Country Private Sector Diagnostic: Creating Markets in Haiti - Leveraging Private Investment for Inclusive Growth
Summary — This World Bank/IFC diagnostic analyzes Haiti's private sector challenges and opportunities, identifying key constraints to growth and investment. The report provides recommendations for leveraging private investment to create markets and foster inclusive economic development.
Key Findings
- Haiti's GDP contracted by 3.4% in fiscal year 2020 with near-zero growth since 2017, trapped in a cycle of low growth and limited poverty reduction.
- 60% of GDP is generated by the informal sector which employs 86% of the labor force, with 95% of formal private sector composed of microenterprises.
- Political instability and violence severely impact business operations, with 57% of formal firms exposed to violence in 2019.
- The apparel sector retains competitive advantages through duty-free US market access and low labor costs despite recent challenges.
- Recent private investment trends in energy, water, and digital financial services show promising opportunities for market development.
Full Description
Haiti remains trapped in a cycle of low growth and limited poverty reduction, with GDP contracting by 3.4% in fiscal year 2020 and near-zero growth since 2017. The country faces severe challenges including political instability, institutional fragility, and extreme vulnerability to natural disasters, with 60% of GDP generated by the informal sector employing 86% of the workforce.
The private sector consists mainly of small, young firms with low productivity, constrained by limited access to energy, water, and finance. Women entrepreneurs play a significant role but face gender-biased constraints. The sociopolitical crisis beginning in 2018, including President Moïse's assassination in July 2021, has severely impacted business operations, with 57% of formal firms exposed to violence.
The COVID-19 pandemic has further deteriorated conditions through reduced demand, supply disruptions, tightened credit, and increased uncertainty. The apparel sector, Haiti's main formal employer, has been particularly affected, though it retains competitive advantages through duty-free US access and low labor costs.
Despite these challenges, recent private investment trends in energy, water, and digital financial services show promise. The diagnostic identifies opportunities for crowding-in private investment through targeted reforms and market-based solutions, particularly in renewable energy, water supply, and digital services.