(2021) FinScope MSME Haiti 2023: Micro, Small and Medium Enterprises Survey Highlights

Haïti Micro, small  and medium  enterprises  (MSME)  survey  highlights South  Africa Lesotho Eswatini Mozambique Tanzania Zimbabwe Zambia Malawi Completed Haï Haiti 2023 20 years of making work for the poor OVERVIEW Partnering for MSME development FinScope MSME Haiti was designed to involve a range of stakeholders engaging in a comprehensive consultation process. This enriches the survey and ensures appropriateness and stakeholder buy- in. The Bank of the Republic of Haiti chaired the reference group (RG) which comprised of Mennonite Economic Development Associates (MEDA) and Diagnostic & Development Group SA (DDG) with expert technical assistance and project management from FinMark Trust (FMT). The survey was funded by the Bank of the Republic of Haiti and United States Agency for International Development (USAID) through the ATTEINDRE project implemented by MEDA. The cover symbol Through the evidence-based FinScope Survey, we hope to effect real change at country level and see the impact of financial inclusion on broader national growth and development. The cover graphic features a flower synonymous to Haiti. The flower symbolizes growth and development while the circle represents inclusive growth. Each flower is an example of the successful growth in a unique environment. By combining the flower with the currency symbol of Haiti we represent the characteristics of the country, linking financial inclusion with successful growth. fffifl I The Ministry of Economy and Finance (MEF) and the Bank of the Republic of Haiti (BRH) are delighted to announce the publication of the national survey report on Micro, Small, and Medium Enterprises (MSMEs) titled FinScope MSME Haiti 2023. This essential work was conducted under the direction of the Coordination and Monitoring Committee for the National Financial Inclusion Strategy (CSSNIF). This initiative was co-financed by the United States Agency for International Development (USAID) and the Government of Haiti. It was spearheaded by the Central Bank of Haiti (BRH) and Mennonite Economic Development Associates (MEDA), the implementor of the USAID-funded ATTEINDRE project. The study was conducted by FinMark Trust, an international firm, in partnership with Diagnostic & Development Group (DDG), a Haitian firm. We would like to emphasize that this project results from a dynamic collaboration among various national actors brought together in a steering committee that includes representatives from key ministries and public and private institutions, such as the Ministry of Commerce and Industry (MCI) through the Investment Facilitation Center (CFI), the Ministry of Economy and Finance through the General Directorate of Taxes (DGI), the Haitian Institute of Statistics and Informatics (IHSI), the Bank of the Republic of Haiti, the U.S. Agency for International Development (USAID), Mennonite Economic Development Associates (MEDA), Quisqueya University, the Center for Applied Planning and Economics Techniques (CTPEA), the Industrial Development Fund (FDI), Alternative Insurance Company (AIC), Digicel, the Haitian Alliance for Inclusive Finance (AHFI), Groupe Croissance, the Chamber of Commerce and Industry of Haiti (CCIH), and the American Chamber of Commerce in Haiti (AMCHAM Haiti). The FinScope MSME study provides an in-depth analysis of the profile and situation of Micro, Small, and Medium Enterprises (MSMEs) in Haiti. Through quantitative and qualitative data collected from over 5,000 formal and informal businesses, it it sheds light on recent dynamics, challenges to overcome, and opportunities to seize. These findings aim to inform development strategies, guide investment decisions, and and strengthen the framework for supporting MSMEs. In most developing countries or globally, micro, small, and medium enterprises (MSMEs) represent a significant share of employment. In both developed and developing countries, these enterprises contribute two-thirds of total employment (World Bank, 2019). In developing countries in particular, small businesses can be a crucial driver of social inclusion, notably by enabling women to participate in economic activities. MINISTRY OF ECONOMY AND FINANCE AND BANK OF REPUBLIC OF HAITI – INTRODUCTORY WORDS II MINISTRY OF ECONOMY AND FINANCE AND BANK OF REPUBLIC OF HAITI – INTRODUCTORY WORDS The vast majority of micro, small, and medium enterprises share certain characteristics, the main ones being labor-intensive production methods and the small size of the business in terms of turnover and employee numbers. In most countries, small and medium enterprises (SMEs) refer to companies employing between ten (10) and 250 people. Businesses employing fewer than ten people are generally called "micro- enterprises" (WTO, 2016). In Haiti, although no official definition is adopted, most micro-enterprises are usually considered part of the informal sector. In 1998, the informal sector accounted for 90% of Haiti's labor force (Lumarque, 1998). In 2023, it represented over 70% (Bernardin, 2023), showing its overwhelming dominance in the country's economic landscape. Furthermore, private employment in Haiti is mainly informal, with more than 90% of the workforce engaged in jobs outside the formal sector's regulatory oversight. In May 1999, it comprised over 85% of all non-agricultural jobs according to a publication by the Haitian Institute of Statistics and Informatics (IHSI), Economic Establishments by Sector – May 1999. In March 2008, the Professional Association of Banks (APB) defined SMEs in Haiti as businesses with between ten (10) and 100 employees, an annual turnover between five (5) and 50 million HTG, and assets of up to a maximum of 50 million HTG. Given the informal sector's significance in the Haitian economy, certain criteria should be included in an MSME definition: • The company’s workforce, indicating the number of jobs created • The company’s assets • The turnover Specific Definitions: • A micro-enterprise is a formal or informal business that employs up to five (5) people and has an annual turnover not exceeding 2.5 million gourdes. • A small enterprise is a formal or informal business that employs between five (5) and 20 people, with a turnover or balance exceeding 2.5 million gourdes but not exceeding 20 million gourdes. • A medium enterprise is a formal business employing between 20 and 100 people with a turnover not exceeding 50 million gourdes. III Business Category Annual Turnover (HTG) Number of Employees Micro enterprise Less than 2.5 million 1 to 5 Small enterprise 2.5 to 20 million 5 to 20 Medium enterprise 20 to 50 million 20 to 100 General Definition: A business is considered an MSME if it meets the following two criteria: a workforce between 1 and 100 employees and an annual turnover of less than 50 million gourdes. MSMEs, often a source of innovation and diversity in our country, are a fundamental pillar of our economy. They represent a significant share of employment and gross domestic product (GDP). Thanks to their agility, they can quickly respond to fluctuations in our context. However, MSMEs face significant challenges such as governance issues, access to financing, limitations in financial education, increased competition, and the need for digital transformation. Moreover, it is crucial to consider gender disparities that affect women entrepreneurs’ access to resources and opportunities. In this context, data collection is essential to foster financial inclusion, ensuring that businesses led by both women and men have equitable access to the necessary tools for success. We firmly believe that supporting this sector is crucial for strategic decision-making to stimulate economic growth, encourage innovation, and promote socio- economic inclusion. By implementing suitable policies and creating an enabling environment, we can allow MSMEs to innovate and thrive, thus contributing to building a more resilient and inclusive economy. We believe that this report will serve as a reference tool for policymakers, financial sector actors, technical institutions, and all national economic agents. May its findings inspire and strengthen your commitment to MSMEs, the true engines of our economy. Together, let us build a prosperous future where these businesses thrive and energize our economy! MINISTRY OF ECONOMY AND FINANCE AND BANK OF REPUBLIC OF HAITI – INTRODUCTORY WORDS IV MINISTRY OF ECONOMY AND FINANCE AND BANK OF REPUBLIC OF HAITI – INTRODUCTORY WORDS M. Alfred Fils Metellus Minister of Economy and Finance (MEF) M. Ronald Gabriel Governor of the Bank of the Republic of Haiti (BRH) Port-au-Prince, October 7, 2024 V Introduction The MSME sector is recognized as a significant contributor to economic growth, development and mass employment. With this knowledge, the crucial role of MSMEs in the national economy anchors on the roles of government, the business community and the public at large to harness and optimize the sector’s development. The lack of recent, holistic and reliable information about the MSME sector was identified to be a significant barrier from past consumer surveys. It is in this pursuit that the Bank of the Republic of Haiti initiated the first FinScope survey to set a baseline of both sector developments and financial inclusion. Methodology The FinScope MSME Survey Haiti 2022 was conducted with a sample of 5310 adult business owners who were selected from their businesses and at household level across the country. The sampling frame and data weighting was done by a sampling expert in consultation with FMT and had the following characteristics: • Business owners are 15 years or older • Business owners consider themselves to be business owners/generating an income through small business activities • Businesses employ less than 251 employees • National, regional and urban/rural representative sample OVERVIEW Survey objectives • To assess the size and scope of micro, small, and medium enterprises (MSMEs) in Haiti • To describe the levels and landscape of access to financial products and services (both formal and informal) • To identify the most binding constraints to MSMEs development and growth with a focus on access to markets • To support evidence-based policy and provide reliable baseline for monitoring and evaluation of initiatives and contribution to critical studies on the sector • To segment the MSME sector into market segments and identify the needs of different segments to stimulate related product innovation • To set a baseline of both sector developments and financial inclusion in Haiti using the FinScope MSME Haiti 2023 as a benchmark and to provide an assessment of changes and factors in the future (including possible impacts of future interventions) VI Nord Nord-OuestNord-Oue Artibonite Centre OuestGrand'Anse Nippes Sud Sud-Est Artibonite Ouest Sud Grand'Anse Nord-Est Nord Nord-Ouest Sud-Est Nippes Centre No Nr d - Nr d - O - u MSMEs Owning 710 337 660 845 Estimated turnover (Annual) HTG bnCGaanG'bnGnpCSaE (3 736 258 286,34 USD) Employing  MSME owners Employees* Full + Part time + Seasonal 1 122 557 DEPARTMENTS OF HAITI • Majority of the MSME businesses are located in Artibonite, Ouest and Sud departments. Distribution of MSMEs by departments Nord Nord-OuestNord-Oue Artibonite Centre OuestGrand'Anse Nippes Sud Sud-Est Artibonite Ouest Sud Grand'Anse Nord-Est Nord Nord-Ouest Sud-Est Nippes Centre No Nr d - Nr d - O - u MSMEs Owning 710 337 660 845 Estimated turnover (Annual) HTG bnCGaanG'bnGnpCSaE (3 736 258 286,34 USD) Employing  MSME owners Employees* Full + Part time + Seasonal 1 122 557 Note exchange rate used was as of June 2023 1HTG = 0.0077$ SIZE AND SCOPE OF THE MSME SECTOR 1 (660 845)7 million 10% ESTIMATED ADULT  POPULATION OF HAITI Estimated % of adult population  that owns MSMEs 710 337 Number of MSMEs they own 11% % of MSME owners with  registered/licensed businesses 1 122 557 Number of employees 89% % of individual  entrepreneurs 11% % of businesses with employees MEDIUM ENTERPRISEMICRO-ENTERPRISE SMALL ENTERPRISE Micro business No. of businesses: 505 405 71.15 % Small business No. of businesses:  169 771 23.90 % Medium business No. of businesses: 35 162 4.95 % Turnover less than  0.5 M HTG Turnover between  0.5 – 2 M HTG Turnover more than  2 M HTG   15 years or older 250 employees or less Business owners Micro – 1 employee,                     [turnover less than 0.5 M HTG] Small – 2 -5 employees                [turnover between 0.5 – 2 M HTG] Medium – more than 5 employees [turnover more than 2 M HTG] *The proposed definition makes it possible to compare MSMEs in Haiti with other economies of similar size. *The steering committee of the National Strategy for Financial Inclusion will work on the implementation steps and  make any necessary adjustments. SIZE AND SCOPE OF THE MSME SECTOR 2 (660 845)7 million 10% ESTIMATED ADULT  POPULATION OF HAITI Estimated % of adult population  that owns MSMEs 710 337 Number of MSMEs they own 11% % of MSME owners with  registered/licensed businesses 1 122 557 Number of employees 89% % of individual  entrepreneurs 11% % of businesses with employees MEDIUM ENTERPRISEMICRO-ENTERPRISE SMALL ENTERPRISE Micro business No. of businesses: 505 405 71.15 % Small business No. of businesses:  169 771 23.90 % Medium business No. of businesses: 35 162 4.95 % Turnover less than  0.5 M HTG Turnover between  0.5 – 2 M HTG Turnover more than  2 M HTG   15 years or older 250 employees or less Business owners Micro – 1 employee,                     [turnover less than 0.5 M HTG] Small – 2 -5 employees                [turnover between 0.5 – 2 M HTG] Medium – more than 5 employees [turnover more than 2 M HTG] *The proposed definition makes it possible to compare MSMEs in Haiti with other economies of similar size. *The steering committee of the National Strategy for Financial Inclusion will work on the implementation steps and  make any necessary adjustments. Business definition by the number of employees DEFINING MSMES FOR THIS SURVEY Other definitions of MSMEs Using number of employees MCI Using turnover MCI DGI Development and Microfinance Agency It should be noted that a definition based on the number of employees (micro- enterprise: 1 employee, small enterprise: 2-4 employees, and medium-sized enterprise: more than 4 employees) would give a similar distribution of MSMEs. 3 Service personal services, education,  financial and insurance,  professional services. Agricultural Service Trade Industrial FEMALE MALE Ser vr eer icr eer ecr SFr ESr Ser SSr evr SSr vFr EFr Mr iEr 66 % 18 % 9 % 7 % Agricultural Service Trade Industrial 15-24 YEARS25-35 YEARS Trade wholesale retail,  accommodation, real estate  activities. Industrial  mining, manufacturing,  construction, gas supply,  agricultural processing. BUSINESS SECTOR SPLIT (%) Agriculture BUSINESS SECTOR VIEW • MSMEs operate predominantly in the trade and agriculture sector. 4 Service personal services, education,  financial and insurance,  professional services. Agricultural Service Trade Industrial FEMALE MALE Ser vr eer icr eer ecr SFr ESr Ser SSr evr SSr vFr EFr Mr iEr 66 % 18 % 9 % 7 % Agricultural Service Trade Industrial 15-24 YEARS25-35 YEARS Trade wholesale retail,  accommodation, real estate  activities. Industrial  mining, manufacturing,  construction, gas supply,  agricultural processing. BUSINESS SECTOR SPLIT (%) Agriculture MSMES BY SECTOR • About 7% of women-owned businesses are formal, majority of these are in the trade sector. 5 BUSINESS AGE BUS BISBNSNUSUS MATURE ENAGMTROW GROWTH HG GPGGMTROW START UP AG GBGMTROW ESTABLISHED LG GNAGMTROW LESS THAN  A YEAR FEMALE MALE LS IS NIS NLS BPS BIS BDS NYS BLS BYS MATURE ENAGMTROW GROWTH HG GPGGMTROW START UP AG GBGMTROW ESTABLISHED LG GNAGMTROW LESS THAN  A YEAR BDS NNS HAS BLS BISBIS NBS BNS LS NDS 15-24 YEARS 25-35 YEARS MATURE ENAGMTROW GROWTH HG GPGGMTROW START UP AG GBGMTROW ESTABLISHED LG GNAGMTROW LESS THAN  A YEAR SIZE AND SCOPE OF THE MSME SECTOR Almost half (49%) of MSMEs in Haiti are established or mature ranging from six years or older. Business life cycle by business age (years) • Segmenting MSMEs by age is the simplest way to differentiate businesses that are in the process of establishing and formalizing their processes. • Age is another dimension that can be used as a requirement for funding and business support especially businesses that have survived beyond the 3 years of existence. 6 BUSINESS AGE BUS BISBNSNUSUS MATURE ENAGMTROW GROWTH HG GPGGMTROW START UP AG GBGMTROW ESTABLISHED LG GNAGMTROW LESS THAN  A YEAR FEMALE MALE LS IS NIS NLS BPS BIS BDS NYS BLS BYS MATURE ENAGMTROW GROWTH HG GPGGMTROW START UP AG GBGMTROW ESTABLISHED LG GNAGMTROW LESS THAN  A YEAR BDS NNS HAS BLS BISBIS NBS BNS LS NDS 15-24 YEARS 25-35 YEARS MATURE ENAGMTROW GROWTH HG GPGGMTROW START UP AG GBGMTROW ESTABLISHED LG GNAGMTROW LESS THAN  A YEAR • The proportion of youth business owners tends to decline as the firm ages. • More youth owners in start ups. BUSINESS LIFE CYCLE BY YOUTH AND GENDER 7 MSME owner 89 %MSE ownerOeNeOTHo Lr YLPYLrLTYE 67 % Are females (largely  micro—87%) 65 % 35 % Young business owners  (below 35 years) 50 % Motivation to start the business is mainly needs driven (opportunity and to  take care of family) 60 % Majority have secondary  education and above 60 % Earn less than  HTG 30,000  per month from  their businesses MONTHLY PERSONAL  INCOME OF BUSINESS  OWNERS HTG 1–9,999 10,000–19,999 20,000–29,999 30,000–39,999 40,000–49,999 50,000–59,999 60,000–69,999 70,000–99,999 100,000–239,000 240,000 or more MSE   E  SE oE wE oE nE ME oE wELocated in urban areas Degree (under/postgrad) Diploma High school Primary school No schooling   15 - 24 years 25 - 35 years 36 - 45 years 46 - 60 years 61 years and older AGE (%) LEVEL OF EDUCATION (%)  ME MoE MoE enE eE wE erE  rE MOE MSE • The most prominent insight is the level of informality as only 11% of all MSMEs are legally recognized. • Informality has a lot of implications on many fronts, which will be discussed in later results. 8 MSME owner 89 %MSE ownerOeNeOTHo Lr YLPYLrLTYE 67 % Are females (largely  micro—87%) 65 % 35 % Young business owners  (below 35 years) 50 % Motivation to start the business is mainly needs driven (opportunity and to  take care of family) 60 % Majority have secondary  education and above 60 % Earn less than  HTG 30,000  per month from  their businesses MONTHLY PERSONAL  INCOME OF BUSINESS  OWNERS HTG 1–9,999 10,000–19,999 20,000–29,999 30,000–39,999 40,000–49,999 50,000–59,999 60,000–69,999 70,000–99,999 100,000–239,000 240,000 or more MSE   E  SE oE wE oE nE ME oE wELocated in urban areas Degree (under/postgrad) Diploma High school Primary school No schooling   15 - 24 years 25 - 35 years 36 - 45 years 46 - 60 years 61 years and older AGE (%) LEVEL OF EDUCATION (%)  ME MoE MoE enE eE wE erE  rE MOE MSE SIZE AND SCOPE OF THE MSME SECTOR 9 11% 89% Formal MSME sector (125 027 businesses) 7% MSMEs registered and  10% licenced Informal MSME sector (1 016 641 businesses) GDP contribution USD 4.2 billion Informal GDP contribution US3.2 billion Business is too small Do not know Do not have money to register Too complicated Do not know how No benefit Do not have time Registration is being processed Refused to answer Tried but did not succeed Avoiding tax alo  Mo  So  Eo so So eo lo Eo ao  o REASONS FOR NOT BEING  REGISTERED (%) Don’t know Complying with the law No benefits Access to finance Avoid harassment from authorities Access to government assistance Avoid fines Other lao Eso eo Eo ao  o  o co MAIN BENEFITS  OF BEING A  REGISTERED  BUSINESS (%) of businesses are  not registered/ licensed.1%8 As low as 11% of businesses  are formally registered, the  majority being informal. 11% COMPLIANT WITH: co lo Eo  o o t(l ot(Esot(aMo CITY HALL MCIDGIMASTMSPPCFIMJSPMPCE FEMALE 25-35 YEARS 15-24 YEARS MALE so   o  co co BUSINESS REGISTRATION (%) LEGAL AND COMPLIANCE 10 11% 89% Formal MSME sector (125 027 businesses) 7% MSMEs registered and  10% licenced Informal MSME sector (1 016 641 businesses) GDP contribution USD 4.2 billion Informal GDP contribution US3.2 billion Business is too small Do not know Do not have money to register Too complicated Do not know how No benefit Do not have time Registration is being processed Refused to answer Tried but did not succeed Avoiding tax alo  Mo  So  Eo so So eo lo Eo ao  o REASONS FOR NOT BEING  REGISTERED (%) Don’t know Complying with the law No benefits Access to finance Avoid harassment from authorities Access to government assistance Avoid fines Other lao Eso eo Eo ao  o  o co MAIN BENEFITS  OF BEING A  REGISTERED  BUSINESS (%) of businesses are  not registered/ licensed.1%8 As low as 11% of businesses  are formally registered, the  majority being informal. 11% COMPLIANT WITH: co lo Eo  o o t(l ot(Esot(aMo CITY HALL MCIDGIMASTMSPPCFIMJSPMPCE FEMALE 25-35 YEARS 15-24 YEARS MALE so   o  co co BUSINESS REGISTRATION (%) • It is clear that MSME owners do not see or understand the benefits of formalizing their businesses. COMPLIANCE AND BUSINESS FORMALITY 11 Total sales made Expenses Income after expenses Revenue/sales before  expenses Cost of sales Stock Debts/debtors Number of customers Yes No Cash Direct debit Pay in kind Cheque Bank transfer 0 - 10% 11% - 25% 26% - 50% 51% - 75% To to aao lao  o  o ao so  o  o emdo to do Eo Eo Eo so do  o o em xo 8 % 92 % HOW CUSTOMERS PAY (%) PORTION OF CASH PAYMENTS  BANKED (%) METHOD OF KEEPING  FINANCIAL RECORDS (%) FINANCIAL RECORDS KEPT (%) BUSINESS KEEPS FINANCIAL  RECORDS (%) Manual system Computerised Keep records in my head Accountant does it Yes No  ao l o BUSINESS HAS  PARTNERS/SHAREHOLDERS (%) WRITTEN  PARTNERS/SHAREHOLDERS’  AGREEMENT (%) Yes No 5 % 95 % • Generally, the records are kept through a manual system while 1% do keep computerized records. BUSINESS RECORDS AND ACCOUNTING PACKAGES Business records kept by MSMEs 12 Total sales made Expenses Income after expenses Revenue/sales before  expenses Cost of sales Stock Debts/debtors Number of customers Yes No Cash Direct debit Pay in kind Cheque Bank transfer 0 - 10% 11% - 25% 26% - 50% 51% - 75% To to aao lao  o  o ao so  o  o emdo to do Eo Eo Eo so do  o o em xo 8 % 92 % HOW CUSTOMERS PAY (%) PORTION OF CASH PAYMENTS  BANKED (%) METHOD OF KEEPING  FINANCIAL RECORDS (%) FINANCIAL RECORDS KEPT (%) BUSINESS KEEPS FINANCIAL  RECORDS (%) Manual system Computerised Keep records in my head Accountant does it Yes No  ao l o BUSINESS HAS  PARTNERS/SHAREHOLDERS (%) WRITTEN  PARTNERS/SHAREHOLDERS’  AGREEMENT (%) Yes No 5 % 95 % MSME CHARACTERISTICS Cash is king!! Considering the MSME sector is predominantly informal, cash is still the preferred medium of transactions. Shareholding and ownership 13 Loan funding  Business management  Training on business promotion  Budget and forecasting  Productivity improvement Debt management  Business start-up Customer relations  Technical training (services,  merchandises) Legislation  Computer training  Digital operations training  Preparing business plan REQUIRED SUPPORT  NEEDED (%)  START UP  CHALLENGES (%) SOURCES OF FUNDING TO  START A BUSINESS (%) AMOUNT NEEDED  TO START (%) 81% Loa Lna noa  fa La ua na na fa fa  a oda  na fa fa  a na da La fa fa  a  a  a ia ia oa oa oa da La na fa  a  a fLa are aware of an  organization giving  assistance or  advice to MSMEs of those aware of an  organization giving  business support  used their service AWARENESS OF SUPPORT  ORGANISATIONS USAGE OF SUPPORT  ORGANIZATIONS IS HIGH 42 % reported that they  need skills MSMES THAT NEED EMPLOYEES WITH  SKILL AND EDUCATION 73 % Sourcing money Cash flow Being owed money/debtors Financial records Not enough customers Finding business premises/space Natural disasters Savings  Informal saving group  Family and friends Money from other business Personal loan  Other money  A relative from diaspora Sold assets Inheritance Less than 50,000 HTG HTG 50,000 - 99,999 HTG 100,000 - 149,999 HTG 150,000 - 199,999 HTG 200,000 - 249,999 HTG 250,000 - 299,999 HTG 300,000 or more  BUSINESS SUPPORT AND EMPOWERMENT • Therefore, such support is required to transform these MSMEs to realize their potential 14 Loan funding  Business management  Training on business promotion  Budget and forecasting  Productivity improvement Debt management  Business start-up Customer relations  Technical training (services,  merchandises) Legislation  Computer training  Digital operations training  Preparing business plan REQUIRED SUPPORT  NEEDED (%)  START UP  CHALLENGES (%) SOURCES OF FUNDING TO  START A BUSINESS (%) AMOUNT NEEDED  TO START (%) 81% Loa Lna noa  fa La ua na na fa fa  a oda  na fa fa  a na da La fa fa  a  a  a ia ia oa oa oa da La na fa  a  a fLa are aware of an  organization giving  assistance or  advice to MSMEs of those aware of an  organization giving  business support  used their service AWARENESS OF SUPPORT  ORGANISATIONS USAGE OF SUPPORT  ORGANIZATIONS IS HIGH 42 % reported that they  need skills MSMES THAT NEED EMPLOYEES WITH  SKILL AND EDUCATION 73 % Sourcing money Cash flow Being owed money/debtors Financial records Not enough customers Finding business premises/space Natural disasters Savings  Informal saving group  Family and friends Money from other business Personal loan  Other money  A relative from diaspora Sold assets Inheritance Less than 50,000 HTG HTG 50,000 - 99,999 HTG 100,000 - 149,999 HTG 150,000 - 199,999 HTG 200,000 - 249,999 HTG 250,000 - 299,999 HTG 300,000 or more  CAPACITY TO GROW AND CHALLENGES • Access to finance would continue being a challenge as the majority of MSMEs are informal and with no financial records. Addressing informality becomes an urgent priority. • Owners generally rely on their savings and informal savings to start the business, mostly needed less than HTG 50,000 to start their businesses. 15 PLACE OF BUSINESS  OPERATIONS (%) BUSINESS HAS ACCESS TO  THESE AMENITIES (%) MSME Trade with larger  businesses 1% 0.2% 2% Trade with government Trade with other MSMEs 97% Have private  customers Street/pavement Residential premises Shopping/trading mall Farm/small holding Business park/premises Stall/table in a designated area Door to door/visits customers Ofce block/park Electricity Toilets outside Well water Toilets inside Storeroom/storage facility Running water from outside Running water from inside Waste storage space PPL AL CL CL EL EL  OFL PL BL UL SL PL CL BL EL PEL CELL PHONE PLA LCA INVERTER CA ELA GENERATOR  A EEA COMPUTER/ LAPTOP ECA CALCUL ATOR ECA LA LA SOLAR PANEL OA EPA Use Do not Use USE OF COMMUNICATION  AND OTHER DEVICES (%) Who do MSMEs conduct trade with? Where MSMEs trade from • Most MSMEs are running their operations from the street / pavement while others from residential premises. 16 ACCESS TO MARKETS PLACE OF BUSINESS  OPERATIONS (%) BUSINESS HAS ACCESS TO  THESE AMENITIES (%) MSME Trade with larger  businesses 1% 0.2% 2% Trade with government Trade with other MSMEs 97% Have private  customers Street/pavement Residential premises Shopping/trading mall Farm/small holding Business park/premises Stall/table in a designated area Door to door/visits customers Ofce block/park Electricity Toilets outside Well water Toilets inside Storeroom/storage facility Running water from outside Running water from inside Waste storage space PPL AL CL CL EL EL  OFL PL BL UL SL PL CL BL EL PEL CELL PHONE PLA LCA INVERTER CA ELA GENERATOR  A EEA COMPUTER/ LAPTOP ECA CALCUL ATOR ECA LA LA SOLAR PANEL OA EPA Use Do not Use USE OF COMMUNICATION  AND OTHER DEVICES (%) 17 ACCESS TO AMENITIES Sig Sng cg aSg tg ig a g aag Slg cSg Sng Sog Sog csg ng ig aog ng nag ng og i g ctg cg ag Signigicant losses Some small losses Not afected Might close down Signigicant losses Some small losses Not afected Might close down Only time will tell Very high threat High threat Moderate threat Low threat Very low threat Don’t know Reduced Same as before Stopped operations Increased GENERAL IMPACT OF  COVID-19 (%) IMPACT OF SOCIO-POLITICAL  INSECURITY (%) THREAT LEVEL ON BUSINESS  VS. OWNER (%) IMPACT ON  REVENUE/SALES (%) 60% of MSMEs have had losses  attributed to Covid-19, as 53% of  owners reported that the revenue  of their businesses declined. of MSMEs have had losses attributed to the  socio-political unrest, and business owners  identified threats towards their businesses and  personal safety. Threat level on business Threat level on owner 53% IMPACT OF COVID-19 ON BUSINESSES 18 Sig Sng cg aSg tg ig a g aag Slg cSg Sng Sog Sog csg ng ig aog ng nag ng og i g ctg cg ag Signigicant losses Some small losses Not afected Might close down Signigicant losses Some small losses Not afected Might close down Only time will tell Very high threat High threat Moderate threat Low threat Very low threat Don’t know Reduced Same as before Stopped operations Increased GENERAL IMPACT OF  COVID-19 (%) IMPACT OF SOCIO-POLITICAL  INSECURITY (%) THREAT LEVEL ON BUSINESS  VS. OWNER (%) IMPACT ON  REVENUE/SALES (%) 60% of MSMEs have had losses  attributed to Covid-19, as 53% of  owners reported that the revenue  of their businesses declined. of MSMEs have had losses attributed to the  socio-political unrest, and business owners  identified threats towards their businesses and  personal safety. Threat level on business Threat level on owner 53% IMPACT OF SOCIO-POLITICAL CRISIS AND INSECURITY ON MSMEs 19 Total business owner (BO) population 100% (660 845) FINANCIALLY EXCLUDED 30% ( 195 847) FINANCIALLY INCLUDED 70% (464 998) FORMALLY SERVED 25% (167 660) INFORMALLY SERVED 58% (382 513) BANKED 14% (90 214) SERVED BY OTHER FORMAL (NON-BANK) FINANCIAL  INSTITUTIONS 15% (99 357)         FINANCIALLY EXCLUDED BOs who do not have/use any financial  products and/or services – if borrowing,  they rely only on friend/family; and if  saving, they save at home          FINANCIALLY INCLUDED BOs who have/use financial products and/or services  for business purposes – formal and/or informal           FORMALLY SERVED BOs who have/use formal financial products  and/or services provided by a formal financial  institution (bank and/or non-bank)         INFORMALLY SERVED BOs who have/use financial products and/or  services which are not regulated, e.g. farmer  associations, saving clubs/groups, private  money lenders         BANKED BOs who have/use financial products and/or  services provided by a commercial bank  regulated by the central bank (BRH)         SERVED BY OTHER FORMAL FINANCIAL  INSTITUTIONS BOs who have/use financial products and/or  services provided by regulated non-bank formal  financial institutions, e.g. insurance companies Total business owner (BO) population = Minimum age  defined by the age at which individuals can enter into a  legal financial transaction in their own capacity Financial inclusion - Framework 20 Total business owner (BO) population 100% (660 845) FINANCIALLY EXCLUDED 30% ( 195 847) FINANCIALLY INCLUDED 70% (464 998) FORMALLY SERVED 25% (167 660) INFORMALLY SERVED 58% (382 513) BANKED 14% (90 214) SERVED BY OTHER FORMAL (NON-BANK) FINANCIAL  INSTITUTIONS 15% (99 357)         FINANCIALLY EXCLUDED BOs who do not have/use any financial  products and/or services – if borrowing,  they rely only on friend/family; and if  saving, they save at home          FINANCIALLY INCLUDED BOs who have/use financial products and/or services  for business purposes – formal and/or informal           FORMALLY SERVED BOs who have/use formal financial products  and/or services provided by a formal financial  institution (bank and/or non-bank)         INFORMALLY SERVED BOs who have/use financial products and/or  services which are not regulated, e.g. farmer  associations, saving clubs/groups, private  money lenders         BANKED BOs who have/use financial products and/or  services provided by a commercial bank  regulated by the central bank (BRH)         SERVED BY OTHER FORMAL FINANCIAL  INSTITUTIONS BOs who have/use financial products and/or  services provided by regulated non-bank formal  financial institutions, e.g. insurance companies Total business owner (BO) population = Minimum age  defined by the age at which individuals can enter into a  legal financial transaction in their own capacity Financial inclusion - Haiti MSME owners FINANCIAL INCLUSION ‘Formal’ is a category classifying products or services as regulated or supervised by a formal institution or any other formal regulator/agency. This is also synonymous to ‘other formal’ or ‘other formal (non-bank)’ to differentiate it from the banked which are mostly commercial and development banks. 21 Fo % ma % ll % lm % Formally served Banked Other formal (non-bank) Informal Excluded ay  % ma % sey  % ayl %  y  % lyv % lya % myd % Banked Other formal (non-bank) Informal only Excluded For mar mor olr y r 2023 Banked Informal  only Other formal (non-bank) Excluded Overall levels of financial inclusion, overlaps and MSME Access Strand Overalls with overlaps • >70% of business owners are financially included. • Half of the business owners use formal financial products or services— one in four business owners (24%) have/use commercial bank products/ services and 47% use other formal (non-bank)products/services. • High uptake (58%) of informal financial products among business owners. • 30% of business owners do not use any formal or informal financial products though they may borrow from family and friends or save at home. FINANCIAL INCLUSION Access Strand 22 Fo % ma % ll % lm % Formally served Banked Other formal (non-bank) Informal Excluded ay  % ma % sey  % ayl %  y  % lyv % lya % myd % Banked Other formal (non-bank) Informal only Excluded For mar mor olr y r 2023 Banked Informal  only Other formal (non-bank) Excluded Overlaps “Business owners generally use a combination of financial products and services to meet their financial needs”. • Only 6% of business owners rely exclusively on banking services. • Around 14% use a combination of formal and informal mechanisms to manage their financial needs, thus indicating that their needs are not fully met by the formal sector alone. • 45% of the small business owners ONLY rely on informal mechanisms such as savings groups and loan sharks. FINANCIAL INCLUSION 23 Nord Centre Nord-Ouest Grand'Anse Ouest Artibonite Nord-Est Sud Sud-Est Nippes Banked Informal  only Other formal (non-bank) Excluded 15-24 years 25-35 years 36-45 years 46-60 years 61 and older Urban Rural No % d % Ce % no % Nt % d % -- % CN % Nt % N- % Ct % n- % NO % Nd % CO % Nd % NO % NN % CO % nt % N- % NC % eu % n- % N- % e % eO % nO % N- % d % -- % Ce % t % NC % ee % nC % nn % Nn % -o % no % Nu % Nn % Co % -u % o % Nu % -o % CC % NO % Nn % CO % nO % Nt % N- % Ct % n- % NN % NN % Cd % nd % O % Nu % -- % eN % N % NC % -O % Cd % nC % d % Ce % nn % o % N- % CO % -- % Male Female Banked Informal  only Other formal (non-bank) Excluded Financial inclusion by Department Financial inclusion by area ACCESS STRANDS 24 Nord Centre Nord-Ouest Grand'Anse Ouest Artibonite Nord-Est Sud Sud-Est Nippes Banked Informal  only Other formal (non-bank) Excluded 15-24 years 25-35 years 36-45 years 46-60 years 61 and older Urban Rural No % d % Ce % no % Nt % d % -- % CN % Nt % N- % Ct % n- % NO % Nd % CO % Nd % NO % NN % CO % nt % N- % NC % eu % n- % N- % e % eO % nO % N- % d % -- % Ce % t % NC % ee % nC % nn % Nn % -o % no % Nu % Nn % Co % -u % o % Nu % -o % CC % NO % Nn % CO % nO % Nt % N- % Ct % n- % NN % NN % Cd % nd % O % Nu % -- % eN % N % NC % -O % Cd % nC % d % Ce % nn % o % N- % CO % -- % Male Female Banked Informal  only Other formal (non-bank) Excluded Financial inclusion by MSME owner’s gender Financial inclusion by MSME owner’s age (focus on the youth) ACCESS STRANDS 25 Lesotho 2016 Zimbabwe 2022 Eswatini 2017 Malawi 2019 Le % ot % Lt % Lh % L  % 2o % o  % L0 % L1 % 6 % h  % 21 % L0 % 2o % h1 % 2L % h2 % 22 % ho %   % o % L %    % ht % o  % Lt % h % h2 % South Africa 2020 Haiti 2023 2  % h % 2 % 1t % 2o % 22 % 0 % e6 % Less than a year 1 - 2 years 3 - 5 years 6 -10 years More than 10 years Industry Service Trade Agriculture o  %   % h0 % 2o % ot % 22 % hh % 2  % Le % 2h % he % 2h % o2 % 2o % ho % 2o % L1 % 22 % h0 % 2h % Banked Informal  only Other formal (non-bank) Excluded Banked Informal  only Other formal (non-bank) Excluded Le % ot % hh % ho % Access Strand by country comparison 26 ACCESS STRANDS Lesotho 2016 Zimbabwe 2022 Eswatini 2017 Malawi 2019 Le % ot % Lt % Lh % L  % 2o % o  % L0 % L1 % 6 % h  % 21 % L0 % 2o % h1 % 2L % h2 % 22 % ho %   % o % L %    % ht % o  % Lt % h % h2 % South Africa 2020 Haiti 2023 2  % h % 2 % 1t % 2o % 22 % 0 % e6 % Less than a year 1 - 2 years 3 - 5 years 6 -10 years More than 10 years Industry Service Trade Agriculture o  %   % h0 % 2o % ot % 22 % hh % 2  % Le % 2h % he % 2h % o2 % 2o % ho % 2o % L1 % 22 % h0 % 2h % Banked Informal  only Other formal (non-bank) Excluded Banked Informal  only Other formal (non-bank) Excluded Le % ot % hh % ho % Financial inclusion by business life cycle Financial inclusion by sector 27 ACCESS STRANDS Savings at bank Savings in other formal (non-bank) Savings in informal sector Not saving Sa va iia nSa Savings at bank Savings in other formal (non-bank) Savings in informal sector Not saving Savings at bank Savings in other formal (non-bank) Savings in informal sector Not saving gsa va na va i a ita nia n a na va va  a iSa bna bva nna Male Female 15-24 years 25-35 years Savings are largely driven  by savings group. LANDSCAPE PRODUCTS • About 63% of business owners are saving. • Only 6% of business owners have/use formal savings products from commercial banks and 8% have savings from other formal non-bank institutions. • Majority of the business owners save informally (57%), largely driven by savings group. • 37% of business owners do not save. Savings Strand 28 Savings at bank Savings in other formal (non-bank) Savings in informal sector Not saving Sa va iia nSa Savings at bank Savings in other formal (non-bank) Savings in informal sector Not saving Savings at bank Savings in other formal (non-bank) Savings in informal sector Not saving gsa va na va i a ita nia n a na va va  a iSa bna bva nna Male Female 15-24 years 25-35 years Savings are largely driven  by savings group. LANDSCAPE PRODUCTS Savings by gender Savings by age groups (youth) 29 Urban Rural Ur % a % nU % RU % u % a % ul % Rl % Savings at bank Savings at  informal sector Savings at Other formal (non-bank) Not saving Less than a year 1 - 2 years 3 - 5 years 6 -10 years More than 10 years Industry Service Trade Agriculture Business expansion  Day-to-day business needs For the future  Mitigation of natural disaster risks Acquisition of more businesses Family education  Mitigation of socio-political crisis uu % u % ua % u % RR % L % ne % a % Ru % l % nU % s % Rs % Ur % ul % n % Ru % a % uL % UU % Ru % l % nR % u % us % a % uR % R % RR % L % nU % l % Rs % s % nU % L % DRIVERS FOR SAVING (%) elb elb eub ub enb sb Ub LANDSCAPE PRODUCTS Savings Strand by business life cycle Savings Strand by sector Savings Strand by region 30 Urban Rural Ur % a % nU % RU % u % a % ul % Rl % Savings at bank Savings at  informal sector Savings at Other formal (non-bank) Not saving Less than a year 1 - 2 years 3 - 5 years 6 -10 years More than 10 years Industry Service Trade Agriculture Business expansion  Day-to-day business needs For the future  Mitigation of natural disaster risks Acquisition of more businesses Family education  Mitigation of socio-political crisis uu % u % ua % u % RR % L % ne % a % Ru % l % nU % s % Rs % Ur % ul % n % Ru % a % uL % UU % Ru % l % nR % u % us % a % uR % R % RR % L % nU % l % Rs % s % nU % L % DRIVERS FOR SAVING (%) elb elb eub ub enb sb Ub Saving Strand drivers to saving and digitized informal savings LANDSCAPE PRODUCTS 31 Cr Cr edr Cir Credit from bank Credit from other formal (non-bank) Credit from informal sources Not borrowing tr tr e r i r Only 17% of  business  owners have  borrowed  in the past 12  months. 17% of MSMEs are currently not  borrowing with the main  barriers being lack of  qualification, fear of debt and  having no need to borrow. 83% ar nkr eCr hr  r dr nr nr nr hr nr er er eir e r ar ekr iir 15-24 years 25-35 years Credit from bank Credit from other formal (non-bank) Credit from informal sources Not borrowing Trade Service Agriculture Industry ik % ea % d % it % ee % a % ih % C % a % it % ek % t % Credit at bank Do not borrow Credit at other  formal (non-bank) Credit at informal  mechanisms Growing my business Day-to-day business needs Start my business To buy machinery Personal reasons I am scared Do not need to Business is slow so I am afraid to borrow I do not believe in borrowing money Borrowed in the past and paid back I do not qualify My earnings change from month to month I tried but was turned down I do not have collateral/security DRIVERS FOR USING CREDIT (%) BARRIERS TO CREDIT (%) Credit by age groups Credit Strand • The proportion of business owners who have loans from formal institutions is similar for both banking institutions and other formal non-bank institutions at 5%. • About 13% of business owners borrowed from informal credit mechanisms. LANDSCAPE PRODUCTS 32 Cr Cr edr Cir Credit from bank Credit from other formal (non-bank) Credit from informal sources Not borrowing tr tr e r i r Only 17% of  business  owners have  borrowed  in the past 12  months. 17% of MSMEs are currently not  borrowing with the main  barriers being lack of  qualification, fear of debt and  having no need to borrow. 83% ar nkr eCr hr  r dr nr nr nr hr nr er er eir e r ar ekr iir 15-24 years 25-35 years Credit from bank Credit from other formal (non-bank) Credit from informal sources Not borrowing Trade Service Agriculture Industry ik % ea % d % it % ee % a % ih % C % a % it % ek % t % Credit at bank Do not borrow Credit at other  formal (non-bank) Credit at informal  mechanisms Growing my business Day-to-day business needs Start my business To buy machinery Personal reasons I am scared Do not need to Business is slow so I am afraid to borrow I do not believe in borrowing money Borrowed in the past and paid back I do not qualify My earnings change from month to month I tried but was turned down I do not have collateral/security DRIVERS FOR USING CREDIT (%) BARRIERS TO CREDIT (%) LANDSCAPE PRODUCTS • MSMEs in the trade sector are more able to access credit than other sectors even though this is informal credit. Credit Strand by sector 33 Yes No PERSONAL RISK INSURANCE (%) TYPES OF PERSONAL INSURANCE (%) 3 % 97 % Personal Risk Health Portable Risk Other Business Industry Service Trade Agriculture YesNo Pero Opportunity to convert personal  accounts to business accounts  – to clearly diferentiate the two entities. Po Yenso Yesao Insured Other formal (non-bank) lr % n % la %   % la %   % ll % P % Only 3% have insurance — mostly covering personal risks. Of those borrowing money (17%),  saving money (64%),  mostly rely on  informal savings groups/sabotaj. Personal Accounts  = 95% of the  banked businesses. 95 % LANDSCAPE PRODUCTS • A lowly 3% of MSMEs have insurance but its mostly covering the owner and not business risks per se! Insurance uptake by sector Insurance and risk management 34 Yes No PERSONAL RISK INSURANCE (%) TYPES OF PERSONAL INSURANCE (%) 3 % 97 % Personal Risk Health Portable Risk Other Business Industry Service Trade Agriculture YesNo Pero Opportunity to convert personal  accounts to business accounts  – to clearly diferentiate the two entities. Po Yenso Yesao Insured Other formal (non-bank) lr % n % la %   % la %   % ll % P % Only 3% have insurance — mostly covering personal risks. Of those borrowing money (17%),  saving money (64%),  mostly rely on  informal savings groups/sabotaj. Personal Accounts  = 95% of the  banked businesses. 95 % USE OF PERSONAL FINANCIAL ACCOUNTS IN RUNNING A BUSINESS 35 KEY TAKE-OUTS Total MSME sector estimated at 660 thousand businesses employing 1,122 million people: • MSMEs contribute an estimated HTG485 billion to GDP. • Artibonite (23%) and Ouest (21%) departments respectively have significant number of MSMEs. • 67% are women-owned businesses. • 35% are youth-owned businesses (15 – 35 years). Business formalization—only 11% of the MSMEs are formal, informal MSMEs are devoid of opportunities from government and financial sector. Covid-19 affected 60% of MSMEs—reported losses due to Covid-19. Surviving Socio-Political unrests—about 53% of MSMEs reported losses due to the civil unrests. • Exacerbated due to MSMEs relying on walk-in clients (97%) for business. • Inability to utilize digital platforms also a limitation. Financial Inclusion related: • 14% of the MSMEs are banked. • 15% are formally served by other formal (non- bank) institutions. • 58% are utilizing informal mechanisms. • 30% are financially excluded. Majority are cash-dependent (99%)—with some pockets of opportunities as 89% of MSMEs bank portions of cash payments (0-10% of all cash payments received). Credit and Savings are mostly from the informal savings groups. • Informal credit is accessed by 13% of MSMEs. • Informal savings are accessed by 55% of MSMEs. Insurance is almost non-existent with 3% of MSMEs insured. Differentiation between personal and business accounts—95% of banked accounts are in name of owner. 36 KEY FOCUS AREAS 1. Formalization of MSMEs is critical— is not just about the fiscus, but about understanding the size of the sector for appropriate government support (e.g. Covid-19 support), proper documentation to access services and financial support, close the information asymmetry. 2. Digitization of payments towards a cash-lite economy—cash has its vulnerabilities, concerted efforts to create a digital ecosystem would assist MSMEs to benefit from its efficiencies and advantages thus enabling them to scale and grow. 3. Access and usage of financial services—access to formal financial services is a clear limitation in Haitian MSME sector, simultaneously understanding which informal mechanisms MSMEs rely on is invaluable. 4. Enhancing business resilience post Covid-19 and Socio-Political Unrest—beyond prevailing challenges, MSMEs will need support and training to develop their entities. 5. MSME definition and categorization is important—setting a common standard to what MSMEs are is an important task. 6. Value proposition for financial service providers via data analytics— with the wealth of data on MSMEs, financial service providers should be incentivized to serve the MSME sector by highlighting the value- proposition for them. 7. Differentiation between personal and business accounts—efforts to transform, differentiate legal and personal entities are key to present data showcasing business transactions, documents and performance. 37 38 Haïti Micro, small  and medium  enterprises  (MSME)  survey  highlights South  Africa Lesotho Eswatini Mozambique Tanzania Zimbabwe Zambia Malawi Completed Haï FinScope MSME Survey Comprehensive study focusing on individual entrepreneurs, and owners of micro-, small- and medium enterprises (MSMEs) and their financial services needs. Dr Kingstone Mutsonziwa Finmak.org.za Tel: +27 67 594 9291 kingstonem@finmark.org.za www.finmark.org.za Mr Abel Motsomi Finmak.org.za Tel: +27 67 594 9291 abelm@finmark.org.za www.finmark.org.za Banque de la Republique d'Haiti ( BRH) Address: Angle des rues Pavée et du Quai Port-au-Prince, Haiti Tel: +509 2290 0777 /+509 2290 0012 info@brh.ht www.brh.ht USAID Atteindre (Attain) Project Implemented by MEDA atteindre@meda.org Tel: +509.2940.7070 Tel: +27 67 594 9291 www.finmark.org.za Ministère de l'Économie et des Finances (MEF) Address: 5, Ave Charles Summer Port-au-Prince, Haiti Tel: +509 25 58 665 www.mef.gouv.ht Ministère du Commerce et de l'Industrie (MCI) Address: 64, Rue Legitime Port-au-Prince, Haiti Tel: +509 29 43 4488 www.mci.gouv.ht