In light of the social and economic consequences generated by the COVID-19 pandemic, Guatemala’s growing technology sector promises to be a shot in the arm for economic recovery. While many businesses were forced to close due to restrictions imposed to hinder the virus, others were well prepared or managed to adapt to major upheavals in doing business. Here three Guatemala tech companies that have fared well and can be expected to continue to grow after the pandemic are highlighted.
Guatemala has the largest economy in Central America and is the most prosperous among the ‘Northern Triangle’, which also includes El Salvador and Honduras. The country’s gross domestic product adjusted for purchasing power parity (GDP-PPP) has grown consistently since 1990 to reach $149 billion (all figures in USD) in 2019. Meanwhile, gross national income (GNI) — a marker of general prosperity — has grown exponentially over the past 30 years to reach $8,870 per capita in 2019.
The Central American nation has a positive attitude towards expanding both local and international business. This is particularly highlighted by an Entrepreneurship Strengthening Law passed in 2018. The law was enacted to promote both first-time and existing investors to engage in new business ventures. Guatemala has also demonstrated its commitment to free trade, with free trade agreements (FTAs) reached with the United States, the European Union, and numerous Latin American markets, including Colombia, Costa Rica, the Dominican Republic, and Panama.
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In addition, Guatemala has seaports on the Caribbean Sea and the Pacific Ocean, with its international trade representing more than 30% of Central America’s total imports and exports. Some of the country’s main export commodities include metals, oil, and timber, along with other valuable goods such as sugar, coffee, and bananas.
If you are interested in doing business in Guatemala, learning about some Guatemala tech companies that have continued to grow during a period of major economic upheaval might provide you with valuable insights into how to maximize your success when expanding into the country.
The impact of the pandemic on Guatemalan business
According to figures published by the Bank of Guatemala, due to the economic crisis caused by COVID-19, the Central American country showed a decrease in its GDP of between 1.5% and 3.5% in 2020. In addition, numbers provided by the Centre for Agriculture and Biosciences International (CABI) showed that business sales fell by 20% in March 2020 and by 40% the following month — resulting in an estimated economic loss of $1.6 billion and $3.3 billion approximately.
According to figures from Guatemala’s Superintendency of Tax Administration (Superintendencia de Administración Tributaria — SAT) — published alongside the numbers from CABI — tax collection data showed a considerable reduction in government revenues, with the tourism and hospitality sector contributing 24.3% less during the first four months of 2020 than during the corresponding period a year earlier. Meanwhile, the transportation and communications sector contributed 14.7% less during the same periods.
On the other hand, according to Johny Gramajo, the Bank of Guatemala’s chief economist, the agriculture sector experienced a growth of 3% during the pandemic, generated mostly by the increased exports of cardamom and bananas. Meanwhile, e-commerce operations in the country grew exponentially during 2020 compared to the previous year.
Three Guatemala tech companies to watch
The following tech companies in Guatemala have grown during the pandemic and should be expected to continue on their upward trajectories in 2021:
Gronn — Guatemalan tech company focused on recycling
Gronn is a Guatemalan tech company that aims to solve the problem of solid waste management, with an eye on taking the service region-wide in Latin America. The company recycles glass bottles into high-quality handmade goods, which are then sold as sustainable products.
So far, Gronn has recycled over 200,000 bottles, having a notable impact on waste reduction, and the company aims to create a model that can be replicated in other regions of Latin America.
Gronn’s ability to succeed while focusing on sustainability highlights how growing environmental consciousness seen in recent years offers opportunities in both the developing and developed world.
PediSuper — Guatemalan tech company providing on-demand delivery
PediSuper is a fully online supermarket designed for the digital marketplace, with the aim of being as convenient as possible. The company focuses on making online shopping simple and effective for those with busy schedules.
This company has seen particular growth during the global pandemic, while it has also contributed to the country’s growing adoption of sustainable practices by scrapping the use of plastic bags.
The company’s deployment of its distinctive pink mopeds is also intended to minimize congestion and pollution in local cities, with capital Guatemala City notorious for its rush hour traffic.
Kingo — Guatemalan tech company bringing clean energy to remote communities
In a clean sweep for sustainability-focused businesses, Kingo is another Guatemalan tech company focused on providing environmentally friendly solutions for major social problems. In this case, providing prepaid solar energy to the country’s massive off-grid population.
According to Kingo’s founder Juan Fermín Rodríguez, when the company started in 2013 he estimated that 400,000 families in Guatemala lived without electricity and by the end of 2019 the company had provided power to over 50,000 families. The success of the company in providing power to some of the most needy populations has drawn considerable attention, with Hollywood star Leonardo Di Caprio investing in the company in 2019, amid other major financial backing it has received.
The result is that Kingo is no longer entirely focused on Guatemala, with its website demonstrating a global outlook in its mission to bring power to remote communities. As such, its rapid growth of recent years can be expected to continue in 2021 and beyond.
Enter the Guatemalan market with the help of Biz Latin Hub
At Biz Latin Hub, our multilingual team of corporate legal and accounting professionals is equipped to help you enter the Guatemalan market and take advantage of the country’s vibrant tech scene. Our locally based team is equipped to deliver excellence in company formation and back-office services and ensure the success of your expansion into Central America.
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