The Context

Guatemala has made significant progress in achieving macroeconomic and democratic stability after a 36-year civil war. Since the signing of the Peace Accords in 1996, the country has improved its access to international markets through several trade agreements.

Nevertheless, Guatemala, the biggest economy in Central America, has one of the highest inequality rates in Latin America. Rates of poverty, malnutrition and maternal-child mortality, especially in rural and indigenous areas, are some of the worst in the region.

The country is predominantly poor, with 49 per cent of the population living in rural areas. Guatemala is characterized by a markedly unequal distribution of wealth, assets and opportunities: between 2000 and 2014, rural poverty increased from 74.5 to 76.1 per cent, while extreme rural poverty increased from 23.8 to 35.3 per cent.

Young people and indigenous communities are the most vulnerable. Among indigenous people, who comprise almost 40 per cent of the total population, the poverty rate is approximately 80 per cent. Additionally, chronic malnutrition affects almost one half of all children under the age of five, predominantly those living in rural areas (53 per cent) and who are indigenous (61.2 per cent).

An increasingly important challenge for Guatemala is improving the levels of citizen security. High levels of crime and violence represent staggering economic costs for the country. Other major challenges for the country are the degradation of natural resources, the vulnerability to climate change, the highly unequal income distribution and the participatory inclusion of the ethnic diversity. 

The Strategy

In Guatemala, IFAD and the Government have joined forces and are working with indigenous peoples, youth and women in order to address the high incidence of poverty in the country.

Key activities include:

• promoting a market-driven development of agricultural and non-agricultural rural businesses and microenterprises. This involves linking small-scale rural entrepreneurs with private-sector players along the value chains;
• developing social and human capital of the communities. This means building entrepreneurial capacities, especially among rural and indigenous women and young people; supporting the legal consolidation of smallholders associations, and giving rural population access to basic infrastructure; and
• enhancing pro-poor rural policy dialogue and sectoral planning. The target is to achieve enhanced country dialogue and sectoral planning and coordination at the national, departmental and municipal levels. A key issue in this regard is facilitating and promoting involvement of communities, particularly those that has been traditionally left behind, as is the case for indigenous people.