Can the private sector help to pave the way to tackle complex challenges in the Northern Triangle of Central America?

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written by José Eguigure and Daniel Barjum 

A few weeks ago, Vice President Kamala Harris, and other top officials, including Samantha Power, Administrator of the United States Agency of International Development, and former professor at Harvard University, attended the inauguration of Xiomara Castro as the first female President of Honduras in its 200 years of independence. According to several sources, including the New York Times, this is a clear statement of the U.S. foreign policy on strengthening its ties within the Northern Triangle of Central America, and represents a good opportunity to pave the way in tackling complex challenges in Honduras, Guatemala, and El Salvador. Can the private sector help to deliver on this cause? How?

Vice President Harris launched “a Call to Action to the Private Sector” last year to join government efforts to increase economic opportunities within the region and “address the root causes of migration” to the United States. Twelve companies and organizations such as Bancolombia, Microsoft, Mastercard, the Harvard T.H Chan School of Public Health, among others joined this effort back in May 2021. Recently, seven new partners have joined including Grupo Mariposa, Cargill, PepsiCo, and CARE International, and all together “have invested more than 1.2 billion dollars.” Although this is a promising initiative supported by the nonprofit Partners for Central America, the major challenge now is how to deliver on this promise, allow for stakeholder engagement, and give agency to local communities. Finding the right approach or blending of approaches will be crucial for the implementation of this strategy. 

The first question we need to ask ourselves is how much do we know about the problem and how different do stakeholders frame it? Then, how do we get high levels of legitimacy among local communities and sustain it across time? How can we overcome countries’ binding constraints, in Honduras for example, its low ease of doing business? Since there are a lot of unknowns and ambiguities, a good way to start these conversations is by engaging and building trust with key stakeholders in each country. Problem Driven Iterative Adaptation (PDIA) can be a useful methodology to complement current efforts. PDIA is a “learning by doing” approach that empowers stakeholders to breakdown problems, identify potential solutions, iterate, and build capabilities while learning throughout the process. PDIA poses a unique and effective approach to development, borrowing ideas from both private and public sector initiatives and experiences around the world.   

A good example of how PDIA has recently worked well within the region is the case of the new airport of Palmerola located 45 minutes outside of Tegucigalpa, the capital of Honduras. The Government of Honduras was looking to strengthen their relationship with the private sector as they wanted to open a new international airport. Using PDIA, the Building State Capability (BSC) at Harvard University set up a team between the private and public sector and guided them through a process of building trust and working together on problems. From this work, the team managed to solve several long-standing issues that the airline industry had faced in Honduras. Of key examples was the full application of a law that allowed airlines to repair their aircraft locally at low costs, and the creation of a long-standing committee to oversee the operations of the new airport. As of December 2021, the airport is in full commercial operation. In addition, PDIA has been applied successfully in other regions around the world, in which the private sector has played a key role. A notable case is the enhancement of local capabilities to “implement a growth strategy in Albania.” Using PDIA and guided also by the BSC, Albania increased garment exports from €495 million ($567 million approx.) in 2013 to €875 million ($1 billion approx.) in 2017 and improved contribution of garment sector to total exports, from 28% to over 44% in three years.  

In brief, the private sector will indeed play a fundamental role in promoting a sustainable way of value creation in the Northern Triangle region. It is instrumental to the success of these efforts for them to support an ecosystem that promotes agency in local communities, creating a “sense of us”, enhancing their capabilities and operating with high levels of both performance and integrity. PDIA and blending implementation approaches will be needed to support this historic opportunity.  

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