February 27, 2007 — Salinas – where more than half the population is indigenous – used to be a very poor area. Many people were leaving the town on Ecuador’s Pacific coast to find jobs elsewhere.
This all changed when local producer associations got together to form the Foundation of Farmers Organizations of Salinas (FUNORSAL).
Joining forces in this way helped the farmers switch from traditional agriculture to the production of cheese and other agro products. Today, there are more than twenty cheese manufacturers in the area, producing high-quality products for export.
Struggle to escape poverty
FUNORSAL is a positive example of how indigenous people can come together to create sustainable livelihoods for themselves and their families.
In many parts of Latin America, however, indigenous peoples are struggling to raise their incomes.
While the region as a whole has made progress in reducing poverty in recent years, more than 80 percent of Latin America’s indigenous people still live in abject poverty, a trend that has changed little since the early 1990s.
In Bolivia, for example, the average monthly income of an indigenous household is only about half that of a non-indigenous family.
A new study by the World Bank—“Economic Opportunities for Indigenous Peoples in Latin America”—examines why the majority of Latin America’s 28 million indigenous peoples are not able to increase their earnings and boost their living standards on a par with non-indigenous populations.
“This report highlights that low income and few resources are mutually reinforcing,” says Harry Patrinos, a lead World Bank education economist and co-author of the report.
“Low levels of education hinder entry into higher paying jobs, while lack of credit or access to farm machinery is a roadblock to increasing agricultural productivity.”
The study finds that indigenous peoples are concentrated in few occupations, live in rural and remote areas, and mostly work in the informal economy.
“As a result of their historic exclusion, indigenous peoples continue to have low levels of human capital, limited access to productive land, basic services, and financial markets, and poor infrastructure,” explains Emmanuel Skoufias, World Bank lead economist and co-author of the study.Obstacles to success
The report highlights some key areas in which indigenous peoples are at a disadvantage:
Jobs and income: In rural areas, indigenous people are more likely to work as unskilled agricultural laborers than non-indigenous people. In urban areas, they are more likely to have informal jobs that lack security, access to social benefits, healthcare, and unemployment insurance.
In Guatemala, for example, less than 50 percent of urban indigenous work for wages, compared to 65 percent for non-indigenous.
Distribution of land: The plots of land owned by indigenous people can be anything from twice as small as non-indigenous landholdings in Peru to nearly eight times smaller in Ecuador.
Access to financial services: Very few indigenous households have access to formal or informal credit. In rural Ecuador, indigenous business owners are often deterred from seeking a loan due to high interest rates.
Access to infrastructure and basic services: Access to running water and electricity can help to increase the productivity and diversification of income-generating activities. In rural Mexico, lack of access to roads reduces the value of land.
Social networks: Indigenous peoples have strong social ties that are important for their survival and prosperity. However, these networks currently help them find work, but mainly in the informal sector, through agriculture and self-employment. They do not help them move into other types of employment that pay better.
What to do about it:
Patrinos and Skoufias suggest two main areas of focus in order to achieve better poverty reduction for indigenous peoples in Latin America:
- Firstly, designing development programs for indigenous populations that combine actions to improve infrastructure with measures to increase access to credit, land, health, education, and nutrition: Examples include conditional cash transfer programs (e.g., Oportunidades in Mexico) and programs to tackle social exclusion (e.g., the Indigenous and Afro-Ecuadorian Peoples Development Project in Ecuador).
- Secondly, raising awareness of the needs of indigenous peoples at the national and international levels. For instance, indigenous communities could make a link between the Second International Decade of the World’s Indigenous People, which ends in 2015, and the Millennium Development Goals which are scheduled to be achieved the same year. This could help them improve collection of data on indigenous peoples’ progress towards the goals and argue for specific results, e.g., increases in school completion.