Peru’s Financial Crisis Fuels Surge in Loan Sharking and Extortion: A Growing Concern for authorities and community leaders
Overview
Amidst a deepening financial crisis worsened by the COVID-19 pandemic, Peru has experienced a sharp increase in loan sharking and extortion cases, driven primarily by predatory ‘gota a gota’ loans.
The Rise of Gota a Gota and Extortion
- Extortion cases surge by 370%: From 4,761 cases in 2021 to 22,396 cases in 2023 (Attorney General’s Office).
- Significant increase in reported cases across Peru: 28 out of Peru’s 34 fiscal districts experienced a rise of at least 150% (Attorney General’s Office).
Origins and Spread of Gota a Gota
- Originated in Colombia: Early 2010s (Police reports).
- Spread to Peru: Started in Chiclayo, Piura, and Trujillo before reaching Lima and other regions by late 2017.
Gota a Gota’s Prey: Most Vulnerable Citizens
- Victims: Mostly unbanked Venezuelan immigrants and Peruvians during the economic downturn.
- Approximately 500,000 people: Relying on gota a gota loans according to credit organization FEPCMAC.
Reasons for the Popularity of Gota a Gota Loans
- Unbanked population: Making loan sharks an enticing alternative.
- Economic pressures: Borrowers desperate to pay off other debts or overcome financial struggles.
Exacerbating Factors
- Cap on interest rates: Making loan sharks more attractive to those in need of funds.
- Foreign competition: Venezuelan gangs entering the market and causing tension between groups.
Adaptation and Growth of Venezuelan Gangs
- Escalating issue: Complicating efforts to control and regulate the loan sharking industry.
- Tren de Aragua: Demonstrated ability to seize control of the market, as seen in Arequipa.
Abraham Valle, director of Colombia-based organized crime consulting agency Consultora Nacional de Criminología, explains:
“They’re not trying to compete head-on with existing groups; instead, they are forming alliances and waiting for opportunities to take control.”
Jorge Chávez, National Coordinator for the Attorney General Office’s organized crime division, adds,
“At least one major Venezuelan mega-gang, Tren de Aragua, has already demonstrated its ability to seize the market in the region of Arequipa, dislodging local gota a gota organizations ‘at gunpoint’.”