Discussing “From Aid to Trade” by Daniel Jean-Louis
An interview with Bruce Kirkpatrick - author, retired Silicon Valley executive and entrepreneur, and Extollo board member - about “From Aid to Trade, How Aid Organizations, Businesses and Governments Can Work Together: Lessons Learned from Haiti.”
With Keith Cobell, President of Extollo.
Keith Cobell and Author, Daniel Jean Louis
Keith: Bruce, thanks for taking the time to chat and discuss the book, From Aid to Trade. To start us off, I’d like to set the context for the readers of this post as to why we chose this book. As most people have probably heard by now, there is somewhere between 10,000 and 20,000 NGOs (that is, non-governmental organizations, also known as nonprofits) in Haiti. What is often not understood is that many of these NGOs import their own supplies and materials, which, as we know, robs the local economy of capital - that is, money that could have been put into circulation in the local economy is instead put elsewhere. The authors, Daniel Jean-Louis and Jacqueline Klamer, do a good job of illuminating the impact of the negative, often unintended, consequences of this “leapfrogging” the local economy. How have you experienced this in your experience working in Haiti?
Bruce: I’ll give you one example. For my first trip to Haiti, a year after the devastating earthquake of 2010, my home church asked me to buy new mattresses and bunk beds for an orphanage Extollo was rebuilding. I found three-inch foam mattresses for sale, stacked against the wall in a cavernous but abandoned printing factory. My Haitian driver had a friend who owned a small metal fabrication business —about the size of a shoe repair shop in the U.S.— who could build beds. I had no way to comparison shop or gauge if the prices were legitimate or competitive.
But I made the deals, the goods were delivered, and 50 girls had new mattresses and beds to sleep in. And we spent the money in Haiti rather than supplying what may have been better quality products made elsewhere. I only realized later how important it was that we contributed to the local economy rather than import our own beds. The temptation to simply purchase quality beds in the US and have them shipped in was very real.
Keith: It sounds like you made the right call but that your American consumer expectations could have led you in a very different direction. I mean, who doesn’t want to ensure 50 girls in an orphanage have the best beds possible?
Bruce: To tell you the truth, I really didn’t know any better back then. I hadn’t read From Aid to Trade by Daniel Jean-Louis and Jacqueline Klamer. To me, I didn’t realize my choice to purchase locally was having a big impact not only on the 50 girls but also the owner of the metal fabrication shop, his family, and his community.
Keith: That so many NGOs opt to import in their own goods is more the norm than the exception, and there are a lot of reasons for this. Many being quite logical, such as quality concerns as you mentioned, as well as cost, expediency, tax-advantages, and expectations from NGO leadership. One of the points Jean-Louis and Kramer powerfully make about this is the purchasing decisions NGOs make have numerous knock-on effects.
Bruce: Haiti is a gorgeous country with pristine beaches, a vibrant culture and resilient people. Yet it remains the poorest country in the Western Hemisphere. Jean-Louis and Klamer write that a failed strategy by government, business and NGO’s has poured billions of dollars into the country with little impact. This strategy is based on the flawed concept that “the Haitian government is too corrupt to be trusted and the private sector appears to be non-existent and antiquated.”
So, NGOs use their financial resources to bring in donated or subsidized goods and then distribute to the communities they serve. As Jean-Louis and Klamer state, “When donated or subsidized goods are distributed below market value, NGOs simply kill the incentives for the private business sector to invest to meet these needs.”
Keith: Exactly. And what is missed in this is that there is a robust business sector in Haiti and if NGOs did most if not all their purchasing from within Haiti, it would be a game-changer for the business climate and the wider economy as a whole. By not supporting the local economy, NGOs are actually working against Haiti’s best interests.
Bruce: The authors illustrate this failure with one heart-breaking story of the Haitian soap manufacturer Auguste Savonnerie. A family owned business for almost forty years, it sold nearly $250,000 (USD) of product a month at its height in 2011. By supplying customized products for the Haitian population and providing personal and professional growth to their employees, the Auguste family survived and thrived, even though three to four million bars of soap were donated through NGOs into the Haiti marketplace each year.
Then cholera hit the country in the wake of the 2010 earthquake and the United Nations imported forty million critical items, including soap. The marketplace was flooded with free soap that was often “resold” for substantially below market price, and Auguste Savonnerie couldn’t complete. Jean-Louis and Klamer state, “Every time a profitable, registered Haitian business goes under, municipal and national infrastructure takes a hit. The livelihood of the business’s employees are significant, but the ripple effect on the local consumers, transporters, wholesalers, and retailers who also rely on that business is catastrophic, not to mention the effect on local infrastructure, which relies on tax revenue for support.” Tragic indeed. And soap isn’t much different in this example than mattresses or bunk beds.
Keith: From your standpoint, how has Extollo fared in this?
Bruce: From our first project to rebuild that orphanage, Extollo has done its best to follow the principles set forth in this book. When we recognized that the greater need was a skilled local workforce rather than rebuilt buildings by expats, we launched our plan to train Haitian men and women in construction skills so they can help in the restoration of the country. Those marketable skills restore their dignity and give them hope for the future. We’re certainly not perfect—we often find it necessary to import talent to our Training Center (which is in Bercy) to provide a level of training we can’t find in Haiti. But now in our ninth year in Haiti most of the roles at the Training Center are held by Haitians, and almost all of our entry-level trainings are taught by former students who now are instructors. Many of our graduates are working and earning a living in Haiti, providing for their families in a way they were not able to before.
Keith: One of the first things I did when coming on board with Extollo was reach out to Daniel Jean-Louis to connect and begin a conversation about how we can add multiple levels of value to Haiti, largely along the lines of his book. I’m thankful that he’s become a friend and now advises us on how to add value to the Haitian economy and our local business ecosystem.
Bruce: Totally makes sense. Being a faith-based, non-profit based in Northern California, we need Haitian voices to help set our vision and guide our policies. With detailed examples and case studies of Opportunity Based Economic Development (OBED) not only in Haiti but other developing nations, this book holds global impact.
Keith: Totally agree. As an entrepreneur, nonprofit leader, and stakeholder in Haiti’s future, what words of advice do you have for other NGO leaders who are also seeking to use their organisations - and purchasing decisions - to have a positive effect in Haiti?
Bruce: If you lead or contribute to aid organizations, you can better serve your constituencies if you advocate for—and alongside—the local business sector. If we all advocate for sustainable policies that puts trade as the essential element for economic growth and poverty reduction, we can give a hand up, instead of a handout, to help the world’s under-served. Reading the book would be a great place to start.