In Guatemala, Community Capital Accumulation Spurs Economic Hope

By Lionel Vigil

News Americas, NEW YORK, NY, Mon. June 24, 2024: Guatemala is a major coffee exporter, ranking 10th in the world. More than 40% of Guatemala’s beans are produced on about 175,000 smallholder farms. These farms employ more than 125,000 people. Coffee is such a part of Guatemala’s life that in 2018, the Guatemalan government named it “An Intangible Heritage of the Guatemalan nation.”

A worker holds coffee cherries during a harvest in Guatemala. Photographer: Victor J. Blue/Bloomberg

Yet, this critical sector and its farmers have long been under pressure from fluctuating global prices, the influence of buyers and, as of late, extreme weather exacerbated by climate change. For these reasons, coffee farmers are among those likely to emigrate from Guatemala. This migration has encouraged the US Government and others to increase efforts to help Guatemala improve its economy. Much of that success rests on attracting foreign investment in food processing, clothing assembly and other sectors. Even if it succeeds, that strategy will take time to bear fruit

In Atitlan, coffee farmers are relying on their own resources to diversify and increase their incomes. In 12 communities, families have set up savings and credit groups that are completely controlled by members. Despite low incomes, families invest small amounts each month. When a group accumulates enough capital, it makes loans to members at low interest. Borrowers use loans to start vegetable and fruit farms, livestock and small businesses. Families diversify and improve their diets and enhance food security. Surplus produce, eggs and poultry are sold in local markets to generate income. A portion of profits are reinvested in the savings and credit group. This enables the accumulation of enough capital to make loans to all members. This can take some time, but by one year all members have taken out loans. They also receive training in basic accounting and budgeting.

In a 3-month period, Atitlan’s 12 savings and credit groups accumulated $11,500 and loaned $6,000.00 to members.

The hundreds of participating farmers—nearly all women—have seen their incomes increase and they and their childrens’ diets improve. (Like the US, Guatemala has seen a steep rise in the marketing and consumption of ultraprocessed foods.) With that has come a renewed commitment to remain in their communities to build better lives for themselves and their families.

It will take multiple approaches to create the conditions for sustainable economic development in Guatemala. Community-based capital accumulation that meets real local needs is proving to be one successful strategy.

EDITOR’S NOTE: Lionel Vigil is World Neighbors Regional Director for Latin America and the Caribbean.