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Bolivia
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Situation and Cooperation
The structure of Bolivian society is characterised by inequality. Socio-economic dividing lines run between the cities and the countryside, the highlands and the lowlands. The indigenous population, which accounts for about 55 per cent of the total population, is largely subjected to social and political exclusion. More than two-thirds of the population work in the informal sector, in which workers are not protected by social standards. The provision of social services is also very limited.
Bolivia's traditional political parties did not live up to their role of representatives of the people's interests and in recent years have largely sunk into insignificance. The entire political system is beset by a crisis of legitimacy and credibility. The capacity of public institutions is also weak. The administration is highly bureaucratic; its employees are underpaid and often poorly trained. Corruption is widespread.
Support for the Morales government's reform policy is strong, as was demonstrated by the population's approval of the new constitution in 2009 and the re-election of the government. Its main objectives are to strengthen the rights of the indigenous population, decentralise administrative structures and sustainably reduce poverty. There is, however, massive resistance to this policy among existing elites, especially in the economically strong lowlands, and this has led to violent clashes and the division of the country along regional lines.
The international partners, the World Bank and the International Monetary Fund (IMF), assess Bolivia's economic situation and the government's macro-economic management positively. By comparison with the period 2002-05, state revenues have more than doubled during the first term of the Morales government and have led to a significant increase in public investment. The underlying reason is the large profits from the export of minerals combined with the nationalisation of key companies in the resource sector.
In the medium term, however, only low growth rates are expected; this is because of the very low level of private investment. The country's limited potential for economic development is concentrated in petroleum and natural gas production, mining and agriculture. Bolivia has the second-largest reserves of natural gas in South America, after Venezuela. The country's most important trading partners are the USA and its neighbouring states, which include Brazil, Argentina, Colombia and Chile.
Notwithstanding moves towards reform and wide-ranging debt cancellation initiatives in 2001 and 2006, poverty in Bolivia is still severe and widespread, especially in rural areas. Annual per capita income has risen in recent years but is still only 1,630 US dollars (2009). Bolivia has risen 18 places on the Human Development Index (HDI 2010) and now ranks 95th out of 169 countries.
Factors obstructing development include poor infrastructure, the small domestic market and an underdeveloped entrepreneurial culture. Unfavourable climatic and geographical conditions also play a part, especially in the Andean highlands.
Development potential
Bolivia has undergone fundamental change since the Morales government came to power. Despite numerous social and political problems, the atmosphere is distinctly optimistic. Societal change is on the whole proceeding peacefully and is supported by the majority of the population. Traditional self-help structures and a well-organised civil society enable the wide-ranging government reforms to be discussed and implemented in the context of an inclusive social dialogue process. Institutions such as the Catholic church and the newly appointed ombudspersons at district level enjoy positive social acceptance and have often mediated successfully between the state and social groups.
The election of Evo Morales as president awakened hopes that social tensions might be reduced and the vast majority of the indigenous population might experience an improvement in living conditions. The UN's Human Development Report (HDR) of 2010 states that important progress has been made towards achievement of the Millennium Development Goals (MDG), especially in relation to the reduction of extreme poverty (MDG 1), access to education (MDG 2), and health care (MDG 6).
President Morales swiftly enacted the renationalisation of the country's gas reserves. Now the Bolivian state enterprise YPFB (Yacimientos Petrolíferos Fiscales Bolivianos) again controls the nation's oil and gas reserves, which had been privatised in 1997. At the end of October 2006, new contracts were signed with all international oil and gas producing companies, securing higher revenues for the Bolivian state. However, foreign observers are concerned that the government does not see cooperation with private investors as a sufficiently important priority. The country is reliant on private investment and needs to offer investors an attractive investment climate. Despite these fears, the donor community sees potential for lasting positive development in Bolivia.
Another sector with identifiable development potential is agriculture. A key element of government policy announced to help fight poverty is comprehensive land reform. The new constitution limits land ownership to 5,000 hectares, and there are plans to allocate hitherto unutilised land to impoverished small farmers.
In the highlands and mountain valleys there is untapped potential for irrigated farming. On the eastern slopes of the Andes, crops such as coffee, cocoa and tropical fruits would offer an economic alternative to coca production. With high-quality products, organic produce or niche products, even small farmers could successfully enter new markets.
Priority areas of German cooperation with Bolivia
The prime objective of Germany's commitment to Bolivia is poverty reduction. Cooperation concentrates on three priority areas:
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Governance and democracy (administrative and judicial reform, civil society)
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Water supply and sanitation
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Sustainable agricultural development
In addition, climate change mitigation and the use of renewable energies are becoming increasingly important. Cooperation in these areas is being planned and incorporated into existing projects in the three priority areas.
At the 2011 government negotiations, Germany committed total funding of 45.2 million euros to Bolivia for the period 2011/2012.
Governance and democracy (administrative and judicial reform, civil society)
Bolivian-German cooperation in this area aims to support the capacity development of state institutions, and increase the participation of civil society groups while at the same time strengthening their orientation toward the common good. To this end, various mechanisms will be introduced to involve the people more. The aim is the creation of a functioning and transparent administration and judicial system, effective structures for democracy and rule of law within a decentralised state, the involvement of all stakeholders and the combating of corruption.
Under his National Development Plan and the new constitution, President Morales is endeavouring to reduce poverty and improve the inclusion of the indigenous population. Germany is promoting these aims inter alia through the programme for decentralised governance and poverty reduction, PADEP (Programa de Apoyo a la Gestión Pública Descentralizada y Lucha contra la Pobreza). This offers extensive advice for partners at all state levels, from local authorities to individual ministries.
In response to the politically motivated use of violence and violation of the principles of the rule of law, PADEP also includes components to promote peaceful conflict transformation and a willingness among the relevant social actors to engage in mutual dialogue. Financial Cooperation is also being deployed to strengthen democratic and autonomous local administrations, and to support the National Plan to Eradicate Extreme Poverty (Plan Vida).
German development cooperation is also seeking to strengthen national and regional parliaments. As part of this work, support is being provided to the legislative assembly to help it develop its procedures, for example through the training of delegates, improved information systems and greater involvement of citizens. At regional level advice is being provided to the newly established parliaments in Chuquisaca and Tarija.
Water supply and sanitation
In this field of work, thanks to Germany's long-standing commitment, development cooperation is able to play an important part in helping shape sector policy and in the sustainable implementation of infrastructure projects. Germany is currently chairing the group coordinating the work of international donors, for instance. The principal objective is to provide socially disadvantaged sections of the population in particular with access to an adequate supply of safe water, and to raise public hygiene standards by improving sanitation and conducting broad-based education campaigns.
To this end, the water supply and sanitation structure is being upgraded and expanded with German help, particularly in small and medium-sized municipalities, and this will be extended in the future to include peri-urban zones. The utilities are also being advised on infrastructure operation, efficient administration and the introduction of socially acceptable, cost-covering user charges. Through the establishment of special-purpose associations, municipalities and their citizens are to be enabled to manage their water supply and sanitation services as self-reliantly as possible, thus counteracting the country-wide atomisation of provider structures (there are currently some 28,000 water providers in Bolivia).
Sector-wide, Germany is also supporting core elements of Integrated Water Resources Management (IWRM) such as sustainable water pollution control, the reconciliation of competing water user interests (drinking water supply/sanitation – irrigated agriculture – industrial utilisation) and integrated management methods incorporating the new constitutional directives. One of the biggest challenges in this area is adaptation to climate change. In this context the new programme 'Water and Climate Change' is designed to help secure the water supply in particularly vulnerable regions.
Sustainable agricultural development
Although Bolivia is a large country in terms of area, its agricultural potential is heavily constrained by its topography, climate and soils. Only around two per cent of total land area is used for arable farming; more than half of this is in the lowlands. For German cooperation with Bolivia, the spotlight here is on satisfying the basic needs of the people in extremely poor rural areas in the valleys and high plains of the Andes.
In this field German support focuses on irrigation. Traditionally, irrigation systems in the Andes are built by the farmers themselves and operated collectively. German development cooperation supports this tradition: as components of a national programme, irrigation projects are being developed in cooperation with stakeholders, and implemented in the form of self-help measures. These measures are complemented by support for integrated watershed management.
Other programmes help small-scale producers with agricultural production and marketing. Particularly important aspects are the maintenance of existing nature conservation areas and sustainable management of sensitive ecosystems. In coordination with the other priority areas, greater emphasis is to be placed in future on measures for adaptation to climate change.
Debt relief
In addition to these three priority areas, Germany is actively involved in efforts to get Bolivia's debt cancelled. In 2001, the country submitted an extensive Poverty Reduction Strategy Paper (PRSP), thus qualifying for extended debt relief under the HIPC II Initiative. Under the terms of the agreement, the funds released as a result of the much reduced expenditure on debt servicing over the next 15 years must be used directly for tackling poverty in Bolivian local communities.
Moreover, Germany is supporting the debt relief initiative of the World Bank and International Monetary Fund approved by the G8 in Gleneagles in July 2005, under which Bolivia's multilateral debts will be cancelled. Germany was also among the advocates of debt relief vis-à-vis the Inter-American Development Bank (IDB). Bolivia has been released from a total debt burden of 4.4 billion US dollars under these debt relief initiatives.
Germany itself has cancelled Bolivia's entire bilateral debts, amounting to 379 million euros. The Federal Republic has thus gone considerably further than agreed under the terms of the HIPC II Initiative.
Information
Publications
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Latin America Dossier
German Development Cooperation with Latin America and the Caribbean
Topics 184
(PDF 5 MB, accessible) -
Promotion of Good Governance in German Development Policy
Strategies 178
(PDF 277 KB, accessible) -
German Development Cooperation in the Sanitation Sector
Special 157
(PDF 414 KB, accessible)
