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Haiti: Relief and Reconstruction

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Op-Ed: Haiti's Fight for Transparency Print

CEPR Researcher Jake Johnston wrote in the Caribbean Journal yesterday:

In the aftermath of the earthquake in Haiti, donors pledged billions of dollars for reconstruction efforts. With those dollars was a commitment to “build back better”; this time was supposed to be different from previous big aid campaigns. But so far less than half of donor pledges have been disbursed, and it has become clear that “building back better” remains nothing more than a slogan. While there clearly have been successes in Haiti since the earthquake and the hard work of thousands of aid workers shouldn’t be discounted, nearly half-a-million remain homeless and hundreds of thousands more are living in desperate conditions. With a visible lack of results and little hard data with which to assess progress, one question naturally arises: “where did the money go?” At the Center for Economic and Policy Research and together with many other organizations, we’ve been trying to track where exactly the money that did get spent, went. It hasn’t been easy. 

To be sure, aid projects shouldn’t be judged solely on what percent of an aid budget went to overhead, or how much went to American consultants or was spent on American products as opposed to Haitian consultants and products. Ideally, the effectiveness of projects should be based on their outcomes, not just on the breakdown of how funds are spent. But measuring outcomes often isn’t feasible. A nominally independent review of the U.S. government’s response in Haiti attempted to measure the quality and impact of aid, but “a disquieting lack of data on baselines against which to measure progress or even impact” prevented them from doing so.

As taxpayers, we have the right to know how our tax dollars are being used and if they are used effectively.  Specifically, this means looking at the United States Agency for International Development (USAID), which has spent well over a billion dollars in Haiti since 2010.  To their credit, it’s not difficult to obtain the first level of transparency: to which organizations USAID gave funds.  USAID factsheets reveal that close to 100 percent of humanitarian funds for Haiti were channeled through NGOs, U.N. agencies or right back to other U.S. government agencies. Included in this billion-plus dollars hundreds of millions of dollars in contracts which have gone overwhelmingly to “beltway bandits” -- firms located in D.C., Maryland or Virginia. Only 0.02% by our latest tally has gone to Haitian firms.

But this isn’t the end of the line when it comes to transparency.  Once funds are given to an organization, what are they spent on? What were they meant to achieve? How much goes back to the U.S. and how much goes to local firms? In a meeting last October in Port-au-Prince a USAID official defended the awarding of contracts to so-called “beltway bandits”, telling me that while certainly some money goes off the top for their profits, much gets spent in country or is given to local subcontractors. It was a back-of-the-envelope calculation, but he estimated that each international worker sent to Haiti could cost up to $250,000 a year.  The important part, he stressed, was that this money would be spent in Haiti on electricity, security, housing, etc. “He has to live here, eat here, dance here, whatever,” the official reasoned.
Read the rest here.
 
Lack of Data Prevents Measurement of Aid Effectiveness, Impact Print

Yesterday, Vijaya Ramachandran and Julie Walz of the Center for Global Development provided a nice overview of the U.S government’s review of its Haiti earthquake response. Ramachandran and Walz found that while the review includes “some frank and enlightening assessments of USG [U.S. government] response and coordination” it contained “very little discussion of aid accountability.”

As Ramachandran and Walz point out, the authors of the review couldn’t determine the effectiveness or impact of aid because of a “disquieting lack of data.” Part of the problem seems to stem from how data collection and management is viewed by aid workers and USG employees, who made up the vast majority of sources for the review. The report states:

During the Haiti response, limitations related to information management followed two major lines. First, there were limited data available for tactical and operational decisions; and second, there were overwhelming requests for data and information from policy leaders in Washington that made systematic data collection more difficult. These demands were often driven by reports in the media.

Thankfully, the authors note that at least “some” of those they interviewed understood that the former led to the latter: limited availability of data was what generated the “overwhelming” number of requests. Others told the authors that requests for information “detracted from the on-ground response” as they were forced to “’chase down’ facts.”

Of course, data is important to the on-the-ground response as well, as the report points out:

Data collection, through surveys and assessments, is an essential component for managing a disaster response. Surveys and assessments are used to identify the needs of the affected population to direct the response. Ideally, these types of data can be used to measure the overall impact of the humanitarian response.
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A Review of the U.S. Government’s Review of Its Haiti Quake Response Print

This guest post is cross-posted from the Center for Global Development.

By Vijaya Ramachandran and Julie Walz

Last week, USAID finally published an evaluation report on its activities in Haiti: “Independent Review of the U.S. Government Response to the Haiti Earthquake”.  The report is dated March 28, 2011. Yes, 2011. It took over a year to post the document on the USAID website.  The review was conducted by MacFadden and Associates – which operates an $80M Indefinite Quantity Contract from USAID.  There are some frank and enlightening assessments of USG response and coordination, but very little discussion of aid accountability.

Here are some impressions of the report:

Let’s start with the good.

Strengthen USAID. The report very clearly calls for a strengthening USAID: improved institutional structures, more staff and capacity, investments in new technology, and a reduction in reliance on outside contractors.  It is a call that has been made many times before, as USAID has evolved from a development implementer into an organization that manages contractors and grantees.  For example, USAID’s direct-hire workforce has decreased from around 8600 in 1962 to 2900 in 2009, despite an increase in foreign assistance. The report says that USAID’s weaknesses were especially apparent because the President appointed USAID as the lead agency in the USG Haiti response.

Nix the “whole of government” approach in disaster response. The report recommends that a “whole of government” approach should not be used in future international disaster response.  It is a concern that our colleague Todd Moss has previously discussed.  Although the idea of having all federal agencies at the table seems logical, it also creates parallel chains of command and further constrains the USG’s ability to get things done.  This is especially true in a disaster situation where rapid response is needed.  After the quake, more than 12 federal agencies sent staff to Haiti.  This created problems in terms of clear lines of authority, with specific reporting structures and delineated functions between agencies.

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Donor Disbursements Slowing According to Latest Data from Special Envoy Print

The Office of the Special Envoy for Haiti released updated data this week on public sector donor disbursements since the earthquake in Haiti. The Special Envoy has been instrumental in holding donors accountable for pledges they made at the March 2010 New York donor’s conference. For the period 2010-2012, 55 public sector donors pledged $5.48 billion dollars with $2.48 billion, or 45.3 percent being disbursed so far. This represents an increase of $96 million since the last update in December 2011, the smallest such increase since the Special Envoy has been tracking donor disbursements.

Overall, the $2.48 billion has been disbursed through four main channels:

-          $1.65 billion (66.6 percent) in grants to multilateral agencies, NGOs and private contractors
-          $337.2 million (13.6 percent) in budget support to the Government of Haiti
-          $295.6 million (11.9 percent) to the World Bank, IDB and UN through the Haiti Reconstruction Fund (HRF)
-          $196.9 million (7.9 percent) in loans to the Government of Haiti

The vast majority of these funds were disbursed in 2010. According to the Special Envoy (PDF), $1.61 billion was disbursed in 2010, $843.1 million in 2011 and just $27.8 million thus far in 2012.  An important qualifier is that disbursed does not mean spent. For example, of the $295.6 million that has gone to the HRF, only $55.7 million has been spent on the ground.

As can be seen in Figure 1, many of the top donors have failed to live up to their pledges (PDF).

Figure 1.

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Haiti Using Funds from PetroCaribe to Finance Reconstruction Print

"The cooperation with Venezuela is the most important in Haiti right now in terms of impact, direct impact," President Martelly told the Associated Press in December. The most important channel for this cooperation is the PetroCaribe agreement, which most Caribbean countries are currently a part of and which the government of René Préval joined in 2006. Through the agreement Venezuela finances part of Haiti’s fuel import bill, allowing for a portion to be paid up front and the remainder to be used as a loan with a long maturity and low rates. The funds made available through PetroCaribe are, as the International Monetary Fund (IMF) explains, “under the control of the central government”. This makes PetroCaribe assistance drastically different from aid provided by traditional donors, which by and large bypasses the government. In fact, traditional budget support to the Haitian state was lower last year than the year before the earthquake.

Over the duration of the agreement, which began in 2008, Venezuela has provided nearly $1.9 billion (PDF) in petroleum products, with over $800 million being paid up front. Following the earthquake, Venezuela cancelled some $400 million of PetroCaribe debt, yet with large disbursements since the earthquake Haiti still owes some $580 million. While significant resources have already been spent, Haiti maintains a balance of $350 million in PetroCaribe funds.

The government of Haiti has predictably turned to one of its only pools of un-restricted funds to finance reconstruction and development programs. The IMF notes that the GOH has “committed to only use PetroCaribe resources to finance growth-enhancing investment projects.” The spending with PetroCaribe funds represents a significant portion of capital spending undertaken by the central government. In the latest IMF review of Haiti’s economy, the IMF estimates that PetroCaribe funds will account for nearly half of domestically-financed capital spending in 2012, amounting to 4.7 percent of GDP. While foreign financed capital spending still overshadows this (it is projected to be 14.9 percent of GDP in 2012), the PetroCaribe funds are unique in that they are directly under the control of the government.

The reconstruction projects financed with PetroCaribe funds have come under scrutiny recently as allegations emerged that Martelly received some $2.5 million in kickbacks related to contracts awarded by the Haitian government. Yet it is also true that the PetroCaribe funds represent some of the largest infrastructure related investments in Haiti since the earthquake. Overall, $380 million has been awarded to firms for infrastructure-related work (PDF) and the most recent data shows that over 73 percent has already been spent. For comparison, the Government Accountability Office found in November that of $412 million in infrastructure projects approved by USAID, only 0.8 percent had been disbursed. It is no wonder then that Martelly told the AP that Venezuela aid stacked up favorably with US assistance, which often takes more time:

"Sometimes for a simple project, it might take too long for the project to happen," he said. "If you're asking me which one flows better, which one is easier, I'll tell you Venezuela."

Amazingly, despite the clear benefits of the PetroCaribe agreement for Haiti, a steady supply of oil, concessional financing, unrestricted funds, it almost never happened.

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