POVERTY: Central America: Boosting Small Enterprise to Fight Poverty

Danilo Valladares : May 06, 2011

Small and medium-sized companies in Central America are the targets of foreign development aid programmes aimed at fighting the region's high poverty levels.
One of the initiatives is the Access Programme for Rural Associations of Micro-, Small and Medium-sized Enterprises in Central America, implemented by the Guatemalan Exporters Association (AGEXPORT) and financed by the International Fund for Agricultural Development (IFAD), a specialised United Nations agency.
'We are mainly seeking to generate employment, and through that, to secure access to food and nutrition security and improve people's quality of life,' the programme's director, Iván Buitrón, told IPS.
The initiative, which got underway in March at a total cost of three million dollars, will provide training to more than 80,000 rural entrepreneurs in Honduras, El Salvador, Nicaragua and Guatemala over the next three years.
When asked about the programme's aims in the region, Buitrón said, 'One is to strengthen capacities in business, administration, accounting, costs, sales and delivery.'
Other goals are 'to support organisational development in production and productivity, and ensure that products reach the standards of quality and volume demanded by the markets and follow traceability requirements.'
Another focus, the AGEXPORT official said, is disseminating 'knowledge, to facilitate access to international fairs to learn about successful initiatives and the importance of meeting safety standards and green production standards.'
Working together is fundamental to helping small and medium enterprises (SMEs) take off. 'It's essential for the state to invest in infrastructure and in stocking up for production, for the private sector to contribute to the technical aspects of market intelligence, and for both to complement each other in public-private alliances,' he added.
The programme thus seeks to reduce poverty by boosting incomes in Honduras, El Salvador, Nicaragua and Guatemala, which are classified by the World Bank as four of the world's 56 lower middle income countries - between 976 and 3,855 dollars in GNI per capita.
For example, 47 percent of Nicaragua's 5.7 million people live on two dollars a day or less, according to the country's National Development Information Institute, as do half of Guatemala's 14 million people, according to United Nations figures.
Despite the high poverty levels, Central America has potential. 'There are many opportunities, and there is demand for products from this region, but what are lacking are policies of support and incentives for speeding up access to markets,' Buitrón said.
The needs of SMEs are clear. 'We have a problem with intermediaries, because they set the prices, and since demand is low, we have to accept them, even if we end up actually losing money in the end,' Alberto Ortiz, a craftsman from the village of Samayac in the southern Guatemalan province of Suchitepéquez, told IPS.
Ortiz, who makes leather belts and bags, finds it hard to overcome the barriers standing in the way of selling his products. 'We have tried to set up an association, but we've had problems, and the government institutions haven't given us a hand,' he complained.
He has no doubt that the IFAD-financed training programme will be a great opportunity for developing small businesses, 'principally for selling our products,' he said.
Lina Martínez, manager of the Garifuna-owned company Wabagari Distribution that makes cassava-based ethnic products in Honduras, under the Casabe O'Big Mama brand name, told IPS that SMEs 'lack the capital and productive and technological capacity to generate volume.'
Martínez, whose company makes 'casabe', an unleavened flatbread made from cassava flour, says 'soft credits' are needed to meet these needs. 'It's important to focus on products with better packaging, and to provide loans with soft interest rates. That would be an excellent alternative,' she said.
Her company sells its products to Wal-Mart, through the U.S. hypermarket chain's 'Una Mano para Crecer' (A Hand to Grow) supplier development programme.
But there are risks when it comes to how aid to SMEs is implemented.
'The support has to have flexibility that provides maneuvering room to allow businesses to respond in a proactive manner to the real situation they encounter,' Yasmin Martínez, with the Chamber of Commerce and Industry of El Salvador, told IPS.
'But these programmes sometimes come with so many limitations that the money ends up in the hands of consultants who tried, but were unable,' to help get SMEs off the ground, she said.
Yasmin Martínez believes the gap in technology and training and a lack of innovation are the main problems faced by SMEs in El Salvador, not to mention organised crime, which through extortion 'suffocates our businesses,' she added.
SMEs are vital to the economy in El Salvador and the rest of the countries in the region.
In El Salvador, 99.6 percent of all businesses are SMEs, which number more than 174,000 in total and account for 65.5 percent of all jobs, generating nearly 488,000 direct jobs, according to the Chamber of Commerce and Industry.
Ingrid Figueroa with the Central American Integration System's (SICA) Centre for the Promotion of Micro and Small Enterprise in Central America told IPS that fomenting small-scale business initiatives, improving access to financing, and strengthening financial education are major challenges that must be addressed in the region.
http://www.globalissues.org/news/2011/05/06/9544

POVERTY: El Salvador: Drugs, inequality and a US-backed dirty war

Chris Arsenault  23 Mar 2011
Barack Obama visits El Salvador to talk security cooperation while facing the ghosts of past US foreign policies.


Obama's decision to visit the tomb of Archbishop Oscar Romero was a popular move with many Salvadorians [Reuters]

US President Barack Obama arrived in El Salvador to talk about drug violence, but he also tried to make peace with history, visiting the tomb of Oscar Romero, a popular Archbishop gunned down by a US-linked death squad in 1980.
Despite cutting his visit short to deal with the situation in Libya, Obama still made time to visit the tomb, showcasing its symbolic importance.
"Obama is sending a message, taking a moderate approach to the region, and getting big points for going to Romero's grave," says Carlos Velazquez, a Salvadorian political researcher at York University in Canada. "It is an emotional thing for Salvadorians."
Twelve years of internal conflict, between leftist rebels from the Farabundo Marti National Liberation Front (FMLN) and the right-wing US-supported government, ended with a peace deal in 1992.
But violence continues to grip the country. "El Salvador has one of the highest homicide rates in the world," according to the US State Department, as violence between rival gangs and drug cartels is far worse on a per capita basis than neighboring Mexico, where killings draw more media attention.

Violence and inequality
Today’s violence has similar root causes to the issues which started the political conflict in the 1980s, including judicial impunity, economic inequality and social fragmentation, says Ivan Briscoe, a conflict researcher and Latin America expert at the Clingendael Institute in the Netherlands.
"In El Salvador, there was an absolutely brutal conflict that has been passed down to gang violence," he says. "Inequality led to the insurgency, but now this inequality has found expressions in other forms."
Archbishop Romero, a theologian who mixed ideas of heaven in the next life and liberation on earth, was highly critical of US military aid. In a letter to then-US president Jimmy Carter, Romero said aid would "sharpen injustice and repression against the people’s organisations" which were struggling for "respect for their basic human rights". After his murder, least 75,000 people died in El Salvador's dirty war.
In some respects, times have changed. Obama has shown a willingness to work with some democratically elected leftist leaders in Latin America, analysts say.
Mauricio Funes, El Salvador's current president, who is supported by the FMLN, told Al Jazeera that he welcomes American security assistance. "I will ask president Obama for more funds to strengthen our police, army, and the judiciary but also to get more involved in fighting our structural problems like poverty and social inequality," Funes, a former TV host, said.
During his visit, Obama promised $200mn to Central American governments to fight drug cartels, as part of a package to "strengthen courts, civil society groups and institutions that uphold the role of law" while addressing the "social and economic forces that drive young people towards criminality".
http://english.aljazeera.net/indepth/features/2011/03/2011323152622625790.html

POVERTY: Microcredit in Guatemala

GUATEMALA CITY, Jun 21, 2010 (IPS) - Rosenda Gómez, a 53-year-old mother of five, knows all about challenges. To overcome them, she started a modest sausage business in Guatemala, and thanks to her leadership skills and training and other support she received, she is now an example of the economic empowerment of women.Sixteen years ago she began to make homemade sausages in her village, Laguna Ocubilá, to sell in the nearby city of Huehuetenango, the capital of the northwestern province of the same name. But her business was a micro-enterprise that allowed her family to just barely scrape by -- until things changed radically three years ago, when the Centros de Servicios para los Emprendimientos de las Mujeres (CSEM) came to her village. CSEM, a network of centres providing technical and financial services for women entrepreneurs, is sponsored by the United Nations Development Fund for Women (UNIFEM) in association with Guatemalan institutions. "We began to receive support, in the form of credit, training to improve our products, and promotion of our chicken and pork sausages in markets and fairs -- none of which we had before," Gómez told IPS. With that boost, Gómez, who only went to school up to third grade, managed to increase production from five to 50 kgs of sausages a week, and demand continues to grow. She also received support to set up a meat processing centre, along with other women backed by the CSEM, which changed the life of her family and her business. Her three youngest children, between the ages of 13 and 15, still live with Gómez and her husband, a truck driver, while the other two have already given them seven grandchildren, she says proudly. Her achievement is even more impressive given the limited economic independence of women in this impoverished Central American country. Men represent 65 percent of the economically active population, and women only 35 percent, according to the government's national survey on employment and income. Social organisations point to the vicious circle of poverty, lack of education and lack of health care suffered by so many in this country of 14.3 million people, where the poverty rate is slightly higher for women (51.5 percent) than for men (48.4 percent), according to the 2006 national survey on living conditions. The CSEM is now supporting 3,273 women in seven services centres that began to be established in 2006 in the country's poorest provinces. Seven others operate in El Salvador, Honduras and Nicaragua. "We learned how to draw up a business plan, market our products and estimate production costs," Sonia Paz, the head of the Asociación de Mujeres Olopenses women's association in the eastern province of Chiquimula, where one of the CSEM centres operates, told IPS. Paz forms part of a group of 36 women who make and sell handicrafts like bags and keychains using fibre from the maguey, or agave, plant. "Thanks to support from the CSEM, we have improved the quality of our products and we have registered with the tax office," said Paz. Rita Cassisi, UNIFEM coordinator in Guatemala, told IPS that the CSEM helps women set up businesses by offering loans, organisational training, assistance in improving products, marketing techniques and other support. "One of the vacuums that we have seen is women's access to financing, which is why the programme is focused on a strategy of economic empowerment at the local, national and regional levels," she explained. At the local level, the CSEM centres work with economic development agencies and public and private lending institutions; at the national level they work with universities, the Economy Ministry, the Presidential Secretariat of Women, and women's groups; and in Central America as a region they work with organisations and agencies that support women. According to Cassisi, the CSEM's beneficiaries "are at the base of the business pyramid; they are women who set up micro-enterprises and micro-businesses, which help move the economy." Like any effort, the CSEM has run into hurdles. Gilda Rivera, head of the CSEM in the western province of San Marcos, told IPS a that although they opened their doors in April 2009, things are moving slowly. "The problem is that we don't have funds to invest, and we have around 80 women waiting for our support," she said. In Rivera's view, too many requisites are set for approval of projects in some cases, which slows down the process, while many women are waiting for training and loans in order to upgrade their businesses and increase production. According to the third regional report on the labour market in Central America and the Dominican Republic produced by the International Labour Organisation (ILO) and the Central American Integration System (SICA), 73 percent of women in the labour force in Guatemala work in the informal economy. Iris Alvarado at the non-governmental Centro de Investigación, Capacitación y Apoyo a la Mujer (CICAM - Centre for Women's Research, Training and Support), told IPS that Guatemala faces serious challenges in terms of gender equity, above and beyond women's economic independence. The country's high levels of gender violence and limited access to education and health, especially in rural areas, must be addressed in the attempt to combat gender inequalities and to provide equal opportunities and living conditions for girls and women, Alvarado said.
http://ipsnews.net/news.asp?idnews=51893