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Since 2014, nearly 10% of the population of Northern Central America—El Salvador, Guatemala, and Honduras—have fled their home countries as a result of a complex mix of humanitarian challenges, including the highest murder rates in the world; climate disasters that have decimated as much as 80% of crops in recent years; a three-fold increase in hunger; and as much as 40% of the population living in extreme poverty. Both as a cause and consequence, it is poverty that stands out as the leading motivation for migration, with 74% of migrants citing it as the primary reason behind their decision to flee.
Like other frontier and emerging economies, Northern Central America has lacked a sustained organising effort to mobilise and maintain the international investments and job creation required to shift the needle on economic growth in the region. To address this need, the Partnership for Central America (PCA) was launched in May 2021 alongside a Call to Action by U.S. Vice President Kamala Harris to reduce the root causes of poverty in Northern Central America. The initiative seeks to mobilise private sector and social impact investments across integrated supply chains between the United States and Central America.
Since our launch, our efforts have together mobilised over USD 4 billion in investment, procurement and lending to Central America, with USD 500 million already deployed to date.
Models from other countries indicate that the challenges driving individuals to migrate can be addressed, but doing so requires the public, private and social sectors to work together around a focused set of large-scale systemic solutions. As a convener, PCA has brought together the leadership attention of more than 100 strategic partners.
Since our launch, our efforts have together mobilised over USD 4 billion in investment, procurement and lending to Central America, with USD 500 million already deployed to date. At their core, these investments aim to achieve two ends: creating employment opportunities; and facilitating the enabling environment for investment through seven multidimensional pillars, including digital access, financial inclusion and job skilling.
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First, job creation. Currently, only 1-in-5 Central Americans is employed in the formal sector. Given this, job creation and formalisation by private sector partners is a primary area of our work. For example, one million new jobs over ten years would represent an increase in the rate of job growth from 2% to 2.7%. This growth is benchmarked against the nearly 2.9% rate achieved by Vietnam during that country’s rapid acceleration between 2006-2011, as their production sector benefited from a similar geographic shift of manufacturing.
Not only creating jobs but also formalising them is essential in this region, and the private sector has a critical role to play helping businesses and workers transition to the formal economy. At PCA, a core part of our work supports the holistic foundations of formalisation, including, training workers while helping businesses—especially small and medium-sized enterprises—achieve the foundations required to achieve formalisation.
By 2032, PCA aims to reach 150,000+ individuals across the region with programmes that directly prepare them for employment.
To support job creation and formalisation efforts, PCA is simultaneously focused on strengthening the enabling environment for sustainable economic growth across the region across seven pillars of impact: financial inclusion; digital access; gender equity; job skilling; access to capital; infrastructure; and rule of law/labour standards. Delving into three of these:
- To advance digital access, PCA has formed a coalition with Microsoft, Millicom and other partners who have together committed to invest USD 735 million in the region to help provide digital access to over 4 million people by 2027. This is significant because over half of the households in El Salvador and Honduras lack internet access, which is a critical enabler of employment and education opportunities.
- Meanwhile, women in Central America participate in the labour force at far lower rates than men (44% vs. 78%) and suffer from one of the highest rates of violence against women and femicide in the world. Further, when women in this region do have access to economic opportunities, they invest 90% of their income back into their families and communities. This is why PCA launched In Her Hands in 2021, a women’s economic empowerment initiative to bring a gender lens to investment in the region. The effort aims to expand opportunities to 2 million women by 2027 and 5 million women by 2032 through financial inclusion, digital skilling, manufacturing and textiles and agricultural programmes.
- Gaps in skilled labour pose barriers to employment across sectors. For example, business service and high-skilled producers have indicated an interest in growing their workforce, but are inhibited from doing so due to gaps in technical skills, English language training and digital capabilities. Through a skilling consortium, PCA aims to mobilise corporate, regional and multilateral partners to expand programming on employment training. This would provide education and training for individuals across the region to directly prepare them for employment by 2027. By 2032, PCA aims to reach 150,000+ individuals across the region with programmes that directly prepare them for employment.
The Partnership for Central America is working to mobilise investments to create and formalise opportunities in this region in order to give families and communities decent work, with the hope of having an impact on the underlying cause of migration from Northern Central America. While many hurdles remain in achieving success in this long-term initiative—including a lack of political will, sustained investments and macroeconomic trends—we have observed several early successes with the concerted effort of our government, corporate and civil society partners. With hope, the lessons and best practices of this effort might be leveraged to advance similar economic development challenges in peer economies across emerging and frontier markets. As USAID Administrator Samantha Power, a founding partner in this effort, noted in her May 2022 Congressional testimony, “The Partnership for Central America shows that with dedicated effort we can draw…companies that want to be involved in that broader societal effort”.
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