Economic Demographics
Republic of Guatemala
- Population (est): 18,065,725 people
- GDP: In 2020, GDP for Guatemala was US $77.07 billion. GDP of Guatemala increased from US $19.74 billion in 2001 to US $77.07 billion in 2020 growing at an average annual rate of 7.55%.
- GDP per capita: US $4,289
- GDP Composition:
- Services 64.2%
- Industry 16.2%
- Agriculture 10.8%
- Construction 4.5%
- Public Sector 4.4%
According to the World Bank, low central government revenues (11 % of GDP on average in recent years and an estimated 9.7 % in 2019) limit capacities for public investments and restrict both the quality and coverage of basic public services, from education and health to access to water.
Market Overview
The Ministry of Public Health and Social Assistance (MSPAS) is the governing body for the regulation and quality control of water for human consumption in the country. It has the responsibility of strengthening the improvement in access to water services for human consumption and sanitation, along with its quality. According to what is established by the Municipal Code and the Health Code, the municipalities have the competence to provide these services.
Water and Wastewater
In Guatemala, a safe and clean water supply is challenged by high demand, reduced flows, lack of urban regulatory plans or watershed management and hydraulic infrastructure. Pollution in the country’s water basins is as high as 90%, due to the discharge of wastewater for domestic, industrial, and agro-industrial use without prior treatment, which hinders the subsequent use of this resource. Only 5% of the discharged waters are treated, and due to the dilution effect, all the waters that receive untreated discharges are contaminated. The volume of contaminated water that is discharged to the basins comes 40% from households, 40% from agricultural activities, 13% from industrial activities and 7% from agribusiness.
There are many challenges that the country must face to avoid the depletion of water sources so that the entire population has access to a continuous supply of quality water and adequate services for the disposal of sewage and solid waste. These areas for improvement also represent potential for U.S. companies seeking investment and commercial opportunities.
Municipalities are the main developers of water and sanitation projects, with 68% of total investments in the sector, followed by state institutions such as INFOM (Municipal Development Institute) and some authorities for watershed management, as well as some associations and private foundations.
Government of Guatemala created the Regulation for Discharges and Reuse of Wastewater and Disposal of Sludge, which seeks the implementation of water treatment in 340 municipalities. All communities are required to install treatment plants, including generating pre-feasibility and environmental impact studies. In 2017, there were 84 treatment plants in rural areas, representing 44% of the total in the country. By 2019, the number of plants installed in Guatemala had risen to 500, but another 1,500 are still needed to reach the figure mandated by the Ministry of Environment and Natural Resources at an expected $750 million cost of construction.
The rapid expansion and economic development of Guatemala City metropolitan region led to the creation of the Mancomunidad Gran Ciudad del Sur, which is made up of the municipalities of Guatemala City, Amatitlán, Mixco, San Miguel Petapa, Santa Catarina Pinula, Villa Canales and Villa Nueva. Each share the Lake Amatitlán basin. Demand for water treatment is impacted by three million inhabitants and industry, which discharges wastewater into the rivers that flow into the Villalobos River, which then flows into Lake Amatitlán.
Seven municipal councils that make up the Mancomunidad Gran Ciudad del Sur have drawn up proposals for the formulation of a master plan for the collection and treatment of wastewater. This plan seeks to build a network of mega collectors of sewage generated by the population of this region. These waters would be diverted to treatment plants before being discharged into the Lake Amatitlán basin.
The project will be financed through an international development bank, with a guarantee by the Government of Guatemala and would help address the environmental challenge of more than three million people living in the Guatemala City metropolitan region. In addition, it would reduce contamination of Lake Amatitlán, the only freshwater reservoir in the region and a reservoir for the generation of electricity. The total investment required for the project is estimated at $137.5 million, with an implementation period of six years.
In Guatemala there is no local manufacturing of equipment for the purification or treatment of water. Local production is limited to pipes for the conduction of water and fluids, so all technologies found in the market are imported. Also, equipment for flow measurement or control and liquid counting equipment also are imported into Guatemala.
Solid Waste
According to the World Bank, each Guatemalan generates an average of 0.47 kg of solid waste daily. If there are approximately 18 million Guatemalans, a total of approximately 8,460 tons of solid waste is generated per day, which implies that annually Guatemala produces 3,087,900 tons of garbage. This garbage goes to authorized municipal landfills, most of which do not have any infrastructure, to clandestine garbage dumps and bodies of water. According to the What a Waste 2.0 Report, it is expected that by 2050, the current figures will have increased by 70%.
Also, the Latin American region is the one that recycles the least in the world – on average only 4.5% of its garbage. In Guatemala, the work of recycling falls to the informal sector. The “guajeros” or garbage collectors are in charge of separating the garbage and taking the waste to recycling plants to obtain additional income.
As in the water and wastewater sector, the municipalities are the main developers of solid waste projects. In August 2021, the Ministry of Environment and Natural Resources published the Regulation 164-2021 that seeks to establish sanitary and environmental standards that must be applied to manage waste and solid waste and avoid environmental contamination.
The situation in which the sector finds itself highlights the great challenges that Guatemala is facing in order to reach the desirable levels of waste management At the same time, it translates into a source of opportunities for companies looking to invest in the sector.
Markey Entry
Doing Business in Guatemala
The United States and Guatemala enjoy a growing trade relationship, which became even stronger after implementation of the U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR). As of January 1, 2015, most U.S. consumer and industrial goods enter CAFTA-DR countries duty free (for goods that meet the country-of-origin requirements). The United States is Guatemala’s largest trading partner accounting for nearly 40 % of Guatemala’s trade.
Market Entry Strategy
Companies should consider their own resources, previous export or business experience abroad, and long-term business strategy before entering the Guatemalan market. U.S. products and services enjoy an excellent reputation in Guatemala. One of the most common market entry options is finding a local agent or distributor. State and municipal utilities often subcontract private Guatemalan firms to perform specific projects, which often requires international technology. Other approaches include licensing, franchising, and identifying local partners for market knowledge and contacts.
These public sector opportunities are published as tenders on the government procurement website, http://www.guatecompras.gt/. It is advisable to any foreign company interested in engaging into a commercial relationship with an official or governmental entity to be associated with a local market participant. Foreign companies can participate in any government procurement modality without a local business associate but must show that the company has provisionally registered with the Mercantile Registry. If the foreign company is awarded a public contract, it must demonstrate that it is properly registered to operate in the country through an authorized entity or subsidiary.
Industry Contacts
Ministry of Environment and Natural Resources -MARN
www.marn.gob.gt
Municipality of Guatemala
http://www.muniguate.com/
Association of Municipalities of Guatemala -ANAM-
http://site.anam.org.gt/
Union of Recyclers Chamber of Industry
https://cig.industriaguate.com/institucional/gremiales/gremial-de-recicladores/
FuncAgua por la Vida
https://funcagua.org.gt/
Municipal Development Institute -INFOM-
https://www.infom.gob.gt/
Authority for the Sustainable Management of the Amatitlán Basin and Lake (AMSA)
http://www.amsa.gob.gt/
Authority for the Sustainable Management of the Lake Atitlán Basin and its Environment (AMSCLAE)
http://www.amsclae.gob.gt/
National Council of Protected Areas -CONAP-
http://www.conap.gob.gt/
National Institute of Forests -INAB-
http://www.inab.gob.gt/
Events
Congreso Nacional de Cambio Climático (not a trade event)
Sistema Guatemalteco de Ciencias del Cambio Climático
https://sgccc.org.gt/congreso/
Contact Us
Please contact Antonio Prieto, Senior Commercial Specialist – U.S. Commercial Service in Guatemala – Email Antonia Prieto for more information.
Antonio Prieto is a Senior Commercial Specialist at the U.S. Commercial Service in Guatemala since March 2009, covering, on a country-wide basis, the Safety & Security, Construction, Health, and other sectors. Currently, Antonio is covering the Environmental Sector.
Antonio is a graduate of the Rafael Landivar University of Guatemala and specializes in International Business.
