Giancarlo Canzanelli provides an overview of the LEDA Morazán and its achievements over its two decades of operation

When the civil war in El Salvador ended there was a need to strengthen the peace agreements, so in 1993, as part of the framework of a United Nations Programme for Human Development (PRODERE), a Local Economic Development Agency (LEDA) was instituted by the Department of Morazán in the Municipality of San Francisco Gotera. Started through a wide participatory approach, the LEDA has had a significant impact on territorial development from the occupational, social, technological and economic points of view.

In the past ten years, in cooperation with 25 national and international organizations, the LEDA has executed more than 63 projects, with a total budget of $10m, generating more than 2,000 new jobs, 250 micro and small business and supporting the growth of 2,200 existing enterprises. Partners include IADB, EU, UN WOMEN, UNOPS, UNDP, OXFAM-ONEDROP, Ministry of Economy, FOMILENIO Technical Secretariat of External Financing (SETEFE), among others.

Agricultural development has been at the top of the LEDA's agenda since its inception. Noticeably, the LEDA created and incubated an agro-industry company that included over 200 small dairy producers, which were suffering from the competition posed by bigger corporations. The LEDA's intervention contributed to the long-term strengthening of the smaller collective.

Social innovation is high in the priority ranking of LEDA Morazán as it is constantly involved in supporting the underprivileged segments of the local population, through ad-hoc projects and the continued delivery of its targeted services. It has recently finalised an interesting project aimed at giving placement opportunities to disadvantaged women and young people (‘Incorporating women and young people in the social-economic contest in eight Municipalities of Morazán’). Besides this, another project (‘Capacity building programme to improve employment and self-employment opportunities for women’) aimed at supporting the development of entrepreneurial skills in women from the age of 18 onwards was also successfully implemented by the LEDA. Another project, (‘PILAS - Sustainable Employment and Self-employment Plan’), was aimed at supporting the access of the unemployed to the labour market, either as employees or entrepreneurs. Organisationally the LEDA is structured to maintain the validity of its participatory mechanism, with a General Assembly composed of eleven organisations (including municipal associations, NGOs and cooperatives) and four individuals representing the social and economic fabric of the province. The organisation's structure includes the General Assembly, a Management Board and a Technical Unit. A Board of directors acts as an executive committee. The Technical Unit, with three departments (Territorial Development, Business Services and Institutional Building), handles the implementation of the activities, and each programme has its own coordinator, technical and administrative staff.  

What’s in it for Salvadoran entrepreneurs?

Small producers and micro-enterprises are supported through a project developed in cooperation with the EU and EURADA (The European Association of Regional Development Agencies) aimed at providing a holistic support mechanism in the sectors of coffee, sisal, livestock, beekeeping, vegetables, tourism and handicrafts.

Young graduate would-be entrepreneurs are also supported through the ‘Programme for young entrepreneurs’ where service delivery mechanisms have been put in place with the aim of supporting them in realising their entrepreneurial projects. In addition, LEDA Morazán also manages a Development Centre for Micro and Small Enterprises that provides business assistance, ITC assistance, capacity building, technical assistance, and networking. It includes the SCWE (Service Centre for Women Entrepreneurship), that provides technical and financial services to bolster women's business initiatives.

In 2000, the LEDA Morazán, had a surplus to invest in the development of the territory, and decided to gradually close the credit programme and to create the micro-financial institution AMC, which now contributes towards 60 percent of the sustainability of the LEDA itself. It was able to involve 20 national and international founding partners in the project, and now AMC can boasts 160 employees and 17 branches around the country. AMC also manages a loan portfolio of $19m with 15,000 customers, 63 percent of which are women.

In 2005, LEDA Morazán created the AMC-Honduras, partnering with the LEDA Valle of Honduras, which currently employs 30 people, has a portfolio of $3.5m, 3,000 customers and five business support centres. Over the last two years, LEDA Morazán also supported the creation of AMC-Nicaragua.

The social side

LEDA Morazán devotes part of its income to social initiatives. Training and capacity building are areas where it is significantly active. Through its initiatives, the LEDA was able to provide scholarships to 203 local students and has trained 6,400 persons (of which 2,400 were women); social and environmental projects have also been carried out by the LEDA, benefiting over 4,000 people, creating cooperatives with 1,200 producers, and engaging 1,500 farmers in the Agricultural Permanent Forum. The organisation has also implemented new advanced services, such as Geographic Information System (GIS) used by the departmental, municipal and national institutions for their planning exercises.

These outstanding results allow LEDA Morazán to wield a strong political influence in the department, promoting and participating in strategic initiatives for local development, with the clear objective of fostering local dialogue among the actors within the ecosystem. It is in this framework that the LEDA supported the development of the ‘System of Actors for Development’ (SAD). This is a publicprivate partnership reuniting the Departmental Council of Mayors (comprising the 26 Municipalities of the Morazán Department), the Cabinet Department, (with representatives of Ministries in the Department of Morazán), and the Morazán Citizens Coalition (which brings together over 30 civil society organisations and representatives of cooperatives). The LEDA has also fostered the creation of the National Institute of Science and Applied Technology (University of El Salvador, INCTAUES) in Morazán, and facilitated its initial operations.

Leading change

At the national level, LEDA Morazán is having a significant impact, as a Government partner, to implement programmes for micro and small enterprises in the territory of Morazán, through the Centre for development of micro and small enterprises. It is also the owner and director of the National Commission of Micro and Small Business, representing the Civil Society Organisations in the country. LEDA Morazán assists the Government and UNDP to adopt the LEDA model in all the five departments included in the strategy for the country's coastal marine area.

The human factor

The experience of this LEDA shows that you cannot plan an incubation process without putting in place the proper human resources. The results obtained by LEDA Morazán are indeed mainly due to the excellent work of their leaders, who are technically capable and truly committed to the development of the Department. LEDA Morazán has won its well-deserved reputation by engaging well-trained and experienced technical, administrative and managerial staff. This has allowed the institution to achieve financial sustainability, while maintaining stable governance procedures, enabling the acceptance of the LEDA. This is all facilitated, of course, by its activated and participatory approach. Keen technical skills, coupled with transparent management processes, have helped navigate muddy political waters, while adhering to the main goal - which is to respond to the needs and demands of micro-entrepreneurs and producers of the territory.

The LEDA of Morazán is part of the ILS LEDA (International Institute for Links and Services for Local Economic Development Agencies) which gathers more than 60 similar LEDAs from around the world. Last year it was awarded with the ILS LEDA ‘Sunflower’ quality label - a significant achievement.

The Overview

In conversation with Alejandro Benitez, Director of LEDA Morazán (El Salvador)

LEDA Morazán is one of the most successful LEDAs in the world. In your opinion, what are its success factors?

Firstly, LEDA Morazán was born out of a very particular context, right after the 1992 peace agreement. The LEDA was a tool to consolidate peace in the department, since it joined local actors coming from both fronts, looking for a shared solution for development. This agreement has worked and the LEDA attracted national and international attention and resources. Secondly, the LEDA has always had a very clear vision of its role in departmental development, of the needs of producers and entrepreneurs, and has always sought appropriate solutions for them, while working to strengthen municipalities and to attend disadvantaged people, particularly youth and women. This produced wide visibility and institutional and social consensus. Lastly, the board has always worked jointly and managed to find high-quality human resources. This has increased the technical capacity of the LEDA and its ability to execute.

What results do you consider to be the most satisfactory in the history of LEDA Morazán?

Several factors have contributed to this. Its selfsustainability, thanks to a rational use of resources and the creation of its own financial institution, the AMC which provides access to micro-credit to 15,000 micro and small businesses and entrepreneurs across the country. We must consider international acknowledgement, not only for being awarded by international organizations (BMI, IDB, ILS LEDA), but also for the presence of AMC in Honduras, Nicaragua and the US. The execution of the agreement with the Ministry of Economy to implement the ‘Centre for Development of Micro and Small Enterprises’ in the department of Morazán, in order to provide capacity building, technical assistance and linkages between small companies and business services was a notable achievement. We are proud that the LEDA is providing assistance to the Ministry of Economy and the United Nations Development Programme (UNDP) to establish new LEDAs in the country. A large number of companies have been supported and established during the past 20 years. During this period we have supported more than four thousand micro and small enterprises and two thousand farmers in the department of Morazán. Crucially, the organisation is influencing policies and development strategies at national and departmental levels. It is already part of the system for the development of Morazán department, and is a member of the Board of Education department. At the national level it sits on the board of the National Commission of Micro and Small Enterprises.

What important innovations has LEDA Morazán introduced in its department?

In the Department of Morazán, innovative instruments to improve productivity and economic competitiveness were needed more than technological innovations. A big innovation was in the financial sector: before the AMC was established, where micro and small producers had no access to credit. Then we helped producers in value chains work; value chains have been created in the field of bee-keeping, livestock and coffee, the geographic information system has been created, and the producers have been connected to the formal market.