Banking and financial services expanded by almost 10 percent a year during the 1970s, in the wake of the growth of assembly manufacturing, construction, and tourism. By the 1980s, however, the country's financial institutions suffered from negative growth as a result of political instability and the consequently insecure investment climate. In the late 1980s, banking and related services accounted for 10 percent of GDP, and they employed about 4 percent of the labor force.
Nine commercial banks--five Haitian and four foreign-- constituted the heart of the financial system. In 1989 the five local banks were the Haitian Popular Bank (Banque Populaire Haïtienne), Union Bank of Haiti (Banque de l'Union d'Haiti), Industrial and Commercial Bank of Haiti (Banque Industrielle et Commerciale d'Haiti), Commercial Bank of Haiti (Banque Commerciale d'Haiti), and the Haitian General Banking Society (Société Générale Haïtienne de Banque--Sogebank). Sogebank expanded its holdings in 1986 to encompass the two branches of the Royal Bank of Canada, previously the oldest and largest foreign-owned bank in Haiti. Of the four foreign-owned banks, two were based in the United States (Citibank and the Bank of Boston), one in Canada (the Bank of Nova Scotia), and one in France (Banque Nationale de Paris). Haiti considered the United States dollar legal tender, but the government prohibited foreign banks from maintaining foreign-currency accounts. Seventy-five percent of all commercial credit went to manufacturing and commerce; only 3 percent went to agriculture. Excessive collateral requirements, high interest rates, and a proclivity toward short-term financing diminished the role of commercial banks in stimulating output, especially among small producers.
Five development-finance institutions--both public and private--helped to offset deficiencies in commercial-bank financing. The main lenders for agriculture were the Agricultural Credit Bank (Bureau de Crédit Agricole--BCA) and the National Agricultural and Industrial Development Bank (Banque Nationale de Développement Agricole et Industriel--BNDAI). BCA provided shortterm credit to nearly 20,000 small-scale farmers for the purchase of inputs and tools. Established in 1951, BNDAI lent to all categories of farmers, but it provided mostly short-term financing to larger, more capital-intensive producers, particularly those cultivating irrigated rice. BNDAI also lent to industrial enterprises, generally on a long-term basis. Private and public funds helped to set up the Industrial Development Fund (Fonds de Développement Industriel--FDI) and the Haitian Financial Development Society (Société Financière Haïtienne de Développement--Sofihdes) in the 1980s. FDI, founded in 1981 to aid firms with ownership that was at least 51-percent Haitian, offered no direct lending to industry, but it assisted existing companies or new ventures in acquiring credit, supplied guarantees on new loans, and provided technical assistance. Sofihdes, established in 1983 with funds from the CBI, AID, and the Haitian private sector, supplied credit with extended repayment schedules to manufacturing firms and agribusinesses ineligible for commercial bank loans. A fifth development-finance institution was the Mortgage Bank (Banque de Crédit Immobilier-- BCI). Established in 1986 with 98 percent private capital, the BCI provided loans of up to US$100,000 for the housing industry, and it offered technical assistance and special loans for some low-income workers.
Other financial institutions included insurance companies, credit unions, finance institutions for the informal sector, and an extensive underground credit system. Several dozen companies wrote insurance policies in Haiti in the 1980s, but only a few were locally owned. Credit unions, established in the 1940s, mobilized savings primarily for agricultural cooperatives. The Haitian Development Foundation and the Haitian Fund for Assistance to Women were instrumental in the late 1980s in lending to small businesses that could not obtain commercial bank credit. There was no Haitian stock exchange.
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