A couple of weeks ago, thanks to CIPE’s friends at the Institute for Liberty and Democracy (ILD), I was able to visit a very special shopping center in Lima, Peru. The name of the shopping mall is Polvos Azules: it derives its name from the street where a group of informal vendors used to be located. These informal vendors are now the owners of the Polvos Azules shopping center.
In the 1980s, approximately 5,000 street vendors were forced by the city to abandon their business locations and move to the Polvos Azules area. At that time, these poor entrepreneurs were widely considered a nuisance. Hernando De Soto’s organization, ILD, came to the aid of these entrepreneurs, recognizing their desire to make an honest living, improve their lives, and thereby make a productive contribution to society. ILD worked with the informal vendors to accomplish legal reforms, giving even small businesses the chance to be officially recognized.
When visiting the shopping center I was truly amazed. These small entrepreneurs that used to be on the streets of Lima have had a tremendous success. The association of informal vendors was able to secure bank financing and purchase the land to build a shopping center for around 25 million dollars. Today the shopping center is worth about 80 million dollars and the association has plans to continue expanding. Each small shop in Polvos Azules looks very organized and it is hard to believe at times that these same vendors were once trading on the streets. Now, the shopping mall even has a local branch of a bank. The management of the shopping center showed me with great pride their latest addition: two escalators- a considerable investment.
Meeting with the people of Polvos Azules really reminded me of an important thing. Latin America is full of entrepreneurs, of people that work hard every day to better their lives and those of their families and communities. What has been missing are the possibilities for these people to truly capitalize on their efforts and construct a better future for themselves. The case of Polvos Azules is a clear example that when an institutional framework is created that helps people gain access to credit—thus giving people an opportunity—they will respond. One topic that I am interested in finding more about is how the association of informal vendors was able to organize in such a way that it could carry out all the necessary steps to purchase the shopping center and to sustain it over so many years. What we have here is a true recipe for success that we need to learn more about so we may start to understand how to replicate it.
Published Date: October 05, 2007