Every morning, Amelia Ixcoy gets up at dawn to put on her apron and begin kneading flour, before filling trays full of baked dough balls from the bakery. Work is fast-paced, a race against time to bake enough loaves before she wakes up. El Palmar, a town in the highlands of Guatemala.
For Ixcoy, The business is more than a source of income: it’s a way to keep your family together. Until three years ago, Amelia lived in fear that her daughter Rosa de ella, who was looking for work after college, would join the hundreds of thousands of Guatemalans who migrate to the United States each year in search of economic opportunity.
Instead, the two women opened the bakery with a loan from a community cooperative that collects remittances, money sent by Guatemalans living and working abroad to their relatives back home. The goal is to help people like the Ixcoy start local businesses instead of joining illegal and often dangerous journeys to the United States.
The El Palmar project, the country’s first migrant cooperative, began in 2019 with around 40 residents contributing funds. To date, it has invested a total of 125 thousand dollars in 25 new businesses, including a bookstore and electronics store., as well as the Ixcoy bakery. At least six other towns in the Guatemalan highlands have followed suit.
This comes amid growing discontent over the way government dysfunction and endemic poverty create pressures for Guatemalans to emigrate. These frustrations contributed to the landslide victory of anti-corruption crusader Bernardo Arévalo in the August presidential election.
The arrests of Guatemalans on the southern border of the United States averaged 61 thousand people between 2012 and 2017rose to 116,000 in 2018 and more than doubled the following year, to 264,000, according to an analysis by the Duke Center for International Development, which noted that climate change has also been a driving force.
Previous policies aimed at curbing migration to the United States have failed to address the root cause: 59 percent of Guatemalans live below the poverty lineand more than three quarters of those who intend to migrate do so in search of economic opportunities.
The high level of migration is depriving the country of workers and creating a cycle of dependency that inhibits economic growth. Those who remain depend largely on money sent by relatives abroadand remittances in 2022 increased 18 percent from the previous year to 18.2 billion dollars, equivalent to almost a fifth of the country’s gross domestic product.
“Migrants are the ones who are bringing Guatemala, migrants are the ones who are improving things,” says Ixcoy. “The poor are struggling to succeed in our country.”
The initiative in El Palmar is part of a broader push in Guatemala to harness the potential of remittances to boost economic development. Despite the large influx of money from abroad, remittances have not translated into a significant reduction in povertyand the majority of funds (approximately 57 percent in 2020) have been used to cover basic household expenses.
“The idea is to increase economic opportunities for the people who live here in El Palmar,” says Milthon Escobar Pelicó, who is president of the cooperative. “Immigrants living in the United States do not want other people to have to migrate. “They want people to have the same opportunities that they would have in the United States, here in Guatemala.”
In addition to bolstering the local economy with jobs and income and increasing your sense of community, the cooperative provides advice on how to save money and when to invest it. Even when Guatemalans manage to accumulate savings, They often lack the financial education necessary to convert them into assets to generate more wealth, according to Pelicó. “People have new houses and cars. But they don’t invest, they don’t have a business, they don’t have savings in the bank,” he says.
Part of the problem is the country’s low financial inclusion rate: Less than half of Guatemalans have an account at a financial institution. This impedes their ability to earn returns on their savings or access credit for new businesses. It may even encourage them to migrate.
“When remittance recipients can save but do not see a significant opportunity to invest their assets in the local community, they make a cost-benefit calculation that they are better off leaving,” says Manuel Orozco, director of Migration, Remittances and Program Development of the Inter-American Dialogue, a think tank based in the United States.
At the moment, Only 5 percent of credit in Guatemala goes to microentrepreneurs, says Orozco, and lenders prefer to invest in low-risk businesses that are already familiar to them. He advocates for the introduction of legislation similar to the American Community Reinvestment Act, which requires financial institutions to reinvest in the communities in which they are based.
President-elect Arévalo says he wants to expand temporary work programs in the United States and invest in the poorest areas of the country to reduce departures.
Until such policies materialize, the members of the El Palmar cooperative are taking charge themselves. Ixcoy has almost paid off the 50,000 quetzal ($6,300) loan he received to start his bakery three years ago. Their main concern these days is meeting the demands of their growing customer base. The bakery employs four people, including Rosa and her husband, to make the 180 loaves that are purchased daily. However, the greatest return has been working with Rosa. “I am very grateful that my daughter is with me and that she has not gone to the US,” she says.
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