Bloomberg Linea — U.S. Vice President Kamala Harris announced Tuesday more than $1.9 billion in new private sector commitments to create economic opportunities in northern Central America, part of a plan to address the economic and social drivers of migration to the United States.
The amount announced more than doubles the value of initial private sector investments in response to the Call to Action launched in 2021 to engage businesses and social enterprises to make meaningful commitments to promote economic opportunity for the people of the region.
The announcement at the Summit of the Americas builds on the Vice President’s December 2021 announcement of $1.2 billion in private sector commitments, bringing the aggregate commitments under this initiative to more than $3.2 billion.
Harris will hold meetings with Caribbean leaders in Los Angeles, California, in the absence of the three northern Central American leaders, who have sent representatives to the meeting.
In a press release, the Biden-Harris administration stressed however that long-term development in northern Central America (Guatemala, El Salvador and Honduras) requires more than the resources of the U.S. government.
Harris has called on the private sector to harness its resources and experience to support inclusive economic growth in the region.
New commitments
The following 10 companies have announced new and significant investments in the region, which join 30 companies that had already invested since the call to action in May 2021:
Agroamérica: The family-owned sustainable food and ingredients corporation will invest more than $100 million in six new projects that will generate 1,000 permanent, living-wage jobs in northern Central America over the next five years.
COATL: The digital services company will invest $35 million in El Salvador to expand rural high-speed Internet access over the next five years by expanding and operating a highly reliable rural broadband network over existing high-voltage power lines.
Fundación Terra: The independent foundation funded by contributions from Terra Inversiones will invest $24.5 million in new programs over five years. The programs will support secondary education, digital access, entrepreneurship and environmental conservation, and will include scholarships to tutor 40,000 students in El Salvador, Guatemala and Honduras in math and Spanish, and which will promote financial inclusion.
Gap Inc.: The company plans to increase its sourcing in Central America by approximately $50 million per year, for a total growth commitment of $150 million by 2025, as part of its strategy to increase supply chain resilience by offshoring more production to the Western Hemisphere. This increased purchasing in the region will support an additional 5,000 jobs in Central America.
Millicom: The telecommunications company will invest $700 million to expand and maintain its mobile and broadband networks in Guatemala, Honduras and El Salvador over the next two years. This investment will boost Millicom’s efforts to accelerate economic growth in the region by increasing connectivity, as broadband penetration rates in these markets are well below the regional average.
Pantaleón: The conglomerate, which makes investments in agribusiness and real estate, will invest $9.4 million to finance the initial phase of a 1,200-acre industrial park on the southern coast of Guatemala. Once completed, the park is expected to house a mix of manufacturing, logistics, and distribution companies, among others.
SanMar: The U.S.-based apparel wholesaler will increase its purchases of products manufactured in northern Central America by $500 million by 2025. These purchases will support the supply of products to SanMar’s more than 60,000 customers, the vast majority of which are small U.S. companies engaged in domestic light manufacturing. The increased capacity required for this growth will result in the creation of 4,000 additional full-time jobs at Elcatex, a Honduras-based apparel manufacturer that is part-owned by SanMar.
Unifi: The company, which produces recycled and synthetic yarns, established its manufacturing and sales operation in El Salvador (Unifi Central America) in 2010, and has invested in El Salvador and the region since then. The company has committed to invest $15 million over the next five years to expand capacity, improve efficiency, and reduce energy use.
The investment includes an innovative new texturizing technology that will increase the company’s polyester yarn production in El Salvador by 40%, and support continued training and job growth in the region.
Visa: The card payment company will invest more than $270 million over the next five years to expand financial inclusion and digital infrastructure, with the goal of incorporating 6.5 million people and one million small and medium-sized enterprises (SMEs) into the formal financial system in Guatemala, El Salvador and Honduras.
Visa will focus on helping the local financial sector to deploy innovative payment technology, improving the financial capabilities of citizens while driving efficiencies in key areas of the economy, including: agriculture, digital disbursement of government subsidies and remittances, while expanding financial education for citizens and SMEs, thereby increasing the uptake of digital payments and bringing more people into the formal economy.
Yazaki North America: The automotive components producer will invest an additional $110 million to hire more than 14,000 new employees in Guatemala and El Salvador by the end of 2026. This comes in addition to the recent announcement to invest $10 million in a new factory in Guatemala, which is scheduled to start production with its first 1,000 employees in January 2023. Yazaki NA provides electrical wire harnesses for General Motors, Ford, Stellantis and other automotive manufacturers worldwide.
Update on previously announced commitments
The Call to Action, which received a response with commitments from 12 companies and organizations, now includes 40 companies and organizations that have committed to invest in the region, representing the financial services, textiles and apparel, agriculture, technology and telecommunications sectors, as well as non-profit organizations.
In addition, the Call to Action has generated new collaboration among participating companies, further boosting the initiative’s impact. Notable developments to date include:
- Microsoft announced in December that it has expanded broadband Internet access to nearly two million people. The company plans to reach three million people across the region by July 2022.
- Nespresso committed in May 2021 to supporting regional economies with at least $150 million in investment by 2025. To date, Nespresso has signed more than $100 million in coffee procurement contracts, including the first shipments of Nespresso coffee from Honduras and El Salvador, which will increase the incomes of thousands of farmers.
- Acción, through its work with partners in northern Central America, has brought more than 140,000 people living in Guatemala, including 90,000 women, into the formal financial sector.
- Davivienda has brought more than 201,000 people into the formal financial sector through the expansion of digital services, signed a new loan portfolio guarantee agreement with the U.S. International Development Finance Corporation and the U.S. Agency for International Development (USAID), and provided more than $100 million in low-cost housing and small business loans.
Translated from the Spanish by Adam Critchley