Peru’s Financial Vulnerability Fuels Extortion and Loan Sharking Epidemic: Gota A Gota Takes Over
In the bustling streets of Peru, financial desperation and criminal opportunism have collided, leading to an alarming surge in cases of loan sharking and extortion.
Alarming Statistics
According to the latest reports from the Attorney General’s Office, extortion cases shot up an astounding 370% between 2021 and 2023, from 4,761 to 22,396, while overall crime rose by a staggering 20% in the same period.
Predatory Practices: Gota A Gota Loans
The dark underworld of Peruvian finance is growing increasingly competitive, with predatory practices such as ‘gota a gota’ or ‘drop by drop’ loans driving the trend. These loans, characterized by extortionate interest rates, accounted for a staggering six times as many reports to the Interior Ministry’s complaints platform as all other forms of extortion combined in 2023.
Origins and Spread
The phenomenon of gota a gota first emerged in Peru around a decade ago, starting in the northern cities of Chiclayo, Piura, and Trujillo before spreading like wildfire to Lima and beyond. The capital city, with its half a million reported cases in 2023, remains the epicenter of this illicit financial market.
Criminal Network’s Reach
A 20-member Venezuelan-Colombian gota a gota group, dismantled by police in Lima on March 16, is a chilling reminder of the criminal network’s reach (Source). In addition to the group’s vast arsenal of guns and explosives, over 4,500 people in Peru owe gota a gota debt.
Drivers of Exploitation
Desperation and financial vulnerability are the primary drivers of exploitation in this cycle. Around half a million Peruvians and over a million Venezuelan immigrants, many of whom lack residency status or formal access to financial institutions, are the most vulnerable targets. According to the World Bank Group study (Source), almost half of Venezuelans in Peru were unbanked as of September 2022.
Economic Circumstances
The Peruvian population is indeed in financial distress. Poverty levels are on the rise due to the COVID-19 pandemic (Source) and recovery efforts have been slow. These circumstances push desperate individuals into the hands of extortionists and loan sharks.
Foreign Competition
However, the situation is not only domestic; foreign competition is exacerbating the issue. Colombian groups have traditionally controlled the gota a gota market but are now facing challenges from recently arrived Venezuelan gangs. These new players may seek alliances with existing groups to eventually take control. In some cases, they have succeeded. According to reports, Peru’s Tren de Aragua gang, a powerful transnational Venezuelan mob, has taken over the lucrative gota a gota market in the Arequipa region of southern Peru [(Source)](https://www.peru21.pe/ economia/lucha-contra-la-usura-peru-arequipa-tren-de-aragua-302714).
Concerns and Solutions
With financial instability fueling the demand and criminal networks continuously expanding, the Peruvian government faces an uphill battle against these predatory financial practices. The vulnerable population must remain vigilant and seek assistance from law enforcement or alternative financial institutions whenever possible.
A passer-by reads an advertisement for a loan.