Introduction
In 2022, the MFA adopted a new strategy for its development cooperation in Central America. This new direction is motivated by the fact that the countries of the sub-region share the same challenges, which cannot be solved on a national basis.
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This new sub-regional strategy lays down three priority themes:
- the socio-economic integration of women and young people;
- climate resilience and environmental sustainability; and
- social cohesion and human rights, including for migrants.
These areas are supported by two cross-cutting themes, which will guide interventions in the priority areas and facilitate the achievement of their objectives: (i) inclusive and innovative finance; and (ii) digitalisation and cybersecurity. This new strategic direction is accompanied by a change in the physical presence in the sub-region. The embassy’s offices in Nicaragua, a former priority partner country, had to be closed in early February 2022 due to the continued deterioration of the socio-political situation in the country. Costa Rica has been identified as the best option for a new geographical location for the Luxembourg Development Cooperation’s offices.
With regard to the regional programmes currently being implemented in Central America, Luxembourg remains an important partner in the Central American Integration System (SICA), particularly through a regional project for female entrepreneurs with the centre for the promotion of micro and small business in Central America (CENPROMYPE). This is a key project dedicated to equality between men and women and the promotion of women’s economic rights. Having performed well in the past, the programme is currently in its second phase of funding, which runs until 2025.
The “Forestry and Climate Fund” (FCCF) impact investment fund was launched in 2017 at Luxembourg’s initiative, as a public-private partnership. It aims to promote sustainable timber exploitation and associated value chains in Central America. The Luxembourg Development Cooperation supported the FCCF through technical assistance from LuxDev until the end of 2022. Technical assistance will again be provided as part of a regional sustainable forest management project, due to start in 2023, which will take into account entire value chains and the inclusion of local people.
At the sub-regional level, the MFA also supported the NGO ADA in its assistance to REDCAMIF (Red Centroamericana y del Caribe de Microfinanzas), a regional network that aims to promote the microfinance industry and its economic and social impact in the Central American and Caribbean region. In 2022, ADA supported the digitalisation processes of REDCAMIF network members through a transition project, while the two organisations are developing a new multiannual programme.
At the end of 2022, Luxembourg launched a second phase of its support to migrant women in Central America and the Dominican Republic, through a regional project with the International Organization for Migration (IOM). In September 2022, a new programme with UN Women started, seeking to promote the financial inclusion of women in the northern triangle (Guatemala, Honduras, El Salvador). A programme with the United Nations Population Fund (UNFPA) seeking to reduce pregnancies among Afro-descendant adolescents will begin in 2023. In addition, the Luxembourg Development Cooperation and the Ministry of Finance have jointly contributed to the third phase of the technical assistance programme of CAPTAC-DR (International Monetary Fund regional technical assistance centre for Central America, Panama and the Dominican Republic). This centre, based in Guatemala, provides technical assistance to its seven member countries, targeting capacity-building for institutions and individuals for the implementation of sound macroeconomic and financial policies.
