Written by Rose Marks
As a founding member of the Partnership for Central America, Accion is committed to creating economic opportunities for communities in the Northern Triangle countries of Guatemala, Honduras, and El Salvador. In response to the launch of the In Her Hands Initiative in June, we’re focusing on connecting women to the financial system and digital economy, bolstering workforce participation, and investing in women-owned businesses. Accion aims to build on our announcement at the 2022 Summit of the Americas earlier this year with longstanding partner Fundación Génesis Empresarial, detailing a path forward for increasing commitment to strengthening livelihoods and communities in the Northern Triangle.
The public-private Partnership for Central America formed in response to Vice President Harris’s Call to Action to the private sector to increase economic opportunity in the Northern Triangle, part of the U.S. Strategy to Address the Root Causes of Migration. Accion joined this partnership because we align with its mission to create solutions to address the complex factors threatening livelihoods in the Northern Triangle. These factors include access to markets and resources, inefficient supply chains, food insecurity, violence, corruption, climate change, gender disparity, and more. Total commitments to the Partnership for Central America now add up to more than $3.2 billion, signifying both political will and private sector momentum to make progress.
Bolstering support for the most vulnerable
Those at highest risk for irregular migration from these countries are low-income, urban youth populations under 40 with low levels of education. The median age of immigrants from these countries is 37, according to the Migration Policy Institute, with almost 50 percent lacking a high school diploma. Youth populations are also the largest demographic in these countries, representing approximately 30 percent of the total population. However, this is also the group that is least able to find educational, employment, or training opportunities, with nearly 28 percent of the youth population unable to access any of these three opportunities. Many young people work inconsistently in the informal economy running small businesses or as gig workers. These statistics are even worse for women, who comprise only 32 to 42 percent of the labor force in Northern Triangle countries, according to most recent World Bank labor data. Meanwhile, Customs and Border Patrol reported that of the 16.2 million emigrants from Central America and Mexico to the United States in 2020, nearly half were women.
Rural populations dependent on agriculture are also at high risk for migration. There are approximately five million smallholder farmers in the Northern Triangle, making up just under one-third of the region’s labor force. Still, the agriculture sector only generates between five percent and 13 percent of GDP in these countries, according to the World Bank, despite a much higher level of production. Guatemala alone loses or wastes over a third of its total post-harvest food production each year, adding up to 20 million tons of food and lost revenue. At the same time, many Guatemalans face moderate to severe food insecurity.
Accion is committed to working toward meeting the needs of these unique groups using the lessons we have learned from more than 60 years of work in financial inclusion in Latin America. We call on others to join us and our fellow members of the Partnership for Central America in our effort to tackle the challenges in the region, with these considerations in mind:
- Take an ecosystem approach: It is crucial that efforts are facilitated using an ecosystem approach, where partners work together to boost both producer and consumer sides of Central American economies simultaneously. Progress in one area without attention to others runs the risk of exacerbating inequality and continuing to make irregular migration both an attractive option and an escape valve. Building economic ecosystems requires close coordination and a willingness to share platforms and resources, but it is the only way to ensure sustained investment in growing local businesses and communities.
- Invest in and amplify the reach of local solutions to local problems: No one is better placed to solve problems in their own communities than the people who live there. The demographic at most risk for irregular migration — urban youth under 40 — is also the demographic statistically most likely to pursue entrepreneurship and have the most digital literacy. Urban youth are in desperate need of opportunities to enter the formal economy. Investing in local fintechs and entrepreneurs will have exponential benefits — growing the workforce and providing resources for those best placed to solve local problems to implement solutions right at home.
- Support digital infrastructure to allow innovative solutions to reach the most vulnerable: Digitization has never grown more rapidly than during the COVID-19 pandemic, increasing access to markets, data, funding, and other resources across the globe. However, this leads to growing inequality for those who are still left out of the digital space. Furthermore, inefficient supply chains in the Northern Triangle are a major problem, leading to food loss and waste and limited market access on one end, and to food insecurity, unstable prices, and lack of consumer choices on the other. Digitization is one way to increase efficiency while providing opportunities for growth, so that the existing workforce is not disenfranchised in the process. Solutions should focus on taking steps to build physical and digital infrastructure so that all can experience the benefits of new and innovative technologies.
Accion will continue to pursue high-level plans to bring together private sector partners to innovate and co-create solutions to address these issues, and we call on other interested stakeholders to join us in these efforts. Learn more about the Partnership for Central America here.