The earthquake in Haiti has disrupted a key economic lifeline for many in this impoverished nation: Money sent from family members working elsewhere in the world back to their native country.
Such remittances, as they are called, totaled around $1.2 billion in 2009, according to estimates from the World Bank, and have equaled about 20 percent of the country’s GDP in recent years.
“In a sense it helps people keep their heads above the water,” said Robert Maguire, a Haiti specialist at Trinity Washington University in Washington, D.C.
Maguire estimates that about one-third of Haitian households receive remittances, which are used for everything from paying school fees to providing families with food and medicine.
The earthquake that struck Haiti Tuesday destroyed much of its telecommunications infrastructure, bringing down the systems many financial services companies use to transfer remittances. It’s not clear when such service will be restored.
“The current payment infrastructure is basically in shambles,” said Manuel Orozco, an expert on remittances with Inter-American Dialogue, a Washington, D.C. policy group.
Remittances can be especially important in a time of crisis, Orozco said, because cash can be used to buy commodities ranging from water to rice. Prices for such basic necessities will tend to naturally rise in a disaster, he noted, making extra money even more important.
The money could also be used for families who are seeking to flee hard-hit Port–au-Prince, Maguire said.
“Even people who are trying to leave the city, they don’t have money to get out of the city,” Maguire said.
Jean-Marc Piquion, vice president of sales and marketing for the money transfer service Unitransfer USA, said Friday that the company was working diligently to restore service in Haiti.
The company may even be able to resume operations as early as Saturday, he said, although it was too early to make any promises.
“We know that money transfers are an integral part of the community,” Piquion said. “It’s pretty much the lifeblood for most (families).”
A spokesman for Western Union, Daniel Diaz, said Thursday that a few of its locations in Haiti had sporadic service but the vast majority was inoperable.
The problems extended beyond just telecommunication infrastructure.
Katleen Felix, a project director with the U.S. operations of Fonkoze, which provides money transfers and microfinance services in Haiti, said the institution has generators and satellite technology at some of its offices. That means transfers could potentially go through to rural areas, though perhaps with some delay.
But the company’s headquarters in Port-au-Prince were badly damaged and some staff was injured, making it difficult to facilitate daily business.
In addition, Felix said Fonkoze was concerned about the safety of employees distributing cash amid the devastation and potential lawlessness, especially in Port-au-Prince.
“The problem is more insecurity, I would say,” she said.
Fonkoze’s 800 local employees also are dealing with tragedies of their own, including losing loved ones and homes to the earthquake, and Felix said it wasn’t clear how many would even be able to get to the company’s offices.
“Our staff is incurring major distress,” Felix said. “How can they go to work and do their work?”
Nevertheless, Felix said the hope was to get operations running normally by next week.
“It’s just a matter of getting out of this crisis,” she said. “There’s so much out of our hands … but we really want to serve the population.”
Orozco, the remittance expert, said the devastation also was likely making it more difficult — and more dangerous — for people to get remittances in through more informal arrangements, such as the border crossing with the Dominican Republic.
And even once the technology is operational again, Orozco said there was good reason for people to be concerned about their safety if they go to a money transfer operation to pick up cash.
“The crisis has exacerbated, like in many other places, the problem of insecurity,” he said.