A Lost Opportunity

Colombia didn’t take advantage of the most buoyant period for its economy in the last 40 years to get a more significant reduction of poverty and inequality

2 de septiembre de 2009

Last week, the government released updated statistics on poverty and inequality in Colombia and nobody was satisfied with the results. Even though there was a 7% decrease in poverty —usually good news—everybody expected more after years of sustained economic growth (2003-2007).

Although a decrease in poverty from 53.7 % to 46 % is noteworthy, it was below everybody’s expectations, even the president’s. In a public event celebrating the International Day Against Poverty in 2006 president Alvaro Uribe stated “Believe me, during my last 46 months in power, poverty will decrease to 35 %.” His projected results were better than those of the National Planning Agency (DNP), who placed the expected figure at 39 % for 2010.

This is not the worst part. The numbers for extreme poverty increased two points ( from 15.7 to 17.8%) in the last three years. This means that more than eight million Colombians cannot access basic provisions with their salaries. (The figure is based on a family of four living with less than 450.000 Colombian pesos -USD 200- a month.)

To top it all off, inequality or income distribution is stagnated and the gap between urban and rural scenarios is expanding rapidly.

The good news amidst the results is that Colombia has released poverty and extreme poverty indicators and statistics once again. Since 2006, when President Uribe began his second term in office, these figures had not been updated. This statistical vacuum generated controversy between analysts and government critics. Without the information, an examination of the government’s social policies to see if they had been as successful as the democratic security strategy had not been possible. Also, without the figures it is impossible to create and design strategies with real impact on the target population.

At first glance, various analysts conclude that Uribe’s government hasn’t fared well in social terms. Poverty figures are decreasing slowly and at this rate it seems impossible to accomplish the first of the eight Millennium Development Goals set out by the United Nations. Colombia should reach 2015 with a poverty index of 28% and extreme poverty at 8.8%.

For Hugo Lopez, manager of the Medellín office of Colombia’s Central Bank, Banco de la República, the figures reveal three crucial problems. In the first place, the government has not been able to reduce extreme poverty. The second problem has to do with rural poverty, which remains at very high numbers. While in the cities 40% of the population is poor, in the countryside this figure reaches 65%. Thirdly, the indicators for inequality and income distribution are not improving. Colombia is currently one of the continent’s most unequal countries. In 2002, the Gini coefficient (an index that measures concentration of wealth) was at 0.59 and hasn’t moved since.

For Jorge Iván González, head of the Research Center for Development at the Universidad Nacional and part of the team of experts who updated the figures, the gap between urban and rural poverty is perplexing. While cities like Bogotá, Medellin and Cali are showing signs of improvement, inequality in the countryside is getting worse. According to González, this is due to flawed government policies towards the rural sector and lack of employment opportunities.

Yet, it is difficult to understand how, after four years of economic growth that surpasses 5% in average, inequality remains untouched. For César Caballero, coordinator for the United Nations Millenium Goals Program, this has an explanation. “The benefits of the bonanza we enjoyed during the last couple of years went to the rich, which only made inequality worse. We couldn’t break with that structure.”

This is not unique for Colombia. The former director of the National Planning Agency, Juan Carlos Echeverry, affirms that in times of economic boom, when the big enterprises grow at high rates, foreign direct investments increase and there are more employment opportunities, the educated sectors of the population enjoy the benefits. The poor with no or few education are left behind.

¿What about ‘Familias en Acción’?
However, if one takes into consideration that the economic expansion cycle is over, what can we expect in the future in social terms? The outlook is gloomy. The government expects that between 2009 and 2014 the economy will grow at 3.3% in average.

Jose Dario Uribe, general manager of Banco de la Republica, warns that sustained periods of economic growth are not enough. Public spending must be directed towards the least favored sectors of the population.

Many analysts still don’t understand why extreme poverty rose 2 percentage points in 2008, the same year the government intensified its ‘Familias en Acción’ program, oriented towards the poorest. Today there are more than two million beneficiaries.

The National Planning Agency Director, Esteban Piedrahita, assures this program has helped the population that lives in extreme poverty. He also affirms this program has worked hand in hand with ‘Red Juntos’, a policy aimed at helping families surpass poverty traps with integrated social development proposals.

Nobody is questioning these programs, but they are clearly not enough. For the director of Cepal in Colombia, Juan Carlos Ramirez, the impact ‘Familias en Acción’ can have on the extremely poor is very little and the reasons are obvious. There are more than 8 million Colombians living in extreme poverty and the program only targets one fourth of this group, two million.

What, then, is the appropriate formula to help people leave poverty and avoid falling in poverty traps? Experts say is it a combination of policies. For example, for Ramirez, it is crucial to implement long-term strategies, like education. “We must try to keep students within the educational system. This is the best possibility to overcome poverty in the future.” Researcher Hugo Lopez believes ‘Familias in Acción’ is not enough, it must be accompanied by a shock-therapy treatment in the employment area.

The poverty figures were released in a heated political environment, just as the presidential race for 2010 is getting underway. All the candidates, including President Uribe—if he decides to run for a third term— are aware that if the security problems don’t dominate the agenda, the social issues will take over a substantial part of the campaign. For many, this government fell short on its promises to the poor.

But as Ramirez states, this is an issue that surpasses specific governments, it is a matter of state. This is what happened in Chile and now the country boasts the region’s lowest poverty rates (14%). The bottom line is that just as in security, where agreements between different sectors must be reached, these are also necessary to protect the most vulnerable sectors of the population.
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