Give a Person a Loan and Will She Be Fed a Lifetime? Microcredit, Aquaculture and Capabilities in the Bolivian Amazon by Ahmed G. Eid Valdiviezo Bachelor of Arts, Universidad Privada Boliviana, 2009 A Thesis Submitted in Partial Fulfillment of the Requirements for the Degree of MASTER OF ARTS in the Department of Geography c Ahmed G. Eid Valdiviezo, 2018 University of Victoria All rights reserved. This thesis may not be reproduced in whole or in part, by photocopying or other means, without the permission of the author. ii Give a Person a Loan and Will She Be Fed a Lifetime? Microcredit, Aquaculture and Capabilities in the Bolivian Amazon by Ahmed G. Eid Valdiviezo Bachelor of Arts, Universidad Privada Boliviana, 2009 Supervisory Committee Dr. Mark Flaherty, Supervisor (Department of Geography) Dr. Denise S. Cloutier, Departmental Member (Department of Geography) Stewart Anderson, Additional Member (VanCity) iii ABSTRACT Supervisory Committee Dr. Mark Flaherty (Department of Geography) Supervisor Dr. Denise Cloutier (Department of Geography) Departmental Member Stewart Anderson (Department of Geography) Additional Member The development interventions of the past thirty years have relied on microcredit and other microfinancial services as a way to include the poor in the dynamics of the free market, so they may have a better chance of benefiting from economic development. Nowadays, the microfinance industry in Bolivia is highly developed, and the country is usually mentioned next to Bangladesh and India as a success case of microcredit, as a myriad of microfinancial institutions operate combining credit, savings and insurance with education, women empowerment or production efforts. In this setting, the Peces Para la Vida II project, was started in Bolivia in early 2015, with the objective of improving food security in Bolivia thorough the promotion of small scale aquaculture and fisheries in the Bolivian Amazon. As a part of this promotion strategy, a microcredit component was included in the project with the intention of scaling up the benefits found in the first stage of the project via an individual microcredit component and a group microleasing operation. Using a qualitative application of an analytical framework that combines Amartya Sen's capability approach and the Department for International Development's sustainable livelihoods approach, this thesis will argue that unless certain conditions on access to markets that enable savings and wealth creation are met, individual microcredit alone may not be sufficient to lead its users towards capabilities that ultimately improve their access to better endowments of various types of capitals, and that the group leasing operation appears to be more promising in terms of allowing those involved as it tackles productivity and market issues simultaneously, but with an implementation plagued with problems and the short time the operation has been underway, it would be premature to be definitive about these results. iv Contents Supervisory Committee ii Abstract iii Table of Contents iv List of Tables vii List of Figures viii Acknowledgements x Dedication xi 1 Introduction 1 1.1 Nature of the problem . 1 1.1.1 The Peces Para la Vida II project . 3 1.2 Research purpose . 5 1.2.1 Research objectives . 5 1.3 Structure of thesis . 6 2 Background 7 2.1 A brief description of Bolivia . 7 2.1.1 Bolivian land reform . 8 2.1.2 Coca leaf production . 11 2.2 Aquaculture, fisheries and microcredit . 12 v 3 Methodology and methods 17 3.1 Theoretical framework: Neoliberalism and microcredit . 17 3.2 Analytical approach: Combining Sustainable Livelihoods with Capabilities 20 3.2.1 The Capability Approach (CA) . 21 3.2.2 The Sustainable Livelihoods Approach (SLA) . 23 3.2.3 The Combined Capabilities and Livelihoods Approach (CLA) . 25 3.3 Methodology: Directed content analysis . 32 3.4 Methods . 32 3.4.1 Semi-structured interviews . 32 3.4.2 Sampling and recruitment . 32 3.4.3 Ethical considerations . 35 3.4.4 Interview locations and field research . 36 3.4.5 Recording and transcribing interviews . 37 3.4.6 Coding interviews . 37 3.4.7 Additional data sources . 38 3.4.8 Final remarks on methods . 39 4 Research findings 41 4.1 Analysis of participants' administrative data at CIDRE IFD . 42 4.1.1 Profile of a PPV II microcredit client and his aquaculture business . 53 4.2 Analysis of relevant macrolevel frame conditions . 54 4.2.1 Institutional frame conditions . 54 4.3 Analysis of the five capitals . 55 4.3.1 Natural and physical capital . 55 4.3.2 Financial capital . 57 4.4 Analysis of microlevel frame conditions . 60 4.4.1 Environmental conditions . 60 4.4.2 Institutional conditions . 62 4.5 Microcredit and the individual livelihood level . 62 4.5.1 Personal conversion factors . 62 vi 4.5.2 Choices and livelihood strategies . 65 4.5.3 Achieving functionings from an expanded capability set: The role of microcredit in wealth creation and business profitability . 69 4.5.4 A productivity approach towards enhanced capabilities: Leasing and the case of the Asociacion de Productores Norte Integrado . 74 5 Discussion 81 6 Conclusions 89 A Additional Information 93 A.1 Interview questionnaires . 93 A.1.1 Individual producer interview . 93 A.1.2 Leasing participant interview . 98 A.1.3 Branch manager interview . 103 A.2 Coding structure and summary statistics . 108 A.2.1 Summary for leasing operation data . 108 A.2.2 Summary for individual client data . 111 A.3 Certificate of ethics approval . 116 Bibliography 117 vii List of Tables Table 2.1 Features of agricultural property . 10 Table 3.1 Client sample . 34 Table 4.1 PPV II: Summary of disbursed loans in the PPV II project . 45 Table 4.2 PPV II: Demographic indicators of individual microcredit clients ................................... 47 Table 4.3 PPV II: Descriptions of loan features by source of funding . 48 Table 4.4 PPV II: Descriptions of loan features by loan purpose . 49 Table 4.5 PPV II: Descriptions of loan features by loan size . 50 viii List of Figures Figure 1.1 Bolivia: Municipalities where the Peces Para la Vida project operated 4 Figure 2.1 Contribution of aquaculture to poverty reduction . 13 Figure 3.1 The Capability Approach . 22 Figure 3.2 The Sustainable Livelihoods Approach (Source: [16]) . 25 Figure 3.3 Assets, livelihoods and poverty . 26 Figure 3.4 Relationships of resource access, use and transformation . 28 Figure 3.5 Adaptation of Sen's framework in [31] . 28 Figure 3.6 A Combined Capabilities-Livelihoods Approach (Source: [28]) . 30 Figure 4.1 Evolution of loan disbursement and its geographical distribution . 43 (a) Cumulative loan disbursement . 43 (b) Loan disbursement by branch . 43 Figure 4.2 PPV II: Distribution of loan size, total assets and net worth . 51 Figure 4.3 PPV II: Distribution of total annual profit . 52 Figure 4.4 Total credit portfolio evolution of aquaculture and related activities in Bolivia and in the study area . 58 (a) Bolivia: National credit portfolio evolution . 58 (b) Bolivia: National credit portfolio composition . 58 (c) PPV area: Credit portfolio evolution . 58 (d) PPV area: Credit portfolio composition . 58 Figure 4.5 Number of aquaculture and related activities in Bolivia and in the study area . 59 (a) BOL: Credit clients evolution . 59 (b) BOL: Credit clients composition . 59 ix (c) PPV area: Credit clients evolution . 59 (d) PPV area: Credit clients composition . 59 Figure 4.6 Delinquency evolution of aquaculture and related activities in Bolivia and in the study area . 60 (a) Bolivia: Portfolio delinquency evolution . 60 (b) PPV area: Portfolio delinquency evolution . 60 Figure 4.7 Bolivia: Average monthly temperature and rainfall (1901-2015. Source: World Bank) . 61 x ACKNOWLEDGEMENTS I would like to thank: My parents for always supporting me. Mark Flaherty, Denise Cloutier, Julio Alem and Alvaro Moscoso for mentoring, support, encouragement, and patience. the International Development Research Center and the Peces Para la Vida project for funding me with a Scholarship. for the broken egg on the floor/for the 5th of july/for the fish in the tank/for the old man in room 9/for the cat on the fence/for yourself/not for fame/not for money/you've got to keep chopping/as you get older/the glamour recedes/it's easier when you're young/anybody can rise to the/heights now and then/the buzzword is/consistency/anything that keep it/going/this life dancing in front of/Mrs. Death Charles Bukowski xi DEDICATION To Julian and my parents. Chapter 1 Introduction 1.1 Nature of the problem As of 2015, Bolivia is ranked 119 out of 188 countries in UN's Human Development Re- port ([33]). During the past ten years, Bolivia has reduced its poverty headcount ratio at 1.90 USD PPP per day from from 20.4% to 6.8% ([21]), while Latin America has done so at a more moderate rate, as the portion of the population living under this poverty line fell from 12.9% to 5.4%. This accelerated reduction of monetary poverty in Bolivia was due to both remarkable reductions in income inequality - the Gini index fell from 58.5 to 48.4, and to economic growth, as gross national income per capita grew at a yearly rate of 3.2% during the past decade - Latin America only grew at a yearly rate of 2.1% ([21]). However, this encouraging trends in poverty were not equally distributed throughout the country: in 1999 rural poverty was 2.5 times higher that urban poverty, but that ratio increased to 3 in 2011 ([24]). Despite being encouraging, Bolivia's performance on economic output and inequality only speak about the country's advances in monetary poverty, and the fact that despite being an outstanding performer in its region it remains in the worlds bottom half in development, is puzzling, and given that most of the improvements occurred in urban areas and through the informal labor market ([24]), show a need to direct more attention towards the performance and focus of development intervention in rural areas of the coun- 2 try.