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Coronavirus, Economy, Haiti, Special Reports

Decline in remittances from pandemic could be hard-felt in Haiti

By Sam Bojarski

Leonie Hermantin was walking into the office at the Sant La Haitian Neighborhood Center, where she works as director of communications, when she saw a man standing at the door. He didn’t say a word, but Hermantin, sensing his need, handed him a $10 bill. 

“‘You have no idea what you’ve just done for me,’” Hermantin recalled the man telling her, gratefully.

Members of the Haitian diaspora are among the millions of people throughout the world facing job loss, late payments and other financial burdens, as the economy contracts in response to the novel coronavirus pandemic. But few countries rely on remittances from diaspora members as heavily as Haiti. In 2019, remittances represented more than 36% of Haiti’s GDP. The economic slowdown in the developed world could have a serious impact on Haitians who rely on this money to pay for necessities like food. 

According to figures provided by Inter-American Dialogue, an international affairs think tank, remittances to Haiti totaled more than $3.3 billion in 2019, a growth of 4.5% from the previous year. The year-over-year increase prevented Haiti’s economy from further declining, as the country experienced negative economic growth last year, wrote Manuel Orozco, a senior fellow at Inter-American Dialogue, in a March 18 paper, “Migration Remittances and the Impact of the Pandemic,” which examined remittances to Latin America and the Caribbean. 

A decline in remittances could exacerbate an alarming food crisis in Haiti. Free trade policies imposed by industrialized nations since the 1980s have made the country more reliant on imported food, eroding its once-robust agricultural sector and leading to increased unemployment. The crisis has also been exacerbated by natural disasters and the political unrest that ground the country to a halt in 2019. 

Charles Edouard-Denis of Petionville owns a seafood export company called HOPE Haiti. Many of the fishermen he employs are no longer working, after Haitian law required his company to stop fishing for lobsters beginning April 1. 

These employees cannot count on a social safety net, like many workers in the United States. 

“If they were getting some remittances, they’re going to be more dependent on those as time goes by, until we are allowed to start back up again and start producing and exporting,” Edouard-Denis said.

A saleswoman sells her wares in front of billboard advertisements. Photo credit: Garry Pierre-Pierre

He expressed hope that business will resume by July. Until then, he is helping his employees by paying their full salaries for April and agreeing to pay half of their salaries for both May and June. 

The $1 million worth of seafood HOPE Haiti exports each year by Edouard Denis’s estimate represents a small chunk of Haiti’s export base, one source of foreign exchange and income. Clothing, textiles and cosmetics account for nearly 90% of the roughly $1 billion in goods Haiti exports. Along with remittances, this key source of income has also been threatened by coronavirus. 

While he has not directly noticed the impact of a decline in remittances, Edouard-Denis said many Haitians have cut down on their spending over the past few weeks. 

Importers are bringing in less goods than they would have a year ago, “but they are still having difficulties getting dollars. And our source of U.S. dollars is the remittances,” he added. 

The diaspora and the downturn

Economic downturns in the U.S have long impacted remittances to Latin America and the Caribbean. Migrants’ capacity to send money home to relatives in this region dropped by at least 10% during the previous recession, in 2009, according to the March 18 Inter-American Dialogue paper. 

Citing Haitian central bank figures, Enomy Germain, an economist at the Center for Planning and Applied Economics in Port-au-Prince, said remittances for March 2020 saw a year-over-year decline of 18%. That same month, the U.S. economy lost more than 700,000 jobs, according to the Labor Department. 

Hermantin estimated that 40% of the workforce Sant La Haitian Neighborhood Center serves is employed in the service and hospitality industry, a sector hit particularly hard by government-mandated business closures. The bulk of the community Sant La serves is located in the northeast corridor of Miami, from Little Haiti to North Miami Beach.

“But we know the rest of the community is impacted, folks that work in hotels in the Keys, in South Florida,” Hermantin said. “A very disproportionate number of our professionals on the front lines are in the hospitals as health care workers, nurses, doctors, lab technicians, respiratory therapists. We know that we have a large number of Haitians as essential workers right now.”

Sant La initially closed its physical location at 13390 W. Dixie Highway. But it soon reopened in response to overwhelming community need. The nonprofit social services organization now helps at least 40 people pick up or fill out unemployment applications each day. It also provides lunch to 100 children who are home from school. 

Having children home has created extra financial responsibilities for parents, added Hermantin, who also expressed frustration over the state of Florida’s unemployment system.

On April 24, the state reported that just 17% of the more than 668,000 people who filed unemployment claims since March 15 were getting paid. An Associated Press analysis ranked Florida near the bottom of all states in terms of its speed of processing claims. The online system for filing claims has routinely crashed, prompting Gov. Ron DeSantis to call for the provision of paper forms for residents to mail in. 

“The system is so incredibly deeply flawed that they have printed paper applications. The applicants have to send the paper forms, so God knows how long it’s going to take to process those. So you have a state of limbo,” said Hermantin.

The $1,200 that the federal government is paying to most American workers could provide a measure of financial relief. But Hermantin said significant sectors of the Haitian community, including those who work under the table, will not be able to receive this money.  

Inter-American Dialogue predicts that at least 13% of the total Latin American and Caribbean migrant labor force in the U.S. will lose jobs due to the pandemic. This could mean a 16% decline in the growth of remittances from the U.S., during the year 2020. 

The April 24 paper, “Economic Impact of Remittances During the Global Pandemic,” also showed the impact that the pandemic could have on remittance flows to Haiti. Inter-American Dialogue’s projections show that 317,136 out of more than 1.5 million Haitian migrant remitters worldwide could lose their jobs. Job losses of this scale would contribute to a lower expected volume of remittances to Haiti in 2020 ‬‬‒ less than $2.7 billion. 

It isn’t yet clear whether the large share of white-collar workers among the Haitian diaspora will soften the potential decline in remittances. When broken down by occupation, Caribbean migrants in the U.S. were more likely to work in health care than any other sector, with more than 13% ‬of the population working in this field, according to the April 24 paper. 

“Haitians work in different sectors, such as health care but may have been equally affected by crisis. The real issue is that industries may take different times to rehire, and that may benefit Haitians, particularly those in the health care sector or transportation,” Orozco told the Haitian Times, in an email. 

While Hermantin did not have exact figures on the money being sent to Haiti, the diaspora has been preoccupied with helping those impacted by the economic downturn in the U.S. 

Sant La has had to call landlords who have threatened eviction, despite the moratorium in Florida. The organization has also created special funds, so families and individuals with the highest need can get cash assistance, according to Hermantin. 

“I don’t see how people can send money when they don’t have any, I mean this thing happened literally overnight. I don’t know how people are sending money to Haiti,” she said. 

The view from Haiti

Photo credit: Garry Pierre-Pierre

Emanuel Alexandre of Thomassin said the decline in remittances is already starting to have an impact. 

“It’s having a great impact on the economic (lives) of many Haitians because a lot of people, they’re living from their remittance. It’s the same (as) before the virus, there were a lot of young students, they were just waiting for the money to go to school,” he said, through a translator. 

Edouard-Denis has noticed long lines at banks, as people attempt to cash money from their savings accounts. But compared to normal times, the lines at transfer stations like Western Union were not long, he said in an April 21 interview. 

A media spokesperson for Western Union did not directly address a request for comment on how the coronavirus crisis has impacted remittances to Haiti.

“Our current focus is to continue to enable our customers to send money to family and loved ones or help our small, medium and corporate client base with cross-border, cross-currency payments,” Lauren Armstrong, who works in corporate communications for Western Union, said in an email. 

Given its dependence on remittances, Edouard-Denis said that if plans to reopen the U.S. are delayed, the resulting impact on the Haitian economy could be unprecedented. 

Everyone depends on remittances: consumers trying to make ends meet, importers who depend on these consumers for revenue, the middle class and the government, which earns revenues from import taxes. 

“The diaspora is really key to all of that. They are the ones buying the food for their families in Haiti,” Edouard-Denis also said. 

If 2020 remittances dip below $2.7 billion, as per Inter-American Dialogue’s projection, it could compound the problems Haiti already faces. Remittances, tourism, agriculture and the free trade zones that contain the country’s textile factories comprise about 60% of GDP, Orozco said, with the informal economy and foreign assistance making up the rest. 

“The collapse of remittances will practically mean a collapse of consumption, a drop in demand of local commodities and imports. It is not about poverty but about prolonging and deepening a serious food security crisis that the country suffers,” Orozco told the Haitian Times. 

Three men sit behind a display of women’s shoes. Photo credit: Garry Pierre-Pierre

Faced with the obvious prospect of less money coming into the economy, the Haitian government announced the reopening of the textile industry in mid-April, after closing it in March. The factories were expected to operate at 30% capacity to ensure adequate social distancing. But the decision, in turn, could increase the ability of workers to transmit the coronavirus. 

“The risk of being infected is very high, I would say, because they still have to take the tap-taps to come to work, they still have to eat lunch where they will congregate around the food source,” Edouard-Denis said. 

Deciding between public health and economic activity has been contentious for the Haitian government, and decisions to shut down parts of the economy have been met with protest, as many Haitians face the prospect of declining incomes. As of April 26, Haiti had 74 confirmed coronavirus cases, a number that is likely an undercount. 

Danielo Desire, also of Thomassin, said through a translator that life has become more difficult since certain sectors of the economy started closing. The minimal foreign money flowing into Haiti’s economy has made necessities “very expensive,” he said. 

A decline in remittances could compound these problems. 

“If (the) diaspora just stopped sending money for one week, the economy is bound to go into recession,” said Edouard-Denis. “So that reduction right now is bound to have significant impact in the coming weeks.” 

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Sam Bojarski

Sam Bojarski

Sam Bojarski has been covering Haiti and its diaspora for The Haitian Times since 2018. He is currently covering New York's Haitian community as a Report for America corps member.
Sam Bojarski
Apr. 28, 2020

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