Guatemala City

Guatemala COUNTRY

3,700,000 CITY POPULATION

Municipality GOVERNMENT TYPE

Introduction

Guatemala City, locally known as Guatemala or Guate, officially Nueva Guatemala de la Asunción (New Guatemala of the Assumption), is the capital and largest city of Guatemala, and the most populous urban area in Central America. The city is located in the south-central part of the country, nestled in a mountain valley called Valle de la Ermita (English: Hermitage Valley). It is estimated that its population is about 1 million. Guatemala City is also the capital of the Municipality of Guatemala and of the Guatemalan Department. Lying in a valley of the central highlands at an elevation of 4,897 feet (1,493 metres) above sea level, it has a temperate and invigorating mountain climate.

Guatemala City is the site of the Mayan city of Kaminaljuyu, founded around 1500 BC. Following the Spanish conquest, a new town was established, and in 1776 it was made capital of the Kingdom of Guatemala. In 1821, Guatemala City was the scene of the declaration of independence of Central America from Spain, after which it became the capital of the newly established United Provinces of Central America (later the Federal Republic of Central America). In 1847, Guatemala declared itself an independent republic, with Guatemala City as its capital. The city was almost completely destroyed by the 1917–18 earthquakes. Reconstructions following the earthquakes have resulted in a more modern architectural landscape.Today, Guatemala City is the political, cultural, and economic center of Guatemala. It is served by La Aurora International Airport.

Data and Facts

Guatemala City was the site for a Guinness World Record on April 2, 2015 for the longest sawdust carpet measuring 1.45 miles (2.329 kilometers)
The most highly populated city in Central America, Guatemala City is home to 2.4 million residents living within an area measuring 150 square miles (388 square kilometers)
Due to the unique geography of the area, there is a pronounced risk of sinkholes. These holes are normally caused by underground rivers which erode the bedrock on which cities are built.
Guatemala City is located 4,900 ft above sea level.Guatemalans living in Guatemala City enjoy a tropical savanna climate with little temperature variation – the average temperature ranges from 22°C to 28°C throughout the year
Guatemala welcomed 1,455,000 tourists into the country in 2014, many of whom visited Guatemala City for its rich culture, great coffee and high concentration of fine restaurants

Administration

In addition to the government offices and services concentrated there, Guatemala City handles nearly half of the capital invested in the country and accounts for more than half of the industrial establishments and production of the republic. It is the focus of highway, rail, and air transport and is the commercial and banking centre of the country.

Guatemala is a constitutional democratic republic whereby the President of Guatemala is both head of state and head of government, and of a multi-party system. Executive power is exercised by the government. Legislative power is vested in both the government and the Congress of the Republic. The judiciary is independent of the executive and the legislature.

On 2 September 2015, Otto Pérez Molina resigned as President of Guatemala due to a corruption scandal and was replaced by Alejandro Maldonado until January 2016.

Congress appointed former Universidad de San Carlos President Alfonso Fuentes Soria as the new vice president to replace Maldonado.Jimmy Morales assumed office on 14 January 2016.Guatemala has long claimed all or part of the territory of neighboring Belize. Due to this territorial dispute, Guatemala did not recognize Belize's independence until 6 September 1991, but the dispute is not resolved. Negotiations are currently under way under the auspices of the Organization of American States to conclude it.Guatemala is divided into 22 departments (Spanish: departamentos) and sub-divided into about 335 municipalities. In 2008, Guatemala became the first country to officially recognize femicide, the murder of a female because of her gender, as a crime. Guatemala has the third-highest femicide rate in the world, after El Salvador and Jamaica, with around 9.1 murders for every 100,000 women from 2007 to 2012.

Economy

Guatemala City, as the capital, is home to Guatemala's central bank, from which Guatemala's monetary and fiscal policies are formulated and promulgated. Guatemala City is also headquarters to numerous regional private banks, among them CitiBank, Banco Agromercantil, Banco Promerica, Banco Industrial, Banco GyT Continental, Banco de Antigua, Banco Reformador, Banrural, Grupo Financiero de Occidente, BAC Credomatic, and Banco Internacional. By far the richest and most powerful regional economy within Guatemala, Guatemala City is the largest market for goods and services, which provides the greatest number of investment opportunities for public and private investors in all of Guatemala. Financing for these investments is provided by the regional private banks, as well as by foreign direct and capital investment, mostly from the United States. Guatemala City's ample consumer base and sophisticated service sector is represented by the large department store chains present in the city, among them Siman, Hiper Paiz & Paiz , Price Smart, ClubCo, Cemaco, Sears and Office Depot.

Guatemala is the largest economy in Central America, with a GDP per capita of US$5,200. The CIA World Fact Book considers 54.0% of the population of Guatemala to be living in poverty in 2009.In 2010, the Guatemalan economy grew by 3%, recovering gradually from the 2009 crisis, as a result of the falling demands from the United States and others Central American markets and the slowdown in foreign investment in the middle of the global recession.Remittances from Guatemalans living in United States now constitute the largest single source of foreign income . Some of Guatemala's main exports are fruits, vegetables, flowers, handicrafts, cloths and others. In the face of a rising demand for biofuels, the country is growing and exporting an increasing amount of raw materials for biofuel production, especially sugar cane and palm oil. Critics say that this development leads to higher prices for staple foods like corn, a major ingredient in the Guatemalan diet. As a consequence of the subsidization of US American corn, Guatemala imports nearly half of its corn from the United States that is using 40 percent of its crop harvest for biofuel production. In 2014, the government was considering ways to legalize poppy and marijuana production, hoping to tax production and use tax revenues to fund drug prevention programs and other social projects.Gross Domestic Product in purchasing power parity in 2010 was estimated at US$70.15 billion. The agricultural sector accounts for about two-fifths of exports, and half of the labor force. Organic coffee, sugar, textiles, fresh vegetables, and bananas are the country's main exports. Inflation was 3.9% in 2010.

The 1996 peace accords that ended the decades-long civil war removed a major obstacle to foreign investment. Tourism has become an increasing source of revenue for Guatemala thanks to the new foreign investment.In March 2006, Guatemala's congress ratified the Dominican Republic – Central American Free Trade Agreement between several Central American nations and the United States.

Business Environment

Guatemala is poor and therefore open to great opportunities; the market is unreserved so you can find lots of opportunities to develop new and creative businesses. Don’t look for difficult problems. If you are an entrepreneur or a venture capitalist it is much better to seek the low-hanging opportunities in Guatemala. Guatemala is positioned geographically very strategically. We have access to two oceans with seaports on each and our time zone is EST, which puts us in a very strategic position for import/export and outsourcing. But our greatest resource is our people. Guatemalans are a talented, outgoing and hardworking peoples. Guatemala ranks first in mobile network coverage, according to a report by the World Economic Forum. Guatemala’s developers, programmers and entrepreneurs are creating amazing new businesses transcending our frontiers with innovative ideas… and we still have a lot coming.

Guatemala doesn’t rank well in the World Bank Doing Business Report. That said, I dare say that the costs of doing business in Guatemala City are manageable and well worth your troubles. Legal and fiscal matters are agile and easy compared to doing business in Europe, for example. I would say there is a strong business oriented culture in the country, however, the majority of people doing business now have either a small business or are self-employed. Also, a very large part of these businesses are part of the informal economy. This business-oriented culture has taught us that we have a lot of talented and resilient people and we can make things happen, but there has to be a transformation in the way Guatemalans perceive the value of entrepreneurship.

We still need to learn to see entrepreneurs with dignity and admiration. That is why over the last few years there have been a lot of entrepreneurial programs and initiatives creating and promoting entrepreneurship and focusing on transforming the way we see entrepreneurship, like heuristica.ufm.edu an entrepreneurial experience that brings together the best ideas with investors, Peoplefund.com a private investment fund backing extraordinary people building scalable businesses around the world, along with many others.

Infrastructure

Renovated and expanded, La Aurora International Airport lies to the south of the city center. La Aurora serves as Guatemala's principal air hub. Public transport is provided by buses and supplemented by a BRT system. The three main highways that bisect and serve Guatemala start in the city. Construction of freeways and underpasses by the municipal government, the implementation of reversible lanes during peak rush-hour traffic, as well as the establishment of the Department of Metropolitan Transit Police , has helped improve traffic flow in the city. Despite these municipal efforts, the Guatemala City metropolitan area still faces growing traffic congestion. A BRT system called Transmetro, consisting of special-purpose lanes for high-capacity buses, began operating in 2007, and aimed to improve traffic flow in the city through the implementation of an efficient mass transit system. The system consists of five lines. It is expected to be expanded around 10 lines, with some over-capacity expected lines being considered for Light Metro or Heavy Metro.

Traditional buses are now required to discharge passengers at transfer stations at the city's edge to board the Transmetro. This is being implemented as new Transmetro lines become established. In conjunction with the new mass transit implementation in the city, there is also a prepaid bus card system called Transurbano that is being implemented in the metro area to limit cash handling for the transportation system. A new fleet of buses tailored for this system has been purchased from a Brazilian firm. A light rail line known as Metro Riel is proposed.

Technology

There is no doubt that one of the primary catalysts of the Guatemala tech scene is a well-known multiplier effect. Few people are aware of it but Guatemala is the source of some great entrepreneurs success stories.The serial entrepreneur Matias Tezano founded hoteles.com, one of the first online reservation sites targeting Spanish speaking internet users and sold to Expedia in 2002 when he was only 22! Since then, Matias has been involved in over 20+ startups as founder and/or angel investor. In 2006, he created Peoplefund, a private equity company that invests in tech startups. Interestingly, Peoplefund invested in Bluekite and Kingo during the first days of their launch.BlueKite, a Guatemalan technology firm that facilitates cross-border bill payments and mobile phone top ups acquired in 2014 for USD 15 million by Xoom, which was itself acquired 2 years later by the giant Paypal. Today, the group has an office in Guatemala City with over 100 engineers.Kingo is a local startup founded by Juan Fermin Rodriguez in 2013 with the vision to provide low income communities with affordable and sustainable electricity. They developed a solar smart kit very simple and quick to install, and it works with technology such as Big Data, artificial intelligence and Blockchain. On April 26th, the startup received an investment from the Leonardo DiCaprio fund.We could not forget Duolingo, the world famous app that helps thousands of people worldwide learn languages through gamification; it was founded by the Guatemalteco Luis Von Ahn in 2011.These success stories can breed other successes and convince influential players to bet on tech entrepreneurship in the country.

One of the greatest advantages of Guatemala is its pool of talents. Guatemala has a high English speaking population, due to the fact many Guatemalan citizens migrated to the US . This makes for a great place to outsource services for countries like the US as it combines qualified English speaking workers with low salaries. Out of the 16 universities in the capital, a few are known for providing high-quality education in business administration and/or technology . Sadly, these universities are private, and therefore, access is unequal.

This year was the first time that we traveled to Guatemala. At the moment, we can only witness the talents rising in the region. The quality of applications we received was surprisingly high, and the top 3 winners were one of the best trios we saw this year at the regional level.

In March, Telefonica announced the launch of their program Open Future that aims to connect entrepreneurs with digital technology solutions, investors, private and public organizations in over 16 countries through a partnership with Multiverse. Claro has also been supporting different initiatives, including our pitching competition where Samsung and Huawei also partnered with us to make the event possible. Telco companies are often the first to participate in innovation, but others are joining as well. For example, in Guatemala, Unilever has recently partnered with Alterna, an accelerator for social entrepreneurs, to support them with efficient solutions that can improve the lives of the low income population. Finally, last September, the government approved the so called, Ley de Fortalecimiento al Emprendimiento. The objective is to strength entrepreneurship by providing a better tax environment, financial support and training for entrepreneurs. It also aims to simplify the process needed to constitute a company. For tech entrepreneurs, many are likely to continue incorporating in Delaware or Virgin Island as it remains faster, cheaper and easier for investment purpose. Nevertheless, the effort is there, Guatemala is the first country in Central America to implement an entrepreneurship law.

It’s definitely the right moment to propel the Guatemalan ecosystem to the forefront of the impact & VC investing movement. We have witnessed the talents, the hungry achiever mindset and capacity of the entrepreneurs. While one could think that the market is too small present an opportunity , it is important to remember that Guatemala is located near 2 giants – USA and Mexico. The cost of talent in Guatemala is very attractive for the US and Canadian companies. For example, an experienced senior engineer or analyst earns on average 12,500 Quetzal to approximately 20,000 Quetzal per month and 7,250 for junior level . Local talents usually speak English without a strong accent and are in the same time zone as the USA which makes it easier to work together. More important than funding though, is access to know-how and high-end network within and outside the country.

Guatemala is a small market compared to, for example, Mexico City or Sao Paulo. The first right step for any entrepreneur is to test, fail fast, iterate and expand to new markets. Multiverse and Heuristika have definitely helped early-stage startups to structure their business and get a better chance at survival, but local founders are asking for a tremplin that can help them scale outside providing them with strategic connections abroad and the methodology to hack their growth. While there is no similar program yet, initiatives like Volcano Summit which aims to create a bridge between Guatemala and the Latin American tech scene with an international network of corporates, investors and entrepreneurs, are great tools to connect and inspire the community.

Looking ahead, it will be all about building a critical mass of investibles ventures. Many entrepreneurs and players complain about the lack of money in the game, but we think that money is there. A few key facts as proof: Guatemala has one of the highest rates of a helicopter and private jet ownership per capita in the world. Also, looking at real estate and urban development, we can conclude that there is a fair amount of wealth in the country. Paseo Cayala is a great example of that. It’s an area of 14 hectares that gathers the wealthy families of the capital. Clearly the money is there, but investors need to be educated about the existing opportunities and to become familiar with venture capital. Mostly, they need trust first.

We have witnessed that success stories like Duolingo or Kindo together with an agenda of different events have convinced more people to launch their own ventures. We expect the number of startups to grow, making it even more important to provide the right environment for development and investment. International acceleration programs can be the right tool to help.

Social Wellness and Human Resources

It is estimated that the population of Guatemala City proper is about 1 million, while its urban area is almost 3 million. The growth of the city's population has been robust since then, abetted by the mass migration of Guatemalans from the rural hinterlands to the largest and most vibrant regional economy in Guatemala. The inhabitants of Guatemala City are incredibly diverse given the size of the city, with those of Spanish and Mestizo descent being the most numerous. Guatemala City also has sizable indigenous populations, divided among the 23 distinct Mayan groups present in Guatemala. The numerous Mayan languages are now spoken in certain quarters of Guatemala City, making the city a linguistically rich area. Foreigners and foreign immigrants comprise the final distinct group of Guatemala City inhabitants, representing a very small minority among the city's citizens.Due to mass migration from impoverished rural districts wracked with political instability, Guatemala City's population has exploded since the 1970s, severely straining the existing bureaucratic and physical infrastructure of the city. As a result, chronic traffic congestion, shortages of safe potable water in some areas of the city, and a sudden and prolonged surge in crime have become perennial problems. The infrastructure, although continuing to grow and improve in some areas, it is lagging in relation to the increasing population of those less fortunate. Guatemala City is not unique in facing and tackling problems all too common among rapidly expanding cities around the world.