Recent Dispatches from Haiti
By Janco Damas - July 2015
Up high, far off from the reality of things, generalizations are often made about doing business in Haiti. I can comment from my own personal experience and with this photo essay you can see what entrepreneurship in Haiti really looks like. Feel free to reach out to me ofcourse if you feel encouraged to do so, there is good and productive work to do.
Nemours Damas is our entrepreneur who opens the books of his company to explain the economics that drive his business. He is an experienced entrepreneur and native son. He left Haiti for ten years to live in the United States. When he decided to move back to Haiti he returned with a new seriousness about growing a business empire there. He is in the thick of it now as Chairman of Groupe 42 S.A. The portfolio of companies include a distributor of potable water, a commercial bakery, retail store, and a 12-room hotel.
East of Haiti is the Atlantic Ocean. We are traveling to Groupe 42's office located about five miles from the national airport and less than a mile from the national palace. The area is densely populated. Large number of people allow the businesses access to a substantial consumer base. Though there are luxurios parts in Haiti, that's not really my thing so you won't see much of that here. In Port au Prince proper there are about 1 million people. Greater Port au Prince includes the cities of Delmas, Cite Soleil, Tabarre, Carrefour, and Pétionville. Including these areas Port au Prince has around 2.5 million people.
The collection of businesses is named Groupe 42 relative to its location on 42 Joseph Janvieve road in Port au Prince. Pictured above is Vielo, 24-years-old, his name pronounced like the French word for bicycle he explained to me.
Vielo attends to the water business, filling gallons and collecting payments. One gallon costs 5 Hatian Gourde or approximately $0.08. The five gallon container like the one pictured here costs 25 Haitian Gourde or about $0.40.
Also, the young man attends to the convenience store that is part of Groupe 42. The store does well because it sells to 42's auxillary businesses and also sells retail to walk-in customers.
Vielo lives in one of the hotel rooms. A rare benefit Nemours provides as his employer. His family lives far outside the city so staying at home would not be conducive to working long hours. The water and convenience store businesses operate from 6 a.m. until 10 p.m. every day. Many young men and woman commute to the city for work. The mass transportation systems is an eclectic array of colorful busses that we'll have to later explore in greater detail, promise.
Back to drinking water. It is essential for growing boys ofcourse.
For young ladies and women especially, this treated water is necessary to maintain femine hygene as prescribed by doctors.
Neighborhood residents purchase about 150 gallons a day from this window.
When the water cisterns are near empty, it's time to call the smiling and blue faced company known as Freche Lokal.
By Janco Damas
Two tanks atop Groupe 42 headquarters hold about 1,600 gallons of water. When the main tank is emptied, Nemours will call the water suplier. Freche Lokal is considered a large company in Haiti. They were heavily financed by the non-governmental organization, UNICEF, after Haiti's 2010 earthquake and continue to partner with the NGO. All together Freche Lokal distributes around 2 million gallons of drinking water daily. Groupe 42 is one of several distribution partners in the area.
Water sales provide a good volume business. Although, the need for a manual attendant eats into the profit. I've often considered if the next evolution of clean water will include common refill stations like those commonly seen in American grocery stores. Perhaps not though, clean water may leapfrog to being distributed by a public utility. For the foreseeable future Group 42 will retain a healthy margin from its water business and water sales continue to draw customers into the retail store and bakery as well.
Haiti's diversified holding companies
By Janco Damas
Small economics in Haiti means successful entrepreneurs need volume. Many of the registered companies in Haiti organize themselves as holding companies with auxillaries to undertake various tangential lines of business. Groupe 42 S.A. is set up as such a holding company. Auxillary businesses include water distribution, the small retail shop, bakery, and 12-room hotel.
The commercial bakery is turning into the most substantial part of Groupe 42 holdings. In 2014 the bakery produced around 2,000 units a day. In 2015, baked good sales reached heights of selling 4,000 daily units.
Baking however is still a relatively manual process. The business struggles with power outages, broken supply chains, and generally could use better facilities. The group also faces certain political risk. For example, periodic fallout from Haiti's public disputes with neighboring Dominican Republic has resulted in seizures of raw matierals at the border. Groupe 42 has suffered through periods of strained supplies, one practical example of political risk in emerging markets.
Two main cooks work throughout the night into the next morning to produce quantities upto 4,000 units. Mostly these units are "pâté". A flaky crescent with ground fish or meat inside.
The oven stays on all day. As one batch is baking, the cooks set aside additional trays of dough and meat that will proceed to the oven.
These young men await the pâté to come out of the oven. They will load their plastic bins with baked goods and take to all corners of Port au Prince to vend Groupe 42 baked goods. Youth unemployment is a big issue for Haiti that often escapes attention. Supporting local entrepreneurs is the best option not just for employment but to develop a sense of dignity and responsibility over self and family.
Earnings from a days worth of baked good sales wait to be counted in the main office.
Creating jobs for the local economy
By Janco Damas
Blue collar jobs remain the main economic driver for Haitian people. Entrepreneurs who are able to scale beyond the micro-enterpise phase and create jobs are of great importance to the viability of all communities here. Jobs in the rural parts can be rare. Many employees live outside of Port au Prince but commute daily to find opportunities in the city.
Nemours holds a job interview inside his office. This applicant would be an attendant to the hotel business.
Another job interview, this time the owner speaks to a contractor about attending to several structural issues and repairing a canopy on the third floor.
The contractor prepares an invoice to price the work. For the last year, contract work for Groupe 42 has been his main source of income with which he takes care of four children.
A quick change of clothes and he's ready to go.
By some standards an old man, but despite being in his 60's the contractor is not afraid to scale this three-story wall to fix the canopy.
Two additional contractors are hired to break up cement near the hotel entrance in order to lay pipes for plumbing. Groupe 42 and it's subsidiaries continues to provide jobs as the company add additional capacity.
Plumbing is now available throughout the hotel, each room with it's own restroom and shower.
With common areas throughout.
Groupe 42's regular full-time employees who keep up the place and serve it's guests.
Chasing down the compeitition
By Janco Damas
Ambition is a common trait amongst entrepreneurs all over the world. Haiti's small business owners have that quintessential competitiveness. However, it is an additional obstacle to accommodate the country's fragile infrastrucure. Small businesses who can circumvent electricy outages, for example, have a substantial competitive advantage.
Seven years after starting Groupe 42, Nemours remains ambitious in his stride to create a successful company that is locally owned and operated. We pull up to Puce's Cakes, a larger commercial bakery. In some ways Puce's is a model for the future. It's volume is perhaps 3 - 5 times that of Groupe 42's.
Puce's Cakes also uses social media, something Groupe 42 has yet to undertake.
The main advantage of Puce's Cakes over Groupe 42's bakery however is this Denyo diesel generator. The generator allows Puce's to operate even during electricity black outs, a somewhat regular occurance in Haiti. Similiar generators cost about $18,000. A serious investment but an asset that seperates large scale and niche producers.
Financing in Haiti does not come cheap or even at reasonable rates of interest compared to developed markets. After visiting a larger and better equipped bakery we visited Kotelam, the local credit union, to inquire about a loan to finance equipment.
Terms for a loan in Haiti would be considered usurious in other areas. This particular lender asked for rates that translated into accumulated interest greater than 100% of the principle. In addition, the lender asked for a 25% down payment on the borrowed funds. Unlike traditional small business financing with a grace period to allow the capital to work into the business, payments on the loan presented here became due just days after the loan is disbursed. Nemours left empty handed in hopes of finding more favorable terms to finance the company's growth.
After seeing for myself how difficult it is to get local financing in Haiti I began thinking if social investors abroad might support the cause at a more reasonable rate of return like 10%. The mounds of paper seen here are mostly business receipts. Having receipts is a wonderful thing. A legitimate paper trail means an investment opportunity with transparent information. If things go well, it will mean more jobs and opportunity for innovation to sink in. So that's what i'm working on now, applying all the excel training and business school know-how etc to create a transparent investment opportunity for a growing Haitian company.
Signing off for now.
- Recent Dispatches from Haiti
Group 42 has grown to occupy three floors with the bakery on the first, hotels rooms on the second, and a lounge on the third floor.