Haiti’s foreign aid transitioned to fintech, but still hit roadblocks

More than a year after an earthquake rocked Haiti’s southern peninsula, Wilson Colin is still waiting for financial help. He had expected it to arrive quickly, as it would be delivered digitally – unencumbered by the logistics of moving physical goods around, able to pass effortlessly over broken roads and through the air, deposited as a payment into a SIM card by international aid bodies such as the UN International Organization for Migration (IOM). But the SIM card never arrived.

“We’re still waiting,” Colin told me The rest of the world. The 39-year-old has not been able to work as a bricklayer since he was shot by an armed group last November. “We live badly, surrounded by bandits and insecurity, without any support,” he said.

In previous disasters, aid in Haiti mainly took the form of food distribution and reconstruction projects. Now it is largely done through direct cash transfers via fintech services, such as MonCash — part of Jamaica-based telecommunications company Digicel, which is one of Haiti’s largest and most powerful mobile phone providers.

Fintech-based aid should provide faster, more secure and inclusive aid by cutting out middlemen and sending money directly to the recipients’ mobile phones. But aid workers, residents, local journalists from Beaumont Municipality and officials from the Directorate of Civil Protection (DPC) – a national disaster management and distribution organization – told The rest of the world a large portion of these funds never reached victims. This has been attributed to a range of problems, ranging from technical glitches delaying payments for weeks to widespread allegations of corruption, including allegations that local officials have simply kept the SIM cards containing aid from international organisations.

Jessica Hsu, an anthropologist and researcher who has worked with activists for over two decades in Haiti, said The rest of the world that technological innovation failed to solve old problems born of poor infrastructure, disinformation and cronyism.

After a massive earthquake struck the island nation in 2010, the amount of aid provided to Haiti reached four times the country’s total internal revenue – $13.5 billion in donations mainly from the United States, according to reports from the Center for Economic and Policy Research (CEPR), a think tank and anti-corruption watchdog, the majority of aid went to cover overhead costs for international companies or to development projects that were not realized.

Fintech promised to change the way aid was delivered. Hazem El Zein, head of the cash-based transfer unit for the United Nations World Food Program (WFP), said The rest of the world cash transfers now account for more than 40% of business globally. In Haiti, only 15% of WFP’s aid transfers are done digitally, but that’s a fivefold increase since the pandemic started, El Zein said. The use of digital money transfers in Haiti by CARE, an international humanitarian agency focused on development and relief, went from 15% to around 75% during the same period.

Sixty-five percent of the Haitian population has a mobile device. Beyond aid, digital wallets have become a fundamental way people send and receive payments. Given ongoing gas shortages and armed conflicts, road travel has become almost impossible in some places, making it difficult to move cash around.

The ability to transfer aid immediately across the country reduces handling costs. MonCash’s fees range from 2% to 6% for aid organizations such as WFP. For CARE, this rate is around 5.5%. Around 10% more goes to fixed expenses, such as paying employees. After factoring in the costs of distribution and security, for every dollar of donor money sent to Haiti via fintech transfers, about 84% ends up in the recipient’s hands versus 74% in the case of traditional aid distribution, El Zein said.

“[Aid organizations] are pushing for more and more digital transmissions because they provide the flexibility for us to respond in a very short time … and they provide traceability,” he said. “Basically, we can show our donors where the money is going.”

But while digital wallets keep aid flowing into Haiti, fintech solutions haven’t been able to bridge problems on the ground.

A prominent complaint among Haitian disaster victims has been that they have not received promised emergency aid after registering with MonCash or aid agency agents. This is often where the promise of help delivered straight to a phone call falls short. Although the money transfer itself is digital, most recipients, like Colin, must be mailed the special SIM card, adding a necessary physical component to the process — a difficult prospect given Haiti’s earthquake-ravaged infrastructure. “Prior to February 2023, a deteriorating security situation caused delays in the distribution of e-money,” Pedro Rodrigues, a WFP communications officer, told The rest of the world.

Even when the SIM cards manage to reach their destinations, the digital infrastructure is also found wanting. Internet and cell phone access is limited, and payment delays have also been attributed to spotty cell phone coverage, said Fiammetta Cappellini, country representative for AVSI Haiti, an international aid organization. The rest of the world.

Representatives of both aid organizations claim there have been few complaints. According to Rodrigues, “the [SIM distribution] The program is now fully operational and active.” But the accumulating problems are generating mistrust and misinformation about who should receive aid. “No program is immune to failure,” Cappellini said, but Hsu, the legal worker, worries that aid agencies continue to face the same pitfalls. “One of the big problems in Haiti is that for the last 50 years, [NGOs] have been trained to work with the state,” Hsu said. “But what happens when the state doesn’t work? They’re never taught about the local realities.”

65% The percentage of Haiti’s population with a mobile device.

DataReport

Problems with payment distribution make it difficult to verify claims that aid has disappeared due to corruption, although they are widely reported across Haiti. Sadrack Baptiste, a civil protection officer stationed in Beaumont in southern Haiti’s Grand’Anse department, said The rest of the world that many in the community he serves have never received the cash transfers that the aid organizations have promised. He said he has heard of this happening across the country, with other civil protection agents often talking about local mayors handing out hundreds of SIM cards – loaded with monthly benefits – as gifts to friends and political supporters. The rest of the world spoke to three other civil protection agents who told of hearing or witnessing similar accounts of corruption.

Representatives from CARE, AVSI Haiti and WFP said they are closely monitoring the delivery of SIM cards until the moment they are handed over to local stakeholders, such as mayors or MonCash representatives.

Job Joseph, Director of Mobilization at the Haiti Response Coalition (HRC), a cross-sector platform that unites organizations to coordinate relief efforts and crisis response, said The rest of the world that in June 2022 the HRC held a conference where representatives of organisations, community leaders and local authorities shared cases of corruption. Many complained of missing SIM cards or the recipients being charged extortionate fees by MonCash representatives, Joseph said.

Baptiste and Marc Daniel, a local journalist in Beaumont, told The rest of the world these acts of corruption often go unreported due to the distance between potential recipients and the organizations that distribute the aid. “This happens mostly in areas where there isn’t a lot of infrastructure,” Joseph said. Whistleblowers also have much more to lose by accusing corrupt local power brokers. “No one ends up filing a complaint,” said Jean Raymond, another civil protection officer from Beaumont The rest of the world.

Since 2018, the UN refugee agency UNHCR and WFP have attempted to take measures to address corruption and misinformation. Maarten Boute, CEO of Digicel Haiti, MonCash’s parent company, said The rest of the world it was up to the aid organizations and the government to properly manage the delivery of funds through fintech services such as digital wallets. “We just want to help with the paradigm shift [towards mobile payments],” he said.

Hsu agrees that by relying so heavily on technological solutions, aid organizations are shirking their responsibilities. “A lot of communities actually tell you to put on your boots and go,” Hsu said. “It’s not that surveillance. So it just creates a context of impunity.”