The Economic Opportunity Mexico Can’t Afford to Miss and More…

The Economic Opportunity Mexico Can’t Afford to Miss and More…

The Economic Opportunity Mexico Can’t Afford to Miss

The coronavirus pandemic is threatening to give Mexico’s economy the hardest hit in the country’s modern economic history.

With job losses from March to May tripling the number of job gains during all of 2019, the gross domestic product could contract by as much as 9% this year, according to America’s Quarterly.  

This affliction has offered Mexico rare potential to expand its economic role in the region as North American trade and production are increasingly brought closer to home. Unless the country is able to revamp its domestic policies, Mexico risks squandering this opportunity.

Mexico had started to benefit from the renewed interest in “nearshoring” by U.S. businesses even before the coronavirus pandemic.

“Having witnessed a year of acrimonious trade rhetoric and tit-for-tat tariffs between the U.S. and China in 2019, U.S. companies have sought ways to avoid disruptions to their supply chains. As a result, Mexico’s share of U.S. imports has edged up to 15% from 13% in early 2018, while China’s has declined to 17% from 22% over the same period,” America’s Quarterly reports.

In June, a survey of U.S. firms by the UBS Evidence Lab, found that more businesses expressed keenness to relocate their foreign operations as a result of coronavirus-related shutdowns. Of those with production in China, 76% have moved or are planning to move capacity out of the country, with one third looking to do so in the near future. The U.S. was the favored destination, chosen by 82% of surveyed firms. Canada came in second at 38%, while Japan came in third at 29%. Mexico ranked fourth with 23%, punching well below its potential weight.

Nearshoring is attractive to businesses because it shortens delivery times and reduces transport costs. According to consulting firm Tetakawi, it takes one week and costs nearly $1,800 to ship a 40-foot container to the U.S. from Mexico, compared to five weeks and around $4,300 from China. The cost of manufacturing labor in Mexico is also among the lowest in the world, at roughly 10% of U.S. factory wages. Additionally, the Mexican workforce is well-trained and expansive, with two-thirds of the population being of working age, between 15 and 65 years.

Mexico has the necessary partnerships to integrate itself deeper into the post-pandemic supply chain. On July 1, the U.S.-Mexico-Canada (USMCA) trade deal was enacted: a relationship that has strengthened protections of intellectual property in recent years, and runs a program that allows companies to import goods for industrial processing and subsequent export, without having to pay import tax or value-added tax.

However, to assert itself in the post-pandemic supply chain, Mexico has numerous hurdles to overcome. President Andrés Manuel López Obrador and his government’s rocky relationship with the private sector and foreign investors raises red flags. The series of policy measures he has taken in the last two years has weakened the regulatory and institutional environment in the country, pushing investor confidence to its lowest level in years – a Bank of Mexico survey in May showed 92% of business enterprises considered it a bad time to invest, compared to 19% in October 2018.

By harnessing its many advantages to capitalize on the nearshoring trend, Mexico has ample opportunity to confront challenges to its economic recovery caused by the COVID-19 pandemic. A change in domestic policy direction toward closer cooperation with the private sector, and clearer rules of the game is necessary for the country to take advantage of the opportunities before it.

From a WhatsApp Channel to Latin America’s Latest Online Travel Startup

Online travel newcomer Milla Travel is looking to shake up Latin America’s travel management landscape, and it sees no better time to do it than during a pandemic.

Founder Antonia San Martin told Skift she’s identified a gap in the market, because corporate travel there hasn’t evolved in line with the rest of the world. Most bookings are made using offline travel agencies, and the market is highly fragmented, apart from some of the larger corporate travel agencies having a presence there.

However, the pandemic has forced companies and travelers to adapt more to digital in Latin America. According to San Martin, the countries are “about 100 years behind what’s going on in Europe and the U.S.”

“I investigated a bit, and most of the companies here hate the solutions their companies are giving them,” she added. She speaks from experience, having traveled for business a lot during previous roles at Nike and Heineken.

Officially launching in April this year after starting out as a WhatsApp channel, Milla Travel is arguably starting out at the worst possible moment, as coronavirus cases rise sharply in Latin America. Brazil has had more than 1.7 million confirmed cases, the second highest global tally after the U.S., with Chile, Mexico and Peru battling major outbreaks.

“There was already a recession on its way pre-Covid. Last year we saw a slowdown in travel volume at about 18 percent to 20 percent, due to the economic situation and the fluctuation in our markets. Companies are worried, and what is more concerning is the fact governments aren’t straight with the information provided about infection rates, where to travel and how we can really protect ourselves,” said Maren Hanschke, president of FCM and Flight Centre, Mexico and Latin America Network.

But San Martin claims larger companies in Chile are now watching the startups and picking up on their trends, including those related to the way they manage travel. She explains that word of mouth is key, and the Chilean government called her a couple of weeks ago to inquire about what Milla Travel could offer.

On the airline side, despite the financial difficulties, coronavirus could force carriers to embrace new ways of working.

“We’ve been talking a lot with LATAM (airlines)…We’re updated on what’s going on. It’s a terrible time, but companies also need new tools now, and better tools, to build their business travel. It will restart. We have to survive, and give the insights that this new corporate travel movement is happening,” San Martin said.

Milla Travel took part in an Air Tech Player Responses to Covid-19 webinar, alongside Amadeus, on July 9. Organized by the International Air Transport Association, the event series showcases technology players and their solutions that could help airlines address revenue protection, cost reduction, and market stimulation/rebound scenarios. During the webinar, San Martin highlighted how a 1 percent impact on corporate volumes impacts airline profitability by 10 percent.

Once the pandemic passes, San Martin hopes corporate travel will bounce back quickly as companies look to recover.

Her startup has secured funding from Planatus Ventures, and has a growing list of clients, including Fintual, Hackmetrix and Mudango. These technology-orientated companies represent ideal customers — startups that once traveling again could be spending around $1 million a year with Milla Travel.

From a content perspective, Milla Travel is taking the New Distribution Capability route where possible, and working with another startup, aggregator Duffel, to plug into several international airlines.

San Martin thinks airlines that do embrace New Distribution Capability have a big opportunity to “unlock their capabilities”, with the standard allowing for a better workflow with richer content and a better chance to sell more ancillaries. Upselling will be important as airlines look to claw back lost revenue, with Singapore Airlines one of the latest carriers to signal its intent.

Where that technology standard isn’t an option, it uses “direct partnership connections” with the airlines as a stop gap. That’s currently the case with LATAM.

Milla Travel has significantly evolved since its inception several months ago, with San Martin explaining that she’s now “embarrassed” by its original, rudimental platform.

“It was practically WhatsApp with a connection into online travel agency Despegar. That was it…It was a terrible minimum viable product, I’m pretty ashamed of it,” she said.

But now, for the corporate traveler, there’s expense reporting, online boarding passes for contactless travel through airports, advice on borders thanks to a tie-up with e-visa firm Sherpa, and — going back to its roots — 24-hour support on WhatsApp. “We’re creating a bridge between business travelers, travel managers and financial officers,” San Martin said.

The new company is targeting Latin America first, and will then look to other regions, as well as aim to secure seed funding. Going beyond borders means it will compete with the likes of Taptrip and TravelPerk, who similarly have the small and medium-sized market in their sights. But if it can make it through the harsh business environment of its home market, whatever comes next probably won’t seem that daunting.

Rapyd Launches All-In-One Payment In Mexico

Rapyd, the B2B financial technology-as-a-service company, launched an integrated payment solution in Mexico, allowing companies to access all local payment methods through one network, according to a recent news release.

In partnership with Mexican payment providers including Banregio, RedEfectiva, Cacao Paycard and others, Rapyd’s service will give businesses the ability to accept cash, bank transfers, and debit and credit cards through a single connection through its all-in-one platform, the company said.

With an annual online shopping growth rate near 30% and a business to consumer market worth nearly $23 billion, Mexico is a market ripe for massive online payment growth, according to J.P. Morgan Global Payment Trends.

Pymnts reports that just as in other countries dealing with the COVID-19 pandemic, Mexican consumers are quickly moving to digital payments or even cash transactions that are used in online payment scenarios. Rapyd said its platform makes digital and cash transactions more accessible to businesses and consumers.

“Mexico is one of Latin America’s high-growth markets. Our full-stack launch will contribute greatly to Mexico’s growing economy by helping local businesses digitize the acceptance of all payment methods in eCommerce marketplaces, digital platforms, gig economy, lending companies, neo-banks, and others,” said Rapyd Vice President Eric Rosenthal, in a statement.

Rapyd’s integrated payments network promises to provide the ability to quickly integrate complex local payment systems simultaneously, which typically can take months or years to integrate individually, the company said.

“Our platform also enables global businesses to accept every major local payment method through one, powerful and simple API integration, removing the complexities of fragmented payment infrastructures and allowing global companies to quickly service the growing Mexican market,” Rosenthal added.

The company said its all-in-one platform also allows these businesses to quickly expand into other high growth markets in Latin America, almost instantly. Rapyd supports more than 900 payment methods in more than 100 countries, the company said.

In December, Rapyd secured $20 million in funding, bringing its valuation to $1.2 billion. That round of funding came from new investment firm Durable Capital Partners. In October, it closed a $100 million Series C funding round, led by Oak HC/FT and joined by previous investor Stripe. Other investors included Tiger Global, Coatue, General Catalyst, Target Global and Entrée Capital.

Earlier this year, Rapyd partnered with Visa to help small and medium-sized businesses (SMBs) expand their FinTech and payment services. Rapyd also joined Visa’s program to issue its credit cards in the United Kingdom and expand its issuing and acquiring footprint across other regions.

Inside Facebook's Tussle with Brazil's Central Bank

Allowing millions of Brazilian users of Facebook’s (FB.O) WhatsApp to send money as easily as texts seemed a golden opportunity for the world’s largest social media company. The messaging service was finally entering the financial services arena with a payment service in Latin America’s largest economy, after years of questions over how Facebook would make money from it.

The June launch, years in the planning, was meant to be the pilot for a potential global rollout - but eight days after going live, the central bank pulled the plug on it.

The shock decision underscores the challenge for Facebook in trying to win over financial regulators and the complexities facing watchdogs in assessing the risks of letting tech giants, with their vast network of users, loose in their world.

In Brazil, it also raises questions about the communications around the launch. WhatsApp executives and central bank officials had held at least three meetings in the previous 21 months, including two in the week running up to the launch.

In the first time he has spoken in detail about the decision, Central Bank of Brazil President Roberto Campos Neto told Reuters the regulator had not determined how to deal with the proposed payment model - a new phenomenon in Brazil, which has no card money transfer service operated via an app.

“Prior to the launch, there was a meeting in which WhatsApp kind of explained its plan, but the central bank was taken by surprise with the launch on June 15,” he said in an interview.

The regulator - which said it never received a formal launch request - suspended the service, Facebook Pay, on June 23. Campos Neto and other officials said concerns centered on competition, data privacy - they have not provided details - and ongoing deliberations over whether WhatsApp required a license as a company offering or arranging payment services.

WhatsApp told Reuters it had answered central bank questions and provided the launch schedule during the final meetings.

“We spoke openly about our plans to bring WhatsApp payments to Brazil,” it said.

The company added it was deeply concerned about users’ privacy, financial details were stored on a secured network and it had data security contracts with all partners. WhatsApp said it did not want to become a financial services company. Financial institutions in Brazil are subject to capital reserve requirements and strict regulations.

As a way around this, and within existing rules, WhatsApp sought to use Visa Inc (V.N) and Mastercard Inc (MA.N), which already had central bank licenses, to carry out the money transfers.

“WhatsApp contacted us roughly two years ago to build a payments solution to bring convenience for their users and also because it did not want to become a financial institution,” Visa’s Brazil Chief Fernando Teles said.

‘IN A PHASE OF ADJUSTING’

WhatsApp said the service used payments networks from Visa and Mastercard, which are regulated companies in Brazil. However, Campos Neto said a money-transfer service provided by a tech platform had never existed in Brazil, the central bank had not yet decided whether WhatsApp itself needed a license.

“It’s worth remembering that big tech isn’t in the payments space in a big part of the world,” he told Reuters on July 8. “So we’re still in a phase of adjusting our regulations.”

It is not the first time Facebook appears to have misread the regulatory runes as it seeks to enter the data-rich world of finance. A year ago, it unveiled plans for the Libra cryptocurrency, only to be met with a backlash from central banks.

In Brazilian payments, the prize is large, with a burgeoning market that saw 1.8 trillion reais ($336.86 billion) in card transactions last year.

In the initial stages of its service, WhatsApp was also looking to make use of a provision in payments regulation allowing companies to start services without a license until they reached 500 million reais or 25 million transactions over a 12-month period, according to a source close to the company.

This, again, is within the rules. However the provision, Campos Neto said, was aimed at encouraging small businesses to enter the market as opposed to a big tech network like WhatsApp with 120 million Brazilian users.

“WhatsApp tried to take advantage of this rule, saying, ‘We’re going to start with very low volumes because once we’re in the system, it will be tough to take us out’,” he said, describing the company as using “this volume gimmick”.

The central bank changed this provision on June 23 to allow it to suspend companies covered by it. Three meetings were held between WhatsApp and the central bank about the payment service, according to public central bank records: in October 2018, plus this year on June 9 and 12 - with one of those final talks attended by Campos Neto and WhatsApp Chief Operating Officer Matthew Idema.

WhatsApp said it also presented the central bank with its partnership model in 2019, although Reuters could not independently verify that meeting and the central bank declined to comment on meetings or dates.

Visa and Mastercard told Reuters they did not notify the central bank they planned to perform transfers for WhatsApp because they thought they already had the required licenses.

“There was no specific rule about messaging services in payments in Brazil, so we did it (the partnership) complying with existing rules,” said João Pedro Paro, President of Mastercard for Latin America Southern Cone.

Mercado Pago Launches POS Terminal, Point Plus for SMEs

On Tuesday (July 14), Mercado Libre’s fintech arm, Mercado Pago, presented “Point Plus” a payment terminal for businesses.

According to Contxto, the device has all the features you’d find on a typical terminal, including receipt printing and a reader that accepts all credit and debit cards. “Point Plus” also completes payments via QR code and includes a 3G data plan. The updated model differs from its predecessor “Point” as well as other fintechs’ solutions, as it does not require a vendor to have a smartphone at hand to operate it, just the terminal. It will initially cost ARS$3,299 (~US$46).

The company explained that vendors who use the device for over three months become eligible for a loan.

On Wednesday (July 15), the company also announced a partnership with ShipStation, a developer of shipping software, from the United States. Vendors on ShipStation will benefit from “scaling and soft-landing into the Latin American market” via Mercado Libre, according to Contxto.

“This partnership will give merchants on the ShipStation platform quick and seamless access to one of the world’s fastest-growing e-commerce regions,” said Krish Iyer Head of Industry Relations at ShipStation.

Covid-19 Is Killing Oil Workers at an Unparalleled Pace in Mexico

Of all the companies affected by Covid-19 around the world, none have encountered a death toll worse than Pemex, Mexico’s state-owned oil producer.

Petroleos Mexicanos, as it’s also known, said late Tuesday that 202 employees and five contractors have died of the disease thus far. No other company has reported fatalities that come anywhere near that number, according to data reviewed by Bloomberg.

The closest comparison may be New York’s Metropolitan Transport Authority, which has lost at least 131 workers. Pemex’s toll also exceeds the 132 recorded by the entire U.S. meat and poultry industry as of July 14, which has four times the workforce and has suffered deadly outbreaks at processing plants.

Indeed, possibly the only institution with a confirmed toll higher than Pemex’s may be the U.K.’s National Health Service, which isn’t a company so much as a collection of health-care systems employing over 1 million people, many of whom have been on the front line of the battle against the virus.

It’s not clear why Pemex’s tally is so high, but social distancing is difficult on offshore oil platforms, and the company may initially have been slow to enact protective measures such as sending workers home, according to Silvia Ramos Luna, the general secretary of the National Union of Petroleum Technicians and Professionals. Many of the company’s workers have pre-existing health conditions such as diabetes and hypertension, which may have contributed to the problem, she explained in an interview.

According to Bloomberg,

“The company previously said it has taken measures including sanitizing work spaces and evacuating some workers from offshore platforms. It has adopted stricter safety protocols, such as temperature checks and rapid diagnostic testing, that Ramos Luna’s union had requested, and the rate of deaths appears to be declining as a result, the general secretary said in an interview.”

Shutting platforms and refineries isn’t practical because Mexico needs the gasoline and diesel, she added.

Corporate disclosures on virus infections and fatalities are patchy at best and prevent reliable international comparisons. Pemex stands out for being unusually transparent, while most of its oil and gas peers don’t report detailed Covid-19 numbers.

But the company’s high death count raises inevitable questions about conditions for a workforce that totaled 125,735 at the end of 2019. Pemex is a major operator of offshore platforms, which typically house hundreds of employees in shared sleeping quarters and crowded dining halls.

“The biggest problems have been on the platforms, for obvious reasons,” said Ramos Luna, whose organization has about 2,500 members and competes with the official Pemex union.

The deaths at Pemex are contributing to a rapidly worsening outbreak in Mexico. Data released Sunday show the country surpassed Italy in the number of COVID-19 fatalities and has the world’s fourth-highest total. As many as 683 health workers had died due to the coronavirus pandemic as of June 28, according to data from Mexico’s Ministry of Health.

Pemex’s high death toll is “not like a normal metric that you look at when you evaluate either the credit or the equity value of a company, but it’s horrible,” said Wilbur Matthews, founder of Vaquero Global Investment LP, which trades in Pemex bonds.

Even before the pandemic hit, the company was no model for health and safety. Pemex reported 10 worker deaths last year, five times as many as Petrobras, even though the Brazilian state-run oil company has half the number of employees. At least eight patients died at a Pemex hospital after receiving contaminated heparin during hemodialysis treatments, the company said in March. Pemex operates a vast network of medical facilities including 21 hospitals that serve workers, their relatives and retirees.

It has issued COVID-19 tests for less than 1% of a population of about 750,000 people in its health-care system. There were 4,119 positive tests as of Tuesday.

Some observers have applauded Pemex for its transparency when it comes to COVID-19 data. Pemex publishes the number of coronavirus cases and deaths on a daily basis, whereas companies including U.S. and European oil majors like Exxon Mobil Corp. and Royal Dutch Shell Plc don’t.

“It’s really good that they actually do release this kind of data,” said Duncan Wood, director of the Woodrow Wilson Center’s Mexico Institute in Washington D.C. Though current and former Pemex employees and their families may have better access to COVID-19 tests than the general population, “even in a privileged health-care system like Pemex’s, they’re still only testing a tiny percentage of the overall population,” he  said.

Industries such as mining, meat processing and oil production, which are often considered essential work, may be more vulnerable to COVID-19 outbreaks because of difficulties in making social distancing work. Of 4,134 employees tested at a JBS SA pork plant in Brazil starting in late May, 1,075 were positive through July 1, according to figures from an independent  public prosecutor’s office. Almost all recovered, and only 20 were off work due to COVID-19 as of early July, the prosecutor said.

The virus outbreak is intensifying in Mexico, where President Andres Manuel Lopez Obrador has prioritized reactivating the economy over enforcing strict lockdowns, a strategy that has drawn criticism.

Like other Latin American countries, Mexico has a high proportion of vulnerable people who must work to meet their basic needs and who live in crowded quarters, adding to the challenge of enforcing social distancing. Mexico has the second-lowest hospital bed count per inhabitant of any country in the Organization for Economic Co-Operation and Development, just after India.

Lopez Obrador’s home state of Tabasco, which contains the bulk of Mexico’s onshore crude production and is a transit hub for oil platform workers, has the second-highest rate of confirmed COVID-19 cases per 100,000 inhabitants, just behind the capital Mexico City, according to government data.

“For Pemex workers, it matters if people are going out to the rigs or working in close proximity at oil fields onshore,” said the Woodrow Wilson Center’s Wood. “Then you really do have to take some preventative measures.”

How Social Impact Start-ups Are Solving Brazil’s COVID-19 Challenges

The persistent problem of inequality in Latin America leaves citizens more vulnerable to the coronavirus. Innovative platforms move towards balancing the scales. In the current crisis, Brazil is unfortunately the country with the second highest number of cases, surpassing one million COVID-19 positive tests by mid-June. A month later, more than 70,000 lives have been lost.

According to Insead, more than 40 percent of Brazil’s employment is part of the informal workforce, which translates into poorer access to social security benefits, public health and established credit, according to the World Bank. Naturally, the pandemic has weakened already fragile connections. There is a cascading effect: The poor social security system undermines the informal workers’ ability to comply with social isolation measures since they need to go out to work and provide for their families.

About 80 percent of Brazil’s poorest classes lack the cash reserves to face a month without income. Precarity hinders those actions designed to contain the spread of the coronavirus. Overcrowded housing without basic sanitation makes it nigh impossible to implement simple recommendations, like hand washing. In Brazil, 48 percent of the population do not have access to a sewage collection system, and there are 35 million people without access to clean water. Thus, in the context of COVID-19, inequality represents just as significant a risk factor as age or certain chronic illnesses like diabetes.

To meet these urgent health, infrastructure and education needs, Brazil’s start-up community, with its platforms and technologies, can help informal workers’ access. Our ongoing research into leapfrogging potential and the United Nations Sustainable Development Goals (SDGs) examines how start-ups can address Brazil’s socio-environmental problems.

Leapfrogging and Social Impact

Leapfrogging – that children’s game where one pushes off the shoulders of another to move further ahead – is different in this context. It’s a way for developing nations to skip steps since the infrastructure that developed nations used to succeed is no longer necessary in the digital age. Developing countries can leverage new technologies to fuel their growth.

Insead’s study of 157 start-ups found that their proposed solutions predominantly featured five SDGs (Figure 1). To reduce inequalities (SDG10), the start-ups focused on health (SDG3), quality education (SDG4) and access to economic growth (SDG8).

Professor Monteiro’s case study, “Digital Transformation in Latin America: Leapfrogging and Social Impact”, has several examples of how digital transformation has enabled disruptive education technology (edtech), fintech and healthcare technology to address socio-environmental problems in Latin America.

Edtech

By integrating technology to widen the audience and improve quality, online education skips traditional classroom methods used in the developed world. Edtech offers solutions to the region’s challenges in education and also gains global recognition. It boasts the potential to reach people in remote areas without resources like schools and teachers at all stages of education.

One example is Agenda Edu. A social impact venture, the multiplatform for communication management and engagement works as a link uniting schools, students and guardians. The start-up is among the top 100 most innovative edtechs from Latin America.

During the pandemic, Agenda Edu supported Brazilian schools and educators in maintaining the connection with students and families to provide continuity in the educational journey. Google searches for the start-up increased 266 percent over the period. The start-up co-founded the “movement for digital education”, offering free solutions to both public and private schools. It has also organised online events to help educators and families adjust to the new reality. It promotes the use of technology in education as a way to reduce social exclusion. In the post-pandemic scenario, it is necessary to rethink the direction of education.

Fintech

Fintech, in this case, is a facilitator of financial inclusion and a tool in the fight against poverty. Because the informal sector uses cash in daily transactions, it’s a vector of contamination in pandemic times. Those with limited access to financial services – the underbanked – rely on cash or cheques, leaving them vulnerable to theft and fraud. For example, banks charge high fees for cash deposits, cashing checks, money orders and transfers. Fintech, on the other hand, offers the underbanked a ticket to financial inclusion and access to financial tools and services at a reasonable cost.

One of the fintechs created to reduce poverty is Brazilian-based peer-to-peer lender IOUU. Its mission is to revolutionise and reinvent the lending industry by connecting small businesses with investors. Nano-entrepreneurs, micro-entrepreneurs and SMEs need the low-interest, fast loans available on the platform. Loan interest rates are up to eight times less than in the traditional banks. Investors benefit from a higher return than in the established market.

Faced with the challenges of COVID-19, IOUU launched a new campaign, offering more favourable conditions for small entrepreneurs in search of funding. The platform also allowed small businesses to complete customer transactions, thus strengthening local consumption and industry.

eHealth

Health has always been among the most significant challenges in Brazil. eHealth start-ups contribute to the creation of sustainable health systems. Faced with the shortcomings of traditional health care in providing access and quality, especially to the most impoverished, the social impact start-up Dr. Consulta was launched in 2011.

Originally, the platform offered high quality primary healthcare services via a network of medical centres in low-income neighbourhoods. It has switched to telemedicine in the pandemic.

The need for social impact businesses

The Brazilian public sector has lent support during the crisis. It has reinforced the Bolsa Família (a social protection network capable of reaching the poorest), relaxed labour laws to maintain jobs and provided emergency aid to informal workers and SMEs. But social impact start-ups, with their agility, are essential to confront the effects of COVID-19 on vulnerable populations. Their post-pandemic role certainly remains fundamental in terms of recovery, resumption of economic activity and new path creation.

Brazil’s growing trend of investment in impact business was US$131 million between 2016 and 2017. However, entrepreneurs still face challenges in securing funds and resources. The pandemic is a wake-up call that gives us the opportunity to reflect on the type of business that we want.

It’s up to us to heed the warning from UN Secretary-General António Guterres, “We can go back to the world as it was before or deal decisively with those issues that make us all unnecessarily vulnerable to crises.”

Contest Encourages Entrepreneurs to Build Back Better in Latin America

Dozens of eco-conscious young entrepreneurs from across Colombia, Costa Rica and Mexico have entered a United Nations Environment Programme (UNEP) contest designed to help them supercharge their ideas.

The budding founders (all university students) are part of the Innovation for Sustainable Lifestyles competition. The initiative will help 25 short-listed candidates develop their planet-friendly business ideas over the next two months, before judges select three winners—one from each country—to enter a startup bootcamp and meet potential investors.

The UN Environment Programme reports that the competition is designed to spur the development of startups that specialize in areas like clean transportation, green buildings and food. It also seeks to support economic recovery from COVID-19, encouraging young entrepreneurs to develop business models that will help their communities build back better.

“Our lifestyles have to do with what we eat, what we buy, how we transport ourselves, where we live and even what we do in our free time,” says Adriana Zacarías, UNEP regional coordinator of Resource Efficiency in Latin America and the Caribbean (LAC). “We need innovative ideas and solutions from young people on how to reduce the environmental impact of our lifestyles, as we build more circular and resilient economies, with more green jobs for the next generations,” Adriana Zacarías added.

About 160 million people between the ages of 15 and 29 live in Latin America and the Caribbean. The region suffers from high unemployment rates, informality and inactivity, problems that could worsen due to the economic contraction associated with the novel coronavirus.

COVID-19 has exposed the weaknesses of the region’s economies, deepening existing inequalities, according to a UN policy brief on the pandemic’s impact on Latin America and the Caribbean. In a region with already gaping inequalities and fragmented health services, vulnerable individuals are once again being hit the hardest, finds the report, encouraging policy-makers and citizens to rethink how to make the region’s economy more sustainable.

To drive lasting change, consumers need better access to clean, low-carbon alternatives as well as a market share increase of sustainable solutions, says Zacarías.

Winners will participate in a virtual bootcamp in October, where eco-innovation industry experts will help them bring their business plans to life. The bootcamp will be organized by the Entrepreneurship Center of the Universidad de los Andes, in Colombia. Each winner will also receive US $3,000 in technical assistance and the opportunity to present their projects to funders and business leaders, who could become future financiers and partners.

The contest is part of the European Commission financed Promoting Sustainable Consumption in Latin America and the Caribbean (ICSAL) project, which works with governments, companies and stakeholders to implement policies that increase sustainability in product design and consumer information. It also supports the Environmental Alliance of America, a regional initiative to develop a common eco-labeling program in Latin America and the Caribbean. Colombia, Costa Rica, Ecuador, México and Paraguay are part of the alliance.

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