Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Diagnosis andRecommendations FinancinginHaiti Agricultural © 2019 The World Bank Group 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org All rights reserved. This volume is a product of the staff and external authors of the World Bank Group. The World Bank Group refers to the member institutions of the World Bank Group: The World Bank (International Bank for Reconstruction and Development); International Finance Corporation (IFC); and Multilateral Investment Guarantee Agency (MIGA), which are separate and distinct legal entities each organized under its respective Articles of Agreement. We encourage use for educational and non-commercial purposes. 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This publication was prepared with support of the Financial Sector Reform and Strengthening Initiative, FIRST, which is managed by the World Bank. Photo Credits: World Bank Photo Library and Shutterstock.com FINANCEMENT AGRICOLE EN HAÏTI Table of Contents Abbreviations and Acronyms ................................................................................ V Acknowledgments .................................................................................................. IX Introduction and Executive Summary ................................................................... 1 The Agricultural Sector in Haiti ........................................................................... 11 Agriculture: A Decisive Sector in the Haitian Economy ............................................ 11 The Multipurpose Family Farm: The Basis of Agricultural Production in Haiti ................................................................................................................................... 12 Agricultural Production: Local Market-oriented, but Insufficient to Meet Demand ...................................................................................................................... 15 Export Production: A Small and Declining Share of Agricultural Production......17 Agricultural Value Chains: Reliance on Highly Competitive Networks of Mostly Informal Buyers ............................................................................................... 19 Private Initiatives in the Agricultural Sector ..............................................................23 Financial Inclusion in Rural Haiti .........................................................................27 Overview of Financial Inclusion in Haiti........................................................................27 The Rural Population, Financial Inclusion and Indebtedness .................................32 Main Reasons Cited for Lack of Accounts in Financial Institutions .....................33 Financial Offerings for the Agricultural Sector ................................................ 35 Limited Supply of Financial Services to the Agricultural Sector ...........................35 Marginal Involvement of the Banking Sector in Agriculture ...................................35 Microfinance and Savings and Credit Cooperatives Sector ...................................39 Public Intervention in the Agriculture Sector.....................................................51 Policy and Regulatory Framework Issues ................................................................... 51 Public Intervention Instruments for Agricultural Financing ...................................53 Innovative Project Mechanisms .................................................................................... 60 Private Sector and Agricultural Finance ......................................................................65 TABLE OF CONTENTS I Recommendations to Promote the Financing of the Agricultural Sector .....69 Evaluate Public Interventions in Agricultural Sector Financing ........................... 69 Complete/Adapt the Legal and Regulatory Framework .........................................70 Enhance the “Financing of Agriculture” Approach .....................................................71 Better Risk Management of Financial Institutions ...................................................72 Strengthen Agricultural Sector Demand .....................................................................75 Bibliography ............................................................................................................77 Endnotes ................................................................................................................. 79 AGRICULTURAL FINANCING IN HAITI II LIST OF BOXES Box 1: Diversity of Agricultural Activities according to Agro-ecological Environment ............................................................................................................13 Box 2: Increasing Poultry Farming ......................................................................17 Box 3: The Madan Sara: An Essential Player in Marketing Agricultural Products in Haiti .................................................................................................... 20 Box 4: The Legal and Regulatory Framework for Microfinance and CECs ................................................................................................................. 40 Box 5: Mutual Solidarity Fund .............................................................................41 Box 6: Examples of Farm Credit Profitability ....................................................47 Box 7: Excerpts from the PSNSSANH ................................................................ 52 Box 8: BNC Lajancash .......................................................................................... 55 Box 9: Negative Effect of Caps on Interest Rates ........................................... 59 Box 10: Example of FAPAH Coverage ................................................................. 62 LIST OF FIGURES Figure 1: Household Agricultural Production Activity .......................................13 Figure 2: Marketing Circuit for Products of Animal Origin ............................. 23 Figure 3: Main Obstacles to the Development of Agricultural Holdings ....... 24 Figure 4: Composition of Haiti’s Population, 2017 ..........................................27 Figure 5: Number of Financial Products used by Adults in Haiti .................... 29 Figure 6: Formal and Informal Savings by Gender, Geographical Area and Income .....................................................................................................31 Figure 7: Money Transfers by Gender and Geographic Area ............................31 Figure 8: Credit and Indebtedness Levels of Haitian Adults ........................... 33 Figure 9: Main Reasons for Not Holding an Account ........................................ 33 Figure 10: Limitations to the Development of Agrifinance ............................. 53 Figure 11: Perennial Farm Insurance Program .................................................. 75 LIST OF MAPS Map 1: Production Areas of Major Crops .............................................................12 Map 2: Density of Financial Institutions ............................................................ 36 AGRICULTURAL FINANCING IN HAITI TABLE OF CONTENTS III LIST OF TABLES Table 1: Overview of Agricultural Areas and Average Production per Farm and Crop Type .........................................................................................14 Table 2: Areas Planted and Raw Product Crop Producers ...............................16 Table 3: Access to Accounts in Haiti and Comparator Countries .................. 28 Table 4: Access to Financial Products and Services by Geographical Area and Income Level (%) ....................................................................................30 Table 5: Accessibility of Service Points .............................................................. 34 Table 6: Indications of Financial Sector Commitments to Agriculture in Haiti ..................................................................................................................... 37 Table 7: Evolution of Bank Credit to the Agricultural Sector .......................... 38 Table 8: Synthetic Data about the Microfinance Sector and CECs in Haiti, 2017 ......................................................................................................... 42 Table 9: Evolution of Data on the Sector since 2007 ....................................... 43 Table 10: Portfolio Quality of MFIs ..................................................................... 44 Table 11: Commitments of the Microfinance Sector to Agriculture