Latin Analysis: How Women Are Rebuilding Central America’s Local Economies

Deb Dowd

In the highlands around Lake Atitlán, Guatemala, women meet every few weeks to pool their savings – small contributions that together can fund school fees, household needs, or new business ventures. Across the border in El Salvador, similar groups are doing the same, building informal safety nets in places where access to resources is scarce. These initiatives are part of a wider movement across Central America, where women’s cooperatives and savings groups have multiplied since the pandemic. While the picture is promising, it is far from perfect. However, new data and recent project evaluations show that where cooperatives and savings groups are backed by training, legal support, and links to markets, women and their families can be better positioned to recover.

Women, the pandemic, and the structural barriers to recovery

Latin American women were disproportionately affected by the pandemic. High-frequency surveys cited by the World Bank showed women in the region were far more likely than men to lose work at the onset of COVID-19, and studies since have warned that gains on gender gaps remain fragile. This is because of high rates of informality, weak social protection, digital divides, and an acute care burden – where women perform over three times the unpaid care work of men in the region – have all amplified the pandemic’s toll on female employment and entrepreneurship.

In this context, cooperatives and savings groups have offered locally rooted tools for recovery. Pooled capital for small loans, collective bargaining and market access, governance training, and social services aim to help women strengthen economic autonomy and balance paid work with care responsibilities. The evidence of their impacts, however, is multifaceted. Savings groups in rural contexts do not always have meaningful effect on monetary poverty in terms of average income, but did facilitate housing improvements and reduce exposure to idiosyncratic shocks. What they also noted was an increased tendency for rural households to become more specialized in agricultural activities – this ability to focus on practices in which they have a comparative advantage was highlighted by the analysts as a positive effect of improved access to financial services. Another IDB study on cooperatives in Latin America and the Caribbean discussed various challenges women face, from gendered stereotypes when conducting business negotiations, to a lack of specialized personnel to manage bureaucratic complexities, to the heavy weight of unpaid care work that limits scaling.

The dynamics discussed in the aforementioned region-wide studies, however, must be examined at the local level to reveal how cooperative and savings models function in practice, and where they fall short. 

Guatemala

Guatemala illustrates both the promise and the limits of community finance. Rural Indigenous women are among the most economically marginalized groups in Central America, and overall poverty rates remain especially high in Indigenous communities: in many highland regions, eight in ten Indigenous people live in poverty. Against this backdrop, savings groups and cooperatives can be accessible tools to build economic resilience, though their success often depends on training, governance support, and access to markets.

One example is the IFAD-supported PRODENORTE project, which established savings-and-credit groups across the country’s northern departments. Women meet fortnightly, contribute small sums – typically between 20 and 200 quetzales – and elect peers to manage loan cycles. Since 2016, one group’s six-month savings pool has grown from about $2,200 to over $12,000, with short-term loans of around US$100 used for small productive investments, schooling, or household needs. Despite low literacy levels among participants, repayment rates have remained high, and by 2024 the project supported around 153 groups and more than 3,000 Indigenous women. The experience highlights how collective savings can generate owned capital and strengthen resilience, even in low-literacy and low-income contexts.

A different approach can be seen in Atitlán Recicla, an Indigenous women’s recycling initiative that transitioned from informal community groups into a formal cooperative with support from NCBA CLUSA and Guatemala’s National Institute of Cooperatives (INACOP). The group’s work began with basic waste collection around Lake Atitlán but evolved into a cooperative enterprise that adds value locally while helping protect the lake’s fragile ecosystem. The formalization process required extensive paperwork and mandatory business training, but this institutional backing proved decisive in turning an informal collective into a legally recognized business capable of seeking new markets and partnerships.

Both initiatives illustrate the diversity of cooperative activity in Guatemala – from savings circles that build financial autonomy to enterprises that formalize local production. Yet they also underscore key constraints: without stronger links to formal financial systems, reforms to lower bureaucratic hurdles, and improved market access, capital built through savings groups remains small and fragmented. And while remittances – received by about 60% of women in Guatemala – hold enormous potential to multiply these effects, that potential remains largely untapped unless financial advice and account access expand in parallel.

Mexico

Mexico’s experience underscores how training, remittance flows, and local policy can work together to advance women’s economic inclusion – although informality and limited access to credit still pose barriers. The country’s dense migrant economy means remittances are central to many women’s livelihoods. According to study by CEMLA, Mexican women receive a large share of remittances from the United States, and Mexico’s rate of depositing these funds into bank accounts is higher than in most of Latin America.  

Nevertheless, many female entrepreneurs remain outside the formal economy: around five million women operate informal businesses, and over one-third cite lack of financing as their main growth constraint. In response, the microfinance organization Pro Mujer has rolled out training and financial inclusion initiatives tailored to women’s needs. Since its launch in 2022, it has reached thousands of participants, helping women improve business management skills and formalize microenterprises.

At the municipal level, Mexico City’s 2024 initiative for cooperatives and the “solidarity economy” reflects a policy effort to institutionalize these principles. The program includes expanding cooperative training schools, preferential contracting for women’s cooperatives, and opening community childcare centers to reduce the unpaid care burden limiting women’s participation in paid work.

These initiatives highlight the value of combining training and supportive public policy to help women move from informality to cooperative enterprise. Yet challenges persist. Training initiatives alone do not ensure access to financing or sustained growth, and many informal entrepreneurs remain unable to obtain credit or navigate registration requirements. Long-term progress will depend on whether financial instruments and administrative frameworks can adapt to the realities of small-scale, women-led enterprises.

El Salvador

Initiatives in El Salvador offer a glimpse of how sectoral projects, cooperatives, and social services can reinforce one another to expand women’s economic opportunities. In coastal communities such as Salinas de Sisiguayo, a women-led cooperative ventured into shrimp farming with support from IFAD’s PRODEMORO project and the Ministry of Agriculture and Livestock. The initiative has helped women diversify income, improve household budgets, and strengthen collective organization, all while participating in a productive and export-oriented sector.

Beyond agriculture, community-based finance has taken root through savings groups supported by Oxfam, CRIPDES, and local partners. Since 2013, these networks have spread across rural areas such as La Libertad, growing from small clusters of grassroots promoters into more than 240 groups. Women who had never saved before began contributing small amounts to fund school fees, home repairs, and emergencies, helping many participants strengthen financial discipline and community engagement.

Public programs have also played a role. The government’s Ciudad Mujer model – developed with support from UN Women – aims to combine economic empowerment, legal assistance, and childcare services. Women who participated were able to secure land leases, access legal assistance, and manage cooperative activities. Meanwhile, the IFAD–FAO Rural Adelante project, launched in 2019, has taken a territorial approach to supporting climate-resilient value chains and gender-sensitive training, reaching thousands of families with technical assistance and market linkages.

El Salvador’s experience suggests that when savings groups, productive cooperatives, and public services operate in tandem, women can achieve durable gains in income and autonomy. Yet scaling these successes remains difficult. Persistent land access inequalities, exposure to climate shocks along the Dry Corridor, and limited access to long-term financing continue to constrain progress. Sustained investment and policy coordination will be critical if these grassroots gains are to translate into broader structural change.

Regional patterns and constraints

Across Guatemala, Mexico, and El Salvador, recent data and project evaluations show that cooperatives and savings groups have played a notable role in post-pandemic recovery. A joint ICRG-OCDC study from 2024 found that cooperative membership was linked to higher household incomes and greater well-being. Income gains were particularly pronounced among women members in El Salvador at 58%, and young participants also reported marked improvements in earnings and skills. In Guatemala and Mexico, initiatives that combined remittance income with financial training and formal account access were associated with higher savings and more stable household finances.

Across these cases, collective structures appear to have helped women accumulate capital, diversify income sources, and strengthen informal safety nets. However, their impacts are context-dependent and constrained by a range of structural factors. Many cooperatives and savings groups operate on a small scale and lack the financial instruments or administrative capacity to transition into the formal economy. Bureaucratic registration processes, limited collateral, and weak links to formal credit markets continue to restrict access to financing. In rural areas, poor infrastructure and narrow market access further limit opportunities for growth, while the persistent burden of unpaid care work reduces women’s time for training and enterprise.

The analyses discussed identify three factors that consistently determine whether these initiatives can expand their reach: financing mechanisms adapted to cooperative structures; sustained technical and market support to move beyond subsistence-level production; and complementary social investments, particularly in childcare and legal services, that enable women to engage fully in economic life. Without these, the gains achieved through local savings and cooperative models could remain modest and fragmented.