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Haiti

Executive Summary

Haiti, one of the most urbanized nations in Latin America and the Caribbean region, occupies the western third of the island of Hispaniola. Haiti’s investment climate continues to present both important opportunities and major challenges for U.S. investors. With a market economy, ample arable land, and a young population, Haiti offers numerous opportunities for investors.  Despite efforts by the Haitian government to achieve macroeconomic stability and sustainable private sector-led and market-based economic growth, Haiti’s investment climate is characterized by an unstable national currency (Haitian gourde, or HTG), persistent inflation, high unemployment, political uncertainty, and insecurity. The global outbreak of the coronavirus and resulting slowdown of economic activity, the August 2021 earthquake in the south of Haiti, the assassination of the Haitian president, and increasingly emboldened criminal actors further complicated the Haitian government’s capacity to achieve macroeconomic stability, create jobs, and encourage economic development through foreign trade and investment. In the absence of a functioning parliament and prior to President Moise’s assassination in July 2021, the Haitian government had taken additional steps to regulate commercial activity by presidential decree, with sudden regulatory changes the business community viewed as detrimental to a functioning market. As a free market system, the Haitian economy traditionally relies on its agricultural, construction, and commerce sectors, as well as the export-oriented apparel assembly industry. Although the business climate is challenging, Haiti’s legislation encourages foreign direct investment. The government has prioritized building and improving infrastructure, including boosting energy production, and has additionally designated agriculture, manufacturing, and tourism as key investment sectors. The Haitian investment code provides the same rights, privileges, and equal protection to local and foreign companies. Under Haitian law, Haiti’s business climate affords equal treatment to all investors, including women, minorities, and foreign nationals.

Haiti continues to face significant challenges and civil unrest. With no dates yet announced for national elections, it is anticipated that political uncertainty and a short-term economic policy focus will complicate the workings of an already opaque bureaucracy. Prime Minister Ariel Henry has publicly announced the imminent formation of a new Provisional Electoral Council to organize elections and a National Constituent Assembly to reform the constitution. While the country maintains a liberal trade and foreign exchange regime, and largely adheres to World Bank programs to fight poverty, continuing reports of corruption and financial mismanagement have raised challenges for investment.

The Government of Haiti (GoH) Post-COVID Economic Recovery Plan (PREPOC 2020-2023) includes the textile sector as one of the most important means for achieving economic transformation and diversification over the next three years. Since its launch in January 2021, the Investment Opportunity Generation Project has tried to support the industry through targeted business information as well as transactional support to increase business opportunities for investors and manufacturers. Despite the negative impact of the pandemic, most companies in the sector currently operates near full capacity.

According to the World Investment Report 2021 United Nations Conference on Trade and Development (UNCTAD), Foreign Direct Investment (FDI) flows to Haiti fell to $30 million in 2020 from $75 million the year prior – a 60 percent decrease and the lowest level since United Nations Economic Commission for Latin America and the Caribbean (ECLAC) began recording FDI inflows using a consistent methodology in 2010. Inflation remains above target because of weak domestic production, a deepening government budget deficit mostly financed by monetization from the Central Bank, food price pressures, and the depreciation of the Haitian gourde against the U.S. dollar. The Haitian Central Bank (BRH) assesses that inflation is also caused by deteriorating security conditions, with armed gangs blocking key transport thoroughfares and cutting off Haiti’s southern departments from markets in Port-au-Prince and the North. The rise in commodity prices on the international market also increases the country’s import bill and amplifies inflationary pressures. Haiti’s net international reserves were $520 million at the end of March 2022. Improving the investment outlook for Haiti requires political and economic stability underscored by the enactment of institutional and structural reforms that can improve Haiti’s business and political environment. The International Monetary Fund projects a 0.3 percent growth of the Gross Domestic Product (GDP) in 2022.

Monthly inflation was recorded at 0.6 percent and 2.1 percent, respectively in January and February 2022. Year-on-year, the inflation rate reached 25.2 percent in February 2022. The Central Bank assesses the implementation of a realistic budget and better coordination between fiscal and monetary policies through adherence to an economic and financial governance pact could limit the monetary effect in the fueling of inflationary pressures.

Haiti is ranked 170 out of 189 countries on the United Nations Development Program’s 2020 Human Development Index. The World Bank’s latest household survey in 2012 reported that over 6 million Haitians live on less than $2.41 per day, and more than 2.5 million fall below $1.12 per day.

The reports of damage from the 2021 earthquake indicate that nearly 54,000 houses were destroyed and 83,770 other buildings, including schools, health facilities, and public buildings, were damaged. The Post Disaster Needs Assessment (PDNA) report, made available on December 12, 2021, estimated the total recovery needs from the earthquake to be $1.98 billion, which is equivalent to 13.5 percent of Haiti’s 2020 GDP.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 164 of 180 https://www.transparency.org/en/cpi/2021/index/hti 
World Bank’s Doing Business Report 2020 179 of 190 http://www.doingbusiness.org/en/rankings 

In September 2021, World Bank Group management decided to discontinue the Doing Business report 

Global Innovation Index N/A N/A https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, historical stock positions) 2020 $29.0M https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2020 $1,320 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

4. Industrial Policies

5. Protection of Property Rights

6. Financial Sector

7. State-Owned Enterprises

The Haitian government owns and operates, either wholly or in part, several State-Owned Enterprises (SOE). The Haitian commercial code governs the operations of these SOEs. The sectors include food processing and packaging (a flourmill), construction and heavy equipment (a cement factory); information and communications (a telecommunications company); energy (the state electricity company, EDH); finance (two commercial banks, the Banque Nationale de Crédit and the Banque Populaire Haïtienne); and the national port authority and the airport authority. The law defines SOEs as autonomous enterprises that are legally authorized to be involved in commercial, financial, and industrial activities. All SOEs operate under the supervision of their respective sectorial ministry and are expected to create economic and social return. Today, some SOEs are fully owned by the state, while others are jointly owned commercial enterprises. The Haitian parliament, when it is functioning, has full authority to liquidate state enterprises that are underperforming. The majority of SOEs are financially sound. However, EDH receives substantial annual subsidies from the government to stay in business.

8. Responsible Business Conduct

Awareness of responsible business conduct among producers and consumers is limited but growing, including corporate social responsibility (CSR) activities. Irish-owned telecommunications company Digicel, for example, sponsors an Entrepreneur of the Year program and has built 120 schools in Haiti. Natcom provides free internet service to several public schools throughout the country. Les Moulins d’Haiti, partially owned by U.S. firm Seaboard Marine, provides some services, including electrical power, to surrounding communities. In the aftermath of the 2010 earthquake, many firms provided logistical or financial support to humanitarian initiatives, and many continue to contribute to reconstruction efforts. Haiti’s various chambers of commerce have also become more supportive of business ethics and social responsibility programs. During the COVID-19 pandemic, many Haitian, U.S., and other foreign-owned firms donated to prevention and treatment measures.

The Haitian government has not established any incentives to encourage to responsible business conduct.

9. Corruption

Corruption, including bribery, raises the costs and risks of doing business in Haiti. U.S. firms have complained that corruption is a major obstacle to effective business operation in Haiti. They frequently point to requests for payment by customs officials in order to clear import shipments as examples of solicitation for bribes.

Haitian law, applicable to individuals and financial institutions, criminalizes corruption and money laundering. Bribes or attempted bribes toward a public official are a criminal act and are punishable by the criminal code (Article 173) for one to three years of imprisonment. The law also contains provisions for the forfeiture and seizure of assets. In practice, however, the law is unevenly and rarely applied.

Transparency International’s Corruption Perception Index for 2021 ranked Haiti in the second lowest spot in the Americas region and 164 out of 180 countries worldwide, with a score of 20 out of 100 in perceived levels of public corruption.

The Haitian government has made some progress in enforcing public accountability and transparency, but substantive institutional reforms are still needed. In 2004, the Government of Haiti established the Anti-Corruption Commission (ULCC), but the organization lacks the necessary resources and political independence to be effective. In 2008, parliament approved the law on disclosure of assets by civil servants and high public officials prepared by ULCC, but to date, compliance has been almost nonexistent.

In February 2022, the ULCC announced the launch of the anti-Corruption circuit at the Court of Cassation. Made up of magistrates from the Courts of First Instance and Courts of Appeal of Haiti, the anti-corruption circuit aims to strengthen judicial efficiency and put an end to impunity in relation to corruption cases.

Haiti’s Superior Court of Auditors and Administrative Disputes (CSCCA) is currently one of Haiti’s few independent government institutions, responsible for reviewing draft government contracts; conducting audits of government expenditures; and clearing all government officials, including those at the political level, to manage public funds. In November 2020, however, the Haitian government published a decree limiting the authority of the Audit Court. The CSCCA had issued three reports in January 2019, May 2019, and August 2020 citing improper management practices by the Haitian government and the alleged wastage of nearly $2 billion of the Petrocaribe funds. Public anger over the Petrocaribe scandal has since burgeoned into a grassroots movement against widespread corruption in Haiti.

The CSCCA publicly calls on Haitian authorities to take measures to influence public expenditure by implementing monitoring and evaluation and consolidating investment expenditure to better assess the effectiveness of public spending. For nearly a decade, the Haitian state has faced a structural deficit in the management of its public resources. Despite many efforts undertaken to improve fiscal performance, the Haitian State is still in a situation of insufficient resources to respond to the pressures exerted on public spending.

Haiti is not a party to the OECD Anti-Bribery Convention.

10. Political and Security Environment

The U.S. government partners with Haiti in its efforts to strengthen the rule of law and enhance public security; pursue economic growth through increased domestic resource mobilization and support for private investment; and strengthen good governance and anti-corruption efforts. President Jovenel Moise was assassinated on July 7, 2022, seven months before the end his five-year term. His administration has faced repeated challenges due to frequently changing executive branch leadership, an ineffective parliament followed by a parliamentary lapse beginning in January 2020, legislative elections not being held as scheduled in October 2019, allegations of widespread corruption, weak rule of law, and a deteriorating economy. These factors have hindered both reconstruction efforts and the passage of important legislation. Sporadic protests since mid-2018 have stemmed from a number of factors, including a lack of progress in the fight against corruption and a lack of viable economic options. Haiti’s political situation remains fragile.

Political and civil disorder, such as periodic demonstrations triggered by fuel shortage, increases in fuel prices and worsening insecurity often interrupt normal business operations. Gang violence continues to plague urban centers. Kidnapping, murders, and sexual and gender-based violence by gangs in their struggle to expand their territorial control have a detrimental impact on the population. The Haitian National Police is seeking to improve the effectiveness of its anti-gang operations, take a more balanced approach between prevention and repression, and increase its presence in sensitive areas. The judiciary suffers from serious structural weaknesses, as evidenced by a lack of judges at every level, high absenteeism, executive influence, and increasing numbers of prolonged pretrial detainees. In recent months, Prime Minister Ariel Henry has continued to engage in dialogue with actors from all political backgrounds in an attempt to broaden the consensus around a single, unified vision that would lead to the restoration of fully functional and democratically elected institutions. Although the government has not yet published a revised electoral calendar, momentum seems to be building around an effort to form an inclusive, credible, and effective interim electoral council that would inspire confidence among a critical mass of national stakeholders.

Damage to businesses and other installations frequently occurs as a result of political and civil disorder. Over the past 10 years, multiple incidents of property damage to offices, stores, hotels, hospitals, fuel stations, and car rental companies and dealerships have been reported in the media and to the U.S. Embassy in Port-au-Prince. Property destruction and vandalism ranges from broken windows to arson and looting. Employees and tourists have also been victims of violence. Kidnapping for ransom is a frequent occurrence in Port-au-Prince. While improvements in the Haitian National Police’s technical and operational capabilities have maintained some semblance of order, violent crime, including looting of businesses, remains a serious problem, along with criminal gang control of a number of Port-au-Prince’s marginalized areas.

More information is available at:

https://travel.state.gov/content/travel/en/international-travel/International-Travel-Country-Information-Pages/Haiti.html

https://www.state.gov/u-s-relations-with-haiti/

11. Labor Policies and Practices

The special legislation of the Labor Code of 1984 establishes and governs labor regulations. Under the Code, the Minister of Social Affairs and Labor enforces the law and maintains good relationships with employers and workers. Normal working hours consist of 8-hour shifts and 48-hour workweeks. In September 2017, the Haitian government passed a labor law to permit three eight-hour shifts in a working day, although this has not been fully implemented for all sectors in Haiti. Workers’ social protection and benefits include annual leave, sick leave, health insurance, maternity insurance, insurance in case of accident at work, and other benefits for unfair dismissal.

Labor unions are generally receptive to investment that creates new jobs, and support from the international labor movement, including the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), is building the capacity of unions to represent workers and engage in social dialogue. The Ministry of Labor and Social Affairs is in the process of revising a new labor code that will better comply with international labor standards.

According to U.S. and other companies, relations between labor and management in Haiti have at times been strained. In some cases, however, industries have autonomously implemented good labor practices. In addition to local entities, the International Labor Organization (ILO) has an office in Haiti and operates an ongoing project with the apparel assembly industry to improve productivity through improvement in working conditions. The ILO, with the support of the U.S. Department of Labor, launched Better Work Haiti, a program that was designed to verify compliance with international labor standards and spur job creation in the garment sector.

Since the inception of Better Work Haiti, the garment sector has seen improvement in occupational safety and health across the factories. Employers have increased their efforts to improve chemical safety, and over 95 percent of local factories have initiated policies to create a safer work environment as well as provide good working conditions to garment workers. Wages vary depending on the economic sector. As of February 2022, the minimum wage for the garment sector was 685 gourdes for eight hours of work or (approximately $6.27) in the export-oriented apparel industry. Better Work Haiti’s biannual report found most factories in compliance with the labor law. The most recent report is available at: https://betterwork.org/portfolio/better-work-haiti-23rd-biannual-compliance-synthesis-report/ ort/ .

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Central Bank of Haiti USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount  
Haiti Gross Domestic Product (GDP) ($M USD) 2020 $6,255 2021 $5,741 https://mef.gouv.ht/ 
Foreign Direct Investment Central Bank of Haiti USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
Total FDI in partner country ($M USD, stock positions) FY2020 $75 2020 $30 https://unctad.org/fr/news/2020-voit-linvestissement-direct-etranger-chuter-de-45-en-amerique-latineen.pdf 
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A N/A N/A BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data 
Total inbound stock of FDI as % host GDP N/A N/A 2020 0.3% UNCTAD data available at
https://stats.unctad.org/handbook/
EconomicTrends/Fdi.html
 

Table 3: Sources and Destination of FDI
Data not available.

14. Contact for More Information

Robert Kemp
Economic Counselor
Embassy of the United States of America
Boulevard du 15 Octobre, Tabarre 41
Port-au-Prince, Haiti
Please address email correspondence to PAPECON@state.gov.

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