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PROMOTING SMALL AND MICRO 

ENTERPRISE IN HAITI 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

INTERNATIONAL MONETARY 

POLICY AND TRADE 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

APRIL 28, 2010 

Printed for the use of the Committee on Financial Services 

Serial No. 111–127 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

BARNEY FRANK, Massachusetts, Chairman 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

GWEN MOORE, Wisconsin 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

CHARLES A. WILSON, Ohio 

ED PERLMUTTER, Colorado 

JOE DONNELLY, Indiana 

BILL FOSTER, Illinois 

ANDRE ́ CARSON, Indiana 

JACKIE SPEIER, California 

TRAVIS CHILDERS, Mississippi 

WALT MINNICK, Idaho 

JOHN ADLER, New Jersey 

MARY JO KILROY, Ohio 

STEVE DRIEHAUS, Ohio 

SUZANNE KOSMAS, Florida 

ALAN GRAYSON, Florida 

JIM HIMES, Connecticut 

GARY PETERS, Michigan 

DAN MAFFEI, New York 

SPENCER BACHUS, Alabama 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

J. GRESHAM BARRETT, South Carolina 

JIM GERLACH, Pennsylvania 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

ADAM PUTNAM, Florida 

MICHELE BACHMANN, Minnesota 

KENNY MARCHANT, Texas 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

BILL POSEY, Florida 

LYNN JENKINS, Kansas 

CHRISTOPHER LEE, New York 

ERIK PAULSEN, Minnesota 

LEONARD LANCE, New Jersey 

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel 

(III) 

SUBCOMMITTEE ON INTERNATIONAL MONETARY POLICY AND TRADE

GREGORY W. MEEKS, New York, Chairman 

LUIS V. GUTIERREZ, Illinois 

MAXINE WATERS, California 

MELVIN L. WATT, North Carolina 

GWEN MOORE, Wisconsin 

ANDRE ́ CARSON, Indiana 

STEVE DRIEHAUS, Ohio 

GARY PETERS, Michigan 

DAN MAFFEI, New York 

GARY G. MILLER, California 

EDWARD R. ROYCE, California 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

MICHELE BACHMANN, Minnesota 

ERIK PAULSEN, Minnesota 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

April 28, 2010 ................................................................................................... 1 

Appendix: 

April 28, 2010 ................................................................................................... 29 

WITNESSES 

WEDNESDAY, APRIL 28, 2010 

Barrau, Olivier, Managing Director, Alternative Insurance Company ............... 6 

Pierre, Mathias, President, GaMa Consulting s.a. ............................................... 4 

Roodman, David, Research Fellow, Center for Global Development ................... 8 

Sanbrailo, John, Executive Director, Pan American Development Foundation . 10 

Winter, Simon, Senior Vice President, Development, TechnoServe Inc. ............ 2 

APPENDIX 

Prepared statements: 

Bachus, Hon. Spencer ...................................................................................... 30 

Waters, Hon. Maxine ........................................................................................ 32 

Barrau, Olivier .................................................................................................. 34 

Pierre, Mathias ................................................................................................. 44 

Roodman, David ................................................................................................ 59 

Sanbrailo, John ................................................................................................. 65 

Winter, Simon ................................................................................................... 177 

(1) 

PROMOTING SMALL AND MICRO 

ENTERPRISE IN HAITI 

Wednesday, April 28, 2010 

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON INTERNATIONAL

MONETARY POLICY AND TRADE, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The subcommittee met, pursuant to notice, at 2:12 p.m., in room 

2128, Rayburn House Office Building, Hon. Gregory Meeks [chairman of the subcommittee] presiding. 

Members present: Representatives Meeks, Waters, Watt, and 

Driehaus. 

Chairman MEEKS. This hearing of the Subcommittee on International Monetary Policy and Trade will come to order. Without objection, all members’ statements will be made a part of the record. 

And I will start by making a brief opening statement. 

I want to first start by apologizing for starting the hearing a few 

minutes late. I am sitting on a conference committee on the Iranian 

Sanctions Act, and that’s all the way over on the Senate side. And 

so I have been intricately involved there. That is the reason for us 

being a little tardy today. 

But I would like to thank—and I know he may be here shortly— 

Representative Miller, the ranking member of this subcommittee, 

for his help in planning this hearing, and to express my gratitude 

for our ability to work in a truly bipartisan manner in seeking solutions to the critical situation in Haiti. 

This hearing is the third in a series of hearings on the situation 

in Haiti. And in considering the situation in Haiti, we have tried 

to consider the principal economic layers of the crisis. We started 

with the sovereign issues of Haiti’s unsustainable foreign debts, 

and I was thrilled to see such bipartisan support for passage of the 

Haiti Debt Relief bill in both the House and the Senate, which was 

signed into law on Monday by President Barack Obama. 

The last hearing we held, on March 16th, considered the macroeconomic plan for Haiti’s private sector. Specifically, we discussed 

the importance of including a specific plan and strategy to promote 

Haiti’s competitiveness in key sectors, and the critical importance 

of incorporating a Haitian-led private sector recovery plan as a central component of the global initiative to assist Haiti following the 

devastating earthquake. 

Today’s hearing will focus on small and micro enterprises. The 

vast majority of Haitians derive their income from informal micro 

enterprises. As is the case in most developing countries, much of 

2 

private enterprise is informal, unstructured, agricultural in nature, 

and provides little long-term security on which to build a prosperous, stable future. 

Indeed, when we hear, as our witnesses will speak to, that no 

more than 10 percent of the private sector is formalized in Haiti, 

and that 10 percent or less of private enterprises contribute to the 

nation’s tax base, and that nearly 35 percent of the Haitian government’s budget is driven by the tax base, with the rest financed 

from aid and donor budgets, it’s hard to see a credible role for the 

government or a path to locally-driven economic recovery. 

When we think of the entrepreneurship here in America, we take 

certain concepts for granted, including access to capital, proper regulation and oversight, delivery of government services, insurance, 

banking services, access to markets, enforcement of contract law, a 

deep and qualified talent pool, etc. But in Haiti, each of these can 

be a major barrier to starting or growing a business. 

What’s more, as our witnesses spoke to at the last hearing, promoting a culture of entrepreneurship in Haiti will also depend on 

changing perceptions of the social role of the entrepreneurs and 

companies and business leaders. 

I look forward to the testimony of our witnesses, and hope to 

take the findings from these hearings to work with my colleague, 

Representative Miller, and others on this committee in a bipartisan 

manner to promote Haiti’s private sector and to help drive a vibrant economic recovery owned and driven by the hard-working, 

ambitious, and resilient people of Haiti. 

And I will now go to Mr. Watt. 

Mr. WATT. Mr. Chairman, I came to hear the witnesses, and I 

think I will pass on an opening statement. I appreciate the chairman calling the hearing; these are very important witnesses. 

Thank you. 

Chairman MEEKS. We will start with Simon Winter, the senior 

vice president of development for TechnoServe Inc., who has a 

knowledge of management strategy, leadership, strategy planning, 

program development, and leading fund-raising and partnerships. 

There are various other things that I could say about him, but I 

want to get right to the testimony so we can get as much as we 

can in, before we have votes. 

Mr. Winter? 

STATEMENT OF SIMON WINTER, SENIOR VICE PRESIDENT, 

DEVELOPMENT, TECHNOSERVE INC. 

Mr. WINTER. Mr. Chairman, members of the subcommittee, 

thank you for the opportunity to discuss creating economic recovery 

in Haiti through private enterprise. In my written testimony, I 

show how the promotion of small growing businesses and a culture 

of entrepreneurship can make a vital contribution to putting Haiti 

on the path to recovery and growth. 

Haiti’s history lacks a strong and vibrant small business sector. 

It has been dominated by a handful of multi-national businesses 

and a small local elite. Without direct intervention to promote economic plurality at the grass roots of the economy, development efforts will fail to alter the structure of the business sector, and restrain the potential for new, broader sources of growth to emerge. 

3 

Haiti does not have to wait for the macro policy and infrastructure environment to improve before seeing benefits from such 

grassroots efforts. TechnoServe’s current work with USAID in Haiti 

started in July of 2009. We identify promising local businesses, 

analyze their financial or business needs, facilitate negotiations 

with financial institutions and business service providers, and monitor the results. 

We believe that the approaches we have used elsewhere are applicable in Haiti. Our recommendations are to include two key 

types of interrelated programs in any new reconstruction recovery 

and development programming for Haiti. 

First, Haiti needs a much-strengthened culture of entrepreneurship, which can be enhanced through the types of entrepreneurship 

programs that TechnoServe has implemented successfully across 

many countries. 

Second, Haiti will benefit from strengthening programs, also 

along the lines of those implemented elsewhere with positive socioeconomic impact by TechnoServe. In my written testimony, I provide examples from our work in Tanzania, Uganda, and Mozambique: countries with similar ratings to Haiti on the World Bank’s 

Doing Business Project. They all demonstrate that, in such countries, entrepreneurial people can be identified, who can be trained 

and mentored to establish small growing businesses that, over 

time, can stand on their own feet. 

The Tanzania business plan competition trained 110 entrepreneurs over 6 months. It exposed them to experienced local business leaders, local role model entrepreneurs, venture capitalists, 

bankers, private investors, university professors, technical experts, 

and other professionals from Tanzania’s private sector. 

Local financiers shift to considering small and medium enterprises as a viable customer base. Half of those entrepreneurs 

trained are now using business support vouchers provided and accessing expansion capital. And the entrepreneurs form an alumni 

network for mutual support, and become the kernel of a shift in the 

local entrepreneurial culture. 

Recently, research of 590 entrepreneurs from previous Central 

American competitions demonstrates that participants in the training phases dramatically outperformed their peers who did not participate. We are busy with such a competition in Haiti. We received 

99 completed applications by February, of which 50 applications 

were submitted after the January earthquake. 

To ensure that Haiti’s high-potential sectors receive the support 

and attention they need to become the engines of economic recovery 

and growth, it will not be enough to stimulate entrepreneurship 

and hope that some good entrepreneurs arise in each sector. 

Comprehensive sectoral programs are also required. The written 

paper includes references to our work in cashew, poultry, and savory bananas in Africa. 

In Mozambique, a country ranked 172 out of 182 in the UNDP’s 

2009 human development index, we ceased 7 years of active support for the cashew processing sector 2008 by when 40 percent of 

nuts produced were processed locally, from zero 7 years earlier. 

Five thousand jobs have been created, about half held by women. 

In January 2009, we found that, since 2001, the aggregate positive 

4 

impact of the renewed cashew industry had been 11.5 million to 

the entrepreneurs, and over 100,000 small-scale farmers. 

Based on the establishment of a similar program to boost the 

mango and passion fruit sectors in East Africa in 2009, Coca Cola 

has selected TechnoServe to be their implementing partner for the 

recently announced Haiti Hope project. This 5-year project seeks to 

double the income of 25,000 Haitian mango farmers, and establish 

local institutions and infrastructure to support the ongoing growth 

and competitiveness of this sector, including value-added enterprises. 

We believe that the Haiti Hope project can become a role model 

for sectoral revitalization that can contribute to the long-term development of Haiti. I believe that, out of the recent crisis, there is 

a moment of discontinuity that will allow the U.S. Government and 

other donors and philanthropists, as well as private sector investors, both local and international, to create a new beginning for 

Haiti. 

Thank you, Mr. Chairman, for the opportunity to speak to you. 

I would be pleased to follow up with you and committee members, 

or any of your staff. 

[The prepared statement of Mr. Winter can be found on page 177 

of the appendix.] 

Chairman MEEKS. Thank you, and thank you for finishing right 

on time. Our next witness is Mr. Mathias Pierre, who is the founder and CEO of GaMa Consulting. Mr. Pierre is a very successful 

Haitian entrepreneur, who wants to make his all-too rare success 

a far more common story in Haiti. 

He is educated, an electrical engineer, and he founded his company—and it’s an IT consulting firm that’s based in Haiti—in 1998. 

Mr. Pierre? 

STATEMENT OF MATHIAS PIERRE, PRESIDENT, GAMA 

CONSULTING S.A. 

Mr. PIERRE. Thank you, Mr. Chairman. Mr. Chairman and honorable members of the House subcommittee, thanks for providing 

me the opportunity to talk to you about my views on the aid and 

construction effort and the critical role that MSMEs should play in 

the process. 

I am an entrepreneur who started with nothing. When I think 

of my past, and the current involvement in my country’s private 

sector, I believe that not only it is possible to change one’s future, 

but most importantly, I have learned that change can be learned. 

We are not conditioned to change by our own genes. It is, instead, 

necessary to define new ways to do things. And I believe, as a cornerstone for rebuilding Haiti, we must instill change in the minds 

of Haitian youth. 

Though I do not come from a wealthy family, I was capable of 

establishing a model of financial performance in applying certain 

principles prescribed in my book, ‘‘The Power of a Dream.’’ Today, 

I am the president and general manager of GaMa, beneficiary of 

the model award over 500 competing companies in the Caribbean. 

In North America, I would be considered a very active businessman. However, in Haiti, this type of participation is mostly viewed 

5 

as an exception to the rule. So, I would consider myself a relatively 

rare species of businessman. 

I am convinced that what I have accomplished is possibly only 

because I actually did it. I believe that I can share my proven 

know-how by working to the foundation, Working Space for the 

Success of Being Haitian. With more than 500 university students, 

my goal, I would like to see the students serve as models, inspiring 

symbols to those who decide to get involved in sustainable development. 

Haiti is more emotional then rational. Haiti is a country where 

emotion and perception plays an important role in the ways an individual acts, his attitude and behavior. Therefore, this is why 

those who succeed are perceived as drivers of growth and seem to, 

therefore, be destined to be depositories for wealth. Those who are 

deprived of means are perceived and consider themselves of being 

incapable of participating in the growth process. 

Life is considered as a hostile heritage. One must make an utmost effort to survive, making it difficult to overcome the realities 

of one’s origin and social status. Compared to the United States, 

where poor become rich in one generation, a typical Haitian destiny 

is determined by his parents’ status. I believe this is driven by an 

environment of scarce resources and an economic model which is 

not based on growth and wealth creation. This leads to a predatory 

distribution of wealth that accentuates the divide between rich and 

poor. 

Ninety percent of Haiti’s economy depends on the informal sector, because 90 percent of the private sector’s jobs come from the 

informal sector. 

January 12th, consequences and opportunities—it is in this context that January 12th occurred, completely changing our business 

environment. Haiti’s most important symbols have been destroyed, 

and a country has been deeply hurt to its core. It has adversely impacted most small entrepreneurs and small merchants in the informal sector: no insurance; destruction of physical assets and inventory; lost revenues; and no access to credit and public facilitation. 

The earthquake aftermath offers an opportunity for a new beginning—most importantly, to put in place new elements to remodernize the economy. 

Intelligent and efficient injection of capital—according to the 

USAID survey, $2.7 billion is needed for the economy to recover the 

MSME sector after the $2 billion lost in 35 seconds. Tangible activities must be undertaken that address the financial needs of the 

productive sector. 

I believe that this could be achieved by adopting the following financial and non-financial measures: provide capital fund in three 

current underserved segments in the private sector; establish an 

MSMEs support and assistance fund; establish a growth capital for 

small and medium businesses in the range of $100,000 and $1 million size; establish a fund for the development of entrepreneurship; 

make available to young entrepreneurs start-up funds for a business; organize contests at the level of university and the technical 

training school to obtain financial, fiscal, and legal assistance; foster an entrepreneurial— 

6 

Chairman MEEKS. Can I ask you to start wrapping up? We’re 

just trying to make sure we get as many people to testify before 

votes start. So if you would, wrap it up. Your statement will be in 

the record. So, please, just summarize, and we will take— 

Mr. PIERRE. Basically, it’s to provide management skills to those 

kids. And, at the end, I think by doing so, we can help Haiti and 

the country and the young people, first, to help them to get started 

and think differently about the private sector, because they are a 

part of the private sector. 

Mr. Chairman and honorable Members of Congress, in my closing, I would like to once again thank you for giving me the opportunity to express my views on the role of the MSME sector in the 

rebuilding effort for a more prosperous and wealthy Haiti. Thank 

you. 

[The prepared statement of Mr. Pierre can be found on page 44 

of the appendix.] 

Chairman MEEKS. Thank you. And I am going to go right—without a real introduction; so I apologize, Mr. Barrau—to you. You are 

the managing director of the Alternative Insurance Company, and 

a promoter of innovative tools for economic growth in developing 

countries. 

I want to go directly to you to get your testimony. Thank you. 

STATEMENT OF OLIVIER BARRAU, MANAGING DIRECTOR, 

ALTERNATIVE INSURANCE COMPANY 

Mr. BARRAU. Thank you, Mr. Chairman, and Honorable Congressmen. Thank you for providing me the opportunity to express 

my views on the critical role that micro, small, and medium enterprises, MSMEs, and especially insurance, should play in the rebuilding process of Haiti. 

Following the biggest catastrophe that Haiti, and maybe the 

world, has known, besides the suffering and loss of lives, I think 

we have several opportunities in front of us, such as what ingredients were missing in the previous attempts to get Haiti on a durable path of economic and social development. 

I would like to stress that the important missing link in the prosperity chain is risk management. This is well illustrated in a famous quote by Sir Winston Churchill, where he says, ‘‘If it was possible for me, I would write the word ‘insurance’ in each home and 

on each man’s forehead, since I am so convinced that insurance 

can, at a moderate price, liberate families from irreparable catastrophes.’’ 

Observers argue that there is a direct correlation between the 

number of deaths following a catastrophe and insurance penetration rate in a society. A vivid example can be seen this year. Haiti 

faced a 7.2 magnitude earthquake with over 250,000 deaths. And 

Chile, a much more developed country—and maybe the richest nation in South America—faced an 8.8 magnitude earthquake, which 

is 500 times stronger, with less than 1,000 deaths, though twice as 

many buildings were damaged. 

Haiti’s penetration rate is close to nil, and there is more information about that in my written remarks. Answering how Haiti can 

increase its insurance penetration rate will help answer some of 

the questions above—or at least reduce the reliance on interVerDate Nov 24 2008 16:30 Aug 26, 2010 Jkt 057745 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 K:\DOCS\57745.TXT TERRIE
7 

national aid. The only way to increase the penetration rate in Haiti 

is through the MSME sector, which, according to a USAID study, 

are the ones that suffered 65 percent of the losses on January 12th. 

They were not insured. 

Given the investments required to rebuild Haiti, we need to facilitate the role insurance has to play in this economy. By making 

the MSME sector financially stronger, the social fabric of Haiti will 

be transformed and benefit all. The government will have a bigger 

fiscal plate and a vibrant economy. MSMEs and the private sector 

will have bigger buying power and better social services and protection from the international community, reduced dependency on foreign aid, and a more stable Caribbean region. 

It is important to support the traditional banking system also in 

difficulty, but it’s even more important to support other financial 

actors, such as development banks and micro-finance institutions. 

Traditional banking activity will not fulfill our hope that money 

will trickle down within the pyramid, and the bottom will benefit. 

Today, entrepreneurs who may have great ideas and do not qualify 

for traditional banking, will never be able to emerge. 

Our mea culpa should be to accept that we did not do a good job 

at protecting the wealth that we Haitians were creating. Challenge 

has to start from the top. The leadership of Haiti needs to lead the 

way by protecting itself. 

Mr. Chairman, Honorable Congressmen, the message should be 

clear from the international community that its effort to rebuild 

Haiti needs to be protected this time. The Haitian government has 

to understand that risk management is important if Haiti is to 

have a sustainable society and economy. Most, if not all, of the government’s assets were not insured. More information also is included regarding this in my remarks. 

Low levels of social security and insurance access is the common 

denominator that is found in all underdeveloped countries. Haiti is 

no different. Faced with such a situation, populations are forced to 

turn to unconventional risk management methods that are more 

costly and always fall short of the expected results. 

In my written remarks, I talk a lot about how poverty can be 

considered as a transitory state that is linked directly to risk management. With private/public donor partnerships, innovative ideas 

and mechanisms can be put in place so that insurance and social 

security can be complementary and more inclusive, as explained in 

my remarks. 

How is the insurance industry following the earthquake, you may 

ask. For the first time in its history, the insurance industry is in 

financial difficulty. The reinsurance cover bought by local companies is not sufficient to cover the losses. There is a gap in the system of approximately $40 million. It is crucial and very much time 

sensitive that insurers who qualify find help to face their immediate obligations. Without insurance coverage, credit to MSMEs 

and entrepreneurs will continue to be prohibitive. 

There is also an opportunity today to properly regulate and supervise the insurance industry, so that it can meet the region, in 

terms of prudential norms and transparency, but also set the foundations for its growth. 

8 

Mr. Chairman, Honorable Congressmen, in closing, I thank you 

very much for giving me the opportunity to express my views on 

the role of the MSME sector, and especially the role the insurance 

industry should play in building a more prosperous and wealthy 

Haiti. 

I am available for your questions, if you have. Thank you. 

[The prepared statement of Mr. Barrau can be found on page 34 

of the appendix.] 

Chairman MEEKS. Thank you. Let me just briefly explain, just 

so—I know you all don’t know what’s going on, but votes have been 

called, and that’s what members are doing. They are running out 

and making votes, and I am trying to make some determinations 

here, as to whether I adjourn, whether I miss a couple of votes and 

make sure I get to the both of the two witnesses that we have left 

and then get to the questions. And there are some members who 

did want to come here, and they said they want to come after votes, 

so we’re trying to, you know, ascertain exactly what we’re doing. 

In the meanwhile, I am going to push forward, I think, and go 

to Mr. David Roodman, who is the research fellow for the Center 

for Global Development. 

And I again apologize for not reading your full biography, but I 

think it’s more important to hear what you have to say. 

STATEMENT OF DAVID ROODMAN, RESEARCH FELLOW, 

CENTER FOR GLOBAL DEVELOPMENT 

Mr. ROODMAN. Thank you, Chairman Meeks. I am going to skip 

the first half of my written testimony, which offers some general 

principles for how to support Haiti’s small and micro enterprises, 

and just focus on micro finance and what to expect and what not 

to expect of micro finance in Haiti. 

And to convey my thinking, which has come out of both a book 

and a blog that I am writing on micro finance, I would like to start 

with a story. 

A couple of years ago, I spent a good deal of time scrutinizing 

what was then the leading study that told us that micro credit reduces poverty, especially when it was given to women. And to decide whether I believed this crucial study, I decided to replicate it. 

That means running all the original math on the original data. And 

the math and the computer programming and this were really very 

complex, and I found myself getting into the weeds and crunching 

a lot of numbers. I would eventually conclude that I didn’t believe 

the study, which is not to say that I think micro credit doesn’t help, 

but that we couldn’t answer the question with this data. 

Now, while I was doing that, I had the privilege of visiting several micro finance programs, including a couple in Egypt, which 

were supported by USAID. And I will never forget the scene that 

I saw in one of the bank branches in a very poor neighborhood of 

Cairo. It was loan disbursement day, and there were hundreds of 

women who had filled this lobby. And then the crowd sort of spilled 

into the hallway and down the stairs and onto the streets, and they 

had their kids, and they were clearly going to have to wait hours. 

And they were all there to get their loans, and it seemed like a 

very excited group. I got to speak to them briefly through a translator. 

9 

I thought about the irony of this situation. Should I tell these 

women that, ‘‘I have been crunching numbers on my laptop back 

in my hotel room, and actually, we are not quite so sure if you 

should take those loans?’’ I mean, that would be absurd. There is 

no way that I could tell them how to live their lives, lives I don’t 

really understand. 

So, I reflected on this sort of conflict between the uncertainty of 

the research on the impacts of micro finance and the vitality of the 

scene that I saw, and I decided that I had to take both seriously. 

And the realizations I came to by doing that, I think, are essential 

for developing realistic expectations of what micro finance can do 

in Haiti, and also for supporting micro finance wisely. 

So, from the research side, I am convinced that we have, essentially, no solid evidence that micro credit—which is the dominant 

form of micro finance—reduces poverty, on average. That’s a strong 

statement. Let me give you a couple of reasons why I believe that. 

First of all, while there are lots of success stories about micro finance—you know them well—there are also failure stories: women 

who borrow and get in over their heads with high-interest debt, 

women who can’t pay back, so their borrowing peers in these credit 

groups come and take their pots and pans or their tin roofs to sell 

in order to repay the loans. 

The other reason beside those stories that I think we need to 

bring some skepticism about the impacts of micro finance is it’s 

really hard to tell whether people are better off because they’re borrowing, or they’re borrowing because they’re better off. And I could 

say a lot more about that, but I won’t. And so it’s a very difficult 

statistical problem. 

The most credible way to pin down cause and effect, to find out 

whether micro finance is really helping, is to randomize, the way 

it is done with good drug trials to see whether drugs are safe for 

people. If people who are randomly offered micro finance do better 

than those who don’t—are not randomly offered, that’s pretty powerful evidence that it’s helping. And just last year, we got the first 

randomized studies of micro finance—or I should say micro credit, 

in particular. 

And the two that we have of micro credit did find that micro 

credit stimulates micro enterprise. More people start businesses, 

and that’s a good thing. But at least in the 15 to 18 months that 

were studied, that did not translate into reduced poverty, in terms 

of income or spending of households, number of children in school, 

and so on. So, that’s a fairly muted verdict, compared to what people usually hear about micro finance. 

But that said, micro finance has scored some impressive achievements, I think, and I want to—and I think our job is to help micro 

finance play to its strengths. And I would list two. 

The first is the ability of micro finance to build dynamic and 

large institutions. The Grameen Bank, which won the Nobel Prize, 

has thousands of employees. It serves millions of people. It’s nonprofit, but it acts a lot like a business. It competes, it innovates, 

it’s improving services for very poor people. And it’s hard to find 

such aid-fostered business-like institutions in other areas of aid, 

outside of finance. There is no Grameen Bank vaccination. 

10 

The other strength I see in micro finance is the ability it has to 

give poor people—really, millions of poor people—more control over 

their financial circumstances. If you live on $2 a day, you don’t actually live on $2 a day. You live on $2 one day, $.50 the next, $2 

the next. That’s because you’re selling vegetables at the corner, or 

selling the rickshaw rides. Your income is unpredictable and volatile. And when you live that way, you actually need financial services more than we do. You need ways to put aside money on good 

days and good seasons, and draw it down in bad. And all the kinds 

of micro finance—micro credit, micro savings, micro insurance, 

even transfers of money—can help people do that in different ways. 

But in this light, micro credit starts to look a little bit dangerous, 

because it can actually reduce people’s control over their financial 

circumstances in some cases. Think about that word, ‘‘bond.’’ It’s 

easy to imagine—and we know it happens—that sometimes people 

get in trouble with micro credit. It’s hard to imagine people getting 

in trouble by saving too much. 

Now, Haiti has a vibrant micro finance sector that, in many 

ways, embodies the strengths that I have just talked about. There 

appear to be competitive, creative, growing institutions— 

Chairman MEEKS. I need you to summarize. 

Mr. ROODMAN. Yes, I’m close. There is more savings, they do 

more savings than borrowing. So I would endorse efforts to bolster 

Haiti’s micro finance sector in this difficult time, and I detail how 

to do that a little bit more in the testimony. 

That said, it’s important to keep in mind that micro finance currently in Haiti reaches about a quarter of a million people, which 

is roughly about 2.5 percent of the population. That’s a great 

achievement, no doubt, but it’s also something that ought to be 

kept in perspective. If one of our goals in helping recovery is getting cash to Haitians so that they can help themselves, so that they 

can buy stuff in the local economy and support small businesses, 

then I think we need to look at other potential avenues that may 

exploit networks that have far greater reach, including the mobile 

phone networks and the remittance networks. 

If we could set up a mobile money system, as now has been set 

up in Kenya, that would allow people to save through their phones, 

then with a stroke of the pen, a donor like the U.S. Government 

could increase the bank balances—essentially, the cash in people’s 

pockets, of every Haitian with a phone number, with the stroke of 

the pen. Thank you. 

[The prepared statement of Mr. Roodman can be found on page 

59 of the appendix.] 

Chairman MEEKS. Thank you. 

Last and far from least, we have Mr. John Sanbrailo, who is the 

executive director of the Pan American Development Foundation. 

STATEMENT OF JOHN SANBRAILO, EXECUTIVE DIRECTOR, 

PAN AMERICAN DEVELOPMENT FOUNDATION 

Mr. SANBRAILO. Chairman Meeks, thank you very much for the 

invitation today. I am honored to be here for the Pan American Development Foundation. Before beginning, I would particularly like 

to recognize your leadership, and the numbers of times that you 

have visited our projects in Colombia. Thank you very much. It has 

11 

been very motivating for our staff and for all of those that we work 

with there. 

We are here today to talk about Haiti. Again, I congratulate you 

for taking the initiative here, and especially in having Haitians, 

Haitian business leaders as witnesses, which is so critical. Our 

foundation has been operating in Haiti for 30 years. We have been 

one of the leading promoters of small and medium-sized enterprises, especially in agriculture and community-based enterprises. 

I have also been involved in the design and development of these 

programs for 40 years as a former director of USAID in El Salvador, in Honduras, in Ecuador, and in Peru. 

I would like to just briefly summarize key points that, from my 

experience throughout the region, as well as the Pan American Development Foundation’s experience in Haiti, are critical for the success of small and micro enterprises that we believe are absolutely 

critical in the reconstruction and recovery of the Haitian economy 

in promoting sustainable development. I have seen this throughout 

my career—I come at this a practitioner—from a number of different country perspectives. 

The first point I would like to make, and further elaborate in our 

written testimony, is we need to recognize the overriding importance of political leadership and stability. And we outline in our 

testimony how absolutely essential this is for the development of 

any enterprises, and micro and small enterprises are certainly part 

of that. 

The second point I would like to make, and that often gets lost 

in a discussion of small and micro enterprises, is encouraging 

sound macro economic and regulatory reforms. Often, there is a— 

what I refer to as tunnel vision in looking at micro and small enterprises. They are not seen in the broader macros and regulatory 

environment. And, from my experience throughout the region, it 

has been those reforms that have made the difference between the 

successes and the failures. Throughout my career, I have seen successes and failures throughout Latin America and the Caribbean. 

But those successes have always been within environments that 

encourage and nurture small business development. 

We have attached to our written testimony a study by the IMF 

that compares the Dominican Republic and Haiti, and highlights 

the critical importance that policy decisions have made in explaining the divergence of overall economic growth. 

I would also like to mention the importance of promoting ownership and titling, the important work that 10 years ago the U.S. 

Agency for International Development did in Haiti, in supporting 

property ownership. That work should be restarted again. 

The fourth point is to expand successful development models for 

small business and micro enterprises. We are supporting one of 

those in our program that is called Community-Driven Development. It’s a Haitian government program, and we helped the Haitian government implement that program. 

The fifth point is to recognize—that has been mentioned here a 

number of times already—the importance of remittances and engagement. More small business development will be done through 

remittances. More homes will be repaired through remittances and 

through international aid. And trying to come up with more innoVerDate Nov 24 2008 16:30 Aug 26, 2010 Jkt 057745 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 K:\DOCS\57745.TXT TERRIE
12 

vative, creative ways of leveraging those remittances is absolutely 

critical. 

Finally, I would say engage the private sector, as you are clearly 

doing here. Involve the private sector. That is what our foundation, 

the Pan American Development Foundation, is all about throughout the region, and especially in Haiti. 

I would also just conclude that there are successes throughout 

the region. There are models from those successes. Not everything 

in Haiti or throughout the region has been a failure. I just point 

to the Dominican Republic, to El Salvador, to your leadership in 

Colombia. And it’s those models that could help Haiti quickly recover from this terrible disaster. And there are important ongoing 

Haitian models that can be rapidly scaled up and developed. 

Thank you very much, Mr. Chairman. 

[The prepared statement of Mr. Sanbrailo can be found on page 

65 of the appendix.] 

Chairman MEEKS. Thank you. What we will do now is we will 

have the subcommittee go into recess. There are several members 

who have indicated they would like to come back after votes, if you 

have the time, because they would like to ask you some questions. 

So we will recess now, and come back right after the last vote. 

Thank you. 

[recess] 

Ms. WATERS. [presiding] I would like to thank you very much for 

your patience. The subcommittee has been in recess while we took 

some votes. The chairman is tied up for a while, but I think that 

he will be back. Meanwhile, we will resume this particular hearing. 

And, as I understand it, everyone had an opportunity to make 

their statements. At this point in time, those members who are 

present normally raise questions about the testimony and the subject matter. 

I understand that much of this hearing focused on the potential 

of micro credit to promote the development of small businesses and 

micro enterprises. Dr. David Roodman’s testimony, as I understand 

it, reminded us that micro credit has its limits, as well as its benefits. One of Mr. Roodman’s suggestions was as follows: ‘‘Give 

USAID and other agencies the flexibility to analyze and adapt to 

the strengths and weaknesses of the Haitian economy, procuring 

locally when possibly, eliminating bottlenecks where possible, delivering in kind where necessary.’’ 

And I think that the work that we have done, and the time that 

we have spent in Haiti and with USAID, that we agree with this 

suggestion. A small businessperson will accomplish nothing if that 

person borrows money to set up a business and then cannot repay 

the loan because he cannot sell his products or services. 

So, I am going to try and share with you some comments and 

questions relative to what I have discovered. On my last visit in 

Haiti, I asked the contract officer to come to a meeting that I had 

organized with local Haitians. I had about 130 persons there who— 

some were in business, others were professionals, others wanted to 

get into business. 

The first thing that I encountered was they had no entry point. 

The persons who attended the meetings could not get into the cluster meetings. And I don’t know if you’re familiar with the cluster 

13 

meetings that go on in Haiti, and all of the subject areas, whether 

it’s health or education, what have you. They are held behind secured gates and walls with some of the local NGOs-mostly local 

NGOs—and others who provide services and talk about the future 

of Haiti. So, they didn’t have an entry point. 

I also discovered that the Inter-American Development Bank was 

in Port-au-Prince. And when I went over who had been invited, it 

appeared that they had gotten a list from the government, but the 

list included some of the same familiar names of business persons 

in Haiti. I gave them a list and they did include 10 additional people that we referred. And then the Inter-American Bank went over 

to the DR, Dominican Republic, where they had another meeting, 

and because we had not been—we were not aware of that, we did 

not submit additional names, and it kind of was the same people 

again. 

So, we’re talking about Haitians doing business and micro credit. 

We are talking about how to do that. When we invited the USAID 

person to come to talk with the business persons, the would-be 

business persons, they brought with them the criteria for basically 

unsolicited proposals, not a lot about requests for—proposals that 

were going out that needed responses. 

But the first thing they said was they—anyone wishing to do 

business with USAID needed to have 3 years of receipts from whatever businesses they had been involved in. Some of us thought that 

was laughable, for a number of reasons. The Government of Haiti 

had lost most of its records. They were lying in the streets around 

the palace and the other government businesses. They didn’t even 

have their records. And many of the people in the room had lost 

their homes. 

And, number two, many of the people there, they were bilingual, 

per se, but they were much more fluent in Creole. And all of the 

information from USAID was in English. And then, the other kinds 

of requirements were just not culturally sensitive. 

And so, that’s one of the problems about local Haitians, I believe, 

attempting to do business. And I saw nothing that gave credit to 

businesses, bigger businesses, coming into Haiti if they would joint 

venture with local Haitians. And I asked about whether or not 

there was a policy relative to that, and there was not. 

So, now I suppose, here in this hearing, not only are we talking 

about small businesses and their ability to do business, we are 

talking about financing and credit. And I would like to ask if any 

of you testified to or you know of how local Haitians wanting to do 

business and needing to have access to capital, how is that 

accessed, either through the Haitian economy or otherwise? Where 

is it—where do they get the money? 

[No response.] 

Ms. WATERS. Anyone? Yes? 

Mr. ROODMAN. Representative Waters, you have raised several 

issues there, and I think you have made some excellent points. 

I think I might focus on this theme of ‘‘do no harm’’ that I mentioned in my written testimony. I think it’s easy to underestimate 

the productive power of the Haitian economy. Mr. Pierre here was 

telling me about how there are various, I think, private groups who 

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14 

ice, and this sort of thing. Meanwhile, he is running a business, 

and there are other businesses that can do the same thing. 

And so, when free services like that are brought in—or when rice 

is brought in, that can also be produced locally— 

Ms. WATERS. I’m sorry, but slow down just a little bit. When 

what is brought in? 

Mr. ROODMAN. Rice. 

Ms. WATERS. Okay. Let’s talk about rice. 

Mr. ROODMAN. The idea—talk about—when outsiders bring in 

goods or services that can be produced locally— 

Ms. WATERS. Yes. 

Mr. ROODMAN. —and give them away for free, that actually damages the Haitian economy. 

Ms. WATERS. Absolutely. 

Mr. ROODMAN. And so, the problem that I think you’re pointing 

to is that the way that the USAID and other public agencies sort 

of constitutionally work, it’s hard for them to procure locally, partly 

because of concerns about accountability and proper use of funds. 

And so, I see AID and the other agencies as sort of like bulldozers, you know. The Haitian economy is like this delicate ecosystem, and it has been damaged, but it’s still alive. And the bulldozers come in, and they manage to build something, but they also 

do a lot of damage along the way. 

And Congress isn’t driving the bulldozers, but it did design them, 

to a large extent. And so the question is, can they be redesigned 

so maybe they’re not bulldozers any more? I don’t know what they 

are—they would be bicycles, or something else that can be operated 

with much more finesse. 

In my written testimony, I refer to some really interesting work 

that is already being done by USAID, what they call market mapping, which looks at what the local economy is capable of producing 

now, what are our bottlenecks, such as lack of warehousing, which, 

if released, could improve the ability of the economy to supply even 

more. 

And if you start to think about this, it leads to a different way 

of thinking, where outsiders need to first figure out what the economy, Haitian economy, can produce, or could produce with a little 

help, and try to fill in the gaps. But make sure not to step on local 

producers. 

And the nice thing—I don’t pretend that this is an easy thing to 

fix in how USAID operates, but it’s something that would not require a large budgetary expenditure, so it’s attractive in that way. 

Ms. WATERS. Thank you very much. Some of us believe, and I believe, that USAID needs to come up with a whole new way of doing 

business in Haiti that would take into consideration all of what you 

said, and more. 

But the problem for Members of Congress is this: We are public 

policymakers, but we don’t normally sit down and write the details 

of an operation. So, what we really do need is we need those who 

understand this to come up with some suggestions for us about 

what USAID should be doing, in order to credibly do business in 

Haiti with Haitians participating. 

For example, someone said to me recently that they had problems with Haitians building—for example, if you have to build a 

15 

school—because they wouldn’t keep up with the receipts, and they 

could only be reimbursed if they kept up with the receipts. 

Well, I think that’s a poor excuse for not contracting with Haitians, because there may be some technical assistance that you can 

provide to talk about, ‘‘This is the way we do business, and here 

is how I think we can make it easier for you. Let me show you how 

we have learned that some business people keep their receipts,’’ 

and help to set up a system by which people—I don’t care if they 

drop it in a bucket every time they pay for something, or they assign a person to follow up with every expenditure, or what have 

you. But it seems to me those are problems that could be solved. 

So, what we need is we need ideas and suggestions about how 

to do business in ways that would keep USAID and others from 

having excuses about why they can’t do business with local Haitians. 

The other thing is this—there are several other things. It’s not 

just USAID. Politics is a part of what goes on in that country, just 

like it is in this country. And there are people who are identified 

and selected, because the government is asked by USAID and other 

American agencies, ‘‘Who do you identify to do business with?’’ And 

so, that has to be dealt with. 

There is a governance problem that we can—because we’re 

friends, and everybody wants to work with the sovereign countries 

in ways that are respectful, I think we can talk about that. We 

have to have some leadership to do that, and we have to think 

about how to get that done so that we’re not simply doing business 

with the same old people, or just some selected people. So that’s 

another kind of problem of being able to, you know, have the business opportunities spread out. 

Right now, one of the things that is—they are wrestling with is 

the over—humanitarian effort of passing out food, because it’s killing the local market in Haiti, of people who make a living selling 

food. I just had an eye-opener on something that I’m not sure 

about, I’m still wrestling with, because I am worried about the 

shelter, or lack of, for the coming season, and afraid of hurricanes, 

etc. And I know that the tarps and some tenting is just insufficient. 

It’s not going to do the job. And I was thinking about what could 

be done in the absence of being able to put housing online fast 

enough. 

And I thought about containers that could perhaps serve the purpose. Because, as these big international shipping containers are 

very well-constructed, a hurricane can’t move them, etc., but someone said to me, ‘‘Well, first of all, it takes up space, and the government now is supposed to be identifying the lots that are available 

to build the housing on, and, secondly, it displaces potential labor,’’ 

except they would have to be retrofitted, which is—you know, 

which would create some labor, but they are thinking that building 

the housing, of course, you know, from the ground is more laborintensive. But it’s going to take a longer time. And what is the cost 

of doing that in human suffering? 

So, these kinds of things, I know, are complicated, and they have 

to be raised. But who—which one of you would have an idea about 

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16 

tunities? Who could help me with that? Mr. Roodman, you have already spoken. What about Mr. Sanbrailo? 

Mr. SANBRAILO. Thank you very much. I speak here as the representative of the Pan American Development Foundation, an 

NGO, but I spent much of my career as a USAID director in a 

number of very difficult assignments. And I would beg to disagree 

that it’s necessarily the rules in which AID operates. I think much 

of the AID funds are actually spent for local procurement in Haiti 

right now, as in most other countries. 

I think the cases that are being referred to are largely food aid, 

where there is only one example of rice, and the unfortunate case 

of rice, and there are other cases like that. But most of the funds 

are being actually spent in Haiti for local procurement for a number of programs. 

Let me just address, specifically, your question. What can USAID 

do? We have worked in Haiti for 30 years. We worked closely with 

USAID, as well as with other donors: the World Bank; the InterAmerican Development Bank; and other agencies. 

One of the biggest issues that I see with USAID and Haiti right 

now is the mission there is tremendously understaffed. It does not 

have the necessary people, particularly compared to the dimensions 

of the disaster. I have been through natural disasters in El Salvador, in Honduras, and in Peru as a director, and I compare the 

missions that I directed at that time to one in Haiti, and you just 

do not have sufficient staff. 

AID also, over the years, has not been able to recruit senior people, people with tremendous experience, to be able to deal with 

multiple natural disasters. So I think it is people who are—that I 

would say are the real constraint. People will make the rules work, 

and address the issues that I think you are rightly pointing to. 

There are all kinds of issues that Haitian groups and Haitians 

have in dealing with U.S. foreign aid, as with other assistance. And 

there is just no substitute to having a well-staffed, proactive—and 

I want to underline ‘‘proactive’’—aid mission that reaches out to 

the Haitian community, and involves the Haitian community in the 

design, development, and implementation of those programs. 

Let me also just mention that we are implementing a home improvement program with AID funding, as well. And what is absolutely critically important is to get Haitians back into homes that 

can withstand heavy rains and the hurricanes through home repair. I think we are going to be able to get more Haitians back into 

homes through rapid repair, assuming the houses can be safely repaired, and we are putting together teams of engineers who can do 

that, and we are confident that we are going to see alternatives. 

Clearly, you need different types of options and alternatives to be 

able to address the dramatic situation of shelter in Haiti right now, 

but we feel this is one of those. Thank you very much. 

Ms. WATERS. Thank you very much. Mr. Pierre, is it GaMa Consulting? 

Mr. PIERRE. Yes, correct. 

Ms. WATERS. What do you consult about? 

Mr. PIERRE. That’s a good question. Actually, this is a company 

that was created—me and my partners, my wife—we were looking 

for a name. And we come up with ‘‘Consulting,’’ because we didn’t 

17 

know anything about business. And what—we do consulting in 

computer and engineering, and—but we have a—today it’s a type 

of CompUSA type business in Haiti. I mean, we sell computers and 

Internet and technology. 

But if—I want to address one important point regarding your 

question today. I think in order for the local people to be able to 

sell to big entities like USAID or big businesses, they need to know 

you. I mean you need to go from the informal to become formal. 

And when you started, access to capital, it’s a real challenge for all 

young Haitian business—or all young Haitians who started a business. 

I remember what I go through in 10 years. It cost me, in the last 3 years, approximately $60,000 to $70,000, going from bank to 

bank, to get the right finance in order to buy a building, because 

I wanted to do something different than others—$60,000 in 3 

years. 

Ms. WATERS. You’re talking about U.S. banks? 

Mr. PIERRE. Local banks in Haiti. 

Ms. WATERS. Yes. 

Mr. PIERRE. Because I couldn’t get access to credit, even with the 

bank that I was working for 10 years in the past. That’s the situation of the access to capital. 

But when I finally got access to credit, I was able, in 2 years, 

to double the revenue of my business. And this is why, today, I 

pointed out the idea of how to address the question of capital to 

help business grow, and what a business can do for this country 

when this business is growing. Because I was able also to go from 

10 employees to 30 employees in that same period of time. And I 

have been able to pay more taxes to the government, contribute 

more to the government, and help the government come and find 

more money to generate funds for education, health, and others, 

provide services to the people. 

And that is the idea behind everything I have been doing for the 

past years. If I can create—to have 200 or 300 companies like mine 

around the country, how this country would change. And what can 

USAID do? I remember in the last meeting with Ambassador 

Sanderson, and I remember she was asking the same question, approximately. ‘‘What can we do for Haiti?’’ I told her, ‘‘That’s a good 

thing to give us. That’s a good thing, to come and help us.’’ 

I remember when I was a kid, every time I saw a new school or 

a new hospital, I saw a government official. I saw a Haitian. And 

I understood from that Haitians are able to do something. Today 

when you open newspapers, you see on TV, you see USAID or foreign companies helping us. When you give me fish every single 

day, you don’t teach me how to fish, so what am I going to do? Just 

go and ask you for more. 

And that’s what exactly Ambassador Sanderson was going 

through. Every time she was in a plane, people was asking for a 

visa, because they want to leave the country. There is no ownership 

to the country. And that is one of the biggest problems Haiti is facing today. The poor people, they are trying to find any way to leave 

their country: by plane; by boat; whatever they can do, they’re 

going to leave. The middle class comes to the United States to have 

their kids, because they want the safe haven for their kids. And the 

18 

rich people, 1 hour and 45 minutes from Miami, make the money 

in Haiti and enjoy it in the United States. 

There is no country that we can change without people, their 

own people, to have ownership of the country. By creating more 

businesses, by providing capital to help young people get businesses out, by providing capital for the small businesses to grow, 

for the medium-sized businesses to become bigger, this will help 

the government because they will provide more revenue to the government. This will help the country. Thank you. 

Ms. WATERS. Thank you. Mr. Driehaus is here. Would you like 

to take 5 minutes for some questions, Mr. Driehaus? 

Mr. DRIEHAUS. I apologize, Madam Chairwoman. I was in the 

Chair over on the Floor, and so I didn’t hear most of the testimony. 

But just following up, Mr. Pierre, on what you were just saying, 

I’m a former Peace Corps volunteer. I worked in West Africa. And 

I’m familiar with many micro lending arrangements. How can we 

empower Haitians to engage in small business development? And 

can we pursue avenues such as peer lending, so that there is the 

engagement, there is capital infusion coming from the outside, but 

the management decisions are all being made internally by Haitians for Haitians? 

Are there models that we can learn, you know, from other areas 

around the world, especially when it comes to micro lending and 

small business development? 

Mr. PIERRE. Actually, there is—we don’t have institutions that 

are helping in that sense. And we have only one institution trying 

to help some businesses, but it’s not enough. And when you go and 

consider the micro enterprises in Haiti, they are all collapsed 

today. I mean there is no money in these, they are collapsed. 

What I suggest is a type of institution that can inject, on an annual basis, capital in the micro enterprise in the form of loans, low 

interest rate, not the micro credit interest rate today. This fund can 

assist those businesses to get them financial training, get them in 

the training process, and at the same time help them formalize. 

Because the formalizations will get them to the point where they’re 

going to pay taxes and contribute to the tax base. Because in order 

to get out of poverty, we need to enlarge the tax base. 

Mr. DRIEHAUS. To what extent does the average Haitian have 

faith in the system, in the financial sector, so that they are willing 

to go to the financial institution for a loan, a traditional-type loan? 

In so many places—and I’m not familiar with the financial sector 

in Haiti—but in so many places, especially in developing countries, 

there is a great reluctance to interact with financial entities, simply because they don’t believe in the government, they don’t believe 

in those financial entities. And that’s why pure lending arrangements are often so much more effective, because they know who 

they’re dealing with. 

To what extent is the formal financial sector in Haiti able to accommodate? And to what extent is their trust between those same 

Haitians that might be developing the small businesses and the financial institutions? 

Mr. PIERRE. Today, I would say there is no trust. The small businesses get their money—the micro gets their money from, basically, 

19 

the micro credit. And the micro credit is a high interest rate, but 

the loans are very fast and they will get it there. 

The medium businesses, it is really tough when you have to get 

access to capital. And the traditional banking system is very reluctant also to lend money, because of the whole credit issue, the old 

credit system that’s in place. So it’s a real challenge today to access 

credit in Haiti. 

Mr. DRIEHAUS. I would open it up to any other members of the 

panel, if you would like to talk about other arrangements that we 

have learned from other developing countries that might be applied 

to Haiti. Mr. Winter? 

Mr. WINTER. Thank you. Yes. The USAID project that we are 

currently part of, which started the middle of last year, and is 

known as the Haiti Integrated Finance for Value Chains and Enterprises program—or HIFIVE for short—is designed to tackle exactly the issue that you’re talking about. 

There have been a lot of USAID projects over the years that have 

stimulated the development of small businesses, particularly in 

value chain contexts, value chains such as coffee, cocoa, mango, 

tourism, handicrafts—all potentially competitive sectors for Haiti. 

But the businesses, as Mr. Pierre says, struggle to get financed. So, 

the project that we’re part of is designed to address that gap by 

supporting those businesses to develop stronger business plans and 

stronger businesses, business operations and so on, to be able to access that credit. 

Now, you still have a problem, because the financial institutions 

are not really motivated and excited about lending into this sector. 

So I believe there is still significant space—if we go back to Congresswoman Walters’s point about what can AID do, or what can 

the U.S. Government do, I think there is still space for some kind 

of a funding mechanism or a guarantee mechanism that could work 

alongside those formal financial institutions to sweeten the deals— 

in other words, to provide perhaps, for example, seed financing or 

first loss guarantees and so on, to encourage those institutions to 

actually make those loans that they are currently very cautious 

about. 

And I believe that if you can start to get that cycle working with 

good quality businesses, then able to access finance, you will 

change the model and you will change the mindset. Thank you 

Mr. DRIEHAUS. Do you still run into an issue of trust, though, 

when it comes to the individual seeking micro financing, especially, 

being far less willing to go to a formal financial institution than 

they might—more traditional means of financing? 

Mr. WINTER. Yes, I’m talking more about the somewhat larger 

businesses than the micro credit side of things. But I think the 

trust issue is there. It doesn’t matter what size the business, in a 

sense. I think you have the trust constraint. And I think you break 

that trust constraint by starting to get these institutions working, 

starting to get them to actually deploy credit where it’s needed, and 

the evidence base then provoking a shift in culture, and a shift in 

attitude. 

Mr. ROODMAN. The title of the hearing includes both micro and 

small enterprises, so there is this distinction. For the micro enterprises, we are thinking of the subsistence, economic activities withVerDate Nov 24 2008 16:30 Aug 26, 2010 Jkt 057745 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 K:\DOCS\57745.TXT TERRIE
20 

in a family, probably. There are a growing number of pretty impressive institutions in Haiti serving them: Fonkoze; SOGESOL; 

and others. And maybe they’re not yet close to meeting the demand. But they are doing what I think you are talking about. They 

are providing credit at the micro level, borrowing models and 

adapting them from the rest of the world. 

And, actually, they are doing—at this point, most of them—the 

big ones have more savers than borrowers, which is a sign that 

they are winning the trust of the Haitian people. So I think there 

is good news there. But that is a separate question from whether— 

probably the system is doing a worse job of delivering credit to 

businesses a step up, the ones that can create jobs and grow. 

Mr. DRIEHAUS. Okay. 

Mr. SANBRAILO. I would just like to further expand on that last 

point. There are institutions doing micro credit and small business 

development in Haiti. Fonkoze is one of those, and doing some very 

good work at a very small level, a small number of loans, a small 

number of people being assisted. 

I should—I think we ought to also emphasize that there are 

two—the two leading banks in Haiti, Sogebank and Unibank, also 

have specialized programs for micro credit and for small enterprises. And, at least prior to the earthquake, they were involved. 

Those programs could be expanded with additional assistance. 

Clearly, the earthquake has disrupted the banking system, seriously disrupted, clearly, the entire economy. But there is something 

to be built upon. There are institutions, not-for-profit institutions, 

for-profit institutions that are attempting to expand credit in Haiti. 

There are also, as I mentioned in our written testimony, examples 

from the Dominican Republic, from El Salvador, and from other 

Latin American and Caribbean countries, as well as from the rest 

of the world, that are well known and can be used and are being 

used in Haiti to do exactly, I think, what is being talked about 

here. 

Clearly, what is needed is acceleration in the provision of funding 

and technical assistance to be able to support those. 

Ms. WATERS. Thank you very much— 

Mr. PIERRE. I wanted to make a point— 

Ms. WATERS. Yes. 

Mr. PIERRE. —regarding that specific aspect. From numbers that 

I get, we have approximately 800,000 micro credit, eventually. 

There is approximately 200,000 recognized—or they have inventory 

approximately 200,000. Only 60,000 receive money from micro 

credit institutions. And when you look at the type of funds that we 

see, the average for some of them is $100 and the other average 

is $1,000. And the interest rate is going from 48 percent to 60 percent a year. 

We have to be—in order to take development—and that’s my 

point, and there is more in my statement regarding that—if we 

think about a developed Haiti, we need to get to a point to say, 

‘‘Hey, are we going to develop this country with this type?’’ I don’t 

say we don’t need the micro credit institutions, but we need different types of funds that help those businesses to grow. Because 

these businesses are not paying taxes. They are the informal sector. 

21 

If they are the informal sector, then I contribute to the tax base. 

And what we do need today, in order to have Haiti sustainable, we 

need businesses that can grow, that can get access to fund with low 

interest rate, and then receive financial, administrative, and fiscal 

assistance. And for these businesses, when they’re going to grow, 

they can give the result that I have been giving with my business. 

That’s what we’re thinking about. 

And this has to be serious, and we have to consider different, effectively, size of businesses. The micro, the small, and the medium 

size, different approach. Banks usually, in Haiti, said, ‘‘Hey, we are 

not going to go for the medium-sized businesses, because they are 

not profitable. They are not profitable.’’ If you consider, like, my 

business, for example, the amount of money that I am paying for 

banks, compared to my profit, it’s very high. 

But this is the situation we have to address in Haiti. And I 

think—and that’s why exactly I go in my testimony—I—to provide 

capital fund to three current underserved segments of the private 

sector. Three segments— 

Ms. WATERS. Thank you very much. I am going to kind of cut you 

short at this point. The chairman came in. Mr. Chairman, we were 

just breaking all the rules and having a conversation here, because 

there are so few of us. And I was trying to solicit from this panel 

ideas about where to get capital, learning more about what’s happening in Haiti with the many capital opportunities. 

But, Mr. Chairman, as I turn this over to you, we had some testimony from Mr. Winter, the senior vice president of development for 

TechnoServe, and he said something about funding opportunities 

under HIFIVE. If you don’t mind, I would like to know what that 

is. Is there a source of money in USAID that we don’t know about? 

Please tell us. 

Mr. WINTER. Thank you. No. The HIFIVE program is not a fund. 

The HIFIVE program is a program to provide training, technical 

assistance, and guidance to the enterprises that are being identified through other programs that are funded by AID that are constrained from accessing capital. 

It’s effectively a smart brokerage system, if you like, because it 

is going to then take those entrepreneurs, introduce them to the 

sources of capital that are available in Haiti right now, find out 

why they can’t be financed, and then put in place the businessstrengthening programs and advisory programs and consulting 

support and training that is needed, then, to get those businesses 

up to the point where the lenders and investors can then put the 

money in. 

Ms. WATERS. Mr. Chairman? 

Chairman MEEKS. Thank you. Let me start right out with Mr. 

Winter, because I was in the UN. They had the donor’s conference, 

etc., and they gave us some juice that was there that was from 

fruits, we were told, from Haiti, and that was utilized by helping 

farmers in Haiti. 

I was wondering if you could tell me—and I think they used that 

number, he was going to be trying to reach up to 25,000 farmers— 

whether you could tell me what’s happening with that program, 

whether or not there is going to be value-created benefit to these 

local farmers, and where we’re at right now? 

22 

Mr. WINTER. Okay. Thank you, Mr. Chairman. Yes, that project, 

which is called the Haiti Hope Project, is being supported by Coca 

Cola, through the sales of the juice, the Haiti Hope juice being currently branded under Odwalla, as a mango limeade. The profits, 

100 percent of the profits from that juice, are going to support the 

funding of this program. We are also hoping the program will be 

funded by the IDB, Inter-American Development Bank—there is a 

proposal currently going through—and USAID. And we are at early 

stages with AID right now. 

What the program is going to do is take a comprehensive look 

at what has already been achieved in the mango sector, and the— 

as we have heard from many colleagues on the panel, there are 

things happening, very positive things happening, on the ground. 

Mangoes is a huge opportunity—it’s the third largest export out of 

Haiti on the agro side at the moment—but a tiny percentage of the 

potential value of that sector is currently being created. 

To give you some numbers, something between 200,000 and 

400,000 tons a year of mangoes are produced in Haiti. Only 10,000 

tons a year of those are exported. And well over 50 percent of the 

rest rots before it ever gets to market. So there is huge value in 

that sector that is not currently being realized for the farmers, and 

potentially for entrepreneurs in Haiti. 

The project design, which is currently being done on the ground 

by a team in Haiti right now, is designed to unlock that value, to 

help to train the farmers in improved agricultural practices, to help 

organize those farmers so they can establish farming groups to access imports, to access the output markets, to build collection centers so that they can aggregate those mangoes into—and package 

them then for the market that would be farmer-owned businesses— 

and there are some good models already, but there are very few of 

them currently operating—and then to look at value-adding opportunities for processing those mangoes into juice and into other 

products—dried mangoes, and so on. There is virtually no capacity 

in that middle segment of the mango sector right now in Haiti. 

Huge potential for it. And that would be a great entrepreneurial 

opportunity for Haitian entrepreneurs. And that’s what we want to 

try and develop. 

So, it’s local markets and export markets, value-adding opportunities—25,000 farmers is the initial target. We believe there are at 

least 100,000 people—families in Haiti right now—who have access 

to mangoes. The idea would be that you catalyze change in the entire sector. But it also becomes, then, a role model for such development in other sectors, as well. Thank you, Mr. Chairman. 

Chairman MEEKS. Are you looking to develop capacity, especially 

for the value-added? Because one of the ideas now, because of the 

devastation in Port-au-Prince, is to create towns outside of Port-auPrince, and those kind of value-added benefits could create small 

cities outside. 

But, you also have to make sure you’re creating capacity-building. Is there any kind—in regards to the project and capacity building so that you can create the jobs? 

Mr. WINTER. Yes, Mr. Chairman. The preliminary design that’s 

unfolding at the moment would have six regional towns outside of 

Port-au-Prince in the rural part of Haiti be the sites for those iniVerDate Nov 24 2008 16:30 Aug 26, 2010 Jkt 057745 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 K:\DOCS\57745.TXT TERRIE
23 

tial aggregation points and the collection centers. So the idea would 

be to create employment in those places, locations outside of Portau-Prince, as the first collection points, and potentially the processing centers, as well. So it is absolutely designed to do that. 

We haven’t consulted yet as widely as we want to on the design 

of this. So, the team on the ground that is designing this program 

has done a lot of consultation with the existing industry stakeholders. But we do want to have a much broader consultative process, to make sure this is really a Haitian-owned and Haitian-led 

and Haitian-driven initiative. 

I don’t want to commit to anything at this point, because we do 

really want the Haitian voice to be in there, and making sure that 

they are making the decisions about the perfect locations for these 

programs. 

Chairman MEEKS. Thank you. Mr. Barrau, let me ask you quickly, I was interested in your testimony, and there was something 

that you said, and, quite frankly, sometimes we deal with the same 

issue in the African-American community here, in the United 

States, where you mentioned the importance of changing—understanding the culture of Haitians, of course, but you talked about 

changing the mentality of ‘‘God will prevail.’’ You talked about that 

as it was related to financial planning and risk management in 

Haiti, and that yet it seems that this is deeply ingrained in people, 

you know, as opposed to getting financial literacy, etc. Can you 

elaborate on that? 

What do you think—how much of it is actual cultural—because 

what happens, I have found here, some of it is cultural, but some 

of it really is having the financial barriers. You can’t get the door 

open. You can’t get in there, so you get frustrated because the opportunities doesn’t seem to be there for you. Some people will say 

it’s cultural, but the fact of the matter is the system is lined up 

against you so that you can’t knock the doors down. What would 

you say? 

Mr. BARRAU. Thank you, Mr. Chairman. I think, with all the surveys that we have done throughout the country and with—specifically for micro insurance products, we had to understand the people, we had to understand the market that we were targeting. And 

in the surveys we realized that Haitians use different types of vehicles to manage risk. It’s just that they couldn’t find the proper tool, 

which would be insurance, because it was not adapted to their 

needs. It was not adapted to their culture, in how do you explain 

the product to them. And also their cash flow, because they don’t 

have a constant cash flow. It comes in and out. 

So, building products was a challenge, and taking all of these 

points in order to develop a product was very challenging. And I 

will take a couple of quick examples, is that out in the rural areas 

each animal represents, at the end, in our understanding, a financial tool for that person. The chicken that the farmer has is like 

their checkbook. If they have something that they need, it can be 

easily sold. A little money takes care of that situation right away. 

If he has a cow, the cow is the CD to him, which is only for big 

emergencies that they could—they need to address that issue. 

So, taking all of the way that they are thinking about risk management, the challenge was to find ways to find a product that 

24 

works better, so that they don’t have to go to their savings or their 

CDs or their checkbook. So that’s why I was saying that culture is 

important. And this needs to be really taken into consideration. 

You cannot force on them the traditional products. They have to be 

adapted. 

One of the biggest issues that helped us also make our products 

viable is the fact that throughout the world—especially in South 

Africa, for example, where funeral insurance is a very big product, 

but they have a very, very low renewal rates. And in our survey, 

the low-income populations couldn’t understand that if they pay for 

the insurance and nothing happens, that they don’t give them back 

the money that they paid. 

So, by doing this, what we did was we told them—we made some 

sort of a savings, where we told them, ‘‘You will get part of your 

money back, but within 3 years.’’ And it was okay for them and at 

the same time okay for us because our renewal rate went fly off 

the roof that no other countries could do. Because, for example, 

South Africa is 40 percent renewal rate when we, ourselves, we got 

to 89 percent renewal rate, just by listening to these people, what 

their needs were, and how we developed the products. 

So, finding ways to insure—which is extremely important—the 

small to medium enterprises and the micro also, is important because it can be counterproductive. You know, micro credit, or credit 

in general, can help somebody move forward in the ladder. But it 

can be also counter-productive if it’s not accompanied by the tool 

that helped these people face their shocks. 

Or, if you use micro finance to generate income, and that person 

doesn’t have a safety net, once they have a shock they will pull out 

that money to face that shock, and that money will not be generating income any more. So micro insurance and micro credit, micro 

finance, are together, they need to be together. Otherwise, it will 

be counterproductive. 

Chairman MEEKS. And my last question would be—I want to ask 

Mr. Pierre one, too, but—the government didn’t appear to have insurance, either, after the earthquake and some of the other storms. 

Could you say anything on that? 

Mr. BARRAU. That was the next step in my written remarks, is 

that to change that culture we have to start from the top. No government buildings, no infrastructure, nothing was insured. There 

are a couple of independent government-owned agencies, such as 

the Central Bank and BNC, which have their own insurance products. But the government had nothing. 

They benefitted from the CCRIF. The CCRIF is a program that 

was put in place with the help of the World Bank to help nations 

face short-term liquidity needs that they have following a disaster. 

But that’s to start rebuilding efforts. Haiti benefitted about $8 million from this program, which is a very low amount of what is 

needed. But, in reality, none of their properties for their operations 

was insured. The parliament is down. The palace is down. The justice system is down. The public health hospital is down. None of 

that was insured. And this is all going to be very, very costly to 

put back together. 

25 

So, again, a question of culture. We need to see things going. We 

need to be doing much more risk management. And it has to start 

from the top. Government has to take the lead on this, I believe. 

Chairman MEEKS. Mr. Pierre? But let me give you my question 

also, and you can add on to what you say, because that will be my 

last question. As we were trying to put together this hearing, we 

were asking a number of individuals in Haiti to give us a successful business person who really started from zero, who didn’t come 

from a family who had a lot of money, or anything of that nature. 

And no matter who we went to, they always came up with your 

name. 

But then, when we would ask for someone else, they were hardpressed to come up with anyone else, which seems to me to be part 

of the fundamental flaw. And I don’t know whether Ms. Waters has 

said so yet, but at a number of hearings we have come where we 

have seen entrepreneurial opportunities, especially given the crises 

that are currently about to take place because of the rainy season, 

where there are NGOs that are building homes that could have 

been business people building homes, and other activities there 

that could have some who has an entrepreneurial spirit put them 

in business. 

So, my question to you is, what do you think can do to help generate the entrepreneurial experiences of individual Haitians to take 

the place of the NGOs, and how can we, from the USAID or others, 

help make more people like you? 

Mr. PIERRE. I think that is a good question. And I think also that 

is what I have been fighting for. 

In 2008—April 8, 2008—when I started my journey, when, after 

the food riots there were—all my business was broken down. I had 

insurance with AIC. That saved my business. And I understood 

that day, when I was in the middle of the street with those young 

people who were throwing rocks at my business, they were breaking a bourgeois business—that means a rich person’s business. 

They didn’t recognize me as the business owner. And that’s the 

problem of the culture and attitude regarding private investment. 

At a certain point, the young Haitian doesn’t believe that he 

could ever be a businessman. When they saw me sometimes they 

identified me as a driver of my wife, or the driver of somebody. I 

am not a businessman until they know. And if they know that I 

am a businessman, then I become a bourgeois, I mean a rich person coming from another world. 

That is the whole thing we have to change. And that day I decided to write a book about my life, and the powerful dream, and 

the book that I have been going around the country and telling 

young people, ‘‘If I did it, you can do it too.’’ 

I didn’t have a chance to study in the United States or in Canada 

or in France, anywhere else. I studied in Haiti, in the state university. I studied engineering. And 6 years later, I decided to start a 

business. I applied certain rules. And that is exactly, I am suggesting to USAID, to any groups or any people who want to help 

Haiti today. 

Haiti has been in a circle of survival. Poverty, decapitalization, 

international aid, and so on. Mistrust and the survival cycle continue. We are talking about what? We are talking about Haiti beVerDate Nov 24 2008 16:30 Aug 26, 2010 Jkt 057745 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 K:\DOCS\57745.TXT TERRIE
26 

coming a prosperous country. In order for Haiti to become sustainable, we need young Haitians to start to create businesses. By creating businesses, they have to start somewhere. First, it’s a 

mindset. We have to tell them they can. How to do that? It’s 

through role models. We need role models, and that’s why the Pioneers of Prosperity contest was very important. 

But now, today, I said there is a problem. I cannot be that model. 

I need to create 200 young people, young businesses, who come out 

and say they were in their neighborhood, they created it. And others will follow. And I keep on saying President Obama today is the 

result of a dream 45 years ago of Martin Luther King, Jr. People 

see it as model. And I have been looking for a certain time. Black 

Americans used to see themselves as basketball players. Now they 

see that they can be President of the United States. It’s through 

role models, they visualize it. And this is what Haiti needs today. 

We need to invest in those people. 

How? We need to create a fund to—when they started, after they 

receive the education, after they have the ideas, to get them to 

start, and give them the proper training to avoid the steps that I 

went through, because it has been a long process for me, 12 years, 

to get to where I am. Now I need those kids to do it in 5 years, 

because Haiti cannot wait any more. 

Ms. WATERS. [presiding] Thank you very much, Mr. Chairman. 

This hearing, Mr. Chairman, has been very good. Each time we do 

this, we learn a little bit more. I think the testimony that I have 

heard, or the questions that have been answered by all of the panelists have been very helpful. I am particularly inspired and enlightened by Mr. Pierre’s testimony, because he has such a positive 

vision with so much hope for the possibilities of Haiti. 

And, Mr. Chairman, I suggest that coming out of this committee 

one of the things you may provide us with some leadership on is 

this. We were at the donors conference in New York, where a number of countries stepped up to the plate. The United States, I think, 

stepped up to the plate with $5.7 billion/$5.9 billion, in addition to 

what we are already doing. 

We, from this side, maybe with the bill that you initiated—and 

I would certainly support that—could carve out, in our donations, 

a loan guarantee fund or a loan fund. Because this access to capital 

is at the basis of everything. And there is technical assistance, 

there are creative and alternative ways to look at insurance. There 

is the possibility of renovating some of the existing structures, to 

make them livable. There are a lot of possibilities here. 

But the basis of the progress is going to lie in the ability to get 

some capital. And I see no reason why, if USAID has not stepped 

up to the plate with a loan guarantee fund or a pure fund to be 

managed in some way—it seems to me that what was suggested, 

I think by Mr. Winter, had to do with getting the local banks, who 

are very reluctant, even after they redo themselves after this earthquake, to lend money. And if they had a guarantee, I think they 

would certainly—you know, you could do, you know, anything from 

a 90 or an 80 percent loan guarantee, or you could do a 100 percent 

loan guarantee, depending on what you structure. 

And certainly, if we said to the Haitian banks that we would 

guarantee a loan, help to develop the criteria with them, working 

27 

together, that may be a whole new way of infusing some capital 

into Haiti for the entrepreneurs who have the ideas and the spirit. 

And I want to tell you, the entrepreneurial spirit is in Haiti. We 

went into camps where people were selling CDs and, of course, selling food. 

And in all kind of ways, I was just amazed at the ways that people had created this town inside the camps, and were selling things 

and making money. One person had turned their camp into like almost a little movie theater, you know, with the DVDs and on and 

on. So, the entrepreneurial spirit is there. We have to get some 

money. We have to get some money there. And this may be one 

way of looking at it. 

Let’s identify and carve out an amount of money, legislatively, 

and say, ‘‘This money is to be used for this purpose.’’ That may be 

something we can do. 

I thank you so very much, Mr. Chairman. If you do not have anything else you wish to do, the Chair notes that some members may 

have additional questions for this panel, which they may wish to 

submit in writing. Without objection, the hearing record will remain open for 30 days for members to submit written questions to 

these witnesses, and to place their responses in the record. 

I thank you, Mr. Chairman, and this committee is adjourned. 

[Whereupon, at 4:50 p.m., the hearing was adjourned.] 

(29) 

A P P E N D I X 

April 28, 2010 

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