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Haiti: Modernization Through P3s

AN ANALYSIS OF HAITI’S NATCOM

This case study explores the partial divestiture of Teleco, a state-owned telecommunications company in Haiti. The resulting public-private partnership between the Haitian government and Viettel, a Vietnamese telecommunication company, is analyzed to tease out best practices that can be used to inform P3s across sectors.

Haiti Teleco was viewed as one of the most corrupt parts of the government. Corruption existed at multiple levels of the organization: workers bribed customers to restore fixed line service that had been ‘interrupted’; sycophants used patronage and cronyism to obtain jobs; and high level officials took advantage of their position to syphon off funds through shell companies, especially through schemes involving international calls. As the sole fixed network operator, Teleco enabled people associated with it to engage in rent seeking behavior. Minor shareholders hid their identities, thus creating mechanisms for substantial corruption. By 2007, it was bleeding cash and nearly unable to provide even minimal service, and the Central Bank of Haiti (BRH) was forced to subsidize the failing company with more than $1 million monthly.

The Government of Haiti (GoH) engaged the International Finance Corporation to bring about the modernization of Teleco. This resulted in a plan to create a P3 that drastically changed the nature of state-sponsored telecommunications in Haiti. In 2010 the IFC confirmed the formation of a new public-private partnership. The GoH and Viettel, a telecommunications company from Vietnam, would partner to create a new telecommunication entity, Natcom.

The new P3 enhanced the overall state of telecommunications in Haiti. Natcom brought a measure of stability to the Central Bank of Haiti and the state telecom regulatory agency. The Central Bank is no longer using its cash resources to prop up a financially untenable Teleco. However, there are still lingering questions, with regards to the ability of Natcom to fulfill all its obligations under the tender. Its sustained presence in Haiti is also questionable considering that it holds only a 5 percent share of the mobile market while its major competitor, Digicel holds 89 percent. Finally, there are questions about Viettel’s financial transparency and management style that many say is not sensitive to Haitian society and culture.

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MODERNIZATION THROUGH PUBLIC-PRIVATE PARTNERSHIPS: AN ANALYSIS OF HAITI’S NATCOM

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