Honduras is a middle to low income country facing significant challenges, with more than two thirds of the population living in poverty and five out of ten suffering from extreme poverty (2012). In rural areas 6 out of 10 households live in extreme poverty.
Since the 2008-2009 global economic crisis, Honduras has experienced a moderate recovery, propelled by public investments, exports and higher remittances. Economic recovery is reflected in GDP growth of 3.7% in 2010, 3.7% in 2011 and 3.3% in 2012. Nevertheless in 2013 this figure decreased to 2.5%, and the economy is expected to grow a 2.8% in 2014. Moreover, inclusive growth continues to be hampered by inequality.
Another challenge is the level of crime and violence in Honduras, as it is the country with the highest homicide rate in the world (79 per 100,000 inhabitants, according to the Observatorio de la Violencia of the Universidad Nacional Autónoma de Honduras). It is estimated that the annual costs of violence account for about 10% of the country's GDP (nearly US $ 900 million). Crime and violence have also eroded citizens’ confidence in the rule of law. In Honduras, victims of crime are 6.5% more likely to take justice into their own hands when compared to non-crime victims.
The country is also vulnerable to external shocks. An example is the agricultural sector, which has lost about a third of its purchasing power in the last two decades, largely due to a decrease in the prices of the exported crops, notably bananas and coffee. Honduras is also susceptible to adverse natural events such as hurricanes and droughts. Measures to mitigate the impact of these shocks are focused on strengthening the adaptation capacity of households, extend risk management mechanisms based on the market and develop effective social safety nets.
World Bank studies have highlighted the importance of improving the quality of education. It will also be necessary to enhance rural productivity and diversify sources of rural income, since most of the country’s poor live in rural areas and depend on agriculture for their livelihoods.
Expanding opportunities through reducing vulnerabilities
Enhancing good governance
The World Bank’s current portfolio in Honduras includes 10 active projects for a total committed amount of US$390 million. These projects are designed to remove long-standing structural barriers to growth, by modernizing the public sector and improving the performance of economic and social services; improve rural productivity and generate employment; strengthen human development by improving educational opportunities and health care; and improve the protection of the environment, among other objectives.
The objectives of this project are to improve the capacities of national and local authorities in the area of crime and violence prevention, as well as to address their originating risk factors. It also aims at enhancing the capacity of selected municipalities to respond quickly and effectively to an emergency.
This project seeks to strengthen the capacity of a comprehensive disaster risk management at a municipal and national level, as well as to improve the capacity to respond quickly and effectively to an emergency. The project also aims at implementing mitigation measures.
The objective of this project is to increase productivity and competitiveness of small rural producers by supporting productive alliances among rural producer organizations and commercial partners. It also supports the implementation and financing of approximately 150 feasible business plans.
It aims to improve the financial and operating performance of the National Electric Power Company (ENEE) through three specific objectives. The first is the improvement of ENEE's commercial and corporate resource management. The second is the rehabilitation of ENEE's distribution regional sub-networks. And the third is to strengthen ENEE's institutional capacity and corporate governance.
This project is designed to strengthen the management of public finances and to establish a more efficient, effective and transparent public procurement system. This will be achieved by improving the public financial management system; upgrading the e-procurement platform; enhancing the internal control systems over personnel expenditures; and building capacity of the central administration.
Through this project, the Honduran Ministry of Education (Mineduc) managed to expand school coverage in disadvantaged communities from 36% to 50%, through the opening and provision of about 800 preschool centers, as well as training all their volunteer teachers.
With funding from the International Development Association (IDA), the Government of Honduras paved two main sections of the Central Corridor (El Porvenir - Marale and San Lorenzo - Olanchito, about 60 kilometers), which allows a better access to the major cities within the poor rural communities.
This project allowed the Government of Honduras, with the support from the World Bank, to bring more than 36,000 children out of risk and improve their social security through a pilot employment program that benefited the most vulnerable young people.
Through the Disaster Risk Management Project, Honduras has developed substantial capacity for disaster risk management, both locally and centrally, through an innovative and participatory approach. The project supported the implementation of programs for disaster risk management in 81 of the most vulnerable municipalities, benefiting about 5 million people.
The Water and Sanitation Sector Modernization Project has improved the access and quality of water in 10 municipalities, while it has also contributed to the decentralization of the sector through the adoption of autonomous models.