damages and losses amounting to 11 percent of GDP.17 Disasters tend to affect disproportionately the poor and marginal populations settling in flood zones, coastal areas, and living in vulnerable self-built dwellings. The vulnerabilities are amplified by environmental degradation, uncontrolled and unregulated urbanization, weak regulatory enforcement capacity (e.g. building codes enforcement), and high physical vulnerability of infrastructure, housing, and livelihood activities. Household preparedness remains low. While the impact was less severe than anticipated, about 42 percent of households reported not being prepared for storm Elsa that hit in July 2021 (HFS, 2021). 1.3 Limited and Unequal Access to Basic Services Low government spending on human development and basic services contributes to low levels of human capital and high out of pocket spending by the poor. According to the Human Capital Index (HCI), Haiti’s human capital is the lowest in the LAC region, affecting poverty and productivity. A child born in Haiti today will be 45 percent as productive when she grows up as she could be if she enjoyed complete education and full health (World Bank 2020). Government spending on human development 14 In 2019, about 1.7 million Haitians lived abroad, while 2 millions Haitians had migrated internally, mostly towards urban areas (UNDSEA 2019; World Bank World Development Indicators 2020). 15 HFS (2021). 16 PDNA 2016. 17 PDNA 2021. 5 HAITI SYSTEMATIC COUNTRY DIAGNOSTIC UPDATE Figure 1.3: School enrollment has increased in past decade, but urban-rural gaps persist 100 90 80 70 60 50 40 30 20 10 Figure 1.4: Child malnutrition rates were declining, but the trend has reverted 0.25 0.2 0.15 0.1 0.05 0 0 2005 2012 2016 2005 2012 2016 Primary School Secondary School Urban boys Urban girls Rural boys Rural girls 2012 2016 2020 Acute malnutrition Underweight Chronic malnutrition Source: IHE and ICF (2005, 2012, and 2018). (health, education and social protection) is the lowest in the LAC region—only about 2 percent of GDP, or less than half of government spending on fuel and electricity subsidies—and declined in the past five years, before increasing slightly in 2020 due to the COVID-19 response. Low government financing reduces access to and quality of basic services, and results in high out-of-pocket spending for health, education, and water services by poor households (10 percent of income for education alone). The low coverage of formal social safety nets means that economic shocks can force households to sell assets and fall deeper into poverty (World Bank 2016). Access to basic education has improved, but shortcomings in quality undermine learning, and most children attend private schools. A child in Haiti who starts school at age 4 can expect to complete 11.4 years of school by her or his 18th birthday. Factoring in what children actually learn, however, expected years of school is only 6.1— reflecting shortcomings in education quality, delays and gaps in school attendance, and high repetition rates (World Bank 2020). Net enrollment rates in primary school increased in the past decade, and enrollment in secondary school nearly has tripled since 2005, contributing to increased school completion and literacy rates (Figure 1.3). About 80 percent of children attend nonpublic schools, which are unregulated and often of poor quality. A recent survey found that many second graders lacked basic reading comprehension and word dictation skills (USAID 2018). A number of factors contribute to quality gaps in education and other basic services, Source: IHE and ICF (2012, 2018); MSPP and UNICEF 2020. including: inadequate qualifications, training, and motivation of personnel; shortages or inadequate quality of inputs (such as textbooks); inadequate standards and accountability for quality; and limited regulation of nonpublic services. While Haiti has implemented promising approaches with potential to address some of these challenges – including results based financing in health and education combined with enhanced quality monitoring – they are not yet scaled up nationally. Despite notable success in controlling cholera, Haiti has experienced mixed progress in improving overall health service access and quality, resulting in limited progress in improving health outcomes. Maternal mortality and neonatal mortality remain high and have not improved in the past decade, pointing to continued gaps in maternal and children healthcare. Across Haiti, 94 out of 100 children will survive to age five, but only 78 percent of 15-years old will survive until age 60 – reflecting a high burden of communicable and noncommunicable diseases (NCDs), and continued gaps in maternal and children healthcare.18 About one in five children are stunted—including a third of children in the poorest quintile—and are at risk of cognitive and physical limitations that will affect them for a lifetime. While nutrition outcomes had been improving, both chronic and acute malnutrition have increased in recent years (Figure 1.4). Two-thirds of children suffer from anemia and half of women aged 15–49 are anemic, increasing risks to child health and mortality (IHE and ICF 2018). While the overall use of health services had improved slightly prior 18 World Bank (2020). The estimated maternal mortality rate in 2017 was 480 deaths per 100,000 live births (IHE 2020). 6 to 2018, the already low percentage of children fully vaccinated further decreased from approximatively 40 percent in 2017 to 30 percent in mid-2021. The proportion of births assisted by skilled personnel increased from 37 percent in 2012 to 42 percent in 2016-2017. Skilled birth attendance has increased in rural areas, while declining slightly in urban areas, due to financial and access barriers. Only about half of health services are provided in the public clinics and hospitals, with nongovernmental and private clinics playing an important role in service provision (IHE and ICF 2018). Poor sanitation and hygiene practices—even more than poor quality of water for drinking purposes—contribute to poor health and nutrition outcomes. Haiti has achieved notable success, however, in controlling the cholera epidemic that broke out following the 2010 earthquake, with no new cases reported since January 2019. Haiti has made progress in improving access to water and other basic services in rural areas and some municipalities, but geography and service gaps remain substantial, while rapid and unplanned urbanization is constraining urban access. The gap in basic service access between rural and urban areas has decreased in recent years, but the rural population continues to face significant challenges in accessing basic services. In rural areas, 40 percent lack access to improved water sources, and 61 lack access to improved sanitation. Lack of access to sanitation in particular poses risks to health and nutrition, with nearly one in five Haitians still practicing open defecation (Figure 1.5). Meanwhile, Haiti’s rapid and uncoordinated urbanization has resulted in over-crowded cities with poor livability, inadequate urban infrastructure and limited access to basic services. Between 2000-2016, Haiti’s urban population grew 5 percent on average annually. According to national official statistics, half of the population in Haiti resides in urban areas but the number could be nearly two-thirds, making it the 4th most urbanized country in LAC (World Bank 2018b). Only one in ten urban residents benefit from solid waste collection -- the lowest in LAC, and one HAITI SYSTEMATIC COUNTRY DIAGNOSTIC UPDATE capacity for provision of water and other services at the regional and local level. Provision of and access to electricity has deteriorated over the past years, leaving gaps that are being partially offset by increased distribution of renewable energy solutions. EDH capacities have deteriorated, with negative impacts on quality and reliability of service (e.g., outside Port of Prince, power is available typically only around 4-6 hours on an unpredictable schedule). The emergence of distributed renewable energy solutions has started to fill in the gap, including in rural areas, due to the entrepreneurial activities of (mostly local) private sector actors, NGOs, communities and donor support. Notably, the GOH has endorsed this development for the first time by developing an enabling policy and regulatory framework and setting up the first national program for mini grids. The few mini grids that operate in Haiti demonstrate that it is possible to achieve a highly reliable service in rural areas, with increased resilience to shocks, as demonstrated by the ability of mini grids in the South to withstand both Mathew and the recent earthquake and remain in operation. Despite some improvements in electricity access, only 4 percent of Haitians have access to clean cooking fuels or technologies, which creates a health risk for women and children, and poses an additional burden on women and girls for collecting wood fuels (ESMAP 2020). Figure 1.5: Despite improvements more than a third of Haitians lack access to basic sanitation 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% in five lack access to improved sanitation (IHE and ICF 2018) The 2010 earthquake reduced the share of urban families with access to water connections in Port-au-Prince, resulting in high dependence 0% 2010 2015 2020 At least basic sanitation Limited sanitation Unimproved sanitation Open defecation on private water providers.19 Despite governance and capacity challenges at the national level, Haiti has made progress in strengthening decentralized Source: WHO and UNICEF 2020. Notes: At least basic sanitation = improved facility and not shared; Limited sanitation = improved facility and shared. 19 World Bank (2017); IHE and ICF (2018). Only 17 percent of urban residents have a private water connection, and only a quarter have access to public piped water services. 7 HAITI SYSTEMATIC COUNTRY DIAGNOSTIC UPDATE Gender equity has improved with respect to basic education, but gaps remain in basic service access for women, the disabled, and other vulnerable populations. School enrollment has increase