Haiti's five million people are among the poorest in the Western Hemisphere. Their country, the second oldest republic in the region after the United States, is the only one in the hemisphere categorized as a Least Developed Country (LDC) by the United Nations. The mountainous and rugged countryside has been severely denuded of forest cover, a condition that has led to worsening erosion and a negative impact on agricultural production. Most of the natural vegetation has been destroyed through clearing for agriculture and timber during the last three centuries.

About three-quarters of the people in Haiti live in rural areas and are heavily dependent upon agriculture. The country's population density is among the highest in the world -above what is often considered ideal for the sustainable management of natural resources. Urban migration of primarily young Haitians is having a negative impact on rural communities, where the increasing population consists predominately of children and the elderly.

UNCDF has been active in Haiti since the early 1970s, working closely with the UN Development Programme (UNDP) to assist the government with a wide range of projects. UNCDF's current programme in Haiti is in line with the Fund's policy of assisting LDCs that are committed to principles of good governance and decentralization.

Local Governance

The new UNCDF programme for the country includes an initiative to support local government with its efforts to sustain and regenerate the northeast region's fragile ecosystem. In contrast to past, highly-centralized activities, this project is attempting to demonstrate how local governments can be used to further local development. This project is addressing the region's severe environmental degradation through a participatory, demand driven process that supports local government programmes, and will introduce measures to enhance local capacity for natural resource management.

The programme is comprised of two separate Local Development Funds (one to support the development of public infrastructures while the other one was set up to support environmental initiatives) are strengthening the capacities of local government and other stakeholders for rehabilitating the environment and constructing small-scale infrastructure (e.g. small roads, health centers, schools, and market fencing), all of which are identified through the participation of local beneficiaries.

As with all new UNCDF interventions, this one began with a thorough community consultation process that involved an investigative formulation team and two workshops where the community determined the scope of the project.

Microfinance

The formal financial sector in Haiti has been severely constrained for years as a result of the declining business environment, forcing the country’s population to outward migration, unemployment or self-employment, with the latter being the main option for 75% of working age Haitians who cannot attain formal jobs. In 2002 alone, the number of micro and small enterprises was estimated to be around 300,000, of which less than 70,000 received formal credit. Despite the rapid growth of the Haitian microfinance industry, which is dominated by commercial banks, cooperatives and NGOs, access to credit by poor entrepreneurs continues to be a problem in Haiti today due to the lending institutions’ inability to access financial resources and their incapacity to handle large transaction volumes.

In its efforts to assist the Government of Haiti expand the provision of financial services to the poor, UNCDF began a microfinance initiative in the same region as the above Local Governance programme. The MicroStart Haiti project was established as a part of the UNDP global MicroStart pilot programme in 1999 to enhance the access of low-income microentrepreneurs in North East Haiti, particularly women, to appropriate financial and non-financial services. In line with UNCDF's microfinance policies, this project is supporting and reinforcing the capacity of local microfinance institutions, particularly credit unions, in order to assist them in scaling-up outreach, while helping them achieve financial equilibrium and sustainability. MicroStart Haiti enjoyed preliminary success at the local level, with the Government of Haiti conveying interest in contributing to a second phase of the programme in 2002. Phase II will continue to build on scaling-up outreach and on enabling high performers reach intermediate growth by winnowing out non-performers and investing selectively in the best institutions.