Over the past decade, Honduras has emerged as a small but increasingly competitive global exporter of apparel. While Latin America and the Caribbean (LAC) accounts for just over 4% of global apparel exports, Honduras has steadily gained ground, becoming the top regional supplier of cotton T-shirts and one of the leading exporters of activewear.

Representing about half of the country’s exports, textiles and apparel play a critical role in creating jobs, generating foreign exchange earnings, and advancing productive development. 

Productive Scale-Up

Grupo Elcatex is one of Honduras’s largest textile and apparel producers and employers. By 2019, the company was operating near full capacity at a time when global demand patterns were shifting and nearshoring dynamics were creating new prospects for regional suppliers.  

To capture that opportunity, Elcatex needed to expand and diversify its production by building a new, vertically integrated facility and adding synthetic fabric capabilities. Funding this major investment plan called for long-term financing that was not available in the local market.

In 2020, IDB Invest partnered with Grupo Elcatex to help turn this growth opportunity into reality. The long-term financing supported the construction and operation of the new San Juan Textiles facility, upgrades to existing plants, and working capital needs. The new plant would allow Elcatex to bring key production stages in-house, expand into synthetic fabrics, and increase overall manufacturing capacity by half.

 More Jobs and Exports

As production lines expanded, new processes were deployed, and the company scaled its operations to meet export demand, more workers were needed. Starting with around 7,300 employees in 2019, employment rose to an average of more than 12,000 formal permanent jobs from 2020-2024, exceeding the project’s original target by a third. By 2024, the company employed 13,425 people.

Exports followed a similar trajectory. Like many exporters, Elcatex faced a sharp downturn in 2020 as the pandemic disrupted global trade. As new production capacity came online, export volumes steadily recovered and revenues strengthened. By 2022, export performance was already outpacing initial targets, and the company continued to expand its footprint in international markets.  

Over the life of the project, average annual export performance consistently exceeded expectations. In 2024, Elcatex’s export sales represented about 17% of the country’s total textile product exports that year, reinforcing Honduras’s position as a competitive supplier in the global textile industry.

Increased Sourcing from Local Suppliers

While the project aimed to strengthen local supply chains, the results were mixed. The number of local suppliers and micro, medium and small enterprises (MSMEs) in the supply chain fell short of targets, mostly due to the limited pool of local firms able to meet standards for export. However, purchases from local suppliers expanded significantly, reaching $110 million per year on average, and purchases specifically from MSME suppliers averaged $19 million, more than doubling expectations.  

At the same time, both the number of and purchases from women-led MSMEs increased. For firms that could meet quality and scale requirements, Elcatex’s growth translated into larger contracts and more stable demand. 

Challenges and Lessons

During implementation, the company faced a series of shocks, including the pandemic, supply chain disruptions, two hurricanes, and fluctuating buyer demand. Yet it maintained operations, avoided layoffs, and recovered key financial indicators within a year. Long-term financing provided by IDB Invest made it possible to invest through uncertainty rather than retreat from it.

Additionally, while Elcatex exceeded targets for exports, production, and formal, permanent job creation, expanding the number of domestic suppliers was more difficult than anticipated, reflecting structural constraints in the local supplier base and the scarcity of firms able to meet technical, scale, and compliance requirements. This signals the importance of investing in strengthening supplier capacity alongside anchor firms.

Taken together, this project shows how IDB Invest supports productive development through the private sector by enabling industrial expansion, translating capacity into exports and jobs, and helping firms remain resilient in volatile conditions. In Honduras, this helped build a stronger manufacturing base connected to global markets and rooted in the local economy.