Over the last six months, we have developed a theory of change concerning wealth creation in rural communities chronicling problems that impede women of the Western Highlands of Guatemala from accessing opportunities in this century. These conclusions form the basis of the logical framework in our proposal to the United Nation's International Organization for Migration (IOM) and the United States Agency for International Development (USAID) program to address the fundamental causes of migration from Central America to the United States. We proudly announce that USAID/IOM selected our proposal titled the Virtual Merchant in a competitive selection process to finance a pilot project addressing critical obstacles to wealth creation for Highland Indigenous Women.
Our analysis begins with identifying the accelerating societal and economic changes interrupting traditional survival strategies and contributing to the development of a culture of dependency. We define a culture of dependency as individuals transferring their agency to outside actors such as government officials or evangelical pastors to satisfy material needs or engaging in risky behavior such as migrating to the United States or participating in illegal markets. The Virtual Merchant project focuses on creating positive coping mechanisms that empower women to identify and take advantage of opportunities. Stress process researchers define coping mechanisms as either positive, identifying and addressing the cause of stress, or negative, emotional avoidance strategies that enable people to function with stress. The project centers on structuring coping mechanisms through financial planning, capacity building, and improving business acumen. A problem we identified is the survival strategy of creating jobs rather than businesses. What we mean by this is that the common practice of Highland entrepreneurs interviewed was to mimic an economic activity perceived as successful. This practice frequently produces income-generating activity comparable to wage labor but does not foster wealth creation. Conservative cultural norms for survival have ingrained behavioral patterns restricting risk-taking and innovative thinking, leading individuals to replicate a successful business venture of a neighbor rather than finding an opportunity in an unmet need or discovering a more efficient means of meeting demand.
The project is grounded in the problem that small informal entrepreneurs cannot participate in electronic commerce because they cannot accept electronic payments, which requires entrepreneurs to formalize their business. Business formalization refers to legally incorporating with the state and paying taxes and registrations necessary. The accelerating rate of consumer choices and government policies reducing the size of informal markets are eliminating spaces for market participation for rural people. Informal surveys conducted by Guatemalan Universities demonstrate that even the most rural consumers prefer packaged and branded products.
This Virtual Merchant pilot project will utilize our circle empowerment methodology as rural enterprise incubators consisting of administrative and marketing accompaniment and facilitation of technical support. We will create turn-key business ventures to eliminate many common and avoidable errors with the assistance of qualified business consultants. The project will house a digital marketing team to assist rural entrepreneurs with branding, packaging, and digital access to harness the migrant solidarity and nostalgia consumer. The migrant community, both internally and internationally, is targeted to address the limited spending capacity of rural consumers. Migrant consumption is differentiated between nostalgic consumption, such as a migrant's desire to have regional ingredients, and solidarity markets which are migrants wishing to purchase goods and services for relatives remaining in the Highlands.
This project's innovative and experimental aspect is forming an investment holding company to facilitate the development of micro-investing to replace micro-lending as the norm of international solidarity engagements. Micro-lending is a very lucrative development model for intermediary organizations that benefit from the annual growth in capital assets under management and the collection of interest. For rural women producers, it represents a perpetual debt trap with recipients frequently taking on more loans to pay off old debts. The simple dynamic is that micro-lending today has rural women working to pay interest to sustain NGOs rather than wealth creation for the entrepreneur or her investors.
We are experimenting with how micro-investing can encourage long-term relationships to develop accompaniment services rather than short-term transactional relationships based on debt collection. The project's vision is to foster the creation of community-based capital markets, replicating many of the positive attributes of successful cooperatives adapted for entrepreneurial pursuits.