Claudia Navas USAID Claudia
USAID CREATING ECONOMIC
OPPORTUNITIES PROJECT QUARTERLY PERFORMANCE REPORT
FY20 Q2: January 1 – March 30, 2019
Submission date: 4/30/2020 Contract No: 72052018C00000
This document was produced by Palladium for review by the US Agency for International Development. The views expressed in this document do not necessarily reflect the views of the US Agency for International Development or the United States Government.
Contents
Introduction ...... 10 Project Description ...... 10 Key Achievements of the Quarter...... 11 1 Trade and Investment Promoted ...... 13 1.1 Support Foreign and Domestic Investment Promotion ...... 14 1.1.1 Define and Implement an Institutional Framework for Investment Promotion ...... 15 1.1.2 Develop, Manage, and Facilitate a Pipeline of Investment Opportunities ...... 15 1.1.3 Support Development of Industrial Zones as Investment Destinations ...... 18 1.2 Implement Economic Corridor Strategies to Guide Project Activities ...... 21 1.2.1 Develop and Implement Economic Corridor Strategies ...... 21 1.2.2 Develop and Support Stakeholder Coordination Frameworks in Target Economic Corridors ...... 21 1.3 Improve The Enabling Environment ...... 22 1.3.1 Provide Targeted Technical Assistance to Support Policy Development and Reforms ...... 22 1.3.2 Build GoG Capacity around Guatecompras ...... 23 1.3.3 Simplify GOG Procedures to Promote SME Access to Services ...... 23 2 Financial Services Mobilized...... 27 2.1 Increased access to financial services through Financial education in Target Geographies .... 28 2.1.1 Develop and Implement a Financial Education Plan Linked to the National Financial Inclusion Strategy ...... 28 2.1.2 Develop the Market of Investment Funds and Other Entrepreneurship Support Mechanisms ...... 29 2.2 Increase the Number of SMEs Participating in the Formal Financial Sector ...... 30 2.2.1 Build Financial Institutions’ Capacity to Finance SMEs ...... 30 2.2.2 Identify and Support Development of New Market Opportunities ...... 31 2.3 Increase the Value of Financing and Financial Services Extended to SMEs ...... 33 2.3.1 Develop and Deploy Financial Incentives to Stimulate Access to Finance ...... 33 2.3.2 Support the Establishment and Expansion of Investment Funds...... 33 2.3.3 Capitalize IMPACT Investment Funds ...... 34
3 Productive Infrastructure Upgraded ...... 36 3.1 Strengthen Local Government Capacity to Identify, Plan, and Implement Productive Infrastructure Projects ...... 37 3.1.1 Assess Municipalities’ Capacity and Resources to Improve Productive Infrastructure ...... 37 3.1.2 Build municipal planning capacity ...... 37 3.1.3 Strengthen Municipal Linkages with the private sector ...... 38 3.1.4 Improve the Municipal Enabling Environment for Project Development ...... 39 3.2 Develop and Support Implementation of a Pipeline of Productive Infrastructure Projects .... 39 3.2.1 Identify and Define Productive Infrastructure Projects ...... 39 3.2.2 Support Implementation of High-Potential Projects ...... 40 4 Private Sector Competitiveness Improved ...... 46 4.1 Develop and Implement Anchor Firm Alliances ...... 47 4.1.1 Identify, Develop, and Manage a Pipeline of Partner Firms ...... 47 4.1.2 Provide Technical Assistance to Firms under Alliances ...... 48 4.1.3 Strengthen Business Development Services Providers ...... 48 4.2 Strengthen the Entrepreneurship and Innovation Ecosystem ...... 49 4.2.1 Strengthen Entrepreneurship and Innovation Development Centers ...... 49 4.2.2 Develop and Leverage Alliances to Improve the Entrepreneurship /Innovation Ecosystem .. 50 4.3 Promote Market Linkages ...... 50 4.3.1 Support participation in international business fairs and Trade Missions ...... 50 4.3.2 Support Participation in National business-to-business exchanges ...... 51 4.3.3 Leverage Technology to Facilitate Market linkages ...... 51 4.4 Develop a Competitive Workforce ...... 52 4.4.1 Develop and Leverage Alliances to Support WorkForce Development ...... 52 4.4.2 Host and Improve the Effectiveness of Job Fairs in Target Geographies ...... 53 4.4.3 Develop and Implement a Formal Employment Opportunity Program for Out-of-School Youth ...... 53 4.4.4 Strengthen the Vocational Training Ecosystem ...... 53 5 Cross-Cutting Activities ...... 55 5.1 Integrate Gender Equality, Social Inclusion and Conflict Sensitivity into Project activities ..... 55
5.1.1 Integrate Gender Equality, Social Inclusion and Conflict Sensitivity into Project Activities ... 56 5.2 Manage Communications, Outreach, and Knowledge Management ...... 58 5.2.1 Manage General Program Communications and Outreach ...... 58 5.2.2 Maintain Coordination and Collaboration with Other USAID/Donor Programs and Stakeholders ...... 59 5.2.3 Support Communications Campaigns to Inform and Change Behaviors ...... 59 6 Program Management and Operations ...... 60 6.1 Manage Mechanisms for Collaboration and Strategy Consensus ...... 60 6.1.1 Organize and Administer a National Key Stakeholders Committee ...... 60 6.2 Develop and Manage Annual Work Plans and Reporting ...... 60 6.3 Mobilize, Manage, and Develop Project Personnel ...... 61 6.4 Manage Project OPerations, Infrastructure, and Procurement ...... 61 6.4.1 Provide Home Office Support and Oversight ...... 61 6.4.2 Set up and Manage Physical and IT Infrastructure ...... 62 6.4.3 Fixed Price SubContracts ...... 62 6.4.4 Administer Grants under Contract ...... 62 6.5 Manage Project Monitoring, Evaluation and Learning Approach ...... 62 7 Lessons Learned ...... 63 8 Challenges, Risks and Opportunities ...... 65 8.1 Challenges ...... 65 8.2 Risks...... 65 8.3 Opportunities ...... 65 Annex A Organizational Charts ...... 67 Annex B Compliance with USAID Environmental Procedures ...... 71 Annex C Success stories ...... 74 Annex D Updated Project Indicators Table ...... 82 Annex E Performance Tracker Indicator ...... 85
Tables and Figures Table 1 Distribution of Allied Companies and Infrastructure projects in Project geographies (March 31, 2020) ...... 12 Table 2 FDI Potential Investment Opportunities with Mexican Companies ...... 14 Table 3 FDI Portfolio as of March 15, 2020 ...... 16 Table 4 List of FDI opportunities which were canceled this quarter ...... 17 Table 5 FDI Portfolio in terms of Feasibility and Phases ...... 17 Table 6 Details of Three Foreign Direct Investment Agendas Facilitated this Quarter ...... 18 Table 7: Proposed agenda for legislative and regulatory reform to create a business enabling environment ...... 22 Table 8 Project Support for Ministry of Labor’s H2A Seasonal Labor Program in the Quarter ...... 24 Table 9 Project Pipeline of Entities Supported in DFC Applications ...... 31 Table 10 Current Status of Annual Purchasing and Contracting Plans (PACC) ...... 38 Table 11 Municipal Instruments Supported by the Project, and their Status ...... 38 Table 12: List of identified infrastructure projects ...... 42 Table 13 Project Alliances with Private Sector Entities ...... 52 Table 14 Workforce Development Initiatives Implemented in the Quarter ...... 53 Table 15 Employment Fairs Supported in the Quarter ...... 53 Table 16 Update of staff hires this year, by Consortium partner and office ...... 61 Table 17 Summary of Environmental Reviews submitted and being followed-up on this quarter ...... 71 Table 18 New Environmental Reviews in-process ...... 72
Figure 1 Map of part of the Department of Guatemala showing two potential investment projects ...... 19 Figure 2: Artist’s rendition of potential Ciudad Reformadores site in Villa Nueva ...... 20 Figure 3: Newspaper article showing Southern Cone Plan developed between municipalities of Guatemala and Villa Nueva ...... 21 Figure 4: People trained in Financial Education in the Quarter ...... 29 Figure 5 People with improved understanding of harassment and inclusion ...... 57 Figure 6 Organizational Chart, Guatemala City Technical Team ...... 67 Figure 7 Organizational Chart, Guatemala City Operations Team...... 68 Figure 8 Organizational Chart, Quetzaltenango ...... 69 Figure 9 Organizational Chart, Huehuetenango...... 70
Task/Inputs Table 1.1 Support Foreign and Domestic Investment Promotion ...... 20 Task/Inputs Table 1.2 Implement Economic Corridor Strategies to Guide Project Activities ...... 21 Task/Inputs Table 1.3 Improve the Enabling Environment ...... 25 Task/Inputs Table 2.1 Increased Access to Financial Services through Financial Education in Target Geographies ... 30 Task/Inputs Table 2.2 Increase Number of SMEs Participating in the Financial Sector ...... 32 Task/Inputs Table 2.3 Increase the Value of Financing and Financial Services Extended to SMEs ...... 34 Task/Inputs Table 3.1 Strengthen Local Government to Identify, Plan and Implement Productive Infrastructure Projects ...... 39 Task/Inputs Table 3.2 Develop and Support Implementation of a Pipeline of Productive Infrastructure Projects ..... 45 Task/Inputs Table 4.1 Develop and Implement Anchor Firm Alliances ...... 49 Task/Inputs Table 4.2 Strengthen the Entrepreneurship and Innovation Ecosystem ...... 50 Task/Inputs Table 4.3 Promote Market Linkages ...... 51
Task/Inputs Table 4.4 Develop a Competitive Workforce ...... 54 Task/Inputs Table 5.1 Integrate Gender Equality, Social Inclusion into Project Activities ...... 57 Task/Inputs Table 5.2 Manage Communications, Outreach and Knowledge Management ...... 59 Task/Inputs Table 6.1 Organize and Administer a National Key Stakeholders Committee ...... 60 Task/Inputs Table 6.2 Develop and Manage Annual Work Plans and Reporting ...... 61 Task/Inputs Table 6.3 Mobilize, Manage and Develop Project Personnel ...... 61 Task/Inputs Table 6.4 Manage Project Operations, Infrastructure and Procurement ...... 62 Task/Inputs Table 6.5 Manage Project Monitoring, Evaluation and Learning Approach ...... 63
Abbreviations and Acronyms ACREDICOM Cooperative in Quetzaltenango, member of MiCoope AEL Local Economic Agenda AGEXPORT Guatemalan Exporters’ Association AGVC Guatemalan Venture Capital Association (Asociación Guatemalteca de Venture Capital) AMCHAM Guatemalan American Chamber of Commerce ASAZGUA Guatemalan Sugar Producers’ Association ASCATED National Council for the Attention of People with Disabilities BAC Banco de América Central - Bank of Central America BAM Banco Agro-Mercantil - Agro-Mercantile Bank BDSPs Business Development Service Providers BEEP Babson Ecosystem Enterprise Platform BI Banco Industrial – the Industrial Bank CAC Key Stakeholders Committee CAMTUR Chamber of Tourism CC Constitutional Court CCG Guatemalan Chamber of Commerce CEMPRO Cementos Progreso, a large Guatemalan Cement Company CENPROMYPE Center for the Promotion of Micro, Small and Medium-Sized Enterprises CentraRSE Corporate Social Responsibility Action Center CHN National Mortgage Credit Bank CICIG International Commission Against Impunity in Guatemala CIG Guatemalan Chamber of Industry CLA Collaboration, Learning and Adapting COINCIDE Guatemala City Investment and Economic Development Advisory Body COMUDE Municipal Council for Urban and Rural Development CONAP Council of National Protected Areas CONRED National Disaster Reduction Coordination Body CONALFA National Committee for Literacy COSAMI San Miguel Cooperative, a member of MiCoope in San Miguel, Totonicapán COVID-19 Coronavirus Disease CUTRIGUA Consejo de Usuarios del Transporte Internacional de Guatemala DCA Development Credit Authority DQA Data Quality Assessment DGAC Civil Aviation Authority DMAIC Define, Measure, Analyze, Improve, Control methodology ECLAC Economic Commission for Latin American and the Caribbean ECs Economic Corridors ERAI Mechanism for Financial Education, Remittances, Savings, and Investments FENACOAC National Federation of Savings and Loan Cooperatives
FUNDAP for the Development of Integrated Socio-economic Programs GDP Gross Domestic Product GIZ German Agency for International Development GoG Government of Guatemala GRC-SAT Central Customs Building, Lavarreda zone 17, Guatemala City FIs Financial Institutions FIG Guatemala Innovation Fund FTE Full-time Equivalent ICMA International City/ County Management Association DI Domestic Investment IDFC United States International Development Finance Corporation FDI Foreign Direct Investment ILO International Labor Organization IMCM Municipal Capacity Assessment Tool INAB National Forestry Institute INGUAT Guatemalan Tourism Institute INTECAP Technical Institute of Training and Productivity IPE National Investment Promotion Entity IUSI Single Property Tax JUNKABAL JUNKABAL Foundation, an institute for higher education and training for girls KINAL KINAL Foundation, an institute for higher education and training for boys LTTA Long-term Technical Assistance MARN Ministry of Environment and Natural Resources MCC Millennium Challenge Corporation MCD Ministry of Culture and Sports MDPs Municipal Development Plans/ Planning MINECO Ministry of Economy MINEDUC Ministry of Education MINFIN Ministry of Finance MINTRAB Ministry of Labor MSPAS Ministry of Public Health and Healthcare MiSMEs Micro, Small and Medium-Sized Enterprises NGO Non-Governmental Organization NTM Northern Triangle Migration OCA Organizational Capacity Assessment OMDEL Municipal Local Economic Development Office PACC Annual Procurement and Contracting Plans PACIT Commercial Attaché Investment and Tourism Program, of the Ministry of Foreign Affairs PDEM Municipal Economic Development Parks PDTM Municipal Tourism Development Plan PGN Attorney General of Guatemala
POTs Land-use Plans PRODETUR Tourism Development Promoter PRONACOM National Competitiveness Program SMEs Small and Medium-Sized Businesses RGAE General Government Procurement Registry RFP Request for Proposal RGP General Property Registry ROSDE Registry of Business Development Service Providers SAT Superintendence of Tax Administration SEAF/CEED The Center for Entrepreneurship and Executive Development SEGEPLAN Presidential General Secretariat for Planning and Programming SEZ Special Economic Zones SICOIN-GL Integrated Governmental Accounting System - Local Government SIECA Secretariat of Central American Economic Integration SOCAP Social Capital Market STTA Short-Term Technical Assistance TA Technical Assistance TVET Technical and Vocational Education and Training UPANA Universidad Panamericana URL Universidad Rafael Landívar USIDFC United States International Development Finance Corporation VAS Vía Alterna del Sur VESTEX Association of the Textile and Apparel Industry ZDEEP Special Public Economic Development Zone
INTRODUCTION The USAID | Guatemala Creating Economic Opportunities Project (“the Project”) entered its third project year in October 2019. Last year, FY19, was a year of growth and consolidation, in which the Project firmly established a pipeline and a clear pathway to achieve its core results. This year, following a reduction in funding to Northern Triangle countries, the Project has continued momentum, focusing resources where they will most directly contribute to core project objectives and expected results. During this Quarter, the Project has seen the introduction of a new government, with Project leaders working closely with USAID to smooth the transition of ongoing activities to incoming representatives. Across all components we have seen good progress towards project objectives in terms of jobs, sales, financing and investment. The progress and strong relationships we had forged with partner companies and counterparts were especially important as COVID-19 came to Guatemala in the final weeks of the Quarter. In mid-March, the Project and allied companies had already begun to feel the impact of the pandemic. In response to the evolving economic and social crisis, the Project began teleworking and implemented a rapid survey of companies to identify how best to adapt approaches and continue support.
PROJECT DESCRIPTION The Project is a 5-year, broad-reaching activity designed to spur productive economic activity in and beyond Guatemala’s capital city. In addition to the department of Guatemala, the Project focuses on private sector-led growth in five departments in Guatemala’s Altiplano region, including Quetzaltenango, Huehuetenango, Totonicapán, San Marcos, and Quiché. With the overarching objectives of generating 50,000 new jobs, facilitating $75 million of foreign and domestic investment, and mobilizing more than $60 million in financing to SMEs, the Project is designed to harness drivers of economic growth, including domestic and international businesses in priority sectors and infrastructure developers. At the national level, the Project is developing and launching substantial investment and trade promotion activities, and in target geographies developing the critical infrastructure and service platforms to attract investment and spur growth. These will be vertically linked through market-based alliances with universities and Technical Vocational Education and Training (TVET) providers for workforce development, and with Small and Medium Enterprises (SMEs) to serve as distributors and suppliers to larger enterprises. In the focus departments, the Project supports the development of an enabling environment that facilitates skill acquisition, entrepreneurship, and SME growth. Through strategic platforms for financial facilitation, the Project enables enterprises of all sizes to access the capital they need to build their businesses and create jobs. The Project is structured with four integrated Components, each of which contributes to core results indicators: • Component 1: Trade and Investment Promoted is focused primarily on activities that contribute to increased foreign and domestic investment, which in turn contribute to increased employment. • Component 2: Financial Services Mobilized is focused on increasing the number of firms receiving financing and expanding the total value of financing provided to SMEs. • Component 3: Productive Infrastructure Upgraded is focused on increasing the total value of investment directed toward productive infrastructure projects and improving municipalities’ capacity to identify and manage the development of infrastructure projects.
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• Component 4: Private Sector Competitiveness Improved focuses on the firm-level indicators that will also contribute to increased investment and jobs growth. This will increase the number of private sector enterprises with improved management capacity or technologies, growing the number of supply chain linkages between SMEs and “anchor firms,” and increasing companies’ sales into local and international markets. Under its workforce development efforts, the Project also increases the number of Guatemalans with new or improved jobs and expands the number of Guatemalan youth participating in workforce development programs.
The Project also incorporates cross-cutting functions, including activities to support the integration of gender and inclusiveness into Project activities, communications and outreach, and ongoing monitoring, evaluation, learning, and reporting of Project results.
KEY ACHIEVEMENTS OF THE QUARTER During the quarter, the Project successfully engaged with incoming government officials in a complex political transition following a contentious election. Our advisors quickly established working relationships at technical levels, maintaining momentum on key streamlining initiatives that were begun last year. This includes efforts with the Ministry of Environment to development the BIAWEB platform to facilitate application and approval of low-risk environmental permits C and CR. It also includes work with the Ministry of Economy (MINECO) to promote the GuateCompras platform and registration of SMEs in the RGAE. The Project’s work supporting the Ministry of Labor in the H2A visa Seasonal Labor Program has also Progress by the Numbers successfully transitioned under the new government. To date the Project has supported: The Project also continued its progress supporting an • Identification of more than $370 million in high investment promotion pipeline for foreign direct potential FDI projects investment (FDI).1 To date, the Project has supported the • $15 million in financial products and services identification of 18 FDI opportunities worth $370 million, accessed by SMEs which would generate at least 4,480 jobs2. This includes • Mobilization of $32 milion in domestic investment two high-probability projects identified this quarter, with • $16 million in capital invested in SMEs, total potential investment of $8.9 million and 150 jobs. including $9 million in the Western Highlands We continued to support outcomes for partner • 10 new municipal instruments adopted to improve infrastructure development companies seeking to expand access to finance. During the • $3 million in new sales to the government by period, partner SMEs received $2.57 million in financing allied SMEs and services, bringing the life-of-project total to $14.99 • 476 SMEs receiving technical assistance million. SMEs also received $6.26 million in capital • $49 million in new sales by allied firms, of investment during the quarter, achieving a life-of-project which 36% originated in the Western total of $15.97 million. Another successful Commercial Highlands and Financial Fair in Guatemala City concluded with • 6,656 people with new or upgraded employment, including 1,484 women and 2,376 negotiations for $12.3 million of financing, and $2.3 million youth in commercial deals.
1 During the quarter, the Project continued to work with USAID to support the case for a waiver of ADS 225’s prohibition on support to Guatemala’s institutions charged with investment promotion. Toward the end of the period, USAID issued guidance allowing the Project to engage directly with PRONACOM and others interested in this type of support to that end. 2 Jobs reported in letters of intent may be underestimated based on the value of the investments and construction required. They also do not include any indirect jobs.
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Multi-faceted support to Investment Funds resulted in an additional $2 million in investment in one fund, allowing it to close its first funding tranche, and Project support linking opportunities to the DFC has led to a pipeline of 15 projects worth $226 million in sectors ranging from critical infrastructure, industrial development and financial institutions lending to SMEs. Partial guarantees facilitated by the Project led to an additional 20 SMEs this quarter accessing more than $5 million in financing. In our work to support the development of productive infrastructure, the Project added two new potential projects worth a combined $44 million to its portfolio, which now encompasses more than $1.2 billion in potential investment that would generate thousands of construction jobs. The Project also supported the completion of six municipal instruments this quarter, which will dramatically improve municipalities' capacities to plan and transparently manage productive infrastructure development. Finally, the project has continued to advance pre-feasibility studies to facilitate investment in productive projects. While some projects have been paused in response to the COVID-19 crisis, the Highways Department is advancing to bidding stages for two highway improvement projects for which the Project completed feasibility studies in 2019. Finally, the Project continues to support a wide range of allied companies to implement business growth plans. During the quarter, we actively supported 75 companies, of which 40 were new partners, bringing the life-of-project total to 476 companies receiving technical assistance. This support created 2,0343 new jobs – 512 women; 433 youth – and generated new sales of $20.79 million this quarter; with 4,6994 jobs generated to date (1,484 women, 1,036 youth) and total new sales of $48.85 million.
Table 1 Distribution of Allied Companies and Infrastructure projects in Project geographies (March 31, 2020)5 Allied Companies Projected New Jobs6 Projected Projected Projected Project and New Financing Investment geographies Infrastructure Sales Required Total Direct Indirect ($M) projects ($M) ($M) Guatemala 160 22,509 15,887 6,622 452.5 59.8 896.8 Huehuetenango 60 4,185 2,884 1,301 86.1 8.1 16.5 Quetzaltenango 90 8,832 6,503 2,329 133.2 20.7 72.5 Quiché 11 2,284 1,709 575 8.6 10.4 27.3 San Marcos 34 1,923 1,457 466 4.6 2.0 26.3 Totonicapán 3 149 82 67 7.4 0.8 0.5 Grand Total 358 39,882 28,522 11,360 692.4 101.7 1,039.9
3 927 direct and 1,107 indirect jobs. Indirect jobs include those not reported in previous quarters. 4 3,592 direct and 1,107 indirect jobs. Indirect jobs include those not reported in previous quarters. 5 The estimates presented could be impacted by the economic effects of the COVID-19 pandemic in Project geographies. The Project initiated development of contingency plans to support allied companies so that they can maintain the greatest number of employees after the impact of the virus on local business. 6 Projected Indirect Jobs are included this quarter, according to the methodology for calculating them included in the pending revision to the Project MEL.
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Claudia Navas/ Claudia USAID
1 TRADE AND INVESTMENT PROMOTED During the quarter, the Project identified new opportunities and facilitated inbound investment missions from Mexico, Costa Rica, and El Salvador. It continued implementation support of process and policy changes with the GOG. The Project also consolidated an alliance with the Municipality of Guatemala and with Grupo Apolo, a real estate company in Villa Nueva. In the case of the Municipality, the Project provided technical assistance to designate an existing development as a Special Economic Zone (SEZ). Technical assistance to Grupo Apolo, will identify a site for an SEZ a larger project. Based on this designation, municipal authorities and private sector representatives will be able to define activities from scenarios identified by the Project to promote investment attraction to the area. The team also continued to participate in inter-institutional coordination activities with the National Competitiveness Program (PRONACOM), the Ministry of Foreign Affairs (MINEX), the Chamber of Industry (CIG), the Consultative Body for Investment and Economic Development of Guatemala City (COINCIDE), and the Ministry of Economy (MINECO) to align investment promotion initiatives and support investment missions. After the newly elected government began its term on January 14, the Project approached representatives of the ministries of Labor (MINTRAB), Environment and Natural Resources (MARN) and Economy (MINECO), to ensure continuation of support undertaken with the previous administration. The Project has established strong working relationships, and we will be able to continue advancing business enabling environment reforms and procedural streamlining identified in the work plan. However, in early March, as a result of the Coronavirus Disease (COVID-19) crisis, four (4) investment missions scheduled to take place in March were postponed. Two investment processes in their final phases were also put on hold, as the companies evaluate the economic impact the crisis will have in their own countries. The project also began reevaluating the status of each of the planned pipeline investments and surveying companies to gauge initial impacts on planned investments.
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KEY HIGHLIGHTS AND ACHIEVEMENTS FROM THIS QUARTER • 2 new investment projects identified -- in manufacturing and processed food sectors -- and in the investment facilitation process; the two projects would bring $30 million of foreign direct investment, generate more than 200 direct jobs, and bring the FDI pipeline to $370 million and at least 4,480 jobs. • Market Intelligence and Investment Promotion and Facilitation Plans created and implemented within the framework of the Inter-institutional Technical Group on Investment under the mandate of MINECO and PRONACOM • Guatemala’s first online ministerial platform to streamline processing of environmental licenses categories C and CR at the Environment Ministry was implemented. The platform includes processes to provide secure electronic signatures and online payments. The system will allow processing of Category CR licenses in a maximum of two days – down from 27 days previously; and Category C licenses in eight (8) days – down from 89 days.
1.1 SUPPORT FOREIGN AND DOMESTIC INVESTMENT PROMOTION During this quarter, the team monitored 18 investment opportunities, representing a portfolio of $370 million which could generate 4,480 direct jobs. Two of these projects were identified and addressed this quarter; five projects are in the final stages of the process and have the potential to invest $10.4 million and generate approximately 290 jobs. Similarly, the Project supported inquiries by five (5) foreign firms interested in investing in Guatemala, providing preliminary information and developing, managing and monitoring three investment agendas. The team also analyzed information from companies in priority investment markets to identify those which could develop competitive advantages by establishing operations in Guatemala and exporting to the rest of Central America and southeast Mexico. In this early phase, 15 Mexican companies have been identified.
Table 2 FDI Potential Investment Opportunities with Mexican Companies
# Sector Potential Investment Areas 1 Commerce Establishment of a chain of retail stores 2 Processed Food Strategic alliance with sugar refineries to produce and retail snacks 3 Commerce Establishment of a chain of convenience stores 4 Manufacturing Manufacture of ophthalmic products 5 Manufacturing Production of industrial gases 6 Light Manufacturing Motorcycle assembly plant 7 Commerce Establishment of a Central American distribution center for non-alcoholic beverages 8 Light Manufacturing Manufacture of oil filters for motorcycles and automobiles 9 Commerce Establishment of a chain of environment-friendly dry-cleaning shops 10 Commerce Establishment of a Central American distribution center for handheld tools 11 Services Development of technological services 12 Light Manufacturing Manufacture of prefabricated structures for social housing 13 Manufacturing Manufacture of flexible plastic tubes 14 Services Real estate services 15 Services and Commerce Expansion of business in insurance and publicity
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It is also important to highlight the renewed drive for cooperation in information and investor facilitation with the new PRONACOM authorities, resulting in successful management of a joint investment agenda for a Salvadoran company seeking to install a jewelry export manufacturing plant in Guatemala. 1.1.1 DEFINE AND IMPLEMENT AN INSTITUTIONAL FRAMEWORK FOR INVESTMENT PROMOTION7 At the beginning of the quarter, the team continued to participate in the Investment Intelligence Technical Group and the FDI Promotion Technical Group, both headed by PRONACOM and the Vice Ministry of Investment and Competition of MINECO. The Vice Ministry of Economic Development of MINEX, the CIG, the Guatemalan Association of Exporters (AGEXPORT) and Project team members participate in these working groups to support development of needed information and promote investment in Guatemala. The addition of MINEX representatives to the working groups was relevant, considering that MINEX is now in charge of the network of Guatemalan commercial attachés abroad and that its main functions are the identification of FDI opportunities. This is an important source for identifying information and opportunities for attracting investment to the country, which is why a draft FDI protocol was prepared by the Group. The Project, in close coordination with the Economic Policy Directorate of the MINEX, generated the first proposal which was presented to the Technical Group for its revision, consensus and implementation. The FDI Promotion Technical Group succeeded in developing a joint work plan, despite the change of authorities in participating institutions. The plan aligns institutional guidelines for the promotion of foreign investment and harmonizes issues of markets and priority sectors. The Group agreed to continue working on issues of sectoral and market information 1.1.2 DEVELOP, MANAGE, AND FACILITATE A PIPELINE OF INVESTMENT OPPORTUNITIES The Project continued to implement its FDI strategy this quarter by following a methodological process based on specialized investment and foreign trade information to identify Mexican companies that currently export to four (4) or more Central American countries, for amounts exceeding $5 million and within the Project’s priority sectors. This analysis determined that priority states for these opportunities within Mexico City, Nuevo León and Jalisco. Some 52% of Mexican companies exporting to Central American countries are concentrated in these three states. During the quarter, the Project followed up on the 20 opportunities in the Project’s investment portfolio. Four (4) have decided not to invest. Two new investment projects – in the manufacturing and food processing sectors -- were identified from El Salvador and Colombia which would bring potential new investment of $30 million and generate more than 200 direct jobs. The Project investment portfolio closed the quarter with a total of 18 projects from the following countries and sectors: nine in (9) Mexico in the sectors of trade, manufacturing, hotels and tourism, food and beverages, construction, financial and health services; three (3) in Colombia, in food and beverages, services, hotels and tourism; one (1) in Costa Rica in construction; two (2) in El Salvador, in manufacturing and food and beverages; one (1) from Canada/El Salvador in construction; one (1) from Colombia/Switzerland in construction; and one (1) in Brazil in
7 Institutional support is on hold in the wake of the August 2019 amendment to ADS 225, which placed more stringent restrictions on support to investment promotion agencies. Support in this area focuses only on transaction-related information and support.
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manufacturing. The estimated investment of these projects is $370 million and the creation of at least 4,480 jobs. Below is the investment portfolio for the quarter, which also identifies the degree of viability of each opportunity: (A) normal, (B) medium, (C) low and (D) cancelled; investment process phases include: (1) prospecting, (2) attention, (3) development and (4) confirmed.
Table 3 FDI Portfolio as of March 15, 2020
Est. Projected Economic Type of Projected # Country Feasibility Phase Investmen Investment Sector Investment Jobs t Timing8 ($ million) 1 Mexico Commerce Greenfield A 3,4 Q1 FY21 0.48 40 2 Costa Rica Construction Greenfield A 3 Q3 FY21 0.20 15 Hotels and Q3 FY21 3 Mexico Brownfield A 3 8.50 35 Tourism Food and Q3 FY21 4 Mexico Greenfield A 3 1.00 100 Beverages 5 El Salvador Manufacturing Greenfield A 3 Q1 FY21 0.25 100 Canada/El Q3 FY21 6 Construction Greenfield A 2 5.00 100 Salvador 7 Mexico Construction Greenfield A 2 Q3 FY21 3.00 320 Food and Q3 FY21 8 Colombia Greenfield A 2 30.00 - Beverages Financial 9 Mexico Greenfield B 3 Q3 FY21 200.00 200 Services Food and 10 El Salvador Greenfield B 1 Q3 FY21 1.00 50 Beverages 11 Brazil Manufacturing Greenfield B 1 Q3 FY21 20.00 450 Food and 12 Mexico Brownfield C 2 Q3 FY21 2.50 50 Beverages 13 Mexico Manufacturing Brownfield C 2 Q3 FY21 25.50 1,200
14 Colombia Services Brownfield C Q3 FY21 0.50 20 1 Colombia/Swit 15 Construction Greenfield C Q3 FY21 15.00 100 zerland 1
16 Mexico Health services Greenfield C Q3 FY21 50.00 1,500 1 Hotels and 17 Colombia Greenfield C Q3 FY21 2.00 50 Tourism 1
8 The timing in which investment is made may change due to the COVID-19 pandemic.
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Est. Projected Economic Type of Projected # Country Feasibility Phase Investmen Investment Sector Investment Jobs t Timing8 ($ million)
18 Mexico Commerce Greenfield C Q3 FY21 5.00 150 1 TOTALS 18 369.93 4,480
High Medium Low
Table 4 List of FDI opportunities which were canceled this quarter
Economic Type of # Country Feasibility Status Sector Investment Light 1 Chile Greenfield D Cancelled Manufacturing 2 Chile Manufacturing Greenfield D Cancelled 3 Colombia Construction Greenfield D Cancelled 4 Colombia Manufacturing Greenfield D Cancelled Note: The four projects which were cancelled represent a reduction in investment opportunity by $32 million and 500 jobs.
The following table represents a summary of the projects, by their degree of feasibility and the investment process stage in of each one. There are eight in the highest feasibility stage; three in Category B, and seven in category C.
Table 5 FDI Portfolio in terms of Feasibility and Phases
Projected Projected Feasibility Phase Projects Investment jobs A 3,4 1 0.480 40 A 3 4 9.950 250 A 2 3 38.000 420 B 3 1 200.000 200 B 1 2 21.000 500 C 2 2 28.000 1,250 C 1 5 72.500 1,820 TOTALS 18 369.930 4,480
During the quarter, a Mexican cosmetics marketing company confirmed its request for Project support to develop an investment agenda to visit Quetzaltenango and Huehuetenango, where the firm will evaluate opportunities to open other stores and expand its presence in major Guatemalan cities.
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The team prepared three investment agendas this quarter, for a Mexican hotel and tourism company, a Costa Rica construction business and a Salvadoran manufacturing firm. These three have a high degree of probability of realizing a potential investment of $8.9 million within the next 12 months, which would generate approximately 150 direct jobs. The investment agendas are described below:
Table 6 Details of Three Foreign Direct Investment Agendas Facilitated this Quarter
Project Highlights of the Investment Agenda • Visit to Escuintla and Petén (PRONACOM took charge of these visits), Mexican hotel chain Quetzaltenango and Guatemala City, to meet with four potential co-investors • Meetings with three hotel service operators • Presentation of opportunities in the Michatoya Industrial Park and business development areas proposed by the Municipality of Guatemala and COINCIDE. • Meeting with the Presidential Commissioner for Investment • Meetings with companies to receive information and advice on legal, Customs, Salvadoran jewelry financial and migration issues manufacturer • Visit to two Special Economic Zones to see the services and spaces on offer • Meetings with two potential primary and secondary packaging providers Meeting with COINCIDE • Meeting with the Presidential Commissioner for Investment • Meetings with companies to receive information and advice on legal, Customs, Expansion of a regional financial and migration issues industrial and • Presentation of opportunities in the Michatoya Industrial Park and business commercial real estate development areas proposed by the Municipality of Guatemala and services office COINCIDE. Collaboration with PRONACOM this quarter resulted in development of a shared FDI portfolio, and joint facilitation of investors from Mexico, Colombia and El Salvador. This collaboration facilitated coordination of investment promotion and facilitation activities with the direct support of the new Competitiveness Commissioner. At the end of the quarter, the COVID-19 pandemic began to impact Guatemala with a stay home order and curfews. This is sure to impact some of the investments in timing and potentially in viability. As time progresses, the Project will continue to assess the situation of its partner investors. 1.1.3 SUPPORT DEVELOPMENT OF INDUSTRIAL ZONES AS INVESTMENT DESTINATIONS Technical assistance began this quarter to support two Special Economic Zone development opportunities in Guatemala: (1) Municipality of Guatemala in zone 12 and (2) Grupo Apolo in the municipality of Villa Nueva. The goal of technical assistance in both cases is to determine the viability of creating special economic zones in two different locations, but this would also result in making viable a project proposal for an economic corridor in the Department of Guatemala. The Project proposed and created a technical roundtable to support the Municipality of Guatemala which includes representatives of the Municipal government, COINCIDE and the Project. This roundtable aims to coordinate planning of technical assistance to identify international and domestic investment opportunities and to determine the short-term legal viability of the special economic zone. with a focus
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on attracting industries taking advantage of creative value-chains – the so-called orange economy9 – working within a framework environmentally sustainable infrastructure. The following image shows the focus of the study: a space with access on two principal transportation routes (Blvd. Atanasio Tzul; Avenida Petapa) in an area with a large concentration of industrial activity, and with potential connection to La Aurora International Airport. In addition, technical assistance for Grupo Apolo in Villa Nueva began with identifying the possibility of creating the Special Economic Zone "Ciudad Reformadores." The concept is to develop an urban center which will improve the quality of life of those living there by integrating opportunities for education, health, housing, entertainment, public services and access to transport. The site will also be connected to the Alternate Route to the South (VAS- Via Alterna del Sur in Spanish). It is expected to have 13,000 homes and 71,000 people within a radius of 2km. The following image shows the connection between Ciudad Reformadores and the VAS, which facilitated the measurement of traffic and the impact that an urban-economic development would have in this area.
Figure 1 Map of part of the Department of Guatemala showing two potential investment projects
This image shows the logical integration of the Pole Zone 12 of Guatemala City with Ciudad Reformadores in Villa Nueva. The following image shows the planning of Ciudad Reformadores in three different phases of construction. Phase 1 is currently under development.
9 Term coined in 2013 by the InterAmerican Development Bank to refer to the phenomenon and value generated by entrepreneurs and businesses applying talent, creativity and technology to problem-solving
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Figure 2: Artist’s rendition of potential Ciudad Reformadores site in Villa Nueva
Task/Inputs Table 1.1 Support Foreign and Domestic Investment Promotion
Est. Task No. Task/Input Description Est. End. Outcome/ Results Status Start 1.1.1 Define and Implement an Institutional Framework for Investment Promotion Information collected In process. A work plan Collect and organize and organized for has been approved and it strategic market intelligence eventual inclusion in is being implemented in 1.01.01-01 Oct-19 Sep-20 for an information system to system/portal to be coordination with facilitate investment consulted by promoters PRONACOM, MINEX, and potential investors CIG, and MINECO.
1.1.2 Develop, Manage, and Facilitate a Pipeline of Investment Opportunities
Continuously support development of new leads for potential investments in Portfolio of investments In process. Currently Guatemala, and the identified of over $100m working with 18 active 1.01.02-01 development of a regional Oct-19 Sep-20 in potential opportunities that total portfolio of investment opportunities US$370million. opportunities, with emphasis in Huehuetenango and Quetzaltenango. In process. Managed and Manage and facilitate up to Letter of interest from facilitated 3 investment eight investment missions investors for investment 1.01.02-02 Oct-19 Sep-20 missions. Pending from priority markets within projects for at least receiving letters of strategic sectors $10m intent.
1.1.3 Support Development of Industrial Zones as Investment Destinations
In process. Consultancy Support up to two selected Recommendations for working with Guatemala municipalities to develop making selected zones 1.01.03-01 Oct-19 Sep-20 Municipality and private Free Trade Zones - Special operational/economically developer in Villa Nueva Zones of Economic viable to determine best free
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Est. Task No. Task/Input Description Est. End. Outcome/ Results Status Start Development in Project zone format for geographies. prioritized territories.
1.2 IMPLEMENT ECONOMIC CORRIDOR STRATEGIES TO GUIDE PROJECT ACTIVITIES The Project presented its assessment of the Guatemala Corridor this quarter to officials at the Municipality of Guatemala, including the newly elected Mayor Alfonso Quiñónez. Officials used the assessment as an input to the development of their own municipal ‘Poles of Development.’ The Project assessment also provided strategic inputs for the Municipality’s General Development Plan and served as a platform for urban planning in the municipality. The assessment has also guided actions that strengthen development projects in neighboring zones with complementary economic opportunities. A case in point is the alliance between MuniGuate and the Municipality of Villa Nueva and the launch of the "Southern Cone" plan, published in the newspaper La Hora.
Figure 3: Newspaper article showing Southern Cone Plan developed between municipalities of Guatemala and Villa Nueva
Fuente: Diario “La Hora”, 29 de enero 2020 1.2.1 DEVELOP AND IMPLEMENT ECONOMIC CORRIDOR STRATEGIES The project completed these activities in Year 2. 1.2.2 DEVELOP AND SUPPORT STAKEHOLDER COORDINATION FRAMEWORKS IN TARGET ECONOMIC CORRIDORS The Project completed these activities in Year 2.
Task/Inputs Table 1.2 Implement Economic Corridor Strategies to Guide Project Activities
Est. Task No. Task/Input Description Est. Start Outcome/ Results Status End. 1.2.1 Implement Economic Corridor Strategies to Guide Project Activities
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Est. Task No. Task/Input Description Est. Start Outcome/ Results Status End. Facilitate up to two dissemination events of Economic Corridor Presentations for 1.02.01-01 Oct-19 Sep-20 Completed assessments at the request of key stakeholders stakeholders
1.3 IMPROVE THE ENABLING ENVIRONMENT This quarter the Project continues to work on supporting the business enabling environment by providing technical assistance to streamline processes in institutions such as MINECO, MINTRAB and MARN, with support from PRONACOM in some cases. Along those lines, a proposed agenda was developed to work with the new government at the beginning of the quarter, which identified different priorities of the institutions mentioned, and the private sector. However, the crisis caused by the COVID-19 pandemic will most likely change priorities that were shifting at the end of the quarter. The Project is monitoring the situation and will develop a new proposed agenda next quarter based on new government priorities. 1.3.1 PROVIDE TARGETED TECHNICAL ASSISTANCE TO SUPPORT POLICY DEVELOPMENT AND REFORMS The Project continues to provide technical assistance to different public bodies to support the development of policies and reforms. The project supported a revision of current jurisprudence in Guatemala related to International Labor Organization (ILO) Convention 169 and developed a proposal on the consultation process identified in the Convention and a Roadmap for developing national regulations. The consultative process would be utilized for both private and public sector actions and would provide investors with more legal certainty in terms of planned investments. Additionally, this quarter the Project received a request for support from the Ministry of Economy for two prioritized legislative issues: 1) review and technical adjustments to the Bill on Insolvency, and, 2) development of an investment law. The first will help individuals or legal entities, which cannot meet their financial obligations and risk losing their properties, to reorganize their affairs while maintaining their commercial and credit activities or liquidating them, in an ordered and easy manner. The assistance was to begin next quarter, however, given the situation created by COVID-19, MINECO began working on this directly. In terms of the second priority, it was put on hold until the Project clarifies new priorities with the Government. The Project legislative agenda is being reviewed to determine new priorities for economic reactivation in Guatemala post-COVID-19 before moving forward with agreed priorities. Work is continuing with PRONACOM in a coordinated manner to ensure improved results at the country level. Work is being done on 1) technical support in relevant areas such as streamlining processes, 2) feedback and monitoring of work agendas to avoid duplication, 3) and participation in technical roundtables to support PRONACOM's business climate work agenda.
Table 7: Proposed agenda for legislative and regulatory reform to create a business enabling environment
Topic Effort Level Results
Monitor Outreac TA h
ILO Convention 169 1. Assessment of legal cases. X X 2. Methodology to carry out consultation process. 3. Roadmap (next steps).
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Topic Effort Level Results
Monitor Outreac TA h Proposed Bill to promote investment attraction,
through Special Economic Zones and industrial parks. Investment and X X Ensuring a policy of attraction of investment favorable to Employment Law the country. Pro Guatemala No longer a priority with current government officials. Regulations X X Modification of Superintendence of Banks will be able to accept resolution JM - 93 - guarantees from government entities outside of 2005, “Regulations for X X Guatemala and Central America such as the DCA from the administration of the United States credit risk”. Streamlining of work Have an online system that facilitates companies that X permits for foreigners require foreign workers, for subsequent employment. Streamlining of Implement an online system that allows users to submit environmental licenses X and receive authorization of category C and CR C, CR environmental forms. Process design and Design the organization and operational process of streamlining for MINTRAB’s Labor Mobility Unit. Identify needs for X temporary work visas effective operation. abroad Construction One- Assist in the simplification of two processes to reduce X X X Stop Window time in obtaining construction licenses. 1.3.2 BUILD GOG CAPACITY AROUND GUATECOMPRAS The Project continues to support the Ministry of Economy and the Ministry of Finance to facilitate SME participation in public bidding processes for State contracts by promoting registration in the General Government Procurement Acquisitions (RGAE in Spanish), in addition to supporting the training processes of the Guatecompras platform. To this end, two registration and training sessions were planned: one in Guatemala City, March 13 and another in Totonicapán, March 19. However, due to the COVID- 19 pandemic and restrictions on public gatherings, these workshops have been postponed. Planning for these and other activities is expected to resume next quarter. In the meantime, work is progressing on the development of a virtual training plan to create an online module and ensure SME access to opportunities through this medium. 1.3.3 SIMPLIFY GOG PROCEDURES TO PROMOTE SME ACCESS TO SERVICES This quarter the Project continued to work with the Ministry of Labor on two priority activities: the H2A Seasonal Labor Program and the documentation and streamlining of Work Permits for Foreigners. In relation to the H2A Visa Seasonal Labor Program, the Project provided support in three areas: (1) communication, (2) strengthening of the Labor Mobility Unit and (3) support to identify potential foreign employers. In the area of communications, there is a proposed communications strategy for the Unit focused on the H2A Seasonal Labor Program, and messages for the correct dissemination of the program. In addition, the Project in the next quarter will provide support for developing messaging for potential companies interested in employing Guatemalans abroad.
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This quarter began with the process of strengthening the Labor Mobility Unit through technical assistance for the streamlining of the H2A visa program. The Project concluded a phase of general assessment of the unit, mapping of current processes and identifying opportunities for improvement. Results of this work were presented to the H2A Visa Program Manager so that they could be validated by the Minister of Labor. This quarter the Project supported the identification of two potential employers with the following employee needs:
Table 8 Project Support for Ministry of Labor’s H2A Seasonal Labor Program in the Quarter
Location of Persons Persons Profile Requested Status Employer Required Interviewed
People with experience in In prequalification phase: a total of packaging, storage or related 182 people were interviewed. issues, since the work they Alaska, The next step will be a second will do is for seafood 100 182 interview conducted by the United States packaging. employer, which is expected to take place during the third quarter of this fiscal year.
People with experience as A total of 33 people were "tower builders", which interviewed. The second consists of accrediting interview process has already Texas, knowledge and certifications taken place and resulted in 16 33 United State in the installation of cellular selection of 12 tower builders and telecommunication towers, 3 supervisors. Another work at heights and basic supervisor is pending selection. electricity
Technical assistance continued this quarter for the documentation of the procedure to streamline foreign work permits, and to develop software for the proposed online process. During this quarter, the Project helped form a technical roundtable to provide follow-up, including representatives from MINECO, PRONACOM, and AGEXPORT. The goal of the technical committee is to support key features of the web platform such as the process for authenticating an electronic signature and the electronic payment services. The system is expected to be operational in May. The Project continues to work with the Ministry of Environment and Natural Resources in the implementation of the BIAWEB system to document the process to obtain environmental licenses C and CR. This support strengthens government efforts to create a simple One-stop Window for construction licensing. • Environmental licenses are required prior to obtaining a construction license, and the C and CR categories represent 80% of current applications. The benefits of the online system include: ease of finding and filling out the appropriate forms; an end to the need to physically visit MARN offices to process the application; receipt of authorization electronically; and reduction of processing time to one or two days for the CR license and between four and eight days for C licenses. The BIAWEB system is the first ministerial platform to include electronic signature and electronic payment. • To-date, the Project has concluded development of the software system, preparation of a proposal for a procedures manual, and implementation of a training plan for administrative, technical and
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maintenance staff from MARN. Currently, the team began the process of implementing the BIAWEB SYSTEM with MARN's IT staff. This included: installing the platform in different MARN facilities; implementing configuration, settings, catalogs, user profiles, online payment processes tailored to Ministry needs; and piloting the system. In parallel, the Ministry began its own communications campaign in social media networks to publicize the new system. This communication strategy has several phases with the objective of reaching the user in a friendly and useful way.
Task/Inputs Table 1.3 Improve the Enabling Environment
Est. Est. Task No. Task/Input Description Outcome/ Results Status Start End. 1.3.1 Provide Targeted Technical Assistance to Support Policy Development and Reforms With the agreement of USAID and the new Agreed Project Completed. Proposal 1.03.01-01 government develop a Oct-19 Jan-20 Policy Agenda submitted to USAID. proposed policy agenda for Year 3 As part of the proposed Document which policy agenda, provide includes proposed Cancelled. This is no longer 1.03.01-02 technical assistance to Oct-19 Sep-20 regulations to be a priority for the current develop regulations for the validated by government. ProGuatemala Law. MINECO Provide support for the Paused. Current development of a law on government authorities have Investment and Trade asked to give priority to the 1.03.01-03 Feb-19 Oct-20 Draft law developed Promotion that improves the Bankruptcy Law but began legal framework for Special working on it internally. To Economic Zones be evaluated next quarter.
1.3.2 Build GoG Capacity around GuateCompras
Support Mineco with up to two (2) workshops for Number of SMEs Sept- Rescheduled for next 1.3.02-01 capacity building for Oct-19 registered in 20 quarter. Mipymes in the RGAE RGAE. process. Support the promotion and implementation of the Application in use Sept- Pending. Training calendar 1.3.02-02 new application to register Oct-19 and potential 20 rescheduled for next quarter. and track information in users trained Guatecompras Based on the recommendations, assist SMEs to Evaluate the current sales improve of SMEs to the State and procedures and Pending. Scheduled to start 1.3.02-03 Jan-19 Mar-20 make recommendations on strategies to next quarter. how to improve identify and compete for opportunities to sell to the State
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Est. Est. Task No. Task/Input Description Outcome/ Results Status Start End. 1.3.3 Simplify GoG Procedures to Promote SME Access to Services Provide technical assistance for the System defined, automatization of 1.03.03-01 Oct-19 Jul-20 documented and Completed. environmental permits C implemented and CR categories for MARN Facilitate software Software system development services to In process. Expected to be 1.03.03-02 Oct-19 May-20 developed and expedite foreign worker completed in May. implemented permits Support implementation of improvements and New process systematization/automation Sept- defined, In process. Expected to be 1.03.03-03 Oct-19 of MINTRAB’s Temporary 20 documented and completed in May. Work Visa Programs for implemented the US and Canada
Support simplification of Improved In process. New process two processes under the processes identified (MARN and 1.03.03-04 Single Window for Jan-20 Sep-20 resulting in Ministry of Health and Social Construction Permits reduction of time Services). TA expected to and cost start next quarter.
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Claudia Navas/ Claudia USAID
2 FINANCIAL SERVICES MOBILIZED During the second quarter, support continued for the creation of synergies between allied Small and Medium-sized Enterprises (SMEs) and financial institutions. Project-allied companies made progress in achieving their expansion plans and generating new jobs, mainly in the Western Highlands, where financial institutions mobilized financial resources for SMEs. After two successful financial fairs in the Western Highlands last year, in March the team led the first Commercial and Financial Fair in Guatemala City, as part of a strategy to reduce information gaps between companies and financial institutions. Participating companies made deals to improve their supply chains and/or make sales, and they negotiated competitive interest rates and terms with financial institutions on proposals for expansion projects. The Project also implemented training on financial topics to both business owners and key financial personnel, with the aim of strengthening management capacities to make accurate and timely decisions. In order to expand financing options for both businesses and banks, the Project helped prepare proposals
for the United States International Development Finance Corporation (DFC) that are expected to promote economic growth and development and help mitigate the negative impact on the local economy of the COVID-19 pandemic that began to be felt at the end of the quarter. By the end of the quarter, the Project began surveying partner companies on expected impacts due to the COVID-19 crisis and planning for emergency support to ensure viability and minimize job loss to the extent possible.
HIGHLIGHTS AND ACHIEVEMENTS FROM THE QUARTER USAID JuanLuis Elgueta/ • 132 new jobs generated by the enterprises assisted by the Project, located in the departments of Quetzaltenango, Huehuetenango, San Marcos and El Quiché; of which 64 are for young people under
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25 years of age - 40 of them for women. To-date, 537 new jobs have been created including 141 for women and 239 for youth • $2.41 million of mobilization in domestic investment, mainly in Huehuetenango and Guatemala. For a total of domestic investment to date of $7.05 million. (44% in Huehuetenango; 18% in San Marcos; 16% in Quetzaltenango; 10% in Guatemala; and 7% in Quiche) • 277 people trained in financial matters (60% men, 40% women), including managers and employees of assisted companies, for a total of 1,444 people trained to-date. • 20 new companies participating in the financial system in Quetzaltenango, Huehuetenango, Quiché and Guatemala, for a total of 96 SMEs participating in the financial system. • $2.57 million in mobilization of financing and financial services for SMEs in Huehuetenango, San Marcos, Quetzaltenango and Guatemala, for a total of $14.99 million to-date. • $2.41 million of capital invested in SMEs in the departments of Quetzaltenango, San Marcos, Huehuetenango, Quiché, and Guatemala, and a total of $4.80 million to-date. • 18 new companies improving their business performance as a result of Project Technical Assistance. For a total of 85 new SMEs supported to date. • $2.86 million in new sales in Huehuetenango, Quetzaltenango, Quiché, San Marcos and Totonicapán and a total to date of $3.75 million • Three new project profiles of national companies prepared for submission to the United States International Development Finance Corporation (DFC) interested in accessing financing or investment resources for approximately $30 million and a portfolio of 15 proposals worth $226 million (see Table below). • A discussion for 15 national family offices on the benefits of diversifying their portfolios into impact investments in the Impact Investment Funds receiving technical assistance from the Project, as well as the financing options and partial guarantees offered by the DFC.
2.1 INCREASED ACCESS TO FINANCIAL SERVICES THROUGH FINANCIAL EDUCATION IN TARGET GEOGRAPHIES 2.1.1 DEVELOP AND IMPLEMENT A FINANCIAL EDUCATION PLAN LINKED TO THE NATIONAL FINANCIAL INCLUSION STRATEGY During the period, the Project trained 277 people on financial topics, 84 of whom are owners and employees of 14 Project allied SMEs in the departments of Quetzaltenango, Huehuetenango, Quiché, Totonicapán, San Marcos and Guatemala. The training was oriented to price analysis, cost center management, budgeting, and financial statement preparation. The Project implemented the first Commercial and Financial Fair March 4 and 5 in the capital, which brought together 241 people from 88 companies and 12 financial institutions. Of participating companies, 66 are based in the department of Guatemala, 15 in Quetzaltenango, 5 in Huehuetenango, 1 in Quiché and 1 in Totonicapán. In this event, 193 people from 88 SMEs were trained on accounting and financial information systems for business management, good practices in structuring financing for SMEs, and finance risks in basic
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governance structures for SMEs. Of the 193 Figure 4: People trained in Financial Education in the Quarter people trained, 111 were men and 82 were women, mainly SME owners. The next Commercial and Financial Fair was scheduled for May 20-21, 2020 in the municipality of Salcajá, Department of Quetzaltenango. However, given the circumstances surrounding the COVID-19 pandemic, this event was suspended until the government issues new guidelines for such activities.
The Online Learning platform was implemented in coordination with Project partner and FINTECH ALAPAR which is expected to provide training on financial topics to SMEs through interactive content that can be downloaded, such as loan quotes, financial statement templates, unit costs, among other documents. The platform was designed to be accessed via the web from personal computers and mobile devices. In addition, it allows for analysis and monitoring of user traffic and behavior, measuring the level of progress. This application is expected to be presented during the next Commercial and Financial Fair and is currently to be found on the website: https://aprendemos.alapar.com.gt. To date, the Project has trained 1,538 people, mainly from Quetzaltenango, Huehuetenango, San Marcos and Quiché. 2.1.2 DEVELOP THE MARKET OF INVESTMENT FUNDS AND OTHER ENTREPRENEURSHIP SUPPORT MECHANISMS In order to support the training of 500 entrepreneurs, during the quarter a training strategy was designed to implement workshops on financial topics and access to financing for the first group of 100. These workshops will be held mainly in Quetzaltenango, Guatemala and Huehuetenango.
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Task/Inputs Table 2.1 Increased Access to Financial Services through Financial Education in Target Geographies
Est. Est. Outcome/ Task No. Task/Input Description Status Start End Results 2.1.1 Develop and Implement a Financial Education Plan Linked to the National Financial Inclusion Strategy In process. Planning and Support financial education 1,250 people organization of financial 2.01.01-01 strategies of at least one IFI with Oct-19 Sep-20 trained education activities via an technical assistance online learning platform. In process. Planning and organization of financial Support public sector financial education activities via an 500 people 2.01.01-02 education strategies with technical Oct-19 Sep-20 online learning platform trained assistance and training in coordination with PRONACOM. In process. 193 people Develop training programs on 500 people were trained in the 2.01.01-03 financial topics within the Financial Oct-19 Sep-20 trained10 Commercial and Financial Fairs Fair. Implement trainings on financial In process. This year 109 topics for allied companies and 250 people 2.01.01-04 Oct-19 Sep-20 people have been trained other public and private sector trained so far. entity beneficiaries 2.1.2 Develop Market of Investment Funds and Other Entrepreneurship Support Mechanisms In process. A methodological guide for Train 500 entrepreneurs and a workshop was 500 people 2.1.2-01 university students on financing Oct-19 Sep-20 developed, and a training11 options including impact funds consultant was hired to train the first cohort of 100 entrepreneurs.
2.2 INCREASE THE NUMBER OF SMEs PARTICIPATING IN THE FORMAL FINANCIAL SECTOR 2.2.1 BUILD FINANCIAL INSTITUTIONS’ CAPACITY TO FINANCE SMES The Project implemented the First Commercial and Financial Fair in the Department of Guatemala, which brought together 169 SMEs and 24 Financial Institutions to participate in 637 commercial and financial business appointments. In negotiations with Financial Institutions, SMEs presented proposals for financing worth $12.3 million. As a reflection of the effectiveness of Project support to the applicants, almost all– 92%–were viewed by financial institutions as cases that could be approved within 90 days. To-date, the Financial Institutions have authorized the disbursement of $1.4 million for three partner SMEs who participated in the event.
10 This number has been reduced to 200 in the proposed contingency work plan currently being reviewed by USAID as a result of the COVID-19 crisis. 11 This number has been reduced to 100 in the proposed contingency work plan currently being reviewed by USAID as a result of the COVID-19 crisis.
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In the same event, SMEs managed to generate B2B business intentions worth more than $2.3 million, for merchandise and services to be delivered in the next six months. Almost a quarter—23%—expected to close deals in April. These expectations, like many others, may be affected in the coming months by the national and international economic uncertainty the COVID-19 pandemic is generating. The next Commercial and Financial Fair was scheduled to be held in Salcajá, Quetzaltenango on May 20 and 21 with the participation of at least 100 companies, mainly in the Western Highlands. The event was designed to strengthen market linkages among companies operating in the region and between the region and Guatemala City. It was also expected to provide expansion opportunities for several companies located in the capital that wish to enter the markets in the Western Highlands. To date, the Project has identified financing need of around $77.0 million among the companies that planned to attend. However, at the end of the quarter the Project suspended the event as a result of COVID-19. The Project, through financing structures via FINTECH, has contributed to the implementation of a new financial product based on non-bank mortgage bonds, which seeks, on the one hand, to provide financing solutions for SMEs with limited or no access to traditional banking, and on the other hand, to improve local investment options for non-institutional investors, who seek to obtain a return that will increase the value of their capital over time. During the quarter, more than $600,000 in loans were placed with SMEs, mainly for working capital utilizing this mechanism.
2.2.2 IDENTIFY AND SUPPORT DEVELOPMENT OF NEW MARKET OPPORTUNITIES The Project developed a prioritized list of economic growth initiatives, as well as three profiles of companies and projects with social and environmental impact, which are interested in accessing investment, credit lines and partial guarantees from the new United States International Development Finance Corporation (DFC). Among them is a new banking entity that will start operations in May 2020 and whose business is the financing of social housing. Three of the four pre-selected companies are in the process of filling out DFC Form 01 and compiling the information to formally apply for financing and partial guarantees. In the case of one of the Project allied Impact Funds, it has already submitted its application for a capital investment and is awaiting a response. The Project built an additional pipeline with 15 companies with a potential total of $226 million in the following sectors.
Table 9 Project Pipeline of Entities Supported in DFC Applications
Amount of Financing Projected Number of Sector Department Requested Employment Proposals ($ million)
Financial Institutions Guatemala, Quiché, focused on SMEs and Huehuetenango, 110.0 6,400 6 social housing Chimaltenango, Escuintla Service companies National 23.0 350 3 Industrial companies Guatemala, Sacatepéquez 41.0 1,680 3 Critical Infrastructure San Marcos 20.0 20,000 1 Guatemala, Housing Projects Quetzaltenango 20.0 1,200 1
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Amount of Financing Projected Number of Sector Department Requested Employment Proposals ($ million)
Investment Funds National 12.0 150 1 TOTAL 226.0 29,580 15
The Project has helped improve business practices in 19 new enterprises located mainly in Huehuetenango, San Marcos, Guatemala and Quetzaltenango. These 19 are part of a group of 85 new enterprises that are in the process of becoming Project allies. It is important to highlight that three of these companies received financing in the Commercial and Financial Fair for a value of $1.4 million; two of them managed to lower their financing burden of annual interest rates from around 30.0% to 11.0%.
Task/Inputs Table 2.2 Increase Number of SMEs Participating in the Financial Sector
Est. Est. Outcome/ Task No. Task/Input Description Status Start End Results 2.2.1 Build Capacity of Financial Institutions to Promote Access to Financing for SMEs In process. Mobilization of at Implement up to four Financial Implementation of the least $10 million in Services Fairs to close gaps first Commercial and 2.02.01-01 Oct-19 Sep-20 credits to SMEs and between supply and demand. Financial Fair, remittance receptor (Cont. year 3) mobilizing $1.4 families million. In process, including Mechanism to preparing applications Work with partner FIs to develop facilitate access to for guarantees and 2.02.01-02 tailored incentive mechanism to Oct-19 Sep-20 credit for SMEs credit for the DFC for stimulate SME lending implemented in at three financial least one bank institutions. Implement selected FinTech 2.02.01-03 Oct-19 Sep-20 Fintech adopted Pending adoption in partner FI In process. An application is under Develop and implement a technical development with assistance plan to improve the Alapar for a module capacities of at least two (2) IFIs to Mobilization of at on financial education. 2.02.01-04 provide better financial services to Oct-19 Sep-20 least $5 million in $600,000 was SMEs and family remittance credits to SMEs mobilized this quarter; recipients by FINTECH bringing to $900,000 mechanisms. FINTECH mobilization to-date. 2.2.2 Identify and Support the Development of New Market Opportunities Expanded In process. Continue assessing market demand opportunity pipeline Development of three and identify market opportunities for credit and new profiles to access 2.02.02-01 Oct-19 Sep-20 for enterprise financing in target investment financing financing and value chains (Cont. year 3) for FIs and Impact investment from DFC. Funds
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Est. Est. Outcome/ Task No. Task/Input Description Status Start End Results Provide technical assistance and/or Facilitate the business development services to In process. 19 mobilization of at allied companies and institutions to business plans for 2.02.02-02 Oct-19 Sep-20 least $10 million in increase their financial solidity and businesses allied to financing for allied capacity to access financing by the Project. businesses financial institutions (Cont. year 3) Facilitate the Provide follow-up and support to mobilization of at In process. Approval two local contracts providing least $6.0 million in of 30 businesses to business development services and financing for allied 2.02.02-03 Oct-19 May-20 become Project allies, structuring of mezzanine financial businesses Support with formal MOU products for small, medium-sized 35 new businesses signing pending. and large companies to participate in the financial sector Provide follow-up and support to Facilitate the In process. 50 the two local contracts providing mobilizations of at businesses approved 2.02.02-04 business development services for Oct-19 Apr -20 least $6.0 million in to be Project allies, to access financing for small, financing to allied with formal MOU medium-sized and large companies businesses signing pending.
2.3 INCREASE THE VALUE OF FINANCING AND FINANCIAL SERVICES EXTENDED TO SMES 2.3.1 DEVELOP AND DEPLOY FINANCIAL INCENTIVES TO STIMULATE ACCESS TO FINANCE The Project is working with a national bank to develop a proposal for both financing and partial credit guarantee to be presented by the DFC. The amount of financing and partial guarantee requested amounts to $10 million. The purpose of these instruments is to expand the Bank's operations in the Western Highlands and enter the SME segment by providing them with better financing options. The Project team expects to support completion of the DFC Form 01 and compilation of necessary accompanying documents by the end of March in order to formally submit the application. A similar process has been initiated with the Cooperative system and another bank in the system. During the next quarter, the Project will explore possibilities of Guarantee Funds aimed at supporting SMEs most affected by the COVID-19 crisis with other Project allied banks. During the period. two Project-allied banks already began to disburse funds received through partial guarantees last quarter. The two banks have shown significant progress supporting the expansion plans and operations of 20 SMEs in commercial, industrial and health sectors. As of March 31, one bank registered placement of $4.6 million in 18 companies; while the other reported placement of $515,000 in two companies, one of them assisted by the Project 2.3.2 SUPPORT THE ESTABLISHMENT AND EXPANSION OF INVESTMENT FUNDS The Project organized a workshop with representatives of 15 local Family Offices, with the presence of the United States Ambassador to Guatemala, the Executive Director of the United States International Development Finance Corporation (DFC) and to Project-allied Impact Investment Funds in Guatemala. The event highlighted the economic and social benefits of investing in Funds and presented new DFC products for financing and investment opportunities for Guatemalan private companies. The Project continues to provide technical assistance to two Impact Investment Funds, including support to attract investors and identify of investment opportunities in Guatemala for their pipelines. The Project
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has supported development of a pipeline of more than 14 proposals for one of the Funds. Of these, four so far have been qualified as viable and the team is helping create the project profiles and implement due diligence. The Project has identified and prioritized proposals with high social and environmental impact that seek to apply for financing, investment or partial guarantees offered by the DFC. Among them are local investment funds that request guarantees on their loans (debt) in order to attract more investors, mainly national ones. The Pomona Impact Fund is being supported to structure a proposal. The Central American Investment Fund (CAIF) has already submitted an application to the DFC. Approval of these applications will contribute to the attraction of national investors, which will allow the consolidation of these Funds in Guatemala, contributing to the expansion of financing options for SMEs, as well as for the development of new projects. The Project is also supporting the development of a proposal to access financing from a new banking entity authorized to operate in the country, whose main focus is the financing of social housing. This financial institution seeks to obtain $10 – 20 million to finance social housing under better rates and terms, which will reduce the financial burden on families. The Project is also supporting another bank in the system to prepare a proposal for a $15 million partial credit guarantee that will enable it to expand its operations with SMEs and enter markets that underserved by banks, particularly in the Western Highlands. Finally, to facilitate the application of DFC partial guarantee to the banking system, the Project is supporting an initiative to modify the Credit Risk Management Regulations of the Superintendence of Banks of Guatemala. This will help the incorporation as “sufficient guarantees” in the banking regulation of the partial guarantee granted by the Government of the United States through the DFC. 2.3.3 CAPITALIZE IMPACT INVESTMENT FUNDS As mentioned above, in January 2020 the Impact Funds, Pomona Impact Fund and the Central American Innovation Fund presented their investment theses to the circle of local investors at the invitation of the US Ambassador and in the presence of the Executive Director of the DFC. Representatives of 15 Guatemalan Family Offices participated in this event. As a result of the meeting, the Funds have held follow-up meetings with several families who are interested in investing up to $2.0 million.
Task/Inputs Table 2.3 Increase the Value of Financing and Financial Services Extended to SMEs
Est. Est. Outcome/ Task No. Status Task/Input Description Start End Results 2.3.1 Develop and Deploy Financial Incentives to Stimulate Access to Finance In process. Mechanism to Development of a facilitate access to DFC proposal by Support at least one FI to expand credit 2.03.01-01 Oct-19 Sep-20 credit for SMEs three banks, one to SMEs implemented in at requesting new least one bank guarantee fund and two with DCAs.
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Est. Est. Outcome/ Task No. Status Task/Input Description Start End Results 2.3.2 Support the Establishment and Expansion of Impact Investment Funds In process. Foster knowledge about investing in Workshop with 15 Stimulate the flow Impact Funds among selected Family local Family Offices. 2.03.02-01 Oct-19 Sep-20 of capital towards Offices/ high net-worth individuals (Cont. Investment Impact Funds from Year 2) opportunity up to $2.0 million. In process. Provide technical assistance and other Two Concept Development of support to facilitate access to guarantees Notes delivered three new business 2.03.02-02 and other credit and investment Oct-19 Sep-20 for DCA/OPIC profiles for mechanisms for eligible IFIs and Impact guarantees investment Funds. (Cont. from Year 2) projects. Pipeline of potential In process. Two Provide TA and other assistance to opportunities for technical impact funds to identify and evaluate 2.03.02-03 Oct-19 Sep-20 funds increased assistance activities investment opportunities (Cont. from and more being Year 2) efficiently implemented. evaluated 2.3.3 Capitalize Impact Investment Funds In process. Event Attract national and international with US investors to impact funds through $20 million Ambassador with meetings, business roundtables and 2.03.03-01 Oct-19 Sep-20 committed to potential participation in national and international impact funds investment of $2.0 events such as FLII, SOCAP, Volcano million from Family Summit (Cont. Year 3) Offices.
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Juan Pablo USAID Gomez/
3 PRODUCTIVE INFRASTRUCTURE UPGRADED During the quarter, the Project supported completion of six municipal management instruments, including a Municipal Development and Land-use Plan (PDM-OT in Spanish) in Quetzaltenango and Annual Purchasing and Contracts Plans (PACC in Spanish) for five other municipalities. The PDM-OT was led by municipal authorities and local representatives of the Presidential Secretariat of Planning and Programming (SEGEPLAN) and was developed according to SEGEPLAN’s methodology. The final document was approved by the Municipal Council and the Municipal Development Committee (COMUDE). The five PACCs were developed in the municipalities of San Mateo and Salcajá, in the department of Quetzaltenango; Santa Cruz del Quiché and San Antonio Ilotenango in the department of Quiché; and Totonicapán, in the department of Totonicapán. The Project provided support to these municipalities based on training provided by the Ministry of Finance on the implementation and publication of PACCs in the Guatecompras Transaccional system. These instruments are of great value in achieving greater transparency in local procurement processes. The Project also followed up on the five feasibility studies completed and delivered to the various public and private partners in order to speed up the bidding processes for implementation of these productive infrastructure projects.
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HIGHLIGHTS AND ACHIEVEMENTS FROM THE QUARTER • 6 municipal instruments approved • 5,085 beneficiaries this quarter from the Huehuetenango Aerodrome project • Pipeline of 32 projects worth $1,246 million with 9 million beneficiaries and 106,170 jobs12 • 5 businesses supported with technical assistance in productive infrastructure
3.1 STRENGTHEN LOCAL GOVERNMENT CAPACITY TO IDENTIFY, PLAN, AND IMPLEMENT PRODUCTIVE INFRASTRUCTURE PROJECTS During this quarter, the Project supported completion of six (6) municipal instruments that will serve to strengthen actions of municipal planning departments. This will strengthen municipal capacities to attract investments which bring increased economic development. 3.1.1 ASSESS MUNICIPALITIES’ CAPACITY AND RESOURCES TO IMPROVE PRODUCTIVE INFRASTRUCTURE The six municipal instruments completed with Project support are the following: 1) Quetzaltenango Municipal PDM -OT, 2) PACC for municipality of Santa Cruz del Quiché, 3) PACC for municipality of San Antonio Ilotenango, both in the department of Quiché; 4) PACC for municipality of Totonicapán, in the department of Totonicapán; 5) PACC for the municipality of San Mateo and 6) PACC for the municipality of Salcajá, both in the department of Quetzaltenango. In addition, the Project followed-up on the approval of the Huehuetenango PDM-OT. The Project supported completion of Phase 3 of the instrument in accordance with SEGEPLAN guidelines, and the final draft is waiting for presentation to the COMUDE for final approval. The Project provided technical assistance to the municipality of La Esperanza, Quetzaltenango to publish its PACC. The process was made more difficult by the change in authorities in January. The Ministry of Public Finance (MINFIN), issued an extension to allow municipalities to publish their PACCs in the Guatecompras Transaccional system until April 15, 2020. 3.1.2 BUILD MUNICIPAL PLANNING CAPACITY In accordance with the provisions of the State Contracting Law and its regulations, all public entities must have a PACC to program annual purchases and contracting, and the PACC must be published through the Guatecompras Transaccional system at the beginning of each fiscal year. The Project continued to strengthen municipal planning capacity for this key tool, and during the quarter we completed training for municipal officials in collaboration with MINFIN. This quarter, the Project also supported pilots to advance the implementation of each PACC, enabling participating municipalities to execute their budgets in a more orderly and transparent manner. The process of implementation and publication of the PACCs in the Guatecompras Transaccional portal can be seen in the following table:
12 This number is calculated as follows: 55,125 direct jobs and 16,631 indirect jobs in the construction phase; 27,658 direct and 6,756 indirect jobs in the operational phase. This totals 82,783 direct jobs and 23,387 indirect jobs for a total of 106,170 jobs.
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Table 10 Current Status of Annual Purchasing and Contracting Plans (PACC)
Municipality Department Status San Mateo Quetzaltenango Published February 27, 2020 Santa Cruz del Quiché Quiché Published February 27, 2020 Totonicapán Totonicapán Published February 27, 2020 San Antonio Ilotenango Quiché Published March 6, 2020 Salcajá Quetzaltenango Published March 6, 2020 La Esperanza Quetzaltenango In process
On January 9, 2020 the Quetzaltenango Municipal Development Committee presented and approved its PDM-OT, which is another municipal instrument of great importance to attract investment to the municipality. The Project continues to provide technical assistance to the municipality of Huehuetenango to effect the presentation and approval of this municipal instrument. However, due to the recent change of municipal government authorities, and the fact that the Municipal Council has not yet been formed, the Project will need to provide continued follow-up next quarter. Due to the COVID-19 pandemic, the two not-yet-completed instruments mentioned may lose their priority among municipal authorities. The following is a summary of the current situation of the 12 municipal instruments for strengthening municipal planning capacities supported by the Project:
Table 11 Municipal Instruments Supported by the Project, and their Status
No. of Municipal Tool for Productive Location Municipal Infrastructure Developing (Municipality / Department) Tools
Municipal Development and Land-use Ayutla, San Marcos; La Esperanza, Cantel y Quetzaltenango / 4 Plan (PDM-OT in Spanish) Quetzaltenango Local Economic Agenda (AEL in Spanish) 1 La Esperanza / Quetzaltenango San Mateo y Salcajá / Quetzaltenango Annual Purchasing and Contracts Plan 5 Santa Cruz del Quiché y San Antonio Ilotenango / Quiché (PACC in Spanish) Totonicapán / Totonicapán Total completed 10 Municipal Development and Land-use 1 Huehuetenango / Huehuetenango Plan (PDM-OT in Spanish) Annual Purchasing and Contracts Plan 1 La Esperanza / Quetzaltenango (PACC in Spanish) Total in Process 2
3.1.3 STRENGTHEN MUNICIPAL LINKAGES WITH THE PRIVATE SECTOR The Project continues to analyze technical assistance opportunities for public-private partnership projects. This includes work with the municipality of Quetzaltenango, which requested support to plan the Chiquilajá bridge project. This bridge is in the northeast of the municipality, on an important road for transit between Quetzaltenango and Totonicapán. The Project also reviewed a proposal by the Universidad Panamericana (UPANA) for a new university campus in Guatemala City.
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3.1.4 IMPROVE THE MUNICIPAL ENABLING ENVIRONMENT FOR PROJECT DEVELOPMENT The Project will support activities to enable the GOG to implement the One-Stop Window for Construction Licenses. These activities will include Project support for improvements in the business enabling environment. Please refer to section 1.3.1.
Task/Inputs Table 3.1 Strengthen Local Government to Identify, Plan and Implement Productive Infrastructure Projects
Est. Task No. Task/Input Description Est. End Outcome/ Results Status Start 3.1.2 Build Municipal Planning Capacity Support completion of Municipal PDM-OT completed for 3.01.02-01 Development and Land Use Plan May-19 Dec-19 Completed Quetzaltenango (PDM-OT) in Quetzaltenango 3.01.02-02 In final stage. Still Support completion of Municipal PDM-OT completed for needs to be Development and Land-Use Plan May-19 Dec-19 Huehuetenango presented to (PDM-OT) in Huehuetenango COMUDE 3.01.02-03 Support completion of Local AEL completed for La Economic Agenda in La May-19 Dec-19 Completed Esperanza Esperanza, Quetzaltenango
3.2 DEVELOP AND SUPPORT IMPLEMENTATION OF A PIPELINE OF PRODUCTIVE INFRASTRUCTURE PROJECTS The Project has a portfolio of 32 potential productive infrastructure projects in different stages of development (identification, selection, profiling, design and monitoring of construction contracts) with a total investment value of $1,246 million potential to generate up to 106,170 jobs (82,783 direct jobs and 23,387 indirect jobs)13. In the quarter, the Project identified and prepared selection data for two new projects: 1) Mancomunidad del Sur roads project; and, 2) Puente Chiquilajá, Quetzaltenango. In addition, the Project has followed up on the allocation of resources for the bidding phases of projects we have supported to complete feasibility studies, which are now moving to public bidding and implementation phases. The Project is following up with officials in the municipalities of Quetzaltenango and La Esperanza, both in the Department of Quetzaltenango, as well as in the Civil Aeronautics Department, the Highways Department and the Rafael Landívar University. Progress has been made on three feasibility studies for projects included in the plan for Year 3: 1) studies for the construction project of the Lavarreda Central Customs Office of the Superintendence of Tax Administration (SAT) in zone 17, 2) a market study for two logistics centers in zone 18 in the municipality of Guatemala, and 3) a technical study of potential obstacles at and around the Huehuetenango airfield. 3.2.1 IDENTIFY AND DEFINE PRODUCTIVE INFRASTRUCTURE PROJECTS This quarter, the Project identified two new productive infrastructure projects. The first is the Chiquilajá bridge. The 35-meter span connects the northeast corner of the Municipality of Quetzaltenango with San Felipe Xejuyup in the department of Totonicapán. This is an important inter-departmental traffic route which allows local traffic to avoid the Pan-American Highway and connects downtown Quetzaltenango
13 This number is calculated as follows: 55,125 direct jobs and 16,631 indirect jobs in the construction phase; 27,658 direct and 6,756 indirect jobs in the operational phase. This totals 82,783 direct jobs and 23,387 indirect jobs for a total of 106,170 jobs.
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with National Route 1 via San Andres Xecul, Totonicapán. At the moment, the Chiquilajá bridge has only one lane, due to the collapse of a parallel bridge structure. In addition, the Municipality of Quetzaltenango included approximately $1 million in its 2020 operational plan for an additional lane on this bridge. The second new project is a new campus of the Universidad Panamericana (UPANA), in zone 16 of Guatemala City. This project is estimated to begin Phases 1 and 2 of construction this year, with an investment of $43 million. The new campus will include buildings for the Rectory, administration, libraries, classroom buildings for different faculties, a university hospital, residential and commercial high-rises, among others. 3.2.2 SUPPORT IMPLEMENTATION OF HIGH-POTENTIAL PROJECTS During this quarter, the Project supported the Civil Aviation Authority (DGAC in Spanish) in the field survey of obstacles in the approach cone of the Huehuetenango Aerodrome, as part of the preparation of the Obstacle Limitation Surface (OLS) study. The study is needed because of the increasing numbers of air passengers coming to the airfield. Execution for this study was scheduled between February 17 and April 30, 2020, but, due to the pandemic, the Project is implementing field work during restricted hours. This study is complementary to the Huehuetenango airfield project to improve airport functioning and provide greater safety for air traffic. The Project continues to support development of the feasibility study and final design of the GRC-SAT Central Customs Building, Lavarreda zone 17, Guatemala City. This quarter, the Project presented a proposal for the pre-design of the administrative building, which includes: three (3) basements, four (4) levels, in addition to two (2) warehouses for confiscated goods, an area for confiscated vehicles, entry and exit checkpoints, operations room, and vehicle inspection area. The SAT is analyzing the preliminary project proposal for approval and to finalize the design. The period for the execution of the study is between January 15th and December 16th, 2020. The SAT team has played a very participative role in the progress of the studies, and they have planned construction for 2021. The Project provided technical assistance to three partner companies to conduct a market study for two logistics centers in Guatemala City. The study whose main goal was to identify the best location for the two sites, was completed this quarter. A survey of potential stakeholders interested in investing in productive infrastructure is in-process and expected to be complete in April.
The Project provided technical assistance to a company in Quiché for the identification of potential investors interested in the construction of a shopping center and a bus terminal in Santa Cruz del Quiché (CENTRAQ). Negotiations are ongoing for investors who were contacted about buying or leasing a portion of the land. A proposal to seek resources to begin moving earth on the property and to provide an improved offer for potential investors is being analyzed by the owner.
The Project continues to support Salcajá's Smart City Plan, which contemplates various public, private and public-private activities and investments to implement the concepts of ‘smart city’ development in the municipality. The Project also developed terms of reference for a feasibility study for development identified in the Partial Plan of the Smart City Plan. The Partial Plan focuses on interventions within a specific part of the municipality, where key elements of the Smart City Plan will begin. The study is expected to begin next quarter. This quarter, the Project exchanged letters with the SAT to agree to implement a design study for the proposed Tecún Umán border post, which includes support from the Project in investment attraction,
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access to finance and updating the Master Plan for development. SAT continues in the process of defining requirements in order to move forward with the design. Two studies of strategic projects were definitively approved and delivered to the officials of the Technical Department of the Highways Department, so that authorities in the new government will proceed to schedule bidding processes for construction. The approved studies are as follows: • Improvement of Highway RD-QUI-2, section: Palibatz, Pachalum-Chuaquenun, Joyabaj, El Quiché • Improvement of Highway RD-GUA-04, section: San Rafael Las Flores- San Antonio Las Flores, Chinautla, Guatemala Finally, the Project continued its technical support for two productive infrastructure projects in Quetzaltenango. The tam provided assistance to the technical team in charge of the campus expansion plan of the Universidad Rafael Landívar in Salcajá, to prepare a public bidding process for construction, and also to gather together documentation required to obtain contracting and construction licenses for the project. The team also supported the Mancomunidad Metropoli de los Altos in preparing documentation for public bidding for four (4) bridges and one (1) road improvement, which are part of the Strategic Road Interconnections project in the municipality of Quetzaltenango.
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Table 12: List of identified infrastructure projects14
Time Period Phase Projected Employment Total Sector Projected Investment Terms of Construction Direct Indirect Employment Projected # Project Name (Public/ Bidding and Identified Selected Profiled Reference phase Employment Employment (Direct + Beneficiaries Private) ($ million) contracting developed completed Indirect) 40,395 Renovation of the Huehuetenango airport 3.0 1.2 4
1 1A. Technical assistance to improve Public Y1 Y2 Q1 Y2 Q1 Se trabajo en conjunto con la 0.5 Y2 Q4 0.0 0.0 - infrastructure DGAC Y2 1B. Study to identify surface limitation Y2 Q4 Y3Q1 obstacles at and near the aerodrome 0.0 0.0 - Strategic Road Interconnections to improve mobility in the Metrópoli de los Altos 2 Municipalities Association area in the Public 6.40 Y2 Q1 Y2 Q2 Y2 Q2 Y2 Q2 Y2 Q2 326.4 98.5 425 201,749 municipalities of Quetzaltenango and La Esperanza Upgrading of part of Highway RD -GUA 4 from Aldea San Antonio Las Flores, in 3 Chinautla to the junction of the highway to Public 4.51 Y1 Y2 Q2 Y2 Q2 Y2 Q2 Y2 Q2 230.0 69.4 299 276,169 San Raimundo, Chuarrancho. in Guatemala
Expansion of academic services at the 4 Rafael Landivar University campus at Private 22 Y1 Y2 Q1 Y2 Q1 Y2 Q2 Y2 Q2 2,822.0 408.4 3,230 130,660 Salcajá, Quetzaltenango Upgrading of part of Highway RD-QUI-2, between Pachalum and Joyabaj, including 5 Public Y1 Y2 Q1 Y2 Q1 Y2 Q2 Y2 Q2 construction of a bridge at La Vega 8.9 453.9 136.9 591 577,254 Godínez, Pachalum, in Quiche CENTRAQ wholesale center and bus 6 Private Y2 Q2 Y2 Q2 Y2Q3 Y2 Q4 Y3Q1 terminal in Santa Cruz del Quiche, 7.69 442.2 133.4 576 701,824 Market study for a Carmel/Espacios 7 Private Y2 Q1 Y2 Q1 Y2 Q1 Y2 Q4 Y3Q1 logistics center in Guatemala 30 1,555.0 469.1 2,024 25,232 Market study for a Los Geranios logistics 8 Private Y2 Q1 Y2 Q1 Y2 Q1 Y2 Q4 Y3Q1 center in Guatemala 20 1,040.0 313.8 1,354 16,675
14 Projects vary from quarter to quarter as some are no longer viable and are eliminated while others are identified and added to the list. The overall projected results in terms of investment, jobs, and beneficiaries therefore may change as the project pipeline is modified each quarter.
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Time Period Phase Projected Employment Total Sector Projected Investment Terms of Construction Direct Indirect Employment Projected # Project Name (Public/ Bidding and Identified Selected Profiled Reference phase Employment Employment (Direct + Beneficiaries Private) ($ million) contracting developed completed Indirect)
Central Customs Building (GRC-SAT), 9 Lavarreda zone 17, Guatemala City, in Public 7.53 Y2 Q2 Y2 Q2 Y2 Q2 Y2 Q4 Y2 Q4 434.0 145.2 579 505,592 Guatemala Border post at Tecún Umán II, Ayutla, in 10 Public Y1 Y2 Q2 Y2 Q2 Y2 Q2 Y2 Q2 San Marcos 23.66 1,306.7 422.6 1,729 217,227 Development in the business zone (Smart Public/ 11 Y2 Q4 Y2 Q4 City Plan) in Salcajá, Quetzaltenango Private 170 650.0 140.7 791 33,445 Valley of Guatemala watershed Public/ 12 management through rainwater Y1 Y2Q3 Y2 Q4 Private 3 353.0 126.6 480 302,108 management in Guatemala Metropolitan University Center (USAC), 13 Public Y2 Q2 Y2 Q2 Y2 Q2 zone 17 in Guatemala 23.89 1,518.4 379.9 1,898 193,588
Convention Center and center for Master´s 14 Degree Studies (USAC), zona 14 in Public 28.65 Y2 Q2 Y2Q3 Y2Q3 1,661.2 449.1 2,110 371,333 Guatemala East-West Road Corridor between Vista 15 Private Y2 Q2 Y2Q3 Hermosa and El Naranjo, in Guatemala 620 31,635.0 9,545.8 41,181 685,782 Part 1 of East-West Road Corridor (COVET 1) from Lourdes Boulevard in z.16 to the 16 Private Y2 Q2 Y2 Q2 Vista Hermosa Saddle in z. 15, in 15 775.0 234.8 1,010 1,210,601 Guatemala
Part 2 of East-West Road Corridor (COVET 17 2) from the Saddle of VH in z. 15 to Private 56 Y2 Q2 Y2 Q2 2,866.0 865.7 3,732 1,239,413 Diagonal 6.in Z.10, in Guatemala Infrastructure to support orderly commercial trading around the junction at Public/ 18 km 188.5 on the Pan-American Highway Y1 Y2 Q1 Y2Q3 Private 2 152.0 44.2 196 31,705 known as Cuatro Caminos, in San Cristóbal Totonicapán University Center at Paraje Chirij-Pachec, 19 Public Y2Q3 Y2Q3 Y2Q3 in Totonicapán 11.02 682.0 174.5 857 26,464
20 USAC University Center in Huehuetenango Public 3.20 Y2Q3 Y2Q3 Y2Q3 263.2 53.3 317 238,984 CUSACQ University Center at Aldea El 21 Public Y2Q3 Y2Q3 Y2Q3 Chajbal, Santa Cruz Del Quiche 5.60 385.6 90.3 476 85,735
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Time Period Phase Projected Employment Total Sector Projected Investment Terms of Construction Direct Indirect Employment Projected # Project Name (Public/ Bidding and Identified Selected Profiled Reference phase Employment Employment (Direct + Beneficiaries Private) ($ million) contracting developed completed Indirect) CUSAM University Center; Aldea 22 Public Y2Q3 Y2Q3 Y2Q3 Quiaxaque, in San Marcos 11.19 995.7 189.7 1,185 177,408 Expansion of commercial and Public/ 23 Y2 Q2 Y2 Q2 transshipment zones in Totonicapán Private 2.46 155.5 45.9 201 1,909 Transformation of solid waste into electrical Public/ 24 54 Y2 Q4 Y2 Q4 energy in the Quetzaltenango Municipality Private 2,954.0 843.6 3,798 439,147 Bypass at Ocubila towards La Zeta, 25 Public Y2 Q4 Y2 Q4 between Huehuetenango and Chiantla 5.49 280.0 84.5 364 103,858 Municipal market 4 de febrero, in zone 7, 26 Public Y2 Q4 Guatemala City 2 152.0 45.9 198 41,405 Vehicle Bridge at San Ildefonso Ixtahuacán, between Cuilco and 27 Colotenango on a highway that leads to the Public 2.5 Y2 Q4 127.5 38.5 166 126,757 Mexican border, Huehuetenango Department System of municipal vehicle bridges in zones 6 and 12 to connect the Pan- 28 Public Y2 Q4 232 American highway with Route 7 West 3.5 178.5 53.9 252,460 towards Quiche Puerta del Istmo Economic Zone, Tecun 29 Private Y3Q1 Y3Q1 Y3Q1 Umán 23.90 21,718.9 6,552.6 28,271 289,795
Strategic Road Interconnections for 30 Mobility, Mancomunidad Gran Ciudad del Public 27.9 Y3Q1 Y3Q2 1,422.9 429.3 1,852 336,574 Sur, Guatemala Bridge construction: Chiquilajá, 31 Public Y3Q2 Y3Q2 Quetzaltenango 1 51.0 15.4 66 100,709 Educational campus expansion, UPANA 32 Private Y3Q2 Zona 16, Guatemala 43 5,193.0 785.0 5,978 48,217 Totals 1,246.49 82,783 23,387 106,171 9,030,174
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Task/Inputs Table 3.2 Develop and Support Implementation of a Pipeline of Productive Infrastructure Projects Est. Est. Task No. Task/Input Description Outcome/ Results Partners Start End 3.2.1 Identify and Define Productive Infrastructure Projects Support the implementation of the June Implementation in 3.02.01-01 agreed upon action plan for Smart Oct 19 2020 In process process City in Salcajá 3.2.2 Support Implementation of High-potential Projects Implement feasibility study and final design to upgrade sections of Completed Highway RD-QUI-2 between Pachalum and Joyabaj in Quiche, Feasibility Studies The feasibility study was 3.02.02-01 Feb-19 Oct-19 including the design for the Completed submitted to the construction of three bridges Guatemalan Highway including La Vega de Godinez Department. bridge in Pachalum Implement feasibility study and final design for the Central Customs Nov- Feasibility Studies Studies in progress, January 3.02.01-02 Aug-20 Building GRC-SAT, Lavarreda zone 19 Completed 15, 2020 to December 16, 17, Guatemala, Guatemala 2020 Analyze the master plan of the In process. The wholesale market and bus terminal Construction 3.02.01-03 Sep-19 Dec-19 recommendations are in (CENTRAQ) for Santa Cruz del Recommendations process. Quiche Implement market study of 2 logistical centers, zone 17. Marketing Study Studies in progress, January 3.02.01-04 Inmobiliaria Carmel/Espacios Oct-19 Dec-19 28, 2020 to March 31, Rentables and Los Geranios, Completed 2020. Guatemala Support studies of six overpasses for the Atanasio Tzul Highway and Feasibility studies This will not be done due 3.02.01.05 Oct-19 Jan-20 the VAS connection in zone 12, Completed to lack of interest from the Guatemala company. Implement feasibility studies for improvements in the Border Feasibility studies 3.02.01.06 Mar-19 Sept-20 Infrastructure in Tecún-Umán II in completed Terms of reference San Marcos are being prepared.
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Claudia Navas/ USAID Claudia
4 PRIVATE SECTOR COMPETITIVENESS IMPROVED During the quarter, the Project provided technical assistance and training sessions to allied companies; promoted opportunities for commercial exchange, such as the Commercial and Financial Fair, which directly helped partner businesses to adopt better business practices, identify and solicit needed financing, and generate trade deals and the exchange of information; and supported the training and placement of needed staff in new positions. Technical assistance continues to focus on partners’ priority issues which will allow them in the short and medium term to align correctly with their growth strategies. Also, 26 new Memoranda of Understanding (MoUs) were signed with companies, whose business plans will generate jobs, new sales and investment in Project geographies. The Project supported the Ministry of Economy in the reactivation of opportunities for Small and Medium- sized Enterprises (SMEs) to register in the General Government Procurement Registry (RGAE), which will promote this market as a growth opportunity for Project allied companies. At the sectoral level, the team helped the municipality of Huehuetenango finalize a draft Tourism Development Plan, which will contribute greatly to promote tourism development in the department by facilitating specific activities which local tourism stakeholders can implement. In addition, the Project continued to foment public-private partnerships and a flexible response to the real needs of the labor market. One of the key strategies is to support development of technical and soft skills tailored to the needs of vacant positions in the market in order to strengthen youth capacities to be hired. However, by the end of the quarter, businesses were beginning to be impacted by the COVID-19 crisis. Restrictions began to impact growth plans with a shift in focus to survive and maintain current jobs and operations.
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HIGHLIGHTS AND ACHIEVEMENTS FROM THE QUARTER
• 795 jobs created (178 women; 98 youth). Of these 795 new jobs, 590 were generated in the Department of Guatemala, 189 in Quetzaltenango, 2 in Huehuetenango, 1 in Quiché and 13 in Totonicapán. To-date 2.076 new jobs have been created (601 women, 523 youth)
• $8,773,501 in domestic investment mobilized; of which $4,023,752 was in Project allies in the Department of Guatemala, $2,410,676 in Quetzaltenango, $193,814 in Huehuetenango, $2,093,121 in San Marcos, $42,006 in Totonicapán and $10,132 in Quiché. Total domestic investment to-date this year: $25,176,270.
• $17,929,692 in new sales; of which $13,247,931 was generated in the Department of Guatemala, $4,017,008 in Quetzaltenango, $516,079 in Huehuetenango, $25,540 in Quiché, $122,744 in San Marcos and $390 in Totonicapán. New sales generated to-date are: $45,099,735
• $3,854,122 in capital investment in SMEs; of which $2,554,005 was invested in the Department of Guatemala, $1,096,170 in Quetzaltenango, $193,814 in Huehuetenango and $10,133 in Quiché. To- date $11,170,346 has been invested in capital in SMEs.
• $323,916 in new sales to State agencies; of which $5,581 was generated in the Department of Guatemala, $210,701 in Quetzaltenango, $88,928 in Huehuetenango, $18,316 in San Marcos and $390 in Totonicapán. SME sales to State agencies to-date this year: $3,010,941
• 17 new Project allies received technical assistance to improve business competitiveness, all located in the Department of Guatemala. Forty new Project allies have received technical assistance this year.
• 71 entities selected for workforce development alliances
• 946 youth participating in workforce development initiative, of whom 515 were women and 431 men. 1,556 youth have participated in these initiatives this year.
• 548 people with new or improved employment, of whom 423 are youth (255 women, 168 men); to date, 1,335 youth have had new or better jobs as a result of initiatives.
• 2 job fairs and employment mini fairs took place in the quarter; bringing to 40 the number of job fairs held to date.
4.1 DEVELOP AND IMPLEMENT ANCHOR FIRM ALLIANCES 4.1.1 IDENTIFY, DEVELOP, AND MANAGE A PIPELINE OF PARTNER FIRMS During this quarter, 26 new MOUs were signed, through which 2,015 new jobs are projected to be generated, $50.3 million in new sales and $8.8 million in domestic investment over the life of the Project. Of the 26 new companies, 77% belong to the manufacturing sector and subsectors of processed food, light manufacturing, beverages and textiles; 19% belong to the trade sector; and 4% to the service sector. The expected results in indicators will be gradual during approximately 24 months, according to the implementation of the agreed growth plans. MOUs are valid for the life of the Project and allow data for agreed indicators to be collected during that time.
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4.1.2 PROVIDE TECHNICAL ASSISTANCE TO FIRMS UNDER ALLIANCES15 During the quarter, technical assistance was provided to 17 new partner companies. The assistance focuses on widening market access, strengthening business strategies and the business model, streamlining production, strengthening application of technology, and promoting soft skills training. The result of this technical assistance is that companies will adopt industry standard best business practices and increase their business competitiveness. The team helped the Municipality of Huehuetenango develop a draft Tourism Development Plan, which was created with the participation of business stakeholders from the departmental Tourism Self-Management Committee, representatives of the Guatemala Tourism Institute (INGUAT), the Municipality of Huehuetenango and local universities. The draft Plan recognizes the municipality's unique identity and the potential to convert the departmental capital into a Tourist Distribution Center16 . This means that boosting tourism in the Municipality of Huehuetenango will gradually impact tourist activity in surrounding municipalities. Likewise, the Plan establishes eight (8) strategic pillars: 1) Institutional framework, 2) Sustainable tourism development, 3) Consolidation and diversification of the tourism offer, 4) Tourism information system, 5) Tourism competitiveness, 6) Tourism marketing, 7) Local tourism security program and 8) National and regional bodies. The Plan is expected to be presented to stakeholders in April 2020 for any final feedback. The document will be finalized next quarter. The Project supported the Ministry of Economy’s Vice-ministry of Micro, Small and Medium-sized Enterprises to implement workshops in which small businesses can register in the General Government Procurement Registry (RGAE). This collaboration will help at least 50 new SMEs registered as potential State contractors. The first workshops were scheduled for March 2020 but had to be postponed because of the COVID-19 pandemic. New dates have yet to be defined. The Project will continue to monitor the sales of 52 companies registered through Project initiatives, which to date amount to $3,010.94, of which 97% have been in the Western Highlands. The Project signed a Memorandum of Understanding with Walmart, which has two main goals: the first is to support the growth strategy of the supermarket chain, mainly in Project geographies; the second is to continue training SME suppliers. In order to fulfill the second goal, the Project identified and selected a group of 16 new SME suppliers to Walmart and initiated an assessment of their businesses to identify opportunities for strengthening. These companies supply Walmart with food products, textiles, and household cleaning products. 4.1.3 STRENGTHEN BUSINESS DEVELOPMENT SERVICES PROVIDERS During this quarter, the team agreed to collaborate with two PROMIPYMES operating in Project territories: one operated by the Guatemalan Managers’ Association (AGG); the other, operated by the Tourism Development Promoter (PRODETUR). Both serve entrepreneurs and micro and small businesses in the department of Guatemala. The collaboration will focus on training to adopt new services to assist entrepreneurs, on themes like market access, innovation and mentoring by utilizing training already planned.
15 List of businesses and types of assistance provided is attached separately 16 The Tourist Distribution Center serves as a base from which tourists can visit attractions in their own territory or nearby. The Center will receive international, national, regional and local tourists and facilitate their distribution to different attractions, and to where they can return to spend the night.
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Task/Inputs Table 4.1 Develop and Implement Anchor Firm Alliances
Est. Est. Task No. Task/Input Description Outcome/ Results Status Start End
4.1.2 Provide Technical Assistance to Firms under Alliances
80 businesses implementing improved 17 new business practices, businesses begin Provide STTA and/or BDS services to resulting in at least technical 4.01.02-01 high potential SMEs to increase Oct-19 Sep-20 3,150 jobs, $91m in assistance this competitiveness sales, and $100m in quarter; To-date investment during the 40 in Year 3 year
4.1.3 Strengthen Business Development Services Providers
Allied MSME entrepreneurship centers: Guatemalan Managers’ Alliance between PROMIPYMES and 4.01.03-01 Oct -19 Sept-20 2 PROMIPYMES allied Association allied businesses (AGG); and Tourist Development Promoter (PRODETUR) Support needs identified; in At least 2 capacity- process 4.01.03-01 Transfer of capacities to PROMIPYMES Oct -19 Sep-20 building sessions development of implemented TORs to hire services
4.2 STRENGTHEN THE ENTREPRENEURSHIP AND INNOVATION ECOSYSTEM With the completion of Babson College's Scale Up program last quarter, the Project continued to provide specialized technical assistance to participants which are now Project allies. The goal with this group of 18 companies is to boost trade in their products or services; six (6) participated in the Commercial and Financial Fair held in Guatemala City March 4 and 5; nine (9) registered for the Commercial and Financial Fair in Quetzaltenango (which has been cancelled), and two (2) received technical assistance to improve their business models and commercial strategies. Next quarter, the Project will invite these entrepreneurs to participate in a series of group training events, focusing on strategic and financial planning, as well as accounting and tax issues. At the end of the quarter, the Project was reviewing and refocusing support on issues to assist companies with their immediate requirements to maintain operations and staff. 4.2.1 STRENGTHEN ENTREPRENEURSHIP AND INNOVATION DEVELOPMENT CENTERS An MOU was signed this quarter with the Association of Cooperation for the Rural Development of the West Enterprise Center (CDRO in Spanish) in Totonicapán.
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4.2.2 DEVELOP AND LEVERAGE ALLIANCES TO IMPROVE THE ENTREPRENEURSHIP /INNOVATION ECOSYSTEM The Project evaluated means to continue strengthening the enterprise ecosystem in Project geographies. Two variables identified for strengthening are "Entrepreneurship Support" and "The Marketplace." The first one refers to providing technical assistance services that allow enterprises to accelerate their development and achieve sustainability as businesses; the second one foments market intelligence for entrepreneurs and promotes market linkages. With these initiatives, the Project will support Entrepreneurship Centers to participate in group trainings, and in market linkage events which will help the centers develop new capacities to serve their entrepreneur and small business networks, as well as supporting the enterprises which graduated from the Scale Up Program. However, it will not be the priority for the next quarter. At the end of the quarter, companies began to be impacted by the COVID- 19 crises and the Project began refocusing efforts on providing emergency support.
Task/Inputs Table 4.2 Strengthen the Entrepreneurship and Innovation Ecosystem
Est. Task No. Task/Input Description Est. End Outcome/ Results Status Start
4.2.1 Strengthening Entrepreneurship and Innovation Development Centers
Provide training and technical 6 Centers with 3 4.02.01-01 assistance to allied Oct-19 Dec-19 5 Centers trained improved services Entrepreneurship Centers
4.2.2 Develop and Leverage Alliances to Improve the Entrepreneurship/ Innovation Ecosystem
18 businesses Provide targeted support to accelerated through 4.02.02-01 accelerators based on Letters Oct-19 Nov-19 Completed in Q1 the Babson College of Engagement. Scale-up methodology
4.3 PROMOTE MARKET LINKAGES 4.3.1 SUPPORT PARTICIPATION IN INTERNATIONAL BUSINESS FAIRS AND TRADE MISSIONS During this quarter, technical assistance was provided to 56 companies interested in participating in international trade events. The technical assistance consisted in creating a directory and profile of events tailored to each companies’ needs. These profiles included information about each event, event goals, profiles of expected participants and potential benefits of participating. Companies expressed interest in participating in commercial events mainly in Central America, North America, Europe, Asia and Colombia. The First Training Workshop on Commercial Issues was held February 6 for 50 people from 25 Project allied businesses. In the full-day workshop, participants were trained in how to enter international markets and in the different commercial tools at their disposal, such as fairs, business conferences and trade missions. Participants also received training in the use of the internet and social media as tools to link to new markets. There was a session on current trends in e-commerce and the behavior of a range of consumers in different markets. The Project also introduced a session on an innovative topic, neuromarketing, which is a technique that helps companies identify which visual or verbal stimuluses grab the attention of, and influence decision of, potential customers. Finally, the workshop included a session on the application of regulations on part-time work – International Labor Organization Convention 175 -- which has as its purpose to formalize labor relations of part-time
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workers in Guatemala. This session aimed to provide another option in employee hiring for partner businesses. 4.3.2 SUPPORT PARTICIPATION IN NATIONAL BUSINESS-TO-BUSINESS EXCHANGES Prior to the Commercial and Financial Fair in Guatemala City March 4 and 5, participating companies received training on how to participate in successful business-to-business negotiations. During the event, participating companies were trained in: a) Compliance and updating of the environmental licenses, b) the State platform for public bidding processes, Guatecompras, which provides a market niche opportunity for Guatemalan companies, c) Accounting and financial information systems for business management, d) Good practices in structuring financing for SMEs, e) Basic governance structures for SMEs, f) Risks of mixing personal and corporate finance, and g) Compliance and perspective on labor regulations. Participants concluded a total of 1,111 business meetings and, as a result, made potential deals worth as much as $2,367,85617. 4.3.3 LEVERAGE TECHNOLOGY TO FACILITATE MARKET LINKAGES With the goal of contributing to allied partners’ use and appreciation of technological tools of modern business, the Project shared an online platform with participants registered for the March Commercial and Financial Fair which facilitated preparation for the B2B meetings and helped participants arrange their schedule for the two-day event. The platform allowed companies and financial institutions to interact five weeks before the event, creating profiles of their companies to attract attention of others, reviewing the directory of participating companies, and arranging their business appointments in the most effective way. The Project supports the use of virtual portals to do business. The widest experience is the support to 100 tourism-supporting businesses in the Western Highlands linked to the global travel platform, Expedia. The Project’s alliance with Expedia has begun to show some movement in sales for some of the key hotels in the program. The training activity suspended in Salcajá, Quetzaltenango, March 18 included a workshop for hotel operators in charge of managing online sales. This training will be rescheduled. The Project is also supporting other innovative business solutions through technology: a digital platform (web and mobile app), for a local company which promotes gastronomic tours, restaurants and events, which included tools such as online payment, artificial intelligence (BOT) and online booking. For another health service provider ally, the Project is supporting development of a transactional platform that will promote health tourism by allowing people to book dental services in Guatemala from abroad. A further project is a mobile application for a regional savings cooperative which will speed up processes and facilitation of loans, improving the way in which the cooperative interacts with clients and the market. In terms of activities promoting the Guatemalan Government portal, Guatecompras, as described above in activity 1.3.2 Build GOG Capacity around GuateCompras, the Project recorded sales in the quarter of 52 registered companies in the amount of $323,916.
Task/Inputs Table 4.3 Promote Market Linkages
Est. Task No. Task/Input Description Est. End Outcome/ Results Status Start 4.3.1 Support Participation in International Business Fairs and Trade Missions
17 According to data from the participant exit survey
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Est. Task No. Task/Input Description Est. End Outcome/ Results Status Start Deliver technical assistance, 10 businesses trained 25 businesses trained to coaching, and skills transfer to participate in participate effectively in 4.03.01-01 for partner companies Oct-19 Sep-20 international trade national and international participating in international fairs and missions trade fairs trade fairs 4.3.2 Support Participation in National B2B Exchanges Select cohort of companies 40 businesses 88 businesses participated in 4.03.02-01 to participate in B2B Oct-19 Sep-20 participating in B2B the Commercial and exchanges activities Financial Fair Deliver technical assistance, coaching, and skills transfer 20 businesses trained 73 businesses trained in 4.03.02-01 for partner companies Oct-19 Sep-20 to participate in effective participation in participating in national B2B national trade fairs national B2B exchanges exchanges
4.4 DEVELOP A COMPETITIVE WORKFORCE During the quarter, the Project continued developing alliances to identify workforce opportunities. Training and placement activities were in full implementation during the quarter. The Project also continued supporting events that provided both training and job placement opportunities. However, by the end of the quarter, it was clear that these activities would be impacted as companies confronted economic difficulties and large gatherings (and a lockdown was put in place) were prohibited. The Project began exploring opportunities to refocus workforce development activities given the current crisis. 4.4.1 DEVELOP AND LEVERAGE ALLIANCES TO SUPPORT WORKFORCE DEVELOPMENT The Project established 71 alliances with private companies this quarter to help strengthen the labor force and help companies find staff through job fairs and employment kiosks which included training for participants to increase their chances of being offered a job.
Table 13 Project Alliances with Private Sector Entities
# of allied Project support Department businesses
Training and linkage to employment 53 companies Guatemala Participation in MINTRAB employment fair 12 companies Quetzaltenango Participation in Municipal Job Fair, with participation of 4 companies Quiche MINTRAB National System for Employment Participation in Municipal Job Fair, with participation of 2 companies Huehuetenango MINTRAB National System for Employment The team led four (4) workforce development initiatives during the quarter, through public-private partnerships, in which training was provided to 946 youth on topics that meet the needs of local markets. The training took place before and during employment fairs and kiosks in Huehuetenango and Quetzaltenango, as outlined in the table below.
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Table 14 Workforce Development Initiatives Implemented in the Quarter
Initiative Allied Partner Department # of Participants
Chiantla Municipal Employment Training in soft skills Huehuetenango 149 youth Center
Training in soft skills Ministry of Labor Quetzaltenango 17 youth
Germany Agency for Training update for assistant International Development Quetzaltenango 14 youth accountants in tax accounting (GIZ) Construction Chamber of Personal protective equipment Quetzaltenango 35 youth Commerce
4.4.2 HOST AND IMPROVE THE EFFECTIVENESS OF JOB FAIRS IN TARGET GEOGRAPHIES Tailored job fairs and employment kiosks have been a key strategy for training youth and linking them to employment opportunities. These activities have been continuously improved, incorporating technology and becoming more specialized as market needs are identified. Training has added value to the employment fairs for job seekers and employment services. Activities implemented this quarter are outlined below.
Table 15 Employment Fairs Supported in the Quarter
Job Fair or Allied Partner Department Positions Offered Kiosk
Construction supervisors, cashiers, warehouse assistants, drivers, drivers’ assistants, sales MINTRAB Quetzaltenango Job Fair representatives, receptionists, waiters/ waitresses, cooks, messengers, customer service representatives Librería Cano Employment Huehuetenango Client services and warehouse staff. Recinos S.A. Kiosk
4.4.3 DEVELOP AND IMPLEMENT A FORMAL EMPLOYMENT OPPORTUNITY PROGRAM FOR OUT-OF-SCHOOL YOUTH As a result of Project activities, 946 young people participated in training initiatives according to the needs identified with the partner companies with vacancies available. These youth received training in technical and soft skills, including: job orientation techniques, workshops for employment, customer service, sales, teamwork, entrepreneurship, attitude for change, values, communication techniques, Excel, professional make-up, acrylic nail techniques, social network management, design for entrepreneurs, beauty culture, culinary initiation, high pastry making and chef training. The youth participating in these workshops then took part in employment mini fairs tailored to the needs of allied companies, with the goal of linking jobseekers to available vacancies. These initiatives were developed in collaboration with private companies, municipalities, cooperatives and government organizations. As a result of the participation in these initiatives, 548 people, 423 of whom were under 25 years old, were linked to full-time formal employment. 4.4.4 STRENGTHEN THE VOCATIONAL TRAINING ECOSYSTEM This activity was completed last quarter. No further activities we undertaken during the reporting period.
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Task/Inputs Table 4.4 Develop a Competitive Workforce
Est. Task No. Task/Input Description Est. End Outcome/Results Status Start 4.4.1 Develop and Leverage Alliances to Support Workforce Development Identify opportunities for WFD alliances in high potential At least 80 businesses In-process 4.04.01-01 sectors including construction, Oct-19 Sep-20 identified housing, commerce, services, and agroindustry Finalize at least 60 WFD 60 alliances formalized In-process 4.04.01-02 alliances Oct-19 Sep-20
At least five initiatives Initiate 5 additional WFD In-process 4.04.01-03 Oct-19 Sep-20 identified to achieve alliances Year 4 goals Efforts coordinated Coordinate with international with at least three In-process 4.04.01-04 cooperation projects similar to Oct-19 Sep-20 youth employment the Project programs 4.4.2 Host and Improve the Effectiveness of Job Fairs in Target Geographies Support National and regional 8 employment mini Completed 4.04.02-01 job fairs to increase demand- Oct-19 Sep-20 fairs
driven focus 4.4.3 Develop and Implement a Formal Employment Opportunity Program for OSY Follow-up on four contracts 1,000 youth inserted for training youth for insertion In-process 4.04.03-01 Oct-19 Sep-20 into the labor market into the labor market
500 youth linked to Implement specialized mini- In-process 4.04.03-02 Oct-19 Sep-20 jobs employment fairs (kiosks)
Develop alliances with 800 youth linked to In-process 4.04.03-03 businesses and institutions Oct-19 Sep-20 jobs
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Massiel Alvarado/ USAID Alvarado/ Massiel
5 CROSS-CUTTING ACTIVITIES
5.1 INTEGRATE GENDER EQUALITY, SOCIAL INCLUSION AND CONFLICT SENSITIVITY INTO PROJECT ACTIVITIES The strategic vision of the Gender Integration Plan 2018-2023 is to ensure that the Project includes multidimensional approaches equitably to women, indigenous peoples, youth and people with disabilities by implementing short and medium-term strategies to promote transformation in the creation of economic opportunities in Project geographies. The expected result for Year 3 is to ensure that seven allied partners implement, within a framework of corporate social responsibility, equality and inclusion plans or policies that promote equal opportunities for men, women, indigenous peoples or people with disabilities. The plans will strengthen processes of selection, recruitment, training and promotion of personnel, without discrimination based on gender, ethnicity or disability. The Project provides technical assistance to partner companies to design and implement Equality and Inclusion Plans. These Plans are aligned with more egalitarian human resource standards and policies and promote the creation of spaces free from discrimination and harassment in the workplace. This quarter, the Project trained 67 employees from three (3) companies that are implementing Equality Plans. The team also designed three other Equality Plans in the departments of Quiché, Huehuetenango and Totonicapán. However, by the end of the quarter, with the current crisis, the Project began evaluating whether companies currently being supported in this area would continue with implementation plans and activities given more urgent issues began to take priority. HIGHLIGHTS FROM THE QUARTER • 67 employees trained in the Departments of Huehuetenango and Quetzaltenango on tools for inclusive businesses, workplaces free from discrimination and harassment, and gender and inclusion as good business.
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• three (3) companies developed Equality Plans. These companies are in Quiché, San Cristóbal Totonicapán and Huehuetenango. • four (4) companies approved their equality plans and are now in the process of implementing these plans. • two companies have drawn up codes of business ethics to be adhered to in their human resources policies and implemented 5.1.1 INTEGRATE GENDER EQUALITY, SOCIAL INCLUSION AND CONFLICT SENSITIVITY INTO PROJECT ACTIVITIES The Project provides technical assistance to partner companies that voluntarily request training on inclusion with multidimensional approaches on gender, youth, ethnicity or disability. The aim is for companies to improve their corporate image by adopting measures aimed at generating workplace spaces free from discrimination and harassment in all its forms. These measures also help companies comply with national constitutional principles of equality. Sixteen employees who make up the Equality and Inclusion Committee of a partner company in Quetzaltenango received training: 69% women; 19% under-25. The participatory training focused on a ‘Toolbox for Inclusive Businesses.’ The goal was to have the basic tools for the development of analyses to identify types of jobs that the company can generate in the future for people with some type of disability. The tools also help identify the necessary infrastructure that must be adapted when hiring people with the right skills for the job but who have some type of disability. The tools presented are a set of practical aides to allow staff to build their understanding of disability and facilitate inclusion processes in all aspects of the organization. In Huehuetenango, the Project provided technical assistance to two companies that are already implementing their Equality Plans. Assistance included training of 51 employees: 25% women; 12% Mayan; and 49% under-25 years of age. The goal was to generate understanding and awareness of the new standards of conduct that should be adopted in partner companies to accomplish ‘zero tolerance’ for discrimination and harassment in its various forms in the workplace. The workshops allowed for the definition of strategic activities the companies can implement in order to promote equality and to generate spaces free from discrimination and harassment. The result of these workshops was to obtain inputs to develop roadmaps, codes of conduct and protocols for prevention and treatment of potential cases or complaints that may occur in the workplace.
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Figure 5 People with improved understanding of harassment and inclusion
The Project provided technical assistance to three (3) partner companies in the departments of Huehuetenango, Quiché and San Cristóbal Totonicapán for the design of Equality Plans. They are currently in draft form and are being reviewed by company managers after approval by their Boards of Directors. The three equality plans are based on a framework of corporate social responsibility, and include a multidimensional approach to gender, youth and indigenous peoples. The issue of disability, at the request of the companies, will not be addressed in the design of the Plans for the first year. Once the equality plans have been approved, the Project will provide technical assistance for their implementation. Of the four Equality Plans approved in the departments of Huehuetenango and Quetzaltenango, two draft Codes of Ethics are being prepared jointly with staff from the partner companies. One has been approved by the company in Huehuetenango and has been included in its annual report submitted to the Ministry of Labor with a view to its institutionalization as a company policy. The other one is under review by human resources personnel of partner firms. In addition, two tools are being developed to gather information for the analysis of job opportunities by type of disability for a partner company in Quetzaltenango, taking advantage of workshops held in April and May. The team also prepared the first draft of a road map for the prevention of and treatment of potential cases of discrimination or harassment in partner companies. This will be discussed and analyzed at meetings scheduled for the following quarter.
Task/Inputs Table 5.1 Integrate Gender Equality, Social Inclusion into Project Activities
Est. Est. Task No. Task/Input Description Outcome/ Results Status Start End 5.1.1 Support Gender and Social Inclusion Strategies for Allied Businesses Implement social inclusion 500 people with an improved In process. 5.01.01-01 and harassment training for Oct-19 Sep-20 understanding of harassment (67) allied companies and inclusion Support with technical assistance to elaborate In process. 5.01.01-02 Oct-19 Sep-20 10 Equality Plans Equality Plans for allied (6) businesses
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Est. Est. Task No. Task/Input Description Outcome/ Results Status Start End Support with technical 7 Equality Plans implemented assistance to implement with an increase in hiring of In process 5.01.01-03 Oct-19 Sep-20 Equality Plans in allied vulnerable groups as defined (4) companies by the plan for each company Support improvements in understanding the importance of In process implementation of social 4 internal training sessions 5.01.02-01 Oct-19 Sep-20 (1 session with inclusion and anti- completed Component3) harassment policies with personnel and Project partners
5.2 MANAGE COMMUNICATIONS, OUTREACH, AND KNOWLEDGE MANAGEMENT The team continues to produce materials as requested by Project staff and partners, with support for eighteen activities in the Quarter, including: Powerpoint presentations for internal workshops and consultant presentations; diplomas for youth job training courses; revision of manuals and consultant reports; social media posts for mini job-fairs and training sessions, among others. The biggest events were the Representational Roundtable Breakfast January 15, the Commercial and Financial Fair March 4 and 5, and the Walmart MOU signing, all in Guatemala City. Highlights • Support for the Representational Roundtable Breakfast with Impact Investment Funds and Family Office representatives, to learn about new opportunities in Guatemala provided by the US International Development Finance Corporation (DFC) and hosted by US Ambassador Luis E. Arreaga in the Camino Real. The Project submitted social media posts to USAID, and photos. • Support to review materials for activities related to the Commercial and Financial Fair in Guatemala City March 4 and 5, which brought together more than 200 participants from Project partner financial institutions and small businesses. The Project submitted social media posts to USAID, and photos. • Support for an event to publicize a Memorandum of Understanding with Walmart, focused on Project support for and success with 20 women-led small business owners through the Una Mano para Crecer program at Walmart/Guatemala. The activity was postponed to next quarter. 5.2.1 MANAGE GENERAL PROGRAM COMMUNICATIONS AND OUTREACH The team provided a short hands-on instruction to technical staff in the Quetzaltenango regional office on the use of the office camera, including sharing a presentation on considerations for Project photos: eye-contact (subjects looking at the camera); context (subject in a context that defines place); action (subject demonstrates pertinent activity). As a result of the Guide on Visual Identity revised in December, and meetings with key Project staff managing eternal consultants and contracts, the team improved its ability to support production of materials – particularly social media posts and Diplomas for Project partners.
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5.2.2 MAINTAIN COORDINATION AND COLLABORATION WITH OTHER USAID/DONOR PROGRAMS AND STAKEHOLDERS The Project met with the USAID communications team in February to learn about the Mission's interest in reporting on the Project. The team also provided communications support to two activities involving other USAID stakeholders this quarter: The Roundtable Breakfast of Representatives from Family Offices, Impact Investment Funds and the US Development Finance Corporation, and the Walmart "Una Mano para Crecer" activity, both with the participation of the US Ambassador, described above. 5.2.3 SUPPORT COMMUNICATIONS CAMPAIGNS TO INFORM AND CHANGE BEHAVIORS During the quarter, the Project also supported the Ministry of Labor Seasonal Labor Program (H2A Visas), with technical assistance focused on developing the communication strategy for MINTRAB's Labor Mobility Department. The Project is working in conjunction with Labor Mobility to document the ongoing processes of selecting candidates for opportunities in 2020.
Task/Inputs Table 5.2 Manage Communications, Outreach and Knowledge Management
Est. Task No. Task/Input Description Est. End Outcome/ Results Status Start 5.2.1 Manage General Program Communications and Outreach Produce communications All Project materials produced Materials for 5.02.01-01 materials for program Oct - 19 Sep-20 according to USAID 18 activities activities requirements and standards 5.2.2 Maintain Coordination and Collaboration with Other USAID/ Donor Programs and Stakeholders 5.02.02-01 Build capacity within Project Oct - 19 Sep-20 All Project staff and partners Introduction to partners on marking, events trained in Communications photography and press and receive templates, support for Xela team. for communication 5.02.02-02 Produce communications Oct –19 Sep-20 All Weeklies, Quarterlies, 12 Weeklies, 3 deliverables Success Stories and Calendars calendars, 1 delivered on-time and with Quarterly and high quality 3 Success Stories 5.02.02-03 Produce bulletins and other Oct –19 Sep-20 The Project communicates communications for achievements regularly with AGEXPORT stakeholders key stakeholder audiences published (bulletins, news pieces, material for six communications materials) weeks 5.02.02-04 Engage with other USAID/ Oct –19 Sep-20 Project participates actively Collaboration donor programs on shared with other USAID/ donor with Embassy/ communications issues programs to communicate DFC and impact of program Embassy/Walm achievements art 5.2.3 Support Communications Campaigns to Inform and Change Behaviors Support Project partners on Project adds value to selected Support for implementation of partner communications MINTRAB 5.02.03-01 Oct –19 Sep-20 communications campaigns initiatives with in-house H2A visa as required technical assistance program
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6 PROGRAM MANAGEMENT AND OPERATIONS During the quarter the Project continues to adjust its spending projections in accordance with the funding cap that began in September 2019. In the second half of March, the Project and its staff are complying with the isolation instructions given by the Presidency of the Republic of Guatemala, which has considerably affected the budgetary execution of the month that was reduced by 40% of what was initially projected. This is expected to be compensated for as soon as the restrictions are lifted and the Project, partners and subcontractors return to normal operations HIGHLIGHTS AND ACHIEVEMENTS OF THE QUARTER
• 12 new subcontracts were signed for a value of $500,327
• During the quarter, 10 new consultant contracts were signed for a total of $12,000.
6.1 MANAGE MECHANISMS FOR COLLABORATION AND STRATEGY CONSENSUS 6.1.1 ORGANIZE AND ADMINISTER A NATIONAL KEY STAKEHOLDERS COMMITTEE During the quarter no events were held with the Key Actors Committee: on January 14 the change of government in Guatemala took place, and new authorities from the Ministry of Labor, Ministry of Finance, Ministry of Economy and PRONACOM took office. The Project began having individual meetings with new authorities. Task/Inputs Table 6.1 Organize and Administer a National Key Stakeholders Committee
Task No. Task/ Input Description Est. Start Est. End Outcome/ Results Status
6.1.1 Organize and Administer a National Key Stakeholders Committee
In process Continued Recurring Organize, conduct, and report on communication and activity derived 6.01.01-01 Oct - 19 Ongoing periodic meetings of the KSC collaboration with key from advance GoG stakeholders of quarterly activities
6.2 DEVELOP AND MANAGE ANNUAL WORK PLANS AND REPORTING Each week, a meeting is held with the leadership and technical teams to address issues related to the results and activities and their progress, as well as to identify opportunities and propose solutions to challenges that have arisen, among other important topics related to effective implementation. While preparing each quarterly report, the management and technical team meet to identify and extract lessons learned, challenges, risks, and opportunities for implementation that were encountered during the quarter covered by the report. As a result of current restrictions, staff continue to meet virtually on a weekly basis to discuss progress and resolve any issues. The Project developed a revised work plan that was submitted on April 1 as a result of impacts related to the COVID-19 crisis.
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Task/Inputs Table 6.2 Develop and Manage Annual Work Plans and Reporting
Est. Est. Task No. Task/Input Description Outcome/ Results Status Start End 6.2.1 Develop and Manage Annual Work Plans and Reporting Regular inputs and Implement periodic discussions on lessons learned to make 6.02.00-01 lessons learned to incorporate any Oct - 19 Sep - 20 In Process needed implementation needed changes in implementation. adjustments
6.3 MOBILIZE, MANAGE, AND DEVELOP PROJECT PERSONNEL As of the end of this quarter, the Project has 57 direct staff members and 16 staff members hired through subcontractors, as follows:
Table 16 Update of staff hires this year, by Consortium partner and office
Staff type Location Number
Expatriate Guatemala City 1 TCN Guatemala City 1 CCN Staff Guatemala City 39 Quetzaltenango 9 Huehuetenango 7 AGEXPORT Guatemala City 8 Quetzaltenango 3 Huehuetenango 2 FUNDESA Guatemala City 3 TOTAL 73 A current Project organizational chart is included as an Annex to this report.
Task/Inputs Table 6.3 Mobilize, Manage and Develop Project Personnel
Est. Est. Task No. Task/Input Description Outcome/ Results Status Start End
6.3.1 Mobilize, Manage and Develop Project Personnel
2-3 trips by senior operations manager(s) to provide training, Knowledge, capacity, and 6.03.00-01 support, and recurrent reviews of Oct – 19 Sep - 20 efficiencies of Project staff Ongoing essential finance management and upgraded operations functions
6.4 MANAGE PROJECT OPERATIONS, INFRASTRUCTURE, AND PROCUREMENT 6.4.1 PROVIDE HOME OFFICE SUPPORT AND OVERSIGHT The Home Office has provided support to strengthen administrative capacity, which has been reflected in program progress.
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6.4.2 SET UP AND MANAGE PHYSICAL AND IT INFRASTRUCTURE All Project offices are fully operational, and no major purchase or set-up costs were incurred this quarter. 6.4.3 FIXED PRICE SUBCONTRACTS This quarter, the Project signed 12 fixed price subcontracts with local businesses for a total value of $500,327. 6.4.4 ADMINISTER GRANTS UNDER CONTRACT Implement grants under contract including providing training as needed to potential grantees.
Task/Inputs Table 6.4 Manage Project Operations, Infrastructure and Procurement
Task No. Task/Input Description Est. Start Est. End Outcome/ Results Status 6.4.1 Provide Home Office Support and Oversight Provide direct PD support in country to technical and operations teams, Work Plan 6.04.01-01 Oct - 19 Sep - 20 Ongoing activities, and troubleshoot technical and operational challenges 6.4.2 Set-up and Manage Physical and IT Infrastructure Maintain physical structure and Office structures and IT 6.04.02-01 Oct - 19 Sep - 20 Ongoing IT in all Project offices supported 6.4.3 Implement Grants under Contract Implement grants under On hold due contract including providing 6.04.03-02 Oct - 19 Sep -20 Grants implemented funding training as needed to potential restrictions and ongoing grantees
6.5 MANAGE PROJECT MONITORING, EVALUATION AND LEARNING APPROACH In March, the Project submitted the modification of the original Monitoring, Evaluation and Learning Plan, approved on June 12, 2018, for consideration by USAID, the changes requested are as follows (the new indicators table can be found in Annex D): • The Project removed indicators that were removed with MOD4, being: Indicators 17, 19 and 22. • Three new indicators were added based on USAID’s request: Indicators 26 [leverage], indicator 1 [Total FTE (that summarize direct and indirect jobs)] and indicator 1.b. [Indirect FTE]. • The targets were updated for Year 3 and Year 5 for three indicators: (1, 20, 23). • The Project added a reference to its proposed calculation of jobs in the value chain and included an accompanying disaggregation. The Project adjusted the definition of Indicator 1, to the text contained in the PIRS from Indicator F-EG 5-2. In addition, an annex was added to include the description of the methodology and the case studies conducted. • The following disaggregation was eliminated from the Indicator 6: “Amount invested by financial intermediaries to provide the services” and “Amount given by financial intermediaries for financing the SMEs.” This disaggregation does not apply to this indicator.
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• The name of Indicator 24 was corrected. Number of individuals with new or better employment following completion of USG-assisted workforce development programs to Number of youth with new or better employment following completion of USG-assisted workforce development programs, based on original contract requirements. • Numbering of indicators remains the same despite the eliminations • Component subheadings were removed from the summary table. • The official definition for the size of firms was updated in several indicators to reflect “Government Agreement number 211-2015; September 21, 2015 (Published on Journal of Central America, Guatemala, September 25, 2015”. Once the Project receives feedback from USAID, the Project will make any additional changes and resubmit a final version for approval. Once this is agreed the final indicator table can also be updated in the Year 3 work plan. During the quarter, information continued to be collected to measure indicators related to Migration in the Northern Triangle (NTM) in the populations supported by USAID. The results will be sent to USAID in April 2020, according to instructions from USAID's Monitoring, Evaluation and Learning team. In addition to the review sessions and analysis of results reported during the quarter, the M&E unit developed the Excel Dashboard of Project results, which is updated quarterly with official information sent to USAID. The Dashboard is currently available on the internal network for all Project staff who wish to consult it in English. Next quarter we will work on migrating the Dashboard to Power BI so that access will be available not only internally to the Project, but also to USAID and partners.
Task/Inputs Table 6.5 Manage Project Monitoring, Evaluation and Learning Approach
Est. Task No. Task/Input Description Est. End Outcome/ Results Status Start 6.5.1 Manage Project Monitoring, Evaluation and Learning Approach Implement the internal DQA DQA completed and 6.05.01-01 Jun-20 Jul-20 In process for the Project documented Quarterly reports Completed each 6.05.01-02 Develop quarterly reports Dec-19 Sep-20 delivered quarter Follow-up and CLA Case Study 6.05.02-03 implementation of the CLA Oct-20 Apr-20 Pending finished Plan CLA case Study finalized and CLA Case Study 6.05.01-04 Apr-20 Jun-20 Pending presented to USAID presented to USAID Revise and update the MEL M&E Plan revised and 6.05.01-05 Plan in the context of Y3 Oct-19 Oct-19 Completed submitted to USAID constraints Implement review and Team meetings held to Completed each 6.05.01-06 analysis sessions of results Jan-20 Jul-20 review and analyze quarter reported during the quarter results and progress
7 LESSONS LEARNED • Although the impact of the pandemic has been enormous in the national economy and in the companies, the crisis has not just created difficulties for companies. Some have seen this crisis as an
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opportunity like any other challenge, leading to boosted creativity and encouraging them to explore new forms of customer service, delivery and e-commerce. Others have incorporated new production lines (gloves, masks, alcohol gel). As with other challenges, innovative and adaptive companies will be more likely to weather the storm of the current crisis. • In the context of political transition and the more recent advent of COVID-19, technical-level relationships have been key to continuing support for process improvement and policy reform in government organizations. Even in instances where the Project has taken longer to obtain an audience with senior level administration officials, work continued at the technical level, which eventually provided a reason for continued support from higher levels. • As the Project continues to gain traction mobilizing financing, high levels of liquidity in the Guatemalan financial system have helped banks expand their financing options for Small and Medium-sized Enterprises (SMEs). This, together with the technical assistance the Project has provided to SMEs and specifically assistance oriented to the preparation and presentation of business plans, development of consistent financial information, banks have an increased interest in participating in this market segment. This has created an environment of competition that translates not only into better interest rates, but also into adaptation of banks’ financing policies towards SMEs and has translated into sustained increase of financing based on capital flows, rather than on traditional mortgage guarantees. This will particularly be important during this current crisis, when banks will be even more unwilling to lend to SMEs. • Even as the Project has brought financial institutions to the table, coaxing credit-starved SMEs to take advantage has presented its own challenges. A culture of credit has yet to really develop in certain regions of the country. This is seen in departments where development is lower such as in San Marcos, Totonicapan, Quiche and Huehuetenango, where SMEs are resistant to utilizing formal credit mechanisms and instead opt for long periods of family saving to invest in growth, as opposed to taking on debt risks with financial institutions. • No matter how many reminders the Project sends to participants, it is also important to implement strict rules for meeting agreed appointments in commercial and financial fairs. Issues with tardiness of absenteeism show a lack of understanding of how these actions impact others and their time. The Project will apply stricter rules going forward to avoid issues with participants’ noncompliance with planned appointments. • In order to have a higher probability of success in monitoring medium- and long-term results after providing individualized technical assistance for partner companies, it is important to continue to engage companies beyond data requests through the life of the project. The Project has been implementing activities of value to partner companies to continue to engage beyond the agreed assistance plans, to avoid losing the connection with the Project. • It is necessary to adapt work readiness training to the needs of companies and institutions in the Western Highlands and even from one department to another. There are very different levels of capacity even within the same region. The Project is, adjusting training to strengthen the profile of candidates and adjust based on needs locally; this makes it possible to achieve an effective link to a job.
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8 CHALLENGES, RISKS AND OPPORTUNITIES
8.1 CHALLENGES • Even in instances where partner companies are not looking for support to obtain financial services, most SMEs in project geographies lack reliable accounting information that would support not only to timely decisions for business management but also as instruments of negotiation with banks. Many SMEs simply cannot provide relevant information on the solvency and profitability of their companies. It also limits their ability to plan and weather shocks. The Project has already begun including some group training to address these limitations. • The economic effects derived from the COVID-19 pandemic imply important challenges, the full extent of which remain to be seen. The need for SMEs to create timely strategies to maintain not only liquidity but also solvency will likely require changes in Project assistance processes.
8.2 RISKS • The pandemic and national responses such as social distancing will limit mobility to carry out investment missions, physically visit partner companies to provide technical assistance, limit workforce development activities, and others due to COVID19. This may put results in jeopardy or at least defer them in some areas. • A slowdown of both the global and local economy, as a result of the effects of the COVID-19 pandemic, will negatively affect the performance of many of the companies assisted by the Project. This may contribute to a considerable reduction in sales, postponement or cancelation of investment intentions, and closure among others. This may impact overall project indicators such as jobs, investment and sales, among others. • Household consumption will also be significantly affected, not only by the effects derived from possible loss of jobs, but also by the decrease in the flow of foreign currency due to family remittances in view of the economic deceleration in the United States. The Western Highlands will be the most affected because a significant part of their income sources come from the family remittances they receive. This may impact the project’s ability to meet savings and loan goals related to the use of remittances.
8.3 OPPORTUNITIES • The Project has been successful in coordinating organizations interested in supporting investment promotion which as led to the creation of working groups to include MINECO, PRONACOM the CIG, and now MINEX which provides for a mechanism to continue to support investment promotion where the project cannot. It also provides a mechanism that will continue to exist after the Project is finished to continue supporting these efforts. • The interest of the business sector to seek financing through the United States International Development Finance Corporation (USIDFC), in order to reduce its financial burden and achieve a greater social impact provides a great opportunity for local firms to contribute to local development. The high level of interest of this entity to generate a pipeline of projects in Guatemala generates an important window of opportunity for the achievement of large-scale projects that will generate new jobs, but also achieve shared investments with national and international investors. This has become even more important during this pandemic as other longer-term finance may be difficult to obtain locally as banks become more risk averse
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• Because of the current pandemic, the Project has been supporting the design of credit and guarantee funds for both public and private sector to incentivize more lending especially to SMEs. This will provide opportunities for Project allied companies and others to obtain financing to get through the current situation. • The current situation has provided an opportunity for the Project to refocus efforts to provide emergency support in both financial and commercial areas of support, consolidating its efforts. This provides an opportunity to provide support that can make the difference in an SME as to whether or not the company survives. • The Project has supported the creation of business networks through several activities such as technical assistance to the Walmart suppliers, ScaleUp Xela and Commercial and Financial Fairs. These business links are now providing opportunities for companies to lean on their networks for support during the crisis.
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ANNEX A ORGANIZATIONAL CHARTS
Figure 6 Organizational Chart, Guatemala City Technical Team
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Figure 7 Organizational Chart, Guatemala City Operations Team
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Figure 8 Organizational Chart, Quetzaltenango
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Figure 9 Organizational Chart, Huehuetenango
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ANNEX B COMPLIANCE WITH USAID ENVIRONMENTAL PROCEDURES HIGHLIGHTS AND ACHIEVEMENTS IN Q2FY3 The capacities of the technical team of components C2 and C4 were strengthened through working meetings to expand and publicize the commitment of the CEO to environmental compliance in the application of regulations 22-CFR-216 and the national legislation of Guatemala. Follow up on the approval process of six (6) EMMPs and three (3) environmental reviews with categorical exclusions submitted to USAID last quarter (Q1-FY3), as described in the table below:
Table 17 Summary of Environmental Reviews submitted and being followed-up on this quarter
Delivery No. Environmental Review Name Location Status date 1 Elaboration of designs for the strategic road In the interconnections project for mobility in the Los process of Quetzaltenango 17/01/2020 Altos Metropolis. (EMMP). being approved 2 Complementary studies for the project to In the expand academic services in Salcajá, process of Quetzaltenango 17/01/2020 Quetzaltenango. (EMMP). being approved 3 Design, preparation of plans (renders) and cost In the definition of a new medical building in process of Quetzaltenango 17/01/2020 Coatepeque, Quetzaltenango. (EMMP). being approved 4 Studies for the development of the planning of In the the yarn dyeing plant in Salcajá, Quetzaltenango. process of Quetzaltenango 17/01/2020 (EMMP). being approved 5 Design of a wastewater treatment and In the management system for a new restaurant in the process of Quetzaltenango 17/01/2020 city of Quetzaltenango (EMMP). being approved 6 Formulation of studies and designs for the In the rehabilitation of roads in two sections: Palibatz, process of Pachalum - Choaquenun, Joyabaj, quiché and San Guatemala 17/01/2020 being Antonio Las Flores - Chinautla, Guatemala. approved (EMMP). 7 Provide technical assistance and studies for the In the good management of the company processing process of Quetzaltenango 17/01/2020 high quality leather in the city of Quetzaltenango being (Environmental review as categorical exclusion). approved 8 Proposal for process optimization and pre-design In the elaboration of the new bakery plant, Guatemala process of Guatemala 17/01/2020 (Environmental review as categorical exclusion). being approved 9 Environmental review for low risk activities that In the do not cause environmental impacts in the CEO The entire area process of project. of influence of 17/01/2020 being (Environmental Review as a Categorical the project approved Exclusion)
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Technical accompaniment for environmental compliance of the project in the current quarter: • The project implemented environmental reviews of sub-activities financed by the project, mainly in components 2, 3 and 4. • Five field visits were made with the technical teams of the beneficiary companies and the CEO team to learn about the planned activities, as well as to jointly identify the potential impacts and mitigation measures relevant to each environmental review. • Six new environmental reviews of project funded activities were conducted and documented using official USAID guidance for the preparation of the respective EMMPs. These are presented in the table below:
Table 18 New Environmental Reviews in-process
# Environmental Review Name Delivery Location Status date Study of soil and complements (geophysical In the prospecting, design of retaining walls and rigid process of 1 Guatemala 20/04/2020 pavement for housing building in zone 13 being Guatemala, Guatemala. approved In the Design, elaboration of plans and catalogue of process of 2 details for 2 housing complexes in zone 16, Guatemala 20/04/2020 being Guatemala, Guatemala. approved In the Develop construction plans for the social process of 3 housing project in zone 1, Guatemala, Guatemala 20/04/2020 being Guatemala. approved In the Design and planning of the new building for a process of 4 San Marcos 20/04/2020 school in San Marcos, Guatemala being approved In the Feasibility study and final design at the detail process of 5 engineering level of the project for the Central Guatemala 20/04/2020 being Customs Building, in zone 17, Guatemala approved In the Design of plans for the new process plant for process of 6 Guatemala 20/04/2020 the production of medical and natural products being approved
Activities planned for next quarter: • Elaborate six new environmental reviews for activities identified in the Work Plan and planned for the third quarter in order to determine the need or not to complete an EMMP for submission and approval to the USAID Guatemala Mission. • Monitoring effective implementation of recommended mitigation measures in developed MMPs. These activities will be implemented with the support of technical specialists or business advisors from different Project components.
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• Training and technical assistance to companies that require an environmental review of activities planned. • Preparation of a presentation on environmental compliance with national and USAID regulations for participants in a workshop to launch the Commercial and Financial Fair in Salcajá March 18, but the activity was postponed due to COVID-19 restrictions.
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ANNEX C SUCCESS STORIES
Distefano is a Guatemalan clothing manufacturer and retailer with 32 outlets, including this one recently opened in Guatemala City. USAID’s Creating Economic Opportunities Project has helped the growing chain improve its competitiveness by strengthening its software system that manages its production, distribution and sales data. Claudia Navas/ USAID USAID STRENGTHEN BUSINESS COMPETITIVENESS WITH TECHNOLOGY
Data management is a key to business competitiveness, and in a fast-growing and ever- changing sector like retail clothing, applications based on artificial intelligence concepts help keep one business ahead of the pack.
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February 2020 - Two years ago, at the height of the pre-Christmas season, Guatemala’s youth-oriented national clothing retailer, Distefano, could hardly hold onto stock in their stores. Their popular jeans, chinos and long-sleeve shirts were flying off the shelves, almost as fast as they could be produced in the factory and shipped to stores all over Guatemala.
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“It was great for sales,” recalled Inventory Planning Manager Eder Chang. “But it was really hard for production. We spent weeks working very late and returning at 6 a.m. to produce more, because sales doubled from what we had estimated. It was a month of madness.” “The idea of using this system Company growth was outpacing the capacity of the internal is to have the right product in reporting and forecasting system to manage production, the right place at the distribution and sales information. The company realized it needed to get a better handle on anticipating and meeting opportune moment for the customer demand, so this situation would not be repeated sale” every season. Antonio Kozina – owner and General With support from USAID’s Creating Economic Opportunities Manager project, Distefano overhauled its data management system to include artificial intelligence algorithms. These algorithms manage all the company’s data – sales from 34 stores; production and distribution of 65,000 products – and can help estimate needs, based on data stored from the last five years. The software predicts, for example, how many women’s blue shirts will be required in Quetzaltenango in two months, how many men’s jeans, size 28, will be sold in Chimaltenango, or how many pairs of women’s chinos will be needed in each of Guatemala City’s 19 stores. For a company like Distefano, improving business efficiency is not so much about reducing the time it takes to get stock to the stores, but rather improving the efficiency of the store inventory, explained owner and General Manager Antonio Kozina. “The idea of using this system is to have the right product in the right place at the opportune moment for the sale,” he said. Distefano has been operating in Guatemala since 1979, and currently sells its distinctive brand of youth-oriented casual clothing for men and women in 34 stores in eight departments in Guatemala, as well as stores in Honduras, El Salvador and Costa Rica. Chang keeps track of 70 major products with up to 150 different sub-items for differences in size, color and cut. In the past, he managed all this using Excel and Inventory Planning Manager Eder Chang at his desk reviewing new Power BI reports calculations to include for Distefano. The new software system uses artificial intelligence and a database expected increases in sales, covering information from five years of sales in 32 stores to predict production, inventory, distribution and future sales needs. Claudia Navas/ USAID Photo
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new points of sale, and additions or deletions to the product lines. “The most difficult task was to do forecasts,” Chang said. “It took two, three, four days depending on the what we had to review and add up the expected percentage increases and new stores. It was very complicated.” The Project worked with Chang and his team to adapt their system software to make use of new artificial intelligence-based algorithms. The technology is relatively new to Guatemala and has been used mostly in the banking and telecommunications sectors, which manage big datasets. Now, with the newly configured software, it just takes the push of a button to find out how many shirts need to go from shops that did not sell very many, to others that have sold out of their inventory. “Fashion is always changing,” said consultant Marco Robles. “The jeans you sell today are not the ones you sold in 2017. The style changes. Colors change. This is different than in a bank, for example. We had to develop a database that could manage predictions within this context of changing products.” Robles and his partner spent time getting to know the whole data collection process at DiStefano and understanding the decision-making needs of the owners and managers. The key to this company, he said, was to understand movement of major kinds of products – jeans, shorts, long-sleeved shirts – and their performance in each store. The software was deployed in January this year, and the Distefano team has been testing it since. It is already proving its power to crunch complex probabilities and provide hard data for decision-making in production, distribution, inventory management, and human resources. “[Let’s say] we produce 500 more shirts for sale next month, based on historical sales. But afterwards the system knows we sold 535. Next time, this number will be used for future calculations. The system builds on itself continuously.” The system also helps manage inventory. It knows there are three shorts in one store and predicts five will be sold there next week. It knows there are six of the same short in another store, which is likely to sell only two. So, two can be moved from one to the next, and sales maximized. “This helps us to have the ideal stock in each store.” The salesforce can also be monitored effectively to see who is reaching their target, who needs some additional motivation, and what commissions are paid to each. Last year, the company reported increased sales of $700,000 and hired 104 new staff, including 42 youth. Kozina expects this new technology to improve sales by 10 percent this year. “Having the stores with the products needed at the right time improves sales,” said Human Resources Manager Beatriz Yoc. “That in the end helps us grow more and create more jobs.” “Now, we have a tool suited to our purpose and allows me to present [trustworthy] data to my boss,” said Chang. “This gives us the peace of mind that we can plan for the last few months of the year and avoid the rush we have had in the past.” 940 words
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UPDATE: DISTEFANO TURNS ITS PRODUCTION CAPACITY TO FACEMASKS FOR COVID-19 With the COVID-19 pandemic sweeping the world and affecting Guatemala, which has been on a partial lock-down since March 17, non-essential stores have closed, including retail outlets like Distefano. At the same time, a presidential decree required anyone venturing out in public to wear a facemask. Almost immediately, Distefano General Manager Antonio Kozina and his team began to think how their company could help in this crisis. “We have the production know-how,” said Kozina. We decided to do this to keep active during the crisis.” The company has developed four kinds of facemasks and is producing about 3,500 per day but have the capacity to make 10,000 per day. The Distefano masks are made with exchangeable filter technology and antibacterial fabric. These environmentally friendly and reusable masks respond to the national demand for personal protective equipment. help fill the gaps in available products. The national youth-oriented clothing company has used its inherent productive capacity and technical know-how – as well as its interest in environmentally friendly products – to respond to the Since the outbreak of the COVID-19 pandemic, Distefano has national demand for facemasks. They can be found at responded to the national need for facemasks by producing www.distefanoshop.com reusable eco-friendly ones.
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Restaurant Brûlé’s founder and chef, Sergio Rivas, is proud to have opened a new restaurant site in zone 3 of Quetzaltenango, which features space for 325 clients, 25 cars and will soon include a 100-person room for special events. The restaurant chain, founded in 2011 and which has three outlets in Quetzaltenango, is growing fast and is one of the top five restaurants in the city. Massiel Alvarado/ USAID photo
USAID SUPPORTS BEST PRACTICES THAT MAKE COMPANIES THRIVE, GROWING EMPLOYMENT
All businesses rely on a combination of talent and creativity in terms of providing goods and services which people need, and good business practices which ensure efficiency and effectiveness of operations.
March 2020 – A restaurant is much more than food, even for an innovative and successful one like Brûlé, Quetzaltenango´s foremost French restaurant. This is what founder and young entrepreneur Sergio Rivas discovered after a year working with USAID´s Creating Economic Opportunities project. “It is not enough to have a good kitchen and old family recipes,” he said. “You also have to have the administrative controls and order. These are the central pillar of a food service business.”
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Nine years ago, Rivas was a 21-year-old with a family flair for cooking and a desire to put that knowledge to use. His great-grandfather was a French baker who emigrated first to Mexico and then to Guatemala more than 100 years ago. His grandparents, his mother, aunts, uncles and cousins all shared something of their past through recipes. Rivas was offered the chance to open a French café in Alliance Française in Quetzaltenango. “Before, we would call the Two years later, he opened his own restaurant in zone 3 – mechanic only when he Restaurante Brûlé. Today he has two more restaurants in Pradera Mall and Interplaza Mall. Based on a project-led machine stopped functioning, market survey, his is one of the top five restaurants in the generating losses – now we city, and he employs 38 people. schedule maintenance visits.” The project began to work with Brûlé about a year ago, Sergio Rivas, Restaurante Brûlé owner analyzing operational processes, starting with the purchase of raw materials and ending with the sale of each item on the menu. The work looked at delivery, cold storage at the warehouse, labor to turn raw materials into delicious plates of food, customer service; and administration. “In a food enterprise, labor and raw materials are the two highest operating costs, which is why balancing them is a priority,” said consultant Luis Pedro Ariz. “When there is no clear control, it is hard to establish the breakeven point.” “This work opened our eyes to a lot of things,” Rivas said. “For example, we discovered that some of the baguettes with beef were more cost-effective than others, so we have been featuring them in our marketing. We discovered that another item – featuring duck – was not cost-effective when we used already-prepared duck meat. Our response was to buy whole ducks and prepare it here in the kitchen. That favorably reduced the cost-per-unit.” One of the findings from the initial project assessment was that controls were limited in each of the three restaurants. For starters, each restaurant was producing its own slightly different versions of key menu items. With project support, Brûlé developed ‘product cards,’ with ingredients identified in specific weights and measures and precise instructions on how to prepare each one. Then, all kitchen staff were trained to manage the portioning and preparation of each plate. Brûlé’s cold storage facilities also needed a remake. Shelves Cold storage rooms were renovated and and storage facilities were inadequate, and there was no outfitted with new shelving, scales to measure organized inventory management to identify what came in or food as it entered and an inventory control what went out. The project recommended the use of scales to weigh everything that came in, and an infra-red thermometer would enable staff to record the core temperature of goods. This would ensure that the cold storage chain was unbroken, and food would keep its freshness as expected.
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The project also helped Brûlé look into its supply chain, where some quality and reliability challenges originated. Some suppliers needed to have a better understanding of the needs of a business dependent on fresh, prompt, and consistent food delivery at reasonable cost. To establish ranges of expected prices for produce, the project shared industry standard data on expected prices of raw materials. And the project helped Brûlé bring data to those discussions. Twenty per cent of deliveries before project support were late – requiring the restaurant to incur higher costs by shopping for ingredients at supermarkets. As a result, Brûlé favorably negotiated prices and guaranteed delivery times with suppliers. The project also helped Rivas and is staff understand the value of professional services and advice in improving is business. “When we started, we learned by trial and error, and this was clearly expensive,” said Rivas. “We have learned in this experience that external advice is worthwhile.” The project not only helped strengthen business competitiveness at Brûlé, but also implemented a market study, focused on client surveys, to guide future expansion plans. The study surveyed more than 200 people – half of whom were regular customers and half of whom were not. The survey revealed key insights into customers and potential customers, their preferences and aspirations. Brûlé has already responded with a more vigorous marketing campaign in social media. Annual changes to the menu will also consider results of the survey. “We knew we were in demand,” said Rivas. “But we didn’t know we were among the top five restaurants in Quetzaltenango.” To-day, Brûlé is thriving. It recently opened a new location in zone 3 with space for 325 customers and 25 parking spaces. It has three new management systems in place – for purchasing, sales, and human resource management. The restaurant chain has added 13 new staff in the past year, including six youth, and finished 2019 with a 70% increase in sales over the previous year. “We have grown by trial and error,” Sergio Rivas said. “But without the help of the project I think this growth we have had would have cost us ten times more and would have taken us much longer.” 908 words
BRULE BEGINS NEW HOME DELIVERY SERVICE AS RESPONSE TO PANDEMIC Ingenuity and rapid action are important in a service business during extreme times, like now during the COVID-19 pandemic. Restaurante Brûlé is adapting to the challenge: immediately offering home delivery service of its well-known products. Last week, the restaurant, the restaurant joined the local Uber Eat and Glovo delivery platforms. “We are selling at 5 or 10 percent of we normally had, but we are rotating the inventory, so that is a good thing,” said owner and chef Sergio Rivas. “We are trying to find a balance in operation and personnel.”
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He says the situation is a little overwhelming, but that there is also some hope. Banks are being flexible in terms of deadlines for payments; the commercial centers are also relaxing rent while they are closed. “There will be losses,” he said, but smaller than they might have been without these initiatives. Rivas also recognizes that, in his chain, the new 325-seat restaurant in zone 3 has the best chance to help reactivate business when the time comes: it has the biggest capacity and can manage to maintain distances between tables more easily; there is a 100-seat function room being finished, for events; it is separated and can be contained more easily than the mall locations. Restaurante Brûlé is moving into home delivery as a “We are going to work a little more but yes we result of the COVID-19 pandemic. Motorcycle delivery are going to succeed,” said Rivas. man Pedro Angel, above, delivers two baguettes and a dessert crepe of apples and cranberries. Pedro Orozco/ USAID
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ANNEX D UPDATED PROJECT INDICATORS TABLE
Unit of Indicator title18 measure FY 2018 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 LOP
9/30/2018 9/30/2019 9/30/2020 9/30/2021 9/30/2022 1/17/2023 Baseline Target Target Target Target Target Target FTE 0 300 5,200 10,000 22,000 12,500 50,000 1. Number of total full-time equivalent (FTE) jobs created Women 0 150 2,600 5,000 11,000 6,250 25,000 Youth 0 90 1,560 3,000 6,600 3,750 15,000 FTE 0 217 3,768 7,246 15,942 9,059 36,232 1.a. [EG.5-2] Number of full-time equivalent (FTE) jobs created. (direct) Women 0 109 1,884 3,623 7,971 4,529 18,116 Youth 0 65 1,130 2,174 4,783 2,718 10,870 FTE 0 83 1,432 2,754 6,058 3,441 13,768 1.b. Number of indirect of full-time equivalent (FTE) jobs created Women 0 41 716 1,377 3,029 1,721 6,884 Youth 0 25 430 826 1,817 1,032 4,130 2. Amount of Foreign Direct Investment (FDI) mobilized USD MM 0 0 8 10 18 14 50 3. Amount of domestic investment mobilized USD MM 0 1.25 5 7.5 8.5 2.75 25 4. Number of people receiving training on financial topics Participant 0 500 2,000 2,500 3,000 1,100 9,100 5. Number of SMEs participating in the financial sector Unit 0 20 50 80 85 35 270 6. Value ($) of financing and services provided to SMEs USD MM 0 2.5 10 15 17 5.5 50 7. Value ($) of financing and services provided to remittance recipients USD MM 0 0.5 1 1.5 2 1 6
18 Three indicators were eliminated based on Mod 4 of the CEO contract including: 17: Amount invested by large firms into smaller firms along the value chain; 19: Number of new formal full time equivalent (FTE) non-agricultural jobs; 22: Number of workforce development initiatives completed. Numbering of indicators remains the same despite the eliminations, also component subheadings were removed from the summary table.
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Unit of Indicator title18 measure FY 2018 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 LOP
9/30/2018 9/30/2019 9/30/2020 9/30/2021 9/30/2022 1/17/2023 Baseline Target Target Target Target Target Target 8. Value ($) of capital invested in SMEs USD MM 0 1.25 2.75 6 7 8 25 9. Remittances value ($) directed towards investments and productive purposes USD MM 0 0.5 1 1 1.5 0.5 4.5 10. Number of municipal instruments of urban and rural regulation completed Units 0 0 3 3 4 2 12 11. Number of infrastructure projects marketed to the GOG and private sector for Units 0 0 4 6 5 1 16 investment, including foreign direct investment 12. Amount of total public and private dollars leveraged for information and communications technology (ICT) and other infrastructure USD MM 0 0 10 15 25 10 60 projects. 13. Number of people benefiting from improved ICT and other infrastructure services People M 0 0 75 75 100 50 300 14. Value ($) of sales generated by SMEs selling goods and services directly to the GOG, per USD MM 0 0 2 3 3 1.1 9.1 year 15. [EG.5-2-1] Number of firms receiving USG- funded technical assistance for improving Unit 0 11 130 350 400 209 1,100 business performance 16. Number of firms participating in newly strengthened supply chains, foreign and Unit 0 3 50 80 100 42 275 domestic 18. [EG.5.2-2] Number of private sector firms that have improved management practices or Unit 0 3 50 80 100 42 275 technologies
20. [EG.5-1] Value ($) of new non-agricultural USD MM 0 2 33 70 104 76 285 sales generated by firms receiving assistance
21. Number of private sector firms selected for partnership Unit 0 20 55 120 70 10 275 23. Number of youth participating in workforce development initiatives Youth 0 250 3,000 3,000 2,000 1,750 10,000
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Unit of Indicator title18 measure FY 2018 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 LOP
9/30/2018 9/30/2019 9/30/2020 9/30/2021 9/30/2022 1/17/2023 Baseline Target Target Target Target Target Target 24. [EG.6-1] Number of individuals with new or better employment following completion of USG-assisted workforce development Youth 0 48 832 2,400 3,520 1,200 8,000 programs. 25. Number of job fairs to connect industry with job seekers, per year Unit 0 1 8 8 8 8 33 26. [EG.3.1-14] Value of new USG commitments and private sector investment leveraged by the Unit 0 1.25 23 32.5 51.5 26.75 135 USG
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ANNEX E PERFORMANCE TRACKER INDICATOR
FY 1 FY2 FY3 LOP (Jan 2018 - Sep2018) (Oct 2018-Sep 2019) (Oct 2019-Sep 2020) (Feb 2018 - Jan 2023) Unit of Indicator Indicator Title19 Achieved Measure Q1 Q2 FY3 % % ID Target Achieved Target Achieved Target Target Cumulative Achieved Achieved Achieved Achieved Achieved to QFY3 Number of total full-time equivalent 300 0 5,200 1,287 10,000 1,378 2,034 3,412 34% 50,000 4,699 9% (FTE) jobs created 1 FTE Disaggregated by sex Female 150 0 2,600 426 5,000 546 512 1,058 21% 25,000 1,484 6% Youth (under 25 Total 90 0 1,560 461 3,000 142 433 575 19% 15,000 1,036 7% [EG.5-2] Number of full-time equivalent (FTE) jobs created. 217 0 3,768 1,287 7,246 1,378 927 2,305 32% 36,232 3,592 10% (direct) 1.a FTE Disaggregated by sex Female 109 0 1,884 426 3,623 546 218 764 21% 18,116 1,190 7% Youth (under 25 Total 65 0 1,130 461 2,174 142 162 304 14% 10,870 765 7% Number of indirect of full-time 83 0 1,432 0 2,754 0 1,107 1,107 40% 13,768 1,107 8% equivalent (FTE) jobs created 1.b FTE Disaggregated by sex Female 41 0 716 0 1,377 0 294 294 21% 6,884 294 4% Youth (under 25 Total 25 0 430 0 826 0 271 271 33% 4,130 271 7% Amount of Foreign Direct 2 USD MM 0 3.5 8 4.08 10 0.24 0.00 0.24 2% 50 7.82 16% Investment (FDI) mobilized Amount of domestic investment 3 USD MM 1.25 0.00 5 12.13 7.5 8.91 11.18 20.09 268% 25 32.22 129% mobilized Number of people receiving training 4 Participant 500 209 2,000 1,027 2,500 25 277 302 12% 9,100 1,444 16% on financial topics
19 Since last MEL Plan modification, three indicators were eliminated based on Mod 4 of the CEO contract including: 17: Amount invested by large firms into smaller firms along the value chain; 19: Number of new formal full time equivalent (FTE) non-agricultural jobs; 22: Number of workforce development initiatives completed. Numbering of indicators remains the same despite the eliminations, also component subheadings were removed from the summary table.
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FY 1 FY2 FY3 LOP (Jan 2018 - Sep2018) (Oct 2018-Sep 2019) (Oct 2019-Sep 2020) (Feb 2018 - Jan 2023) Unit of Indicator Indicator Title19 Achieved Measure Q1 Q2 FY3 % % ID Target Achieved Target Achieved Target Target Cumulative Achieved Achieved Achieved Achieved Achieved to QFY3 Number of SMEs participating in the 5 Unit 20 1 50 71 80 4 20 24 30% 270 96 36% financial sector Value ($) of financing and services 6 USD MM 2.5 0.05 10 6.80 15 5.58 2.57 8.14 54% 50 14.99 30% provided to SMEs Value ($) of financing and services 7 USD MM 0.5 0.00 1 0.00 1.5 0.00 0.00 0.00 0% 6 0.00 0% provided to remittance recipients Value ($) of capital invested in 8 USD MM 1.25 0.00 2.75 5.94 6 3.77 6.26 10.03 167% 25 15.97 64% SMEs Remittances value ($) directed 9 towards investments and productive USD MM 0.5 0.00 1 0.00 1 0.00 0.00 0.00 0% 4.5 0.00 0% purposes
Number of municipal instruments of 10 urban and rural regulation Units 0 0 3 3 3 1 6 7 233% 12 10 83% completed Number of infrastructure projects marketed to the GOG and private 11 Units 0 0 4 4 6 1 0 1 17% 16 5 31% sector for investment, including foreign direct investment Amount of total public and private dollars leveraged for information 12 and communications technology USD MM 0.0 0.0 10 1.89 15 0.00 0.00 0.00 0% 60 1.89 3% (ICT) and other infrastructure projects Number of people benefiting from 13 improved ICT and other People M 0 0 75 2.33 75 2.31 5.09 7.40 10% 300 9.72 3% infrastructure services Value ($) of sales generated by 14 SMEs selling goods and services USD MM 0 0.00 2 2.17 3 0.52 0.32 0.84 28% 9.1 3.01 33% directly to the GOG, per year
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FY 1 FY2 FY3 LOP (Jan 2018 - Sep2018) (Oct 2018-Sep 2019) (Oct 2019-Sep 2020) (Feb 2018 - Jan 2023) Unit of Indicator Indicator Title19 Achieved Measure Q1 Q2 FY3 % % ID Target Achieved Target Achieved Target Target Cumulative Achieved Achieved Achieved Achieved Achieved to QFY3 [EG.5.2-1] Number of firms receiving USG-funded technical 15 Unit 11 20 130 381 350 35 41 76 22% 1100 477 43% assistance for improving business performance Number of firms participating in 16 newly strengthened supply chains, Unit 3 0 50 122 80 10 0 10 13% 275 132 48% foreign and domestic [EG.5.2-2] Number of private sector firms that have improved 18 Unit 3 0 50 221 80 0 4 4 5% 275 225 82% management practices or technologies [EG.5-1] Value ($) of new non- 20 agricultural sales generated by firms USD MM 2 0 33 16.83 70 11.1120 20.79 31.90 46% 285 48.85 17% receiving assistance Number of private sector firms 21 Units 20 3 55 88 120 29 71 100 83% 275 191 69% selected for partnership Number of youths participating in 23 Youth 250 127 3,000 2,364 3,000 610 946 1,556 52% 10,000 4,047 40% workforce development initiatives [EG.6-1] Number of youths with new or better employment following 24 Youth 48 0 832 704 2400 208 423 631 26% 8,000 1,335 17% completion of USG- assisted workforce development programs Number of job fairs to connect 25 Unit 1 0 8 24 8 14 2 16 200% 33 40 121% industry with job seekers, per year [EG.3.1-14] Value of new USG 26 commitments and private sector USD MM 1.25 3.50 23 18.10 32.5 9.15 11.18 20.33 63% 135 41.93 31% investment leveraged by the USG
20 Adjustment in the amount, the reports of sales from fairs by foreigners and outside Project geographies were left out. Total amount lowered from $11.28 million to $11.11 million.
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