The tyranny of statistics is back with a vengeance. In February Bill Gates told the Spanish government that it makes no sense to ‘help countries like Peru, a middle-income country with a per capita income of US$10,000, while there are children dying of malaria and people unable to get medicines for AIDS’. ‘Peru, said Gates, ‘has resources to exploit and could be as rich as a European country.’ But reality is far from being as simple as this, which is something that emerges strognly from a chapter of Christian Aid’s report The Scandal of Inequality in Latin America and from the May Update of the Peru Support Group.
DFID, of course, cut Peru off its aid list some years ago, but in May we learned that the coalition government is putting pressure on the EU to wield the axe more widely. On 16 May Stephen O’Brien, Parliamentary Under-Secretary of State for international Development, told the Commons: ‘As a result of concerted UK pressure, the EU is currently reviewing key aspects of its entire approach to aid; this includes cutting funding to countries that don’t need it, such as some middle-income countries in Latin America.’
For the sake of accuracy, Bill Gates’ figure of US$10,000 a year is adjusted for purchasing power – the raw figure is US$5,400 – but the US$10,000 is the figure relevant for discussions of poverty so Gates has the right figure. Again for the sake of accuracy, while malaria is not currently a major problem for Peru, the country’s poor children have quite enough problems to be going on with. A hardship map shows that in the Andes and Amazon between 88.8 and 100 per cent of young people have their basic needs unmet.
While this is ture, the biggest problem problem facing Latin America is inequality, between a rich minority and a poor majority, but also between regions within the same country. In the rich countries that make up the OECD, the widest income gap between the richest and poorest regions is 100%, while in Brazil it is over 800% and in Peru over 600%.
The reasons for this situation are complex. There is the legacy of colonialism, in which Latin American countries were basically seen as sources of raw materials or profit for the metropolitan countries, a situation reproduced today in the mining and hydrocarbon industries. And colonialism depended on slavery, either of the indigenous populations or of transported Africans, as in the case of Brazil. Both these population groups remain disadvantaged today in many Latin American and Caribbean countries.
In the case of Peru, the gap is between the coast on the one hand and the jungle and the highlands on the other. An important report published in April by Christian Aid, The Scandal of Inequality in Latin America and the Caribbean, devotes a chapter to Peru. The country’s economy overall has grown at an average rate of 6.4% since 2002 with an estimate for 2011 of almost 7%. Poverty rates nationally have fallen from 48.3% in 2004 to 34.8% in 2009, but while the figure for Lima was 15.3%, in the poorest department, Huancavelica, it was 77%, and over 59% in five other departments. One reason for this is the low level of tax revenue, 14.9% of GDP in 2010. Another reason, or set of reasons, lies in Peru’s decentralised administration. The royalties from the mining bonanza of recent years go to the regions and municipalities where the mines are located, and this has led to increasing inequality in the availability of resources across the country. The Ministry of Economy and Finances (MEF) is obsessed with hierro y cimiento – ‘steel and concrete, i.e. infrastructure – rather than social spending on health, education and water and sanitation. There has also been inadequate training for regional and local officials in dealing with their increased budgets: the Christian Aid report quotes a Congressman from Huancavelica as saying that the department annually returned S/100 million (US$38 million) to the MEF over the last ten years because they could not design acceptable projects to invest in.
Gender disparities are another factor in the persistence of poverty: a horrifying average of 10 women die a month from extreme violence, 70% at the hands of their partners. These aspects of inequality in Peru were explored by Andrew Nickson and Paula Escribens in the May issue of the Peru Support Group Update.
There is much useful support DFID and the European Union could give the Peruvian government in matters of taxation and regional administration, but perhaps they too see aid as primarily a matter of hierro y cimiento. And for the non-governmental development agencies there remains a crucial role in supporting small pilot programmes in agriculture, education and micro-finance that can then be taken over by local public and private agencies. And above all, they have a role in supporting local civil society in holding government to account. In making decisions about aid, as well as considering headline poverty rates in Latin America, there is also a need to insist on the message: ‘It’s the inequality, stupid!’
Read the Christian Aid report here.
Acess the PSG website here.