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Programme for economic and employment promotion
Programme description
Title: Programme for economic and employment promotion
Commissioned by: Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (BMZ)
Country: Honduras
Lead executing agency: Secretaría de Industria y Comercio (SIC)
Overall term: November 2004 to December 2010
Context
Progress is being made in the integration of Central America into international trade with the establishment of a regional customs union, the coming into force of the Central American Free Trade Agreement, CAFTA-DR, and the talks on an association agreement. The government of Honduras is relying more and more on the dynamic strength of micro, small and medium-sized enterprises (MSME) which already account for a significant share of the gross national product and of employment. However, neither the framework conditions nor MSME promotion by the public and private sectors is adequate, compared to the region as a whole, to ensure sufficient competitiveness of this sector.
Objective
The sustainable introduction of innovative instruments for economic and employment promotion has improved the competitive capacities of the MSMEs.
Approach
The programme aims, through the sustainable introduction of innovative instruments for economic and employment promotion, to improve the competitive capacities of MSMEs in Honduras. The basis for action is the national poverty reduction strategy and the policy for promoting competitiveness of MSMEs. Priority is placed on capacity building for public and private promotional institutions.
The programme comprises four activity areas:
- Improvement of framework conditions for MSMEs
Through increasingly concerting the activities of public and private sector actors, the creation of an appropriate legal framework for MSME promotion and the removal of barriers blocking establishment and operation of MSMEs, the framework conditions are improved. The most important partners are the Ministry of Industry and Trade, chambers and associations, and the Honduran National Business Council (COHEP).
- Qualitative and quantitative improvement of the performance of private enterprises and financial services
New products are developed and marketed in selected regions. The most important partners are the banking supervisory authorities, financial institutions, private sector service providers, and chambers and associations.
- Local economic promotion
The concept of local economic promotion is anchored at the national level. The implementation of productive local economic promotion projects is supported in selected regions. The most important partners are the interior ministry, the umbrella organisation, Association of Honduran Municipalities (AMHON), and at local level, municipal councils and private sector institutions.
- Improving the employability of young people
Job-market-oriented and job placement services are being introduced in selected regions. Establishment of a job-market observatory, including the requisite analysis capacities among the partners, is being promoted. The most important partners are the labour ministry and, at local level, chambers and associations and municipal councils.
The programme takes a multilevel approach based on the concept of systemic competitiveness. This entails interventions at the macro level, in policy advising; at the meso level, in institutional promotion; and at the micro level, in developing specific products. At the same time, an ongoing exchange is sought between national policy and strategy-making and the sub-national application of this planning, in order to pass on practical lessons learned to the national level.
At all levels, there is intensive cooperation with other German and bilateral and multilateral development cooperation organisations active in MSME promotion in Honduras.
Results achieved so far
The programme has:
- Presented a draft law on MSME promotion in parliament, including the proposal that a vice-ministry be established.
- Introduced procedural simplifications and set up one-stop agencies and web portals in three municipal councils. Expenditure of time and money for issuing company operating licences, planning and building permissions and other administrative formalities were cut by up to fifty percent.
- Set up two innovative business services at the Honduran National Business Council, COHEP: an information web page for MSMEs and a business opportunity exchange.
In 2006, the information page had over 30,000 visitors. Through the business opportunity exchange, which was also in operation at the Latin America Conference of German Industry, more than 300 businesses established contact at three events held in 2005 and 2006 and concluded business transactions worth several million US dollars.
- Introduced new financial products for accumulating savings on the basis of foreign remittances. These products are marketed through the umbrella organisation of saving and loan cooperatives via about 20 cooperatives countrywide and an Internet page. The microfinance software Microbanker, developed by GTZ and the UN Food and Agriculture Organisation (FAO), was introduced in three Honduran financial institutions.
- Developed and disseminated procedural regulations for the process of transforming microfinance institutions into regulated financial intermediaries. The brochure serves as orientation for the entire microfinance sector, which wants to comply with the regulations of the bank supervisory authority in order to gain access to further funding. To date four institutions have been formalised and another four are in the formalising process.
- Developed and discussed a national policy for local economic promotion and training of municipal personnel for their part in this promotion. The concept was anchored in the interior ministry.
- Supported first initiatives in local economic promotion for tourism in the La Esperanza region in Intibucá: trade fair for marketing local products, cultural festival.
- Supported establishment of a trilateral job market observatory by the labour ministry, the Honduran National Business Council and labour unions: training staff for market analyses. An initial study on youth employment was conducted by the observatory.
- Established job market counselling and a job placement service for young people in the municipality of Choloma. In 2006 this service placed more than 600 youths in permanent employment positions. Three hundred received job market counselling. Demand for such services is great. Expansion is taking place, financed by other donors as well, to include two further regions (Santa Rosa de Copán and La Esperanza/Intibucá).
Further information
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