Haiti Economic Elite Families Adapting to New Competition

By Robert P. Waltzer, Dow Jones, [21 February 1996]

Port-au-Prince (Dow Jones)—As foreign lenders push Haiti to open its economy and consolidate democratic reforms, the country's leading business families are in a process of rapid adaptation.

After a long alliance with the dictators and ruling military factions, the families appear to be shifting support to President René Préval, inaugurated last week in the first transition of democratically elected presidents in Haiti's 192-year history.

With the army gone, the business elite needs Préval to succeed, said a Western diplomat in Haiti.

At the same time, the families are increasing their cooperation with=20 foreign partners and financiers.

In recent interviews, top executives with two of those industrial family empires—the Mevses and the Bigios—suggested that their expansion activity is designed to hold their place at the forefront of the economy in which they are expecting accelerated growth.

Well-known local names such as Mevs, Bigio, Brandt, Madsen and Acra, have run the economy since the early days of this century.

They control much of Haiti's industry and trade; its supplies of petroleum, telephones, sugar, flour, plastics, soap, cooking oil, cement, steel, iron. They also own most of the country's warehouses.

But with the Haitian economy in shambles, and the government increasing its dependence on international aid hinged to economic liberalization, competitive pressures are loosening the exclusive grip that the local business elite has on the economy.

In order to position for increased competition, the families are now either working with, or seeking, foreign partners in at least two port facilities, an oil tank farm, an electricity plant, a flour mill, a sugar mill, and two cement plants.

They're doing joint ventures now after realizing they can't do things alone anymore, said Pierre Chauvet, President of Agence Citadelle, the American Express franchise holder in Haiti, and a leading businessman.

One of the key areas of joint-venture activity is construction-related work. An example of a joint-venture expansion effort is Ciment Varreux, Haiti's only cement bagging plant, which is jointly owned by the Mevs family, Robert Stryhanym, a French engineer and Cementos Mexicanos (CEMEX), of Mexico.

To capture expansion in the construction sector, the company is developing a $10 million cement production plant with a 600,000 to 800,000-ton annual capacity which will be ready by the end of 1996, Fritz Mevs, the family's patriarch, said in a recent interview.

The plant would compete with a government-owned cement plant slated to be privatized under Préval, months after the privatization was derailed under the government of former President Jean-Bertrand Aristide.

Foreign diplomats in Haiti said that the Mevses, and other Haitian elite families, have bid with foreign partners on the government-owned cement plant, Ciment d'Haiti and the flour mill, La Minoterie d'Haiti. They are the first expected privatizations.

In another deal, Fritz Mevs, who runs his industrial empire with his two sons, Fritz Jr. and Gregory, late last year completed building a $22 million fuel storage tank farm with a one million dollar barrel capacity.

Mevs is now seeking to lease them and already signed a deal with Elf Aquitaine S.A., the giant French petroleum concern, which may open retail gas stations here. Shell and Texaco, Haiti's main gasoline suppliers, already began leasing Mevs' tanks last year.

Fritz Mevs said he is also seeking a foreign partner to reopen the shuttered Haitian American Sugar Corporation (HASCO). The substantial capital needed to reopen it, $15 million to $20 million, requires a partnership, he said.

And in a fourth deal with foreign investors, Mevs signed a government contract in July to supply Haiti with 28 1/2 megawatts of electricity. The family expects to build a fixed power station along with Florida Power & Light.

Business patriarch Gilbert Bigio, meanwhile, has his own expansions with foreign investors in mind. He plans a $12 million industrial facility surrounding a port in Haiti's small, western city of Miragoane, said Phillippe Lahens, chief economist for the CB Group S.A., the Bigio family's holding company.

The site of an old Reynolds Aluminum facility shuttered in 1985, the facility would include free-zone manufacturing, maritime services, a ship demolition and scrap metal export operation and a calcium carbonate mining operation.

Bigio expects to close the deal this year with a consortium of Haitian investors and shippers in Miragoane along with foreign investors, possibly from Israel, France and other European Union nations.

Lahens said Bigio lost his original foreign partner as a casualty of the 1991–1994 U.S.-led economic trade embargo against Haiti designed to oust the military regime from power.

Bigio, meanwhile, will nearly double the production of Aciérie d'Haiti, which produces steel building materials. The expanded facility, slated for an end of 1996 completion, would produce 80,000 tons a year and bring down production costs. Another key Haitian industrial family, the Brandts, which intends to develop another port, this one in Fort Liberté, is also seeking foreign investors for the $100 million project, foreign diplomats said.