Haiti: 3 Weeks Later, Are Your Dollars Helping?

By Daisy Hernandez Feb 02, 2010

It’s been three weeks now since the earthquake hit Haiti and the Associated Press has issued a grim picture of where recovery efforts stand: medical teams still need the basics like bandages and only 2,000 tents have been distributed for the 1 million who are homeless. What about the dollars you sent to Haiti through donations or remittances? It turns out that the more gringo money we send to Haiti the more we mess with the country’s exchange rate. Translation: The more dollars we send the less people in Haiti get when they exchange those dollars into the local currency, the gourde. That’s a problem because food and other basic necessities are bought in gourdes and since the earthquake prices have increased. So just when people need gourdes the most, they’re getting less of them. I learned about this from emailing with Steven Werlin, a branch manager for Haiti’s largest microfinance institution, Fonkoze, which has more than 40 branches in the country and bills itself as “Haiti’s alternative bank for the organized poor.” Werlin works out of a branch in the port town of Marigot in southeastern Haiti. In the week after the earthquake, actual dollars weren’t even making it to Haiti. “Although dollars were, in a sense, flooding the market, they were not entering in the form of cash, but as internet transfers between remittance companies and offices like Fonkoze,” Werlin writes. The problem? With the country’s main city in ruins, no one had actual dollars on hand. People were, in effect, forced to take remittances in gourdes or go without. “We had been scheduled to receive some cash on the Wednesday after the earthquake. So when it struck, our reserves were at a minimum. Thus we could only pay out remittances in gourdes.” Their offices finally received dollars on Jan. 23, but with an increase in prices those gourdes weren’t going very far. Is there a way to control the currency’s value? “There have been countries over the years that have regulated their currency’s value, either by fiat (like Haiti under Duvalier who set the gourd at five to the dollar or the Soviet Union and its ruble) or by maintaining reserves of other currencies or gold and increasing or decreasing those reserves to stabilize things,” Werlin writes, adding “Haiti is in no position to do either. Regulation by fiat would require a massive security apparatus capable of enforcing a legal rate and the other alternative requires substantial reserves.” So what’s a gringa to do? We still have to send dollars. Haitians need the cash even if it’s buying fewer goods these days. But let’s not kid ourselves into thinking that American cash buys real recovery. Long-lasting relief is going to come from supporting a democratic government in Haiti, not a U.S.-sponsored one. This means staying abreast of what Obama’s government is doing in Haiti and supporting grassroots organizations and families directly. Consider turning that one or two-time donation into a quarterly one and sending it directly to Haitian grassroots organizations. Another tip: know who the middleman is when you send money. Fonkoze, for example, has an agreement with the City National Bank of New Jersey, which allows people to deposit money into a Fonkoze savings account through that bank free of charge. “It is not quite as fast or as convenient as the conventional transfer services, but it’s a great deal,” Werlin writes. The big wire-transfer companies like Western Union are notorious for the fees they impose on remittances and the devastation of this earthquake has made no dent in the profit mongering approach these companies take. The New York Times reported earlier this week that in Port-au-Prince, people were claiming to have been charged a 10-percent disaster fee on their remittances. While fees are being hiked so are the prices of basic goods. People living in Marigot could buy gasoline at 200 gourdes a gallon before the earthquake, Werlin reports; now it’s costing 500 gourdes a gallon or more. “It’s more expensive than it was,” Werlin writes, “but that is a small problem when you compare it with the misery in Jacmel, Léogâne, and Port-au-Prince.” Marigot was not spared in the earthquake though. Buildings were damaged, yes, but mostly people there, like so many in other parts of Haiti, suffered emotionally. “Port-au-Prince is, in particular, where families in towns like Marigot send the very few of their young people who are able to go to college,” Werlin writes. “It is where almost all the nation’s universities are. Or were. Here in Marigot, the earthquake’s grim immediate aftermath were small, quiet conversations, scattered throughout the town, in which locals pooled their news of friends and family in Port-au-Prince, news of homes destroyed and lives lost. Telephone communication was hard in the hours and days following the quake. You could try a number dozens of times without ever being able to get through. Word from the capital, most of it miserable, came slowly, loss by loss, name by name.” Image by United Nations Development Programmeand used under a creative commons license.