Enterprise, Trade and Environment

To reduce inequalities between the rich and the poor, USAID/Guatemala supports activities to strengthen the competitive sectors within the country, such as the handicraft industry. Through micro-credit programs, trade promotion, and business development initiatives, rural communities are expanding their opportunities and forging linkages at the national and international levels.

The following facts give a snapshot of the current conditions for enterprise, trade and environment in Guatemala:

• Among the world’s top 25 biodiversity ‘hot spots’ with one of the planet’s richest, most bio-diverse regions – highly threatened by degradation and deforestation
• Many unique eco-systems are adequately managed and provide sustained flow of resources essential to economic growth
• Boasts two UNESCO World Heritage sites, Tikal and Antigua
• Diverse cultural heritage that includes 24 sociolinguistic groups (21 Mayan)
• Well-located for U.S. and Central American markets: U.S. is Guatemala’s most important trading partner and accounts for 30% of exports and 36% of Guatemala imports
• Proven capability to produce high-quality products
• Management talent and good labor force
• Third worst income distribution in the world: per capita income of $1,750 masks extreme inequalities between urban, largely ladino and rural, indigenous populations
• GDP growth rate of 2.5%, a $23.3 billion economy that is the largest in Central America
• Imports 50% more than it exports and the $2 billion in remittances from Guatemalans, primarily in the U.S., maintains balance of payments
• Remittances bolster rural economy and support construction and capital for small and medium businesses

USAID/Guatemala programs are designed to build on the opportunities that exist to have a significant impact on the development challenges that this snapshot depicts. A sampling of that impact accomplished by USAID and its partners over the last few years includes:

• Modernizing customs administrations to improve the efficiency of moving imports and exports
• Technical assistance and training for small-scale producers to allow them to have higher value production that meets international quality standards and market requirements
• New policies and laws that help communities obtain rights to and manage cultural and natural resources, including high biodiversity areas
• Employment opportunities opened for over 155,000 rural business people
• $21 million in public/private investment generated in market towns
• 20 sustainable community forestry concessions produce certified wood and protect forests
• Ministry of Environment created
• More than 350,000 hectares of forest certified and dozens of communities managing their own certified forest concessions
• Eco-tourism sites certified by Green Deal
• CONAP (National Council for Protected Areas) strengthened

In order to spur rural income growth and contribute to poverty alleviation, agricultural production must meet domestic demand and grow significantly faster than the rural population by means of exports. Agriculture is extremely important in areas such as the Guatemalan highlands because it generates the income necessary to increase demand for non-farm production. For the most part, the economies of Central America still rely heavily on the agricultural sector as a source of rural employment and income generation. Producers must meet higher standards for quality, volume, and delivery in order to take advantage of market opportunities and penetrate new markets.

The goal for the new USAID/Guatemala 2004-2009 strategy is to help increase income levels and generate more and better opportunities for adequately-remunerated employment opportunities, especially in rural areas. This goal can be achieved with greater national and foreign private investment and improved conditions for competition in global markets. To do this, our programs under the 2004-2009 strategy will continue to promote sustainable use of cultural and natural resource endowments and work to create and implement feasible public policies and effective public institutions.

Progress toward this goal is measured by changes in the composition of exports to less traditional and higher-value products and improved competitiveness in the world markets.

USAID’s economic growth programs will work to:

1. strengthen laws, policies, and regulations that promote trade and investment;
2. create more competitive, market-oriented, private enterprises; and
3. promote broader access to financial markets and services.

Specific activities designed to enhance laws, policies and regulations that promote trade and investment include efforts to increase competitiveness at different levels:

• At the national level via improved capacity to negotiate and implement trade agreements, including general trade and investment policies and more specific DR/CAFTA-related policies such as trade capacity building and the Environmental Cooperation Agreement and via reduction in the barriers to trade, investment, and market integration;
• At rural level via rural development and agrarian (land) policies and commercial laws and regulations that are more consistent with labor, intellectual property rights, international commitments and prevailing practices and that facilitate participation of small and medium-sized firms in trade;
• At level of key industry clusters, such as forestry, agro-industrial, and tourism/handicrafts, via the reform of competition laws, reduction in the barriers to trade, investment, and market integration and facilitation of small and medium-sized enterprises in trade.

Key counterparts in the activities listed above are the National Program for Competitiveness (PRONACOM), the Presidential Commission for Tourism, and the Ministry of Agriculture, the latter of which will facilitate and strengthen private sector compliance with Sanitary-Phytosanitary (SPS) requirements.

Specific activities to create more competitive, market-oriented, private enterprise opportunities, particularly for small- and medium-size farms and non-farms in rural Guatemala. The three cluster areas that these activities will focus on are agriculture and agri-business, forestry and tourism. USAID/Guatemala activities will foster direct results in:

• Increased number of new small and medium enterprises (SMEs);
• New partnerships and business alliances involving SMEs;
• Expansion of existing SMEs into new, high value markets;
• Introduction of SMEs to new technologies;
• Stronger and more sustainable small and medium producer organizations;
• New and sustainable technical and business services for SME’s.

The Ministry of Culture and Sports will be the principal counterpart for promotion of the co-administration of cultural heritage sites and the National Council of Protected Areas (CONAP) for promotion of forestry and protected areas management.

Specific activities to broaden access to financial markets and services include those that:

• increase access to rural financial services;
• promote more productive use of remittances; and
• improve financial sector supervision.

A key counterpart in expanding access to financial markets and services is the commercial banking sector, which is helping to broaden and leverage financing available to Guatemala’s small- and medium-sized enterprises, and other regulatory authorities and business groups. Important donor partners are the World Bank and International Finance Corporation, Inter-American Development Bank, Central American Bank for Economic Integration, U.S. Chamber of Commerce, and international industry groups

Environment Activities

Guatemala has a wealth of natural resources that are both ecologically and economically important. The country contains the largest area of cloud forest and wetlands and the highest population of large cats in Central America. As an important point of convergence of species migrating from both North and South America, Guatemala plays a vital role in the conservation of many migratory bird species from the United States. Rich biodiversity, cultural diversity, and a historic past easily make Guatemala one of the world’s top tourism destinations. Tourism and other enterprises based on natural resources, such as forestry, comprise a significant part of Guatemala’s jobs and export earnings. Increased investment and economic growth in natural-resource-based sectors need to be managed carefully to conserve the environmental and economic value of these resources.

USAID Guatemala’s environment program, located within the Office of Enterprise, Trade and Environment, supports environmentally sound management of natural resources in priority areas of high biodiversity, including the Maya Biosphere Reserve in the Petén, the Motagua-Polochic system (which includes the Sierra de las Minas Biosphere Reserve), and the Atitlan Volcanoes Bioregion. The program aims towards providing sustainable income-generation alternatives to people living in and around protected areas. Activities include efforts to establish certified timber production, encourage tourism, and promote environmentally sound production practices.

USAID/Guatemala is currently signing new cooperative agreements aimed at building upon past successes in conservation through establishing certified forestry activities, certified/sustainable tourism operations, and environmentally sound agricultural production. These activities will be implemented through FY2009.

USAID’s environment activities in the following categories are summarized below:

• Biodiversity & Conservation
• Forestry
• Climate Change
• Population, Health, & Environment

Biodiversity & Conservation

In the Maya Biosphere Reserve, Sierra Lacandón Park staff were trained in fire management, fire breaks were implemented, and patrols were conducted. In the Sierra de las Minas Biosphere Reserve, 11 municipalities signed agreements that included the payment of the salary of one park guard per municipality, a significant success stemming from the establishment of the Board of Directors for the Reserve. In the Atitlán Bioregion, work with municipalities on park management and tourism infrastructure and administrative capacity is yielding results. The municipality of San Pedro has developed an operating plan, and defined a park co-management structure that includes local government authorities, NGO, and civil society organizations; a financial plan is under development. With financial resources leveraged from other sources, San Pedro has constructed trails, a visitor center, and a geology museum. In Santa Clara Municipality, two park guards were hired by the municipality.

There is evidence that this work is having a positive impact on conservation. USAID’s partner’s efforts to protect the nesting sites of the endangered scarlet macaw are having some success. Biological monitoring in the Maya Biosphere Reserve indicated that of 19 nests monitored, 17 chicks (90 percent) survived. In the Atitlán region, monitoring data for indicator species such as frogs (Eletheurodactylus), horned guan (Oreophasis) and bees (Bombini and Euglossini) showed no significant changes compared to the baseline. In the Motagua-Polochic region, data show no changes in bromeliads. Manatee numbers also appear to be holding steady, with observations at the same frequency as 2003.

Until recently, many of USAID’s activities in Guatemala were carried out through the Parks in Peril program. Implemented by The Nature Conservancy, Parks in Peril is one of USAID’s most successful conservation programs. In Guatemala, the program aimed at conserving biodiversity, improving protected area management and mitigating the effects of climate change in the Maya Biosphere Reserve (including Laguna del Tigre and Sierra Lacandón National Parks); the Sierra de las Minas Biosphere Reserve (including the Motagua – Polochic RAMSAR wetland region); and the Atitlán Volcanoes Bioregion. This program ends in September, 2006.

To learn more about Parks in Peril’s conservation activities in Guatemala, click here.

Forestry

With the assistance of USAID, Guatemala has become a world leader in certified community-managed forests, with over 400,000 hectares of community forest certified by the end of Fiscal Year (FY) 2005. During FY 2005, USAID assisted 11 community forestry organizations by providing training and technical assistance in business management (organization, administration, accounting and financing, planning, marketing, customer service); forest management and certification; marketing research, pricing and costing; and preparation of forest management and financial plans. An analysis of these organizations indicates that they have increased their capacity to manage their businesses and are applying improved practices. Organizations developed internal by-laws, most updated financial records and developed five-year management plans and financial planning instruments. By having a five-year operational plan, concessionaires are in a better position to negotiate timber sales with buyers as well as to promote long-term alliances with the private sector.

The new Community Enterprise for Forest Services in Peten, which was legally established with USAID support, has provided technical services on marketing products and managing harvests to ten community organizations. In addition, almost 20 percent of the concessions’ timber was sold through the enterprise, with the remainder negotiated and sold directly by the concessions, as in the past. The Community Enterprise generated a price increase for the concessions of $0.20 per board foot of mahogany for the percentage it sold. Significant progress has been made in reducing costs and consolidating forest certification by using the Community Enterprise for Forest Services as an umbrella.

Monitoring of these activities in community-led forestry concessions has shown that biodiversity is higher in the forestry concessions than in some protected areas, due to their stronger controls over illegal logging, access, and other activities that negatively impact biodiversity. USAID will build upon these successes while continuing to monitor biological diversity in these activity areas.

USAID continued to support fighting forest fires by providing technical assistance, facilitating training activities, purchasing fire fighting equipment, and helping to cover operating expenses, such as meals, gasoline, and payment of fire brigades.

At the policy level, the Agency supported the formulation of the Forest Management Policy and Non-timber Products Policy that were officially approved by the National Council of Protected Areas, made available to the public, and are being applied through regulations, dialogue (“mesas de diálogo”), and agreements with communities. The Forest Management and Non-timber Products Policies have been key in managing forestry activities, including the enforcement of CITES regulations for mahogany; the development of regulations, procedures, and guidelines for xate palm management activities inside parks; the development and implementation of park management plans; and the support of user rights and compliance by forestry concessions.

Climate Change

Primarily through improved protected area management, training and technical assistance, and vulnerability reduction and adaptation, USAID is succeeding in preserving the environmentally significant lands of Guatemala. At the same time, these efforts have addressed the issue of climate change by preserving carbon stocks and building the capacity of the Guatemalans to reduce greenhouse gas emissions. In the future, USAID may expand work in clean production, a priority for the Government of Guatemala and for the implementation of CAFTA. For more information see USAID/EGAT’s Guatemala Climate Change Country Program web page and Guatemala Global Climate Change Country Profile

Population, Health, & Environment

In the Petén region of Guatemala around the Maya Biosphere Reserve, USAID’s Population, Health, and Environment program supported the NGO ProPetén in its Remedios II project. Emphasizing mass popular education to encourage the use of family planning and better environmental land management, the project developed a Radio Soap Opera, “At a Crossroads.” Set in an imaginary village, the story will air daily for an entire year. Following extensive background research, ProPetén identified key themes to be highlighted throughout the program: migration, land speculation, more environmentally-friendly land-use practices, family planning, safe motherhood, and prevention of sexually transmitted infections and AIDS, as well as gender equity and intercultural relations.

A second popular Population, Health, and Environment program is the "Mobile Biosphere," a cross-terrain vehicle that travels to remote communities across the Maya Biosphere Reserve to organize informal education activities including talks, mini-workshops, skits, movies, and games. Educational themes include natural pesticides and organic fertilizers, crop diversification, family planning and reproductive health, forest fire prevention, environmental sanitation (trash collection and disposal, latrines, drinking water), education, improved nutrition, and medicinal plants.

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(See Where We Work for summary of programs, activities, partners and counterparts.)