Connecting Tradition and Innovation: A Journey to Cochas Bajo, in the Peruvian Andes
An initiative by impactMarket, Ammer Cards, Celo Foundation, and the Peruvian NGO Agape Hands.
In September 2023, we initiated an exciting project pilot with Ammer Group, the Celo Foundation, and the Peruvian NGO Agape Hands to bring Unconditional Basic Income (UBI) and Microcredit to empower a community in Tarma, Peru. We shared an overview of this pilot in a previous article and we will now take you on a journey to the heart of the Andes.
Don’t worry about the high altitudes… Do expect to get as much excited about this pilot as we are!
Context: Financial Inclusion and Poverty in Peru
Financial inclusion and poverty are critical issues in Peru, affecting millions of its citizens. To paint a comprehensive picture of the situation, it’s important to consider various aspects related to access to financial services, financial literacy, poverty rates, and the state of crypto adoption and development in the country.
Access to Financial Services and Financial Literacy:
Financial Inclusion: Access to formal financial services historically has been limited in Peru, particularly in rural areas. According to data from the World Bank, in 2017 only approximately 36% of the adult population had an account with a formal financial institution, leaving a significant portion of the population unbanked or underbanked.
Financial Literacy: Limited financial literacy is a barrier to financial inclusion. Many Peruvians, especially in remote regions, lack the necessary knowledge to make informed financial decisions or to take advantage of available services.
Poverty Rates:
Poverty Incidence: Poverty is a persistent issue in Peru and, despite a positive improvement in the past years, the COVID pandemic negatively impacted the progress achieved so far. According to the World Bank, seven out of ten Peruvians are currently poor or have the risk of becoming poor. Approximately 60% of households in Peru continue to lack essential services, including but not limited to access to drinking water, sanitation, electricity, and internet.
Regional Disparities: Poverty rates are not evenly distributed throughout the country, with rural areas typically experiencing higher poverty rates than urban centers. The Andean region, where Tarma is located, has historically had higher poverty rates compared to the coastal and urban areas. Economic disparities and limited access to basic services are more pronounced in mountainous and rural regions, disproportionately affecting women in these regions.
Crypto Adoption and Development:
Penetration Among the Population: Crypto adoption in Peru is still in its early stages and hasn’t evolved substantially in the last 3 years in comparison to other countries. The use of cryptocurrencies for everyday transactions is limited to primarily international remittances.
Challenges: The use of cryptocurrencies faces various challenges in Peru, including regulatory uncertainty, lack of awareness, and concerns about financial stability. Additionally, many individuals in rural areas had limited access to the internet and technology, which further hindered adoption.
Opportunities: Despite these challenges, there was potential for cryptocurrencies to address financial inclusion issues. Initiatives like our project in Tarma could help raise awareness about cryptocurrencies and their potential benefits in underserved communities.
Community: Cochas Bajo, Tarma, in the Peruvian Andes
Cochas Bajo is a rural community located in the district of Tarma, within the department of Junin. This community embodies the very essence of the Peruvian Andes, with its cultural richness and the resilience of its people against economic challenges. This pilot aims to contribute to both their economic well-being and the preservation of their cultural heritage. Cochas Bajo is characterized by its unique blend of aspects:
Demographics: Cochas Bajo is home to a predominantly indigenous population, largely of Quechua descent. This demographic diversity adds to the rich cultural tapestry of the region.
Geography: The community is situated in the picturesque Tarma region, surrounded by the breathtaking Andes mountains. The geographic isolation of this area has, historically, presented challenges in terms of access to basic resources and services.
Economy: Cochas Bajo primarily relies on agriculture, with subsistence farming being a common livelihood. Economic opportunities have traditionally been limited, contributing to the high poverty rates in this region.
Culture: The culture of Cochas Bajo is deeply rooted in Andean traditions, including music, dance, and artisanal craftsmanship. The people here take great pride in preserving their cultural heritage.
Social: The community is closely knit, with strong social bonds and a sense of collective identity. However, limited access to financial services and opportunities is a recurring issue.
The Protagonists in this Pilot
Beneficiaries: 36 women and 14 men were selected by the NGO Agape Hands to receive the UBI. The pilot was comprised of 3 people aged between 18 and 29, 26 aged between 30 and 49, and 21 people over 50 years old. Yes, we are talking about grandparents transacting crypto in a small rural village in the Peruvian Andes 🤯
You might be thinking… HOW? That’s the beauty of this groundbreaking partnership between impactMarket, Ammer Cards, Celo Foundation, and the NGO Agape Hands. The best in accessible Web3 technology with local roots, leveraging the ground experience of Agape Hands and a remarkable sense of community to drive seamless crypto adoption with a positive impact.
Merchants: Two women between the ages of 18 and 29 were selected to participate in this pilot being empowered and engaged in a few different ways. First, they applied for and received microcredit to invest in their businesses. Second, they received a PoS (Point of Sales) device with the Ammer Pay app installed to enable beneficiaries to easily spend their UBI. Third, thanks to Ammer’s simple-to-use solution and the UBI incentivizing the beneficiaries to consume more, they could see an increase in demand and profit.
The two small stores are mostly focused on selling groceries and a variety of basic items. Before this pilot, they only accepted payments in cash. Having access to new forms of digital payments, such as crypto, helps incentivize both merchants and their customers to explore and benefit from other financial solutions.
Preliminary Results
Showcasing the impact of the initiative, these two merchants utilized their funds to make substantial contributions to the local economy. According to insights from Ammer Cards, to date, one merchant sold goods totaling 1,678 cUSD, while the other one recorded sales of 1,579 cUSD. The beneficiaries, leveraging their newfound financial resources, engaged in 220 transactions, amounting to a total value of 3,256 cUSD, through purchases from the participating merchants.
Breaking down the transaction dynamics, the first transactions averaged 25.9 cUSD, the second batch of transactions averaged 15.8 cUSD, and subsequent transactions, were consistently 10 cUSD or less. This diversified usage of funds reflects a thoughtful approach by the beneficiaries.
One significant learning emerged during the course of the pilot: in the initial stages, beneficiaries expressed concerns about high transaction fees, leading them to make bulk purchases. However, as the pilot progressed, participants learned that cUSD fees were minimal, enabling them to spend their funds more often on day-to-day needs without incurring substantial losses. This newfound knowledge empowered beneficiaries to make more frequent, smaller transactions, enhancing their overall quality of life.
Up next…
As this 3-month pilot is coming to an end, stay tuned for upcoming articles, social media posts, and an inspiring short documentary to know all about the outcomes, stories from the participants, and the next steps of this journey (did someone say microcredit? 👀).
Ammer Group
Ammer is a Swiss company that develops innovative products and solutions based on Web3 technology. The company’s mission is to provide the world with a payment system that would allow billions of people who do not have access to traditional banking systems to participate in the global economy.
Celo Foundation
A mission-driven foundation responsible for education, community engagement, and ecosystem support of the Celo platform.
impactMarket, The Human Empowerment Protocol
impactMarket provides accessible financial solutions to empower underprivileged people worldwide, such as Microcredit, Learn & Earn, Unconditional Basic Income (UBI), and the crypto wallet Libera.
You can find impactMarket also on Twitter, LinkedIn, Facebook, Instagram, GitHub, Youtube, Telegram, and Discord.
