Letty Barán has an uneasy feeling when she gazes at the hills of Quetzaltenango. Exquisite houses are appearing all around the region’s southwestern highland. This is where many Guatemalans begin their journey to the United States. These three-story residences with French windows and neoclassical facades rise above the cinder blocks of their neighbors. Dubbed “remittance architecture,” the structures are built with money sent home by migrants. And to Barán, who left the town of El Palmar in Quetzaltenango for the U.S. in 1990 and regularly returns to visit, the houses are a symbol of the trap in which Guatemala is caught.
“When I look at them, I think, first, how great that someone has been able to build their dream house. But then, how sad,” says Barán, 50.
Houses that appear to be investments in the eyes actually cost cash. Many of these houses were built with remittances. They are often on unstable ground, in locations at high risk for landslides or disconnected from roads and sewers. The grand homes often remain vacant because many migrants prefer to live in the U.S. with their families and the security of their neighborhood.
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Lack of economic opportunities is why 9/10 residents flee a country which loses tens to thousands of citizens each year. The U.S. estimates that 3 million Guatemalans send huge amounts of money back home each year to help improve their lives. In 2021, buoyed by the Biden Administration’s stimulus package, remittances to Guatemala reached a record $15.3 billion—making up 17.8% of the nation’s entire economy (compared with 9.2% in 2011). However, despite tens and millions of dollars of U.S. assistance, remittances fail to make a difference in improving the domestic situation each year. The flow of people from northward is stronger.
In the U.S., there has been endless noise about the influx of immigrants. However, their money flows silently and is often ignored in both policy and rhetoric.
El Palmar residents believe this change is crucial to end the cycle. In late 2018, Barán and her son Danny, who stayed in Guatemala, joined around 30 others in setting up the country’s first migrant co-op: organizing via WhatsApp and Zoom, the members, split between people in El Palmar and their relatives in the U.S., pool a portion of their remittances together. They offer loans to members who have less cash, and share knowledge about starting businesses and building homes, enabling all of the members to launch projects that grow both members’ wealth and the local economy. “The co-ops are building a culture of savings and credit between migrants and their families, and creating a new source of leadership on development,” says Rodulfo Santizo, founder of Prima-veral Inc., a U.S.-based nonprofit helping migrants to set up remittance co-ops.
Barán’s stepsister Amelia Ixcoy (not pictured) runs a bakery supported by the El Palmar cooperative
TIME – Daniele Volpe
This idea is based on collective remittances programs that Mexican migrants established in late 20th-century Mexico. If it succeeds, the project could not only change the lives of every person in El Palmar, but also start to transform Guatemala’s economy—and its relationship with the U.S.
The co-op holds around 500,000 quetzales—around $65,000—and has so far invested in 10 of its members’ new businesses, including carpentry shops, bakeries, and bookstores. The aim is to eventually enlist all 29,000 of El Palmar’s residents and their relatives, to funnel as much of the money earned in the U.S. as possible into making the town a better place to live.
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El Palmar’s co-op is part of a growing movement to turn Guatemala’s unprecedented flow of remittances into lasting change for the country. Primaveral Inc. says that co-ops have been set up in two more southern cities, while 13 others are in the process. MayaPlus was launched in Guatemala in 2021 and allows migrants to reduce the amount they pay for remittances. This gives them greater control and reduces fees. This is a continuation of financial-education programs, which foreign aid agencies started running in Guatemala in 2016. They are designed to help remittance recipients invest and formalize their finances.
The goal of these efforts is simple, says Danny, who used money sent back by his mother to start a successful grocery store in Quetzaltenango: “We want to improve things, to create work for everyone, so people don’t have to leave.”
Willy Barreno is well-versed in the factors that push Guatemalans to their north and knows what it takes to get back. Barreno, who has 14 years’ experience in cooking at successful restaurants in New Mexico and Chicago, returned to Guatemala in 2010. In Quetzaltenango, Barreno opened La Red Mexican Restaurant, which serves Mexican food with Guatemalan flavours and ingredients. He dreamed about using local produce and employing other returning migrants. Today, La Red hangs by a thread. Barreno said that he depends on the generosity of friends and relatives to keep La Red open from week to week. “This is the worst failure of my life,” he tells TIME over a Zoom call, shaking his head.
Barreno says businesses like his have struggled to compete with the major U.S. chains, like Taco Bell, McDonald’s, and Domino’s, that have proliferated in his city since he left in 1996. Barreno claims the government failed to encourage the growth and expansion of Guatemalan business, instead, it has focused on the attraction of foreign businesses like Walmart. Most things in Quetzaltenango come from the U.S.: the clothes in its many thrift stores, the electronics in its markets, the old cars on its streets, the money in people’s pockets.
Willy Barreno, center (center), in La Red’s kitchen.
TIME – Daniele Volpe
“Remittances are like rain,” Barreno says. “Right now it’s raining a lot, but the rain comes from the sea—the U.S.—and the money all goes back there eventually. It doesn’t stay here for the development of the local economy. So none of the people want to stay either.”
It is a stark economic reality. Guatemala’s average minimum monthly wage is approximately $420, while California’s average income before taxes stands at almost $2,000. Pandemic–related business closures have made even those who were relatively well-off consider migrating, says Rosario Martinez, a researcher at the Guatemala City chapter of the Latin American Social Sciences Institute. “For a long time it was mostly poorer women from rural areas with little education who would go to work in cleaning,” she says. “Now we’re seeing professionals, people with midlevel studies or even university degrees, that because of the pandemic lost their jobs. We’re losing our youth.”
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But only one-fifth of Guatemalan migrants to the U.S. intend to move there permanently, according to a 2018 survey by the Inter-American Development Bank (IDB); that’s compared with half of Salvadorans and one third of Hondurans. Most Guatemalans, migration experts say, plan to spend only a few years earning money to pay for their children’s education or help their parents build a house, and then return to a new and better life. Barán, who worked as a hotel maid in Washington, D.C., during her early years in the U.S., sent her mother money for a “small, humble” house and to invest in local businesses, which Danny now runs. Barán now lives with her other three children in Arlington, Va., and works mostly as a notary. She’s not sure if she’ll return, but if she did, she could have a comfortable life.
It doesn’t always work out that way. “I’ve heard so many painful stories from friends who return home after years and get the shock of their lives when they find their family has spent everything,” Barán says.
The 2020 U.N. Economic Commission for Latin America – and the Caribbean Study, which was based upon surveys taken in the southern Guatemalan region of Guatemala found that 56.1% go towards daily consumption. Only 8.2% are spent on renting or building homes and 5.4% are saved or invested. According to IDB, remittances account for almost half of households’ income. They are crucial in covering food and clothing costs.
Rut Urizar (financial-education coordinator, Inter-American Dialogue), a think-tank, said that the lack of education in finance can affect the return for migrants and their families on their remittances. Urizar points out that the most common reason migrants arrive in America is to save money on their homes. Some recipients are not familiar with handling large amounts. A Dialogue consultant in Huehuetenango found that a young mother had lost around $13,000 in one year of husband sending her. “She was looking after her 3-year-old daughter, and the daughter had an iPhone. And she said it’s the second phone, because the girl broke the first one,” Urizar says.
The Dialogue has been working together with partners, including Cities Alliance (a U.N.-funded alliance on urban poverty); the Swiss Agency for Development and Cooperation and the U.S. Agency for International Development. Since 2016, financial education programs have been established in over 30 Guatemalan cities where there is a lot of migration to the U.S. In order to help people collect money or make remittances, local financial teachers are installed in banks. These programs opened 3,000 products and helped save $2.4million. They also help participants reach mortgage advisers—who will assess the value of their land—and access small-business coaches.
This kind of financial education works because it speaks to people in their language, says Jorge Mario de León, who has been consulting since 2016 out of a branch of Micoope, a savings and credit union, in Salcajá, Quetzaltenango. Sometimes that’s literal: the multilingual team offers sessions in Spanish and in local Indigenous languages like Mam and K’iche’. Teachers also make use of the cultural information they have in their communities to communicate their messages.
De León has helped people set up businesses and build homes. De Leon also claims he helped people avoid migrating, based on 22-years of personal experience with traffickers. “When I went to the U.S., it cost 35,000 quetzales [roughly $4,500]. Now it costs three times that,” he says. “So I say to people, is it worth investing that much in the journey? Why don’t you invest it in a business here? For a month, I lost myself in the mountains. To survive, I needed to drink water from the puddle. Don’t do it.”
National government finds itself in awkward circumstances when it comes to discussing migration and the importance of remittances. Alejandro Giammattei President has pledged to clamp down on people-smugglers, and decrease exodus. This is in keeping with U.S. goals. However, the Guatemalan daily reported that the Guatemalan government was also implementing the U.S. goals. Prensa Libre has noted, remittances are a crucial “escape valve” for millions in a country where more than half of families live in poverty. Much of Guatemala’s rapid economic growth over the past decade is due to more citizens going to the U.S. and sending money home.
“We’re talking about billions of dollars coming into the economy that the government is just kind of gifted every year,” Kathryn Klaas, then an associate at the Dialogue’s Migration, Remittances, and Development Program, told TIME in 2021. “That means that the urgency of creating sources of income that are enough for people to live on in Guatemala—which means formalizing the economy, creating a living wage for people, having regulations—that’s one agenda point that the government doesn’t have to deal with.”
eighbors of Cajolá come here to receive the remittances from their relatives who live in the United States, on April 8.
Daniele Volpe, TIMEN
However, the government has not been able to set up formal programs that would capitalize on these remittances. Its current $200 million plan to reduce undocumented migration, though heavily focused on helping to generate new businesses and jobs for people in high-migration regions, doesn’t mention the money flowing into those areas from abroad and the role it could play. The plan is unlikely to be as successful as previous attempts, according to local experts.
But officials may be waking up to remittances’ potential. Guatemala is undergoing a rapid period of urbanization, projected to take the proportion of people living in cities from 54% now—among the lowest in Latin America—to around 65% in 2030, according to U.N. estimates.
At an event organized by the Dialogue in July, Guatemala’s vice minister for housing said helping citizens manage the money from remittances to build good, well-ordered neighborhoods would be key to the nation’s development. The ministry plans to work with Guatemalan consulates to make sure migrants are using their money on “supervised projects, with some support [from the state] so they don’t end up being structurally unsound,” he said.
Many want more from the government, though, says Quique Godoy, a radio host and economist who discusses remittances once a week on his show on Guatemala’s Radio Infinita. He argues that officials should follow the example of Mexico’s government, which in the 1990s established so-called three-for-one programs: organized groups of migrants in the U.S. would fund projects in their neighborhoods back home, and for every dollar they spent, national, regional, and municipal governments would each put in $1, turbocharging the local development the migrants were leading. “We have to give incentives for migrants, so that instead of giving their money to people for consumption, they decide that they give part of it to a community investment project,” Godoy says.
Godoy states that Guatemala could create an ideal four-for-1 program supported by local banks and businesses. “Because that will create more consumption in the long run, which benefits business.”
But for now the migrants themselves are leading the way, says Primaveral’s Santizo. He wants to see all 340 of Guatemala’s municipalities set up credit co-ops. “We have [aid agencies] expressing interest in working with us,” he says, “but if they don’t, then we the migrants will do it ourselves. We’ll do our own development.”
—With reporting by Eloise Barry/London
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