Bolstering Private Enterprise in El Salvador

This post was authored by Lucía Bonilla from Palladium.

Starting a business is not easy. There are many steps to undertake: paperwork, legal actions, permits, a business plan, financing, and marketing. That is why in El Salvador, many businesses stay within the informal market.

When Flor Olivares and her husband, Samuel, found out that she was pregnant with triplets, they immediately knew that they had to think about their family’s future and economic stability. They set out to sell pastries and baked goods back in 2011. But they did not stop there; after a few years they began baking their own products. That is how Los Trillizos [The Triplets] Bakery began.

“We had many plans and dreams but needed someone to guide us in the process; that is why we turned to CONAMYPE for professional advice,” she explains. This was fortuitous, as it brought Los Trillizos into the network of the USAID Economic Competitiveness Project, which partners with CONAMYPE, National Commission for Micro and Small Enterprises. Together with CONAMYPE, the project is providing technical assistance to 2,288 micro and small companies in areas such as innovation and technology adoption, good manufacturing practices to improve quality, automation, preparation of nutritional labels, online marketing, and how to access better points of purchase.

“Through technical assistance, thanks to CONAMYPE and USAID, our company now has nutritional labels, and we acquired a packing machine to improve our products’ presentation,” Flor says. “This is how our company has entered international markets.” In 2018, the bakery increased its sales by $75,000 due to project support.

The USAID Economic Competitiveness Project is providing technical assistance to CONAMYPE and other business organizations to help improve their systems and business advisory services, as well as develop new ones considering the requirements of micro, small, and medium-sized enterprises (MSMEs). Through the alliance with CONAMYPE, the project has generated $5.6 million in new sales and 686 new jobs in just one year.

Incorporating Innovation

The Economic Competitiveness Project also supports the development and implementation of strategies for innovation among MSMEs to increase sales. In partnership with the Salvadoran Chamber of Commerce (CAMARASAL), the project supports the INNOVEXPORT program to increase companies’ competitiveness through the introduction of innovation in production processes and business management.

>Óptica Vista is a Salvadoran family-owned lens crafter and optometrist service founded in 1990 and located in Santa Ana (western El Salvador). “Our goal has always been to generate jobs and social awareness, to build a staff and generate a network of clients that become family and help us grow,” says Claudia Barrera, owner of Óptica Vista. "INNOVEXPORT has helped us to persevere and develop these areas by improving our service delivery and attention to clients. Now we have created more job opportunities in the local economy.”

INNOVEXPORT has helped Óptica Vista increase its sales by $8,850. In a seven-month period, 24 companies have generated $695,085 in new sales and 88 jobs via INNOVEXPORT. It was the first time that the program was implemented outside of the country’s capital, making it possible for businesses in eastern and western El Salvador to access this service.

Additionally, the project, CAMARASAL, the Corporation of Salvadoran Exporters, the Business Foundation for Social Action, and the Secretariat of Governance have joined forces in a public-private alliance, the first of its kind in the country, to implement the Culture of Excellence Program, which assesses businesses and then helps them develop plans to improve their processes and services.

Chocolates Melher is one of 15 participants in the Culture of Excellence Program. Melher is a Salvadoran manufacturer of chocolate coatings for frozen fruits, ice cream, popsicles, candies, and bakery products. Melher has identified its business challenges and improved internal processes to be more competitive and enter new international markets.

“It's hard to think we're going to be competitive if we do not improve our internal processes,” says Rommy Rivera, organizational development director of Chocolates Melher. “It wouldn’t be possible to export our products if we don’t search for excellence. It is a very competitive market out there, and we have the capacity to compete, but we must work daily in improving all processes inside our company to better our products and satisfy our clients’ needs. That is what the Culture of Excellence Program has taught us.”

Palladium implements the Economic Competitiveness Project, which increases the competitiveness of economic sectors in El Salvador by strengthening the capacity of micro, small, and medium-sized enterprises to compete in domestic and international markets.