What do you notice first about a Third World slum?
You see numbing uniformity, for one thing. You focus on one home: walls made of cardboard and woven straw matting, a piece of tin slung across for the roof. It seems casual, temporary—the kind of structure bored Cub Scouts might throw together on a lazy summer afternoon.
But next to that home stands another just like it, and another; they stretch for miles—yes, miles—in all directions. Around the world, the names for slums may vary—shantytown, favela, barrio—but the construction does not.
In Lima, Peru, a wiry, tanned young American named David Wroughton stands in a slum neighborhood of 100,000 people, trying to explain to some visitors how such “instant cities” come about. Wroughton directs a Christian agency called ACUDE (a Spanish acronym for United Christian Action for Development) that works in these slums.
“Peru calls these areas pueblos jovenes, or ‘young towns,’ ” he begins. “In an effort to encourage land redistribution, a former government relaxed the laws against squatters. If you own a plot of land that is not being cultivated, a group of 20 to 50 families can get together and launch an ‘invasion.’ They just show up one night, throw together these instant dwellings, and raise a flag. You cannot expel them, and eventually they will gain legal rights to your land.”
The land policy has changed the face of Peru. So many settlers have flooded in that pueblos jovenes now fill virtually every vacant space in Lima. Slums, not suburbs, encircle the city, giving shelter to more than three-and-a-half-million people.
According to Wroughton, the pueblos jovenes go through several stages of progress. At first, fights may break out over property lines. No city services exist, of course, so each household digs a simple hole in the ground to serve as a toilet. Trucks bring in loads of water to sell at extortionate prices.
After a year or so of haggling with the government, a community may get water, electricity, and perhaps even a sewerline. Houses of sun-dried brick gradually replace the shacks. Vegetation appears: zucchini plants and grass and jacaranda trees. Finally, community leaders attempt to obtain title to the land they have invaded, a laborious process that may take ten years and require a few mass demonstrations in front of the presidential palace.
Thus, minicities have sprung up all around Lima. In this staunchly Catholic country, the pueblos jovenes take on poignant names: Via Salvador—“Way of the Savior”; and Ciudad de Dios—“City of God.”
Wroughton’s organization assists such impoverished areas mainly by providing jobs, ACUDE (affiliated with Opportunity International, formerly the Institute for International Development) provides loans for very small businesses, which help create more employment (one job for every $1,250 invested) and fit in well with Third World cultures.
Free Enterprise At Work
It is a hot, muggy afternoon, and Wroughton is checking on ACUDE’s projects in an early-stage settlement. He steers his four-wheel-drive Toyota through a labyrinth of dirt alleys. There are no street names, or even streets. Children shiny with sweat dash into the alley after a battered soccer ball. A skinny dog rouses himself to bark at the newcomers. You can see into most of the shacks: bare rooms, no glass in the windows, a statue of the Virgin along one wall.
Wroughton stops at a storefront business, the Speedy Parrot. Inside, a shoemaker greets him warmly. ACUDE loaned him $500 for a stitching machine, and as a result his business went from subsistence level to a kind of family assembly line. Two children and a mother-in-law are in the kitchen, boxing and sorting shoes for stores downtown.
“We start with individuals like this man,” Wroughton explains. “No bank would consider giving him a loan. He had no assets, no balance sheet to examine. We use local churches to screen potential borrowers for us, which encourages a sense of responsibility and honesty.”
The next stop, a bakery, shows the progression from family business to an enterprise with several employees. The owner opens the door after a few loud knocks, and the yeasty smell of bread fills the air. The baker smiles constantly, bows slightly in response to every question, and then eagerly shows off his brick oven which is large enough to hold 25 tin sheets of rolls.
Appearances may deceive, Wroughton remarks on the way out. The baker is one of his problem cases. After ACUDE loaned him money for new equipment, the man squandered all his profits in a lottery for an automobile. “About 20 percent of our borrowers run late with their payments, although sometimes they have good excuses: a family member comes down with typhoid fever; a thief steals a week’s earnings. In all, about 5 percent of our loans are never paid back. Yet, we feel proud of the fact that 90 percent of our businesses are still operating after three years.”
ACUDE has gradually moved toward an aggressive free-enterprise stance, an evolution that reflects Wroughton’s own change in thinking. “Having grown up in Peru, I was scandalized by the wastefulness of U.S. society I saw while in college. For a time, I ate only food that I retrieved from garbage containers behind grocery stores. And when I came to Latin America [first Colombia, then Peru], I favored more socialistic programs. But I have seen too many of them flounder here.
“Under land reform, for example, Peru went from huge food surpluses to perennial shortages. The peasants had no training, and much of the land they worked became desert. People had no incentive to be productive. Here in Lima, the bloated government bureaucracy makes it almost impossible to start a small business. As a result, over half the economy is ‘informal,’ or unofficial.”
Wroughton concluded that ownership was the key ingredient needed to instill pride and responsibility. ACUDE built in incentive programs. If a tailor pays off a $500 loan, he can qualify for a $1,000 loan; if he repays that, he can get a $1,500 loan. In this way, some ACUDE-financed businesses have blossomed into enterprises with 10 or 11 employees. More than 500 small businesses are now surviving, even thriving, because of ACUDE, which began with an initial investment by American Christians of only $360,000.
Although the initial loan pool comes from contributions, ACUDE does not operate like a charity. Wroughton explains, “We charge maximum interest for our loans, which in Peru is 40 percent. That seems steep, but with a 60 percent inflation rate we still lose money on every loan. And we badger all those who fall behind in payments. We’ve learned the hard way that charity ‘handouts’ can breed a form of permanent dependence. I want these borrowers to be working their hardest to pay back loans and succeed in business. Only that spirit will make these families self-sufficient.”
For his last stop of the morning, Wroughton drives to a one-room store. It is a neat building, with a very limited assortment of goods: bread, Coca-Cola, cooking oil, chewing gum, pens, pencils. The manager, Toribia Chavez, insists on serving complimentary soft drinks to Wroughton and his guests. She has an open Bible on the counter, and she tells Wroughton she is praying for him and all the other employees of ACUDE. The meager stock in her store comes from one of their loans.
Chavez has 16 children, aged from 11 to 33. She runs through the names of the older children, proudly describing what each is doing now. One son is learning carpentry skills in an ACUDE training program. The income from her store supports the 10 children who still live at home and her disabled husband as well.
“That’s what makes it all worthwhile,” Wroughton says after the visit, as he ducks under the doorway and steps into bright sunlight. “You can read the gratitude on her face,” he says. We have worked with Senora Chavez for three years, and she now has the same feeling of success as the owner of a corporation in the U.S. She feeds her large family with dignity.”
By Philip Yancey.
