17AM in Mexico: Scouting SDG investments in Chiapas and Yucatan

On June 13, 2019, our Director of Structured Finance, Fernando Concha, arrived in Mexico for an eight-day scoping trip, exploring the potential for an SDG-aligned fund in Mexico that would focus on refugees and displaced persons as primary beneficiaries.

The Fund would be a first of its kind in many ways. It would be the first SDG fund in the country, and a marked first step in channel private investment capital into sustainable development in the country.

The Fund would also would be a product of the Initiative for Inclusive Investment in Mexico (3IM) – a partnership between 17AM, Mexico’s Secretariat of Foreign Affairs lead by the Undersecretary for North America, Jesús Seade, the Refugee Investment Network, and Dalberg to tackle the challenge of displaced populations in Mexico. As a coalition member, our goal is to build an inclusive investment strategy that looks to turn the development challenges and extensive refugee populations into an opportunity for impact and SDG-aligned investment in southern Mexico.

We’re excited that this work has led to Fernando traveling to the states of Chiapas and Yucatan in Southern Mexico to perform on-the ground research and speak to local partners about a potential SDG – 3IM Mexico Fund. We are excited to share some of the more personal notes, experiences, and moments that highlight the vibrant opportunity for an SDG-aligned blended finance investment vehicle to drive private investment, development, and target displaced populations across the southern states in Mexico. 

Merida – A Hidden Gem Committed to Becoming a Global Sustainable City    

Merida is the capital city of the State of Yucatan. In a matter of days Fernando began to view the city as a “hidden gem.” In the last decade, Merida has quickly evolved into the financial hub of the Yucatan peninsula, boasts freedom from Narco violence, and looks to position itself as a global city. As put by one local business leader, “Merida is quickly becoming the strategic hub for all of the Yucatan Peninsula politically and economically.”

Meeting with some of Merida’s top representatives was illustrative of the energy and potential of the city. When Fernando met with Dr. Eduardo Seijo Solis, Merida’s Director of Economic Development & Tourism, he has just landed from a trip in China, where he was showcasing Merida as a city ready for investment. Along with Dr. Seijo Solis, his subdirector, Miguel Antonio Morales, and Zoila Jimenez, a member of the Secretaría de Participación Ciudadana (Citizens Participation Department) of the City of Merida, spoke about their ambitions to grow Merida into a global city, their extensive engagement in sustainable development, and the strength of the city’s active civil society.

A showcase of one of the social development projects currently being undertaken by the City of Merida

A showcase of one of the social development projects currently being undertaken by the City of Merida

The city not only wants to be an example of good public policy for the Peninsula, Mexico, and the world, but is also actively taking preemptive action to accommodate immigrant inflows. Ms. Jimenez has been training community leaders on the immigration phenomenon in Merida so the city better serves the increasing refugee population coming from Central America’s “Northern Triangle,” which she mentioned in their meeting. “Recognizing the city’s growing wealth and safety,” said Miss Jimenez, “we want to be prepared to engage and included displaced populations that will migrate to Merida in the future.”

The city is also looking ahead to hosting future displaced populations coming from other states in Mexico that have been plagued by violence, especially those states that have suffered from cartel violence. There is a shared belief by the city government and the business community that the biggest asset the state and the city has, and the cornerstone of its development agenda, is its public safety and the integrity of its police force, which has not been infiltrated by organized crime.

Chiapas – Challenges Spell Development Opportunity

In Chiapas, Fernando learned from both large and small communities, visiting the towns of San Cristobal de las Casas, San Juan Chamula, Zinacantan, Chiapa de Corso, and Tuxtla Gutierrez. Chiapas immediately stood out as in need of infrastructure development. Over his travels Fernando saw a wealth of possibility, personalities, and a diversity of sustainable operations and enterprises in the region.

Chicoasen – Local Hydroelectric Dam close to the town of Chiapa de Corzo

Chicoasen – Local Hydroelectric Dam close to the town of Chiapa de Corzo

With the failure of natural gas supply, energy is a critical rising need in the Yucatan Peninsula and other southern states. Thus, there is a rapid and expanding presence of more sustainable and non-traditional renewable forms of energy production across the region to meet rising business demands in the southern states as a whole. One example is Chicoasen, the largest hydroelectric dam in Chiapas and supplies neighboring states.

Greenhouses for Sustainable Flower Cultivation & Production. Zinacantan, Chiapas

Greenhouses for Sustainable Flower Cultivation & Production. Zinacantan, Chiapas

Fernando reported back to team that his “time in [the town of] Zinacantan revealed entirely new dimensions to the sustainability efforts of the region.” Chiapas is a region defined by its vast and diverse indigenous populations, culture, and ecological diversity. In Zinacantan this was clearly observable in the sustainable textiles through non-chemical dyeing. The greenhouses above show the sustainable flower industry that has been developing in the region which have also been financed through various world bank and development banks.

Sustainable Development Linkages & Investable Opportunities 

There are companies in Mexico rapidly innovating to meet the growing challenges of sustainable development, increasing displaced populations, and a growing middle class. Kessel Company is one of many examples of the ample SDG-aligned investment opportunities across the southern states.

While discussing the energy needs of the South, we learned of Kessel, a company quickly gaining popularity around Mexico City by selling affordable, easy-to-install solar powered water heaters for the tops of residential homes. Their second-generation product is powered by solar panels and can provide the electricity needs for a single family. Kessel has their factory in Mexico City and is in the process of building servicing facilities in southern states to meet the increasing demand for their product. Fernando visited their factory and immediately saw the feasibility of this production and distribution model from Mexico City across southern states in high-need energy areas. As we further investigate the feasibility of an SDG – 3IM Mexico Fund, Kessel gives us optimism about our ability to source investments in Mexico which can serve the needs of refugee and displaced populations in Southern Mexico.

Founder Samuel Neuenschwander at the Kessel Co. Factory in Mexico City

Founder Samuel Neuenschwander at the Kessel Co. Factory in Mexico City

Grace Stone