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APOYO Consultoría

is the leading firm in business advisory services in economics, finance, business and public administration

Proposal to improve minimum wage policy in Peru

Four measures for the provision of basic infrastructure “sets” to the most excluded population

03/21/2017

Although Peru has managed to significantly reduce poverty levels in recent years, there are still many areas in which poverty prevails. In this context, it is very important to acknowledge that there is an unprecedented opportunity to foster the economic development of the most excluded families in the country. APOYO Consultoria has identified four measures that will contribute to this problem’s solution.

The most effective way of seizing this opportunity is through the Fund for the Economic Inclusion of Rural Areas (Fonie, for its Spanish acronym), which was created to increase access to four basic services with simultaneous interventions (“sets” of interventions) in high-priority areas. Even though Fonie’s approach and regulations render it a powerful policy tool, the results it has attained in 2013 have been below expectations. The “sets” are not complete (they do not consider the four basic services) and it is mainly financing small-scale works.

Considering the above, in this Policy Proposal APOYO Consultoria recommends changing Fonie’s operation strategy in two key fronts. First, isolated interventions should be replaced by sets of interventions. Second, the fund’s operation should not depend exclusively on public works but should also be enabled through all available investment modalities, including PPP and Works for Taxes.

For the design of this proposal, Hugo Santa María, José Luis Escaffi, José Carlos Saavedra, and Andrea Gonzales-Vigil have consulted with multiple experts, public authorities, and private sector representatives. We expect the proposed measures to help improve the fund’s management, and its focus on providing sets of basic infrastructure (its main objective), thus allowing a significant increase in the access of Fonie beneficiaries (almost five million individuals) to high-priority basic services.