Haiti’s miraculous transformation has lessons to be learned for South Africa.
There are clear lessons to be learnt from this ground-breaking and transformational work in Haiti, and I believe the government of South Africa could apply LSL’s innovative financing for development model, but specifically tailored to South African requirements so that significant additional revenues could be identified for the government.
After the earthquake in 2010, Haiti was an almost destroyed country and its people were in dire socio-economic need. South Africa is, however, on the opposite end of this spectrum, but it does have its own socio-economic challenges. Amongst others, and similar to Haiti, is the alleviation of poverty and the provision of housing for an estimated 1.25 million (according to census 2011) households who are currently living in informal settlements.
Although housing remains a top priority for the South African government, it has also become a looming crisis. Now more than ever it needs practical solutions to alleviate the current backlog, and provide adequate and affordable housing, as well as upgrading informal settlements.
There is no disputing that housing not only improves outcomes for individuals but affects communities and the global economy at large. Affordable housing in the right locations can bolster South Africa’s economic mobility and ultimately drive the country’s GDP growth.
The acting Chairman of the South African Fiscal and Financial Commission has estimated that it would cost approximately R800 billion to eradicate the housing backlog by 2020. I recently visited South Africa and it became very clear that the use of Innovative Financing for Development (IFD) mechanisms could provide South Africa with a solution.
IFD mechanisms are proven solutions that identify new revenue sources for sustainable development for a government. The revenues are generated through micro-contributions placed on globalised activities such as telecommunications, financial transactions, transport and tourism, and electronic payments. They have very little impact on the local population and can be used as a stand-alone mechanism or to complement already existing funding initiatives.
I am passionate about IFD and it is my experience as former Prime Minister of Haiti that led me to create LSL World Initiative (LSL), which I believe could help the South African government in many areas where there is still inequity and the need for sustainable socio-economic development.
How Haiti moved from rubble to sustainable development.
In 2010 Haiti faced a total of 1.6 million people that were living in sub-human conditions, Haiti was ranked last on the Corruption Perception Index, it had a high crime rate and only 1% of GDP was being spent on education. Inflation was running at 8%, government spending was out of control and Innovative Financing for Development did not exist. It was clear that something had to be done.
Together with a team of young professionals sourced from the largest universities and working in close collaboration with the shrewd Haitian Minister of Finance, Jean-Marie Carmelle, we put together some of the most ambitious financial plans to resurrect Haiti from a terrible financial and human situation. What was accomplished was truly remarkable. The new broom swept clean and after two and a half years the face of Haiti had completely changed.
The face of Haiti in 2013
- Inflation had dropped to 4% (from 8%)
- Government spending was drastically reduced by 25%
- Innovative Financing for Development increased 220% from a base-line of 0%
- The police force was increased by 30% providing security for the Haitian people
- Crime had reduced significantly
The added security meant that Haiti became one of the top three safest countries in the Caribbean to visit. Victims of the earthquake were rehomed, homes were rebuilt and the reconstruction efforts proceeded rigorously. Only 60,000 people were homeless in 2013—a massive reduction of 90%. With assistance from the international community, infrastructure and public facilities were rebuilt, including five new international grade hotels, destined to give Haitian tourism a much-needed boost.
All in all, Haiti was pulled up by its bootstraps from ruins to a solid base for sustainable development. 1.4 million needy Haitian children were sent to school to receive free, quality education through an Education Fund fed by micro-contributions placed on incoming international telecommunications and remittances.
My experiences taught me that there is a need to think out of the box when seeking to provide creative solutions for seemingly insurmountable developmental problems. One should never forget that “Where there is a Will there is a Way.”
There are clear lessons to be learnt from this ground-breaking and transformational work in Haiti, and I believe the government of South Africa could apply LSL’s innovative financing for development model, but specifically tailored to South African requirements so that significant additional revenues could be identified for the government. This could reduce the housing backlog more quickly. There are many other areas where this could also be applied very successfully.
The governments of countries working with LSL transparently determine the allocation of funds according to their own priorities and through this can cater for vital needs such as clean water, housing development, health and education services, electrification, infrastructure development and others.
Ultimately, my vision is to empower countries toward a prosperous, sustainable future through economic self-sufficiency.
By Laurent Lamothe, Founder and CEO of LSL World Initiative