At Fundamental, we’re deeply committed to create solutions with our ventures that solve Latam’s biggest challenges: inequality, unemployment, food security and effects of climate change. So, what exactly does that entail? This month the International Recycling Day took place, giving us good reason to reflect on how waste is linked to those challenges and impacts millions of individuals in Latin America as well as its environment.

Waste in Latin America is increasing. So are its effects on people and the planet.

Before we state numbers, it’s important to remark that reliable waste and recycling statistics for the region do not exist (yet). The 2024 Circularity Gap report estimates that over 60% of total waste generated in Latin America go unaccounted for. The gap in information presents a large challenge for understanding the scope of the problem. Following statements for waste generation should be seen as estimations.

• Waste generation: What’s the baseline? In Latin America and the Caribbean, the average waste generation per inhabitant stands at 1 kg/day. It lies 0.26 kilos higher than the global average although the levels fluctuate drastically based on a country’s income levels and consumption patterns. In 2021, the region was responsible for 12% of total global waste generation.
• Projected increase in waste: Waste volumes in Latin America are expected to surge by at least 25% by 2050, depicting an urgent need to manage its consequences.
• No second life: Only 4.5% of waste is recycled in Latin America and the secondary material consumption stands below 1%. What does it mean? The region’s production relies heavily on virgin materials and only a very small volume of materials are given a “second life”, putting a large strain on the planet’s limited resources.
• How not managing waste puts people and the planet at risk: More than one quarter of LATAM’s waste is disposed of in open dumpsites each day. With 40 million people lacking access to waste collection services, this leads to significant health and environmental risks. The issue disproportionately affects marginalized and rural communities, highlighting the social inequity of waste management. As waste generation increases, this problem will be amplified.
• Collecting waste for a living: Despite its negative effects.. waste has value! No one knows this better than the 4 million people in Latam who depend on recycling for their livelihood, with a substantial portion working in the informal sector. However, while “waste pickers” play a critical role in supplying waste for recycling to companies, they often face unsafe and undignified working conditions.

When waste gets wasted: A fragmented value chain.

We all know the saying: “one man’s trash is another man’s treasure”. But as the situation is today, Latin America’s waste and recycling industry is unprepared to handle the surge in waste due to its high levels of informality and lack of infrastructure. This depicts lost opportunities of all kinds: social, environmental, financial, and underscores a critical need for a functioning value chain​. What’s not working?

Taking Colombia as an example, roughly stated, the recycling network consists of waste generators, waste pickers, informal recycling and collection centres, buyers and intermediaries. The challenge is that most find themselves and their business needs isolated from each other, limiting the economic benefits related to the purchase and sale of recyclable materials:

• Waste pickers struggle with market access, information asymmetry and limited means for transportation. Waste pickers are often linked to informal recycling centers. However, despite their importance in supplying the fragmented value chain, they struggle: Firstly, they are poorly connected to waste producers, making their daily finds uncertain. Second, waste pickers have limited access to information about market conditions that would inform them about the best and most profitable materials for collection. Third, most waste pickers use manual carts for material collection, which limits the amount they can collect and the income they can earn.
• Volume and quality requirements of final buyers leads to inefficient intermediary networks. As a final point in the value chain, many recycling companies (waste buyers) have minimum quantity requirements for the purchase of material that the waste collectors or collection points cannot meet. As a result, complex networks of intermediaries have developed that buy and sell recyclables to meet final sales requirements. This not only lowers the price received by waste collectors and informal recycling centers, but also leads to low traceability and therefore transparency of the collected waste. It becomes difficult to meet the quality standards required by the recycling companies to process recyclable material into new products.
• Demand for recycled materials grows rapidly: While the value chain is flawed, there is an increasing demand for recycled materials driven by changing regulatory requirements and industry standards. For instance, Colombia launched the Ley 2232 to regulate plastic management and reduction and is joined by over 70 countries. Or Coca Cola, one of the largest CPG, introduced the program Reciclave in 88 cities in Colombia to increase collection and recycling rates, raise awareness for the issue and improve working conditions for waste pickers.

While the increasing demand represents a great opportunity for the entire value chain of recycling as well as the environment, the various players are unable to fully exploit it due to their fragmentation: the current supply of recycled materials is only growing by 1% and is therefore being outstripped by demand.

On a mission to make waste valuable for all: Reciclamos Juntos in Cartagena

As we’ve seen: The increase in waste and the growing demand for recycled materials can’t be met by most recycling systems in LATAM. Could this gap be leveraged to create an inclusive, mutually beneficial value chain? Our circular economy venture Reciclamos Juntos in Cartagena, Colombia has been developing a solution in the past years:

The popular tourist town’s recycling value chain used to be highly fragmented and worked at the expense of informal waste pickers: Although managing the city’s waste, they’d typically make the bare minimum of $5.50 USD a day. Also, most of them worked individually, having little bargaining power or security. Reciclamos Juntos, under the leadership of Jaime Fernandez and supported by the Wealth Inequality Initiative, set out to challenge the status quo by building a recycling system that connects the critical actors and provides value to all. How?

• Building a network of waste associations: Reciclamos Juntos supported the creation of waste associations, the development of best practices and offered training on separation, collection, quality control and business management. By empowering individual workers to build and lead their own recycling business, they were able to reduce information asymmetry, improve their equipment and increase efficiency. This allowed them to grow a team of waste pickers, offer safe working conditions and increase income.
• Installing an end-to-end waste collection service: Reciclamos Juntos optimized and integrated a whole recycling value chain and today, works B2B by connecting the waste collector associations with bulk waste generators and bulk recycling buyers, hence strengthening the weakest links in the chain. Through the waste pickers, they were able to increase the collection of valuable recycling materials by 44%, which positively impacts the waste situation in Cartagena.

Today, Reciclamos Juntos operates a network with 348 bulk waste generators (malls, schools, hotels..), 26 recycling centers and 623 waste collectors. By working for the waste associations, they were able to increase their income by 40% — a big impact!

While this model has proven successful, the startup is further evolving as it is launching a recycling warehouse and the commercialization of the plastic collected by the recycling centers. As indicated, the demand for recycled PET is increasing! Securing both quality and scale of the pet collected and linking them to new recycling plant buyers, Reciclamos Juntos taps into an opportunity that will positively impact the whole supply chain and the environment. Like that, the venture is able to close the circle on plastic.

Since the end of last year, social entrepreneur Jesús Cruz joined Reciclamos Juntos as a CEO and Co-Founder. He brings over a decade of experience in Colombia ‘s waste management sector and an extensive track record in leading successful startups. After spending 13 years building and operating Organicos del Caribe, an organic materials waste management and composting company, he has joined Reciclamos Juntos as its CEO to drive its impact and commercialization model to new heights.

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At Fundamental we’re deeply committed to create solutions with our ventures that solve Latin America’s biggest challenges: inequality, unemployment, food security and effects of climate change. What exactly does that entail? In honor of International Women’s Day, in this article we’ll focus on Gender Inequality and how it affects women’s economic opportunities in the region.

Since 1977, the 8th of March has been recognized as “International Women’s Day” by the United Nations. However, in many Latin American countries this day is not for celebrating but for protesting the everyday inequality and (deadly) violence that women face.

Women in Latin America struggle to participate and thrive in the economic system.

It’s important to remember that gender inequality impacts all aspects of the female experience but has great implications for women’s ability to work and make a livelihood. LATAM’s gender gap in labor participation is one of the largest in the world! Although women’s share of the workforce has grown over the last 50 years and 58% attained labor participation, it is still far below male participation, which is around 82% (IDB, 2019). What are the contributing factors and consequences?

• Unpaid labor is work that does not render financial compensation within a household (childcare, cleaning, cooking, etc). There is still a cultural expectation of women being the main caregiver resulting in them taking on twice as much unpaid labor hours than men and even more in the years they have children (IDB, 2019). Hence, unpaid labor can signify a pitfall for women as it compromises their ability to take on paid work, as well as explore academic or entrepreneurial opportunities.
• Many women find themselves trapped in low paying jobs. Despite growing participation: Once women enter the workforce, they tend to be employed in lower-paying jobs compared to men due to occupational segregation, meaning they usually study for and work in female-dominated sectors like care or education that are poorly rewarded. A study conducted by BID shows that despite a comparatively high female labor participation in Peru (80%) the quality of employment tends to be worse as many rural women lack access to education and find themselves in states of self-employment, unpaid, informal, or part-time jobs.
• Increased education doesn’t translate into gender pay parity. Although more women (60%) than men (less than 50%) are graduating from college in Latin America, the pay off and representation of women in the workplace trails behind. In the countries where Fundamental currently has ventures, the following hourly wage gaps persist: 20% in Mexico, 6% in Colombia, 30% in Peru and 5% in favor of women in Guatemala (largely due to the “maid effect”) (BID study).
• Sexual Harassment in the workplace is pervasive. A recent survey in Mexico showed that 20.8% of the women respondents said that they had suffered gender-based violence in the workplace in the past year. Additionally, traveling to and from work often imposes risk for women as public transportation is often filled with forms of abuse. Mexico City is currently the most dangerous transport system for women out of five of the world’s biggest commuter cities.

The data suggests that the lack of economic opportunities puts women in Latin America at risk of economic vulnerability and dependency, which goes far beyond mere income disparities and affects their overall security, freedom of choice and psychological well-being.

Is entrepreneurship an opportunity for women to increase income?

According to the Global Entrepreneurship Monitor, women in Latin America exhibit some of the highest levels of entreprenuership. It can allow women to overcome the barriers above, as running your own business allows for greater autonomy and flexibility. However, women entrepreneurs face their own set of challenges:

• Women-led businesses are typically small and informal and less digitized: Almost all (99.5%) of women-owned businesses qualify as “micro” meaning that they employ less than 10 people and 78% of women owned businesses are informal. They also use less digital tools to facilitate their business compared to men.
• Women founders are not receiving sufficient investments. Only 2% of capital goes towards women led businesses.
• Women often depend on personal savings to start their business. 73% of women cannot access financial capital for their business due to the limited financial education and tools tailored to their needs, as many low and middle income women lack a credit history or other requirements imposed by banking institutions.
• Not enough women mentors and communities of support, means that women often face the hardships of entrepreneurship alone. 48% of female founders have reported a lack of mentors and female support, according to Inc.

How does this all translate for Fundamental and our venture building ?

Although entrepreneurship provides opportunities for women, it is not free of gender-specific barriers. It is the aspiration of Fundamental to overcome these by building ventures providing women-owned microbusinesses with transformative solutions. How does this look like in real life? The best example from our portfolio is Voalá!:

Voalá! is a startup in Guatemala, focusing on beauty professionals. Only 37% of women in Guatemala participate in the formal labor market (compared to 87% men), giving it the lowest rank in LATAM. However, the beauty industry represents an exception and therefore, a unique opportunity for women to become financially independent. It’s the reason we’re foscuing on this sector due to it’s large potential for scalability and therefore, impact.

As a tech-enabled franchise, Voalá! empowers low-income women to build thriving beauty businesses. Many of them work alone, are highly fragmented with no bargaining power and resources to expand their salon, all while juggling family responsibilities on the side. Voalá! challenges this status quo by offering women:

• A product marketplace with significant discounts
• Social commerce opportunities (direct sales, mini shops) without upfront investment needed
• Certified training and mentoring
• In-person community events

Members of the franchise decrease their costs of business, generate additional income, overcome the challenges of low liquidity and gain essential business and technical skills as well as learning through the Voalá! network. As a result, women not only develop financial independence but also professional confidence.

It only makes sense that Voalá! is lead and co-founded by a female — and serial — entrepreneur herself: Lorena Chacón. She brings more than 25 years of experience in entrepreneurship, technology, cosmetology & health in Guatemala and is driven by a grand vision to empower female entrepreneurs, support them in building thriving businesses and increase their confidence to become successful in their field.

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