Counterpart International will launch the Guatemala Rural Prosperity Investment Fund to lift smallholders at the bottom of the pyramid out of poverty. It will use blended capital to create a permanent, scalable solution that delivers sustainable farming techniques to the most neglected communities, through a partnership with the Guatemalan Ministry of Agriculture, building the capacity of farmers associations (CADERS) and expanding the availability of rural micro-loans aligned with market-based solutions. This formalizes and commercializes a proof of concept successfully implemented from 2012-2016 in order to reconstruct rural agriculture in the poorest areas of Guatemala, scalable to the Northern Triangle.
Phase I is a highly-leveraged grant program reaching the poorest, indigenous populations. In this pre-market incubator, 45,000 farmers (40% women, representing a substantial increase in womens participation toward narrowing the skills gap) will receive sustainable agriculture assistance to improve crop productivity, moving them from subsistence farming to stabilization, with an estimated 10% income increase and increased capacity to improve family nutrition. Based on market conditions, 9,200 will be loan ready, participating in a step-change investment to further improve livelihoods.
Phase II is a debt investment fund where investor capital is on-lent through financial institutions as agriculture micro-loans to accelerate sustainable farming practices and yield. It is expected the fund will be active for 10 years. Investors will be returned any outstanding balance on their initial investment plus promised interest, or evergreen their investment. Phase II will reach up to five new departments by Year 3, and up to 15 by Year 10. Incomes among farmers in the loan group will rise by another 20%, out migration will be reduced by 25%, and childhood nutrition indicators will improve by 50%. Our long-term goal is to refine the model of sustainable agriculture assistance leading to improved market access and more loan-ready smallholders.
-Year 1, Q1/Q2: Convene Investment Advisory Group, initiate empirical baseline for up to five new departments in Guatemala, secure seed financial funding. Each quarter, 3,750 smallholders will begin the sustainable agriculture training and assistance program, with 2,000 smallholders receiving loans within the first year.
-Year 1, Q3: Complete design & financial mechanism, and investment fee structure for the Fund
-Year 1, Q4: Secure first round of investment capital to launch Fund ($3,000,000).
-Year 2, Q1-Q4: Each quarter, 3,750 individuals begin the training and assistance program, and 3,600 receive loans in Year 2.
-Year 2, Q4: Second round of financing secured ($5,400,000)
-Year 3, Q1-Q4: Each quarter, 3,750 individuals trained with 3,600 receiving loans in Year 3
-Year 3, Q3: Planning completed for next three-year increment
-Year 3, Q4: Third round of financing secured ($5,400,000)
Rural, indigenous farmers in Guatemalaparticularly womenhave been left behind in Guatemalan agriculture. They have little access to information, services, or institutions that can deliver long-term support and market access. In these communities, women are increasingly heads of household, but face illiteracy rates of 59%, making it difficult to reach them with traditional support. Poor land management practices have led to deforestation and erosion, compounding problems of ever-shrinking plot sizes. Many children grow up with diets nearly devoid of vitamins and proteins. According to the World Food Programme, Guatemala has the fourth highest chronic malnutrition rate for children under age five in the world, reaching more than 49.8% country-wide, and 69.5% in indigenous communities. Weak economic opportunities and the inability to make a decent living through agriculture are further compounded by social and security disruptions in the region.
There is ample opportunity for rural, indigenous smallholders to improve production for their families and local, regional, and global markets. Yet traditional sources of support that have connected rural communities to markets elsewhere namely, a reliable extension service combined with financial services for the rural, indigenous poor have been non-functional for decades.
Counterpart seeks partners who share our vision of breaking the cycle of poverty in rural, indigenous communities in Guatemala, and who want to place their money in poor communities that are typically hard to reach with social impact investment vehicles.
Counterpart also seeks early-stage advisors who can help develop the Rural Prosperity Fund so that it is a robust investment vehicle for social impact investors with an exit strategy for investors by Year 10. Counterpart is also seeking seed capital partners plus investors for scaling the Rural Prosperity Fund.
Counterpart seeks partners who can help identify and evaluate retail-level microfinance organizations that can successfully manage the Funds capital with a portfolio of individual farmers and achieve geographic coverage.
Finally, Counterpart seeks market-based and NGO partners able to open new markets to participating communities or with existing programmatic resources to expand the program to farmers in new geographies using the proven method.
Counterpart offers its now-proven model of capacity building for successfully training and supporting rural farmers so that they can succeed in agricultural markets, using a method that is successful with women, youth (including girls), indigenous populations, and those traditionally economically and socially marginalized in Guatemala. This successful model supports the institutional systems that can help lift subsistence farmers to stabilization. The investment model also serves as a step-change investment to further improve livelihoods. Counterpart offers on-the-ground resources including an existing office, and relationships with Guatemalan organizations and the public and private sectors. Current partners are committed to expansion and 34% of funding is already secured. Through this commitment, we offer social investors an opportunity to help break the cycle of poverty in rural, indigenous communities.