CommentaryFood & Drinks

Chicken Fries, Economists, and Poverty

A lead economist for the World Bank’s Development Group, Leora Klapper, published an intriguing article in Thursday’s Guardian about how the world’s poor raise money without access to formal banking. She gushed over the Peruvian pollada (even though she spelled the name wrong: “pollado”), a chicken roast people throw when they need to raise money, generally for an emergency or for a special need.

On weekends, these pop up in the neighborhoods of Cuzco, put on by families, groups of people and neighborhood associations. While grilling chicken is very popular, people will cook up other meats and call the event a parrillada, at the same time they sell beer and provide music on loud speakers.

Prior to the event the sponsors will plumb networks, going door to door selling tickets. If they do not get pre-sales they have to come up with the money to invest in the raw meat, speakers, chairs, tables, and beer. This can be a substantial sum of money in and of itself and people run the risk of losing it if they cannot get enough people to come to consume and party so that they recoup their investment and earn money.

As a result, the pollada tends to be a group effort. It is very hard for an individual to come up with the capital necessary for a public festivity. Poor people can only access these events if they belong to those groups.

Chicken at a Pollada
Chicken at a Pollada

Another group means of raising capital that is common in Cuzco is the pandero. It is a savings association. People gather together regularly and give an established amount as a contribution. They also share food, gossip, laughter, and fun. At the end of the event the collected money is given to one of those present. They also collect more for special funds, such as a Christmas fund in order to provide each member a special Christmas basket.

Nevertheless, it is difficult for the very poor to avail themselves of these since they often lack the money in hand at any given moment to do so. The only way they can is to invest their time in social relations that will allow them to benefit.

One of the main points of Klapper’s article is that the poor tend to lack access to formal banks. They may have informal means of savings, such as those involved in groups, but they do not have access to loans, bank accounts, and credit cards. As a result, the article suggests informality is poverty. That may not be the case

In Peru, banks are spreading their services to an ever wider swatch of the population. As a consequence, the people who participate in polladas probably have bank accounts and maybe even credit cards now, though they are probably not adequate for their full financial needs. Like most people, they live between the formal and the informal, the need to rely on friends and family and to rely on banks.

This is the group that Peru is officially moving out of poverty at rapid rates, meaning they have more income and more reliance on formal services such as banks. Nevertheless there is still a segment that remains unserviced, for good or bad. They are the challenge for Peru’s Neo-Liberal government and its World Bank Allies.

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