World Bank arm OKs first loan to Haiti since 1998

By Anna Willard, Reuters, 10 October 2003, 5:34 PM ET

WASHINGTON, Oct 10 (Reuters)—The World Bank's private sector financing arm has approved its first loan for Haiti since 1998, for a company making Levi jeans in a controversial free trade zone.

Non-governmental groups tried to stop the $20 million International Finance Corporation loan to a Dominican Republic based textile manufacturer called Grupo M, because they fear the workers at the factory will not have proper labor rights.

The loan was approved by the IFC's board on Thursday without objections from any of the shareholders.

Everybody voted for it, Mark Constantine, the IFC's principal strategist, in global manufacturing and services department told Reuters.

There is a complete lack of private investment going on there and pretty miserable conditions for the local community, it's a very poor area, in the poorest country in the Western Hemisphere, the people working there are thrilled to have jobs.

Non-governmental groups say Haiti has a poor record of enforcement of labor rights and said there is a risk the workers' rights will be violated.

In a letter to the British representative at the World Bank, the Bretton Woods Project, a network set up by British non governmental groups, urged the IFC not to approve the loan unless it concluded a contractual commitment on labor rights.

The IFC has commitments against child and forced labor, but the World Bank board has not yet taken a decision on freedom of association and nondiscrimination the other two core standards outlined by the International Labor Organization, Constantine said.

But he said because the textiles plants in the free trade area plan to supply goods to companies such as Levi Strauss, Liz Claiborne and Tommy Hilfiger, Grupo M is likely to stick the rules even though they are not set out in the IFC deal.

Our client observes these codes of conduct and is subject to regular audits by these major brands, Constantine said.

The Levis and Liz Claibornes of the world cannot afford the reputational risk that comes with lousy practices.

The World Bank itself is unable to lend to Haiti because the Caribbean nation is in arrears on earlier loans.

Constantine said the IFC had decided to go ahead with the project even though its parent institution cannot operate there, because the loan is going to a private company and not the government.