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Last Updated: Tuesday, 8 March 2005, 08:46 GMT
Rural poverty central to Bolivia's plight
By Alberto Souviron
BBC News business reporter

For subsistence farmers in Potosi - one of poorest regions in South America's poorest country - severe environmental degradation and extreme poverty have become integral parts of everyday life.

Peasant from Potosi, in the city of La Paz
Moving to the cities rarely helps peasants escape poverty

In the villages of this south-western part of Bolivia, starving peasant women from the Quechua tribes line the streets, their arms outstretched in begging gestures that epitomise the suffering endured by many.

Many of them left their homes to try a new life in the city, although poverty is also a phantom that lingers there.

But head north to the town San Pedro de Buena Vista and a more promising picture emerges.

There an irrigation project assisted by German development agency GTZ has allowed peasant communities to recover the old green areas their grandfathers had told them about.

Today, agriculture follows sustainable development principles, children in the villages no longer go hungry, and there is hope.

Then journey further, to the resource-rich Santa Cruz province, which accounts for a third of Bolivia's economic output and where business leaders are calling for autonomy, and it becomes clear how complex the management of the Bolivian economy really is.

Cocaine decision

Bolivian agriculture minister Victor Barrios has long insisted that the government is doing its best, working closely with rural organisations and local government to hammer out an economic strategy that identifies regional potential in agriculture, as well as in other areas such as industry, oil or mining.

President Carlos Mesa on announcing his resignation
President Mesa's reform efforts have come to an end

But to little avail.

On Monday, President Carlos Mesa offered his resignation to Congress, amidst accusations of economic mismanagement and threats of mass protests by some, and amidst contrasting street demonstrations by his backers.

There is no guarantee that the resignation will be accepted, and Mr Mesa's offer is widely seen as a political move aimed at bringing about dialogue in a turbulent political climate.

Mr Mesa's critics insist foreign multinational companies have been extracting the nation's natural oil and gas resources without paying a proper level of tax, while the Bolivian people has been faced with sharply rising energy prices.

Also raising the temperature is the way foreign investment in the country's utilities, which were privatised in the 1990s, led to poor people being charged for water.

The main anger has been voiced by coca growers, under attack from US-backed efforts to eradicate their production of the base ingredient of cocaine.

President Mesa's main critic is the leader of the opposition, Evo Morales, who is both the head of the coca growers and in charge of the second largest force in Congress; the Movement Toward Socialism (MAS).

Local capacity

At the heart of the problem, beyond any decision about the country's important oil and gas industry, lies widespread rural poverty and the lack of viable alternative incomes for the cocoa farmers.

A girl peasant in San Pedro de Buena Vista (Photo: Patricia Fernandez, GTZ)
Children in San Pedro de Buena Vista no longer go hungry

Indigenous people across the country say neither the government nor international organisations such as the World Bank know enough about the real challenges facing them and insist they are perfectly able to manage their own projects.

Many proposed projects have never moved beyond the desk of faceless bureaucrats, while education projects tend to ignore the "many peasants [who] have not even finished school", despite their deep knowledge of rural issues, says Nelson Bartolo, of the Indian Confederation of Western Bolivia (CIDOB) which represents 120,000 Guarani people.

"If the World Bank really wants to help us, it would be interested in directly financing our projects," Mr Bartolo says.

Gonzalo Colque, of Bolivia's Earth Foundation, agrees that rural communities should be more closely involved in decisions about their destiny.

Bolivia's government should work with organizations such as the 'ayllus', which sometimes include 100 or 150 families linked in accordance with existing community structures, says Mr Colque.

Rural strategy

Recent thinking within the international aid community suggests Bolivia could benefit a great deal from targeted rural investment.

The World Bank has identified investment aimed at getting Latin America's rural economy working as a key factor in reducing poverty in this vast region.

Peasant girl in Bolivia (Photo: FAO)
Many peasants cannot finish the school


The answer lies in the statistics. Seven in ten people live below the poverty line in many countries in the region - including Bolivia, Guatemala, Honduras, Nicaragua, Paraguay and Peru.

Add it all up and the figures show that 65 million people in Latin America and the Caribbean could benefit from investments made into the rural economy.

The benefits should be felt at a national level too. The World Bank has just found that the investment in the rural economy could be much more beneficial than previously thought.

Latin America's rural economy contributes 12% of economic output. This figure, says the Bank, could double as poverty is reduced and as development is pushed forward.

A 1% growth in the basic farming, forestry and fisheries sector could boost national economic output by 0.22% and poor families' income could rise 0.28%.

"This represents more than twice the expected 0.12% increase," the Bank says.

Fulfilling potential

Currently, most governments in the region "are failing to deliver... the right mix of public policies in the rural space, either from a growth or a poverty reduction perspective", says the World Bank's chief economist for Latin America and the Caribbean, Guillermo Perry.

Bolivian farmers (Photo: FAO)
Formal projects often fail to take into account rural skills and knowledge

Rural investment must be shifted from subsidies, which do little or nothing to boost development, towards education and technical development, the Bank says.

Investment in education helps build a better future for the poor and the Bank has found that investments in agricultural research and development can yield a return of up to 40%.

Moreover, policy makers must get better at looking for value for money in terms of productivity improvements when they decide where and how to invest, the World Bank's Daniel Lederman insists.

Bolivia leader quits amid protest
07 Mar 05 |  Americas
Bolivia head says he will resign
07 Mar 05 |  Americas
Bolivia ex-leader on death charge
21 Feb 05 |  Americas


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