7. State-Owned Enterprises
Before the privatization efforts that began in the mid-1990s, the government of Haiti fully owned and operated State-Owned Enterprises (SOE). The Haitian commercial code governs the operations of the SOE’s. The sector included a flourmill, a cement factory, a telephone company (TELECO), the electricity company (EDH), the national port authority (APN), the airport authority (AAN), and two commercial banks: Banque Nationale de Credit (BNC) and Banque Populaire Haitienne (BPH). The law defines SOE as autonomous enterprises that are legally authorized to be involved in commercial, financial and industrial activities. All SOEs operate under the supervision of a sectorial ministry, and are expected to create economic and social return. Today, some SOE’s are fully owned by the state, while others are mixed-enterprises. The Haitian parliament has strict authority to liquidate state enterprises that are underperforming.
Today, the non-financial SOEs that remain in the public portfolio includes the electrical company (EDH), the national airport authority (AAN), the sugar factory, the port authority (APN), the social security office (ONA), the postal office, and the vehicle insurance company (OAVCT). The majority of SOEs are financially sound, with the exception of EDH. EDH is receiving substantial annual subsidies from the government of Haiti to stay in business.
With the economic difficulties of the late 1990’s and mismanagement of the SOE’s, the government was forced to liberalize the market and allow foreign firms to invest in the management and/or ownership of Haitian state-owned enterprises. To accompany the initiative, the government established the Commission for the Modernization of Public Enterprises (CMEP) in 1996 to facilitate the privatization process, while creating strategies to privatize all SOE’s.
In 1998, two U.S. companies, Seaboard and Continental Grain, purchased shares of the state-owned flourmill. Each partner currently owns 23 percent of the new company known today as Les Moulins d’Haiti. In 1999, a consortium of Colombian, Swiss, and Haitian investors purchased a majority stake in the national cement factory. In 2010, a Vietnamese corporation, Viettel, officially acquired 60 percent of the state telecommunications company Teleco (now operating as Natcom), with the government of Haiti retaining 40 percent ownership. Competition is not distorted in favor of state-owned enterprises to the detriment of private companies.
To further liberalize the economy, the government provided fiscal incentives to the GB Group to build Haiti’s first Panamax container port. This project received its first ship in late 2015.
The government of Haiti has allowed private sector investment in electricity generation to compensate for EDH’s inability to supply sufficient power. Three private power producers generate electricity for EDH. The most recent entry, E-Power, opened a 32 megawatt, USD 56 million, IFC-financed heavy fuel-oil powered generation plant in Port-au-Prince in 2011. The government has allowed limited private sector investment in selected seaports, and expressed interest in the USAID-backed Cap-Haitian Port rehabilitation project, and in privatizing the Port-au-Prince and Cap-Haitian airports. Despite initial enthusiasm in both the public and private sectors for privatization, progress has been slow. To date, out of nine State-Owned Enterprises three enterprises have been privatized, and two other privatizations are under consideration.