Peru: Nearly 40% of vulnerable microentrepreneurs lack adequate housing and sanitation

According to the Multidimensional Poverty Study conducted by Financiera Confianza among its clients, together with the BBVA Microfinance Foundation (FMBBVA) and the SOPHIA Oxford Institute of the University of Oxford, the main deficiencies in the households of vulnerable Peruvian microentrepreneurs are sanitation (affecting 39% of households) and housing materials (38%).

In the case of vulnerable microentrepreneurs in Peru, the main gaps were found to be access to sanitation and housing (57%), followed by years of schooling (29%) and health insurance (28%).

Almost half of the entrepreneurs in poverty suffer from three deprivations, which means that to overcome this situation, they not only need to increase their income generation above PEN 378 (US$97) to cover the expenses of each household member per month but also overcome some of these more qualitative deprivations thanks to this increase in their income.

“The most critical situation is that of a group of clients close to 7% who experience six or more deprivations simultaneously,” highlighted Sabine Alkire, director of the Human Development and Anti-Poverty Initiative at Oxford University.

“We want to deepen our understanding of the well-being of the families of the entrepreneurs we serve to improve their quality of life; that is why we have used this method of measuring multidimensional poverty, which enhances our monitoring of the per capita surpluses of Financiera Confianza’s entrepreneurial businesses and their relationship to the official poverty line in the country,” said Stephanie García Van Gool, director of Impact Measurement and Strategic Development at FMBBVA, who led the report.

At the close of 2021, 72% of the entrepreneurs surveyed were in a vulnerable condition. It means that their businesses generated per capita income of up to PEN 1,134 (three times the poverty line), so they were living in monetary poverty or at high risk of falling into it in the event of unforeseen circumstances.

METHODOLOGY

It is worth mentioning that this index is a standard adopted by the United Nations that has been imposed internationally.

Nearly 100 countries use this methodology in their official statistics. It is a way of measuring poverty that complements the traditional one based on income level.

But what does it mean to suffer multidimensional poverty? The study, conducted by Financiera Confianza and BBVAMF, is based on nine indicators that target three dimensions of poverty: education, health, and housing.

It measures how many households have these deprivations and with what intensity. Countries use these indicators in their multidimensional poverty statistics.

This multidimensional vision is complementary to that of monetary poverty. The Financiera Confianza study shows that some people are not poor monetarily speaking since they receive incomes above PEN 378 (National Poverty Line 2021, according to INEI), but they suffer from these structural deprivations.

“This is very important because the study also detected that people in multidimensional poverty have a higher probability of suffering a “shock”, that is, a critical change in their quality of life due to the economic impact of an unforeseen event,” said Akamine.

With information from El Comercio