Open Regional Fund for the Economy and (Youth) Employment in Central America (FACILIDAD)

Project description

Title: Open Regional Fund (ORF) FACILIDAD for the Economy and (Youth) Employment in Central America
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Countries: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua
Lead executing agency: General Secretariat of the Central American Integration System (SICA)
Overall term: 2012 to 2018

Context

Agricultural exports, the manufacturing and processing sector and migrant worker remittances to their home countries dominate the national economies of Central America.

Although the region’s countries have seen a slight increase in economic growth in recent years, this has had little impact on employment and income levels so far. More than half of the population in Central America lives below the poverty line. Particularly young adults and women are affected by unemployment and underemployment.

Companies often have a low competitive level due to outmoded technologies and dated production and management methods. There is also a lack of specialised and qualified workers.

Objective

The competitiveness of micro, small and medium enterprises (MSMEs) and the employment opportunities in selected sectors of Central America have improved for women and young adults in particular.

Approach

Between 2013 and 2017, 5 idea competitions were held, resulting in the implementation of a total of 25 winning regional project proposals. In addition, 90 small and medium-sized enterprises (SMEs) have been selected to participate in a manager programme.

The ideas competition is open to projects that:

  • generate product or process innovations, thereby improving the competitiveness of MSMEs;
  • improve the employment situation of women and young adults;
  • introduce new training opportunities or labour market services that respond to the needs of enterprises;
  • allow the establishment of innovative cooperation arrangements between enterprises in Germany and Central America.

Promoted projects have a term ranging between 18 and 36 months. On average, the executing institutions contribute 50% of the funding. The main implementation partners of the Open Regional Fund (ORF) FACILIDAD are the centre for the promotion of MSMEs (CENPROMYPE) with registered offices in El Salvador. The project collaborates with institutions in the public, private and academic spheres. The export promotion agencies in Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua serve as executing institutions for the manager programme, with the support of the respective chambers of commerce.

Results

The following results have been obtained so far:

  • More than 1,900 people (including 46% women) were able to improve their employment situation. Of those, roughly 1,300 have obtained new jobs and salary increases of more than 10%. The figure also includes 330 start-ups that have created roughly 340 new jobs; 65% of these newly formed companies and more than 70% of their employees were still active in the market one year after the formation of the respective companies.
  • So far, it has been possible to develop 23 new education offerings. 17 of those have been permanently established and can be offered without support.
  • Five fundamental process and product innovations that improve the competitiveness of the MSMEs involved have been introduced in the region: financial products, networks in heath tourism, new value chains, international expansion of business operations, and micro-franchising models.
  • In connection with the manager programme, 17 SMEs from the region have concluded deals with German companies with total business volume of more than USD 2 million so far.
  • Additional indirect results are as follows:
  • Cooperation between public, private and academic institutions at regional level has improved
  • CENPROMYPE is supported in the development of regional strategies to strengthen MSMEs and start-ups. In addition, its competency as knowledge manager is promoted, thus driving its further development into a platform for dialogue on successful concepts in the region.
  • International donors are interested in cofinancing projects and are staying informed of topics addressed by the Open Regional Fund (ORF) FACILIDAD.

 

Additional information