Monday, August 8, 2011

Passport Series: Ecuador: Part 1: Country Background

This month’s Passport Series focuses on Ecuador, thanks to your votes on Kiva’s Facebook page! Ecuador is a South American country with dynamic ecosystems, which are home to the Amazon Rainforest, Andean Mountain Range, Galápagos Islands, and Pacific Coastal region. Follow us throughout the month of August as we learn about Ecuador’s country profile, its microfinance sector, and the lives of its Kiva borrowers.

The History

Ecuador is known for having an established ancient civilization prior to Spanish arrival in the New World. The Inca Empire ruled throughout Ecuador until the arrival of Francisco Pizzaro and his force of Spanish Conquistadors in 1532. Like much of South America, Ecuadorian culture blends the influences of Spanish colonialism with the resilient traditions of pre-Columbian peoples. Within two years the Conquistadores occupied and defeated the Inca Empire. Colonial rule lasted until 1882 when Ecuador gained independence from Spain.

Quito, Ecuador - Photo Credit: Kristen Casey

More recent history includes; border wars with Peru, political instability and erratic presidential terms. Protests in Quito contributed to the mid-term ousting of three of Ecuador's last four democratically elected Presidents. In September 2008, voters approved a new constitution; Ecuador's 20th since gaining independence. Rafael Correa has been president since January 2007. The president and vice president are elected on the same ticket by popular vote for a four-year term and can be re-elected for another consecutive term; the last election was held on 26 April 2009 with the next to be held in 2013.

The Geography

Photo Credit:

Although relatively small (near the size of Nevada), Ecuador can be broken up into four distinct regions: the Amazon Rainforest, Andean mountain range, Pacific coast and Galápagos Islands (distinguished by color on the map above). Ecuador’s Cotopaxi Mountain, located in the Andes, is the highest active volcano in world! With its untouched beauty and a unique environmental makeup, Ecuador attracts a plethora of investors; however, some of the attention that fosters economic development results in irreversible environmental damage.

Current Environmental Issues

The Ecuadorian Amazon and the Galápagos Islands are ecologically sensitive areas.
Ecuador is well known for its ongoing lawsuit with Chevron; the corporation is accused of polluting the Amazon Rainforest with an estimated 18.5 billion gallons of toxic wastewater. The Ecuadorian Amazon is the most bio-diverse watershed in the world! Unlike other areas of the Amazon, including the eastern Brazilian section, Ecuador’s western basin is a large, intact ecosystem. It is home to a number of indigenous groups, some whom lived in complete solitude throughout the 20th century. Currently, a number of oil companies from different countries are drilling in Ecuador. Many countries like Ecuador are often thrilled to sell their natural resources such as oil to stimulate capital. However, the country is also faced with the scary reality that this drilling is contaminating the region and causing deforestation. This disrupts both the ecosystem and the lives of the indigenous tribes that have settled here – clearly causing some tough choices for foreign investors and local governments.

Amazon Rainforest, Photo Credit: Onely Flores

The Galápagos Islands are home to an incredible amount of endemic species, including both terrestrial and oceanic plants and animals. The Galápagos Islands are labeled oceanic islands, as they do not come in contact with the continent. Their geographic position aided in the evolution of an immense amount of native species in which the life that exists on the 127 islands and islets do not breed anywhere else on earth. Half of all terrestrial life is endemic; specifically, 91% of reptiles, 79% of mammals, 56% of insects, 49% of birds, 42% of plants are native. The archipelago’s natural composition makes for a unique and irreplaceable region, and due to the exciting and diverse sites of these islands, tourism has exploded! Previously, international popularity put tourism before conservation, placing the entire ecosystem in danger due to problems accompanying overpopulation, pollution, unnatural migration, invasive species, and over-fishing. Conservation efforts for the Islands are widely supported!

Galápagos Islands

The Economy

Ecuador’s struggle to initiate a strong development path eased, by recognizing and utilizing its natural and universally unique environmental composition. Ecuador is substantially dependent on its petroleum resources, which have accounted for more than half of the country's export earnings and approximately one-third of public sector revenues in recent years.

In 1999 and 2000, Ecuador suffered a severe economic crisis with GDP decreasing by 5.3%. Poverty increased significantly, the banking system collapsed, and Ecuador defaulted on its external debt. In March 2000, the Ecuadoran Congress approved a series of structural reforms, including dollarization (switching currencies completely to the US Dollar). Learn more about the controversy over dollarization in Ecuador - read, It’s All About the Benjamins, Baby by: Leigh Madeira, KF10.

More recently, the Ecuadorian economy contracted again due to the global financial crisis, the sharp decline in world oil prices and a slow in their remittance flows. The Ecuadorian government estimates that growth has picked up; however, many commentators are raising concern that some of Correa’s presidential choices have generated economic uncertainty and discouraged private investment.

The People

Ecuador currently has a population of 15 million, and while the capital city is Quito, the country’s largest city is Guayaquil with 2.6 million inhabitants. In 2010, 33.1% of the population lived below the poverty line of $2 a day. Ecuador’s population is made up of 65% Mestizos (mixed Amerindian and white), 25% Amerindian, 7% Spanish and others and 3% Black. While Spanish is the official language, many indigenous languages are spoken, especially Quechua! Similar to most Latin American countries, 95% of Ecuador’s inhabitants are Roman Catholic.

Indigenous Women, San Rafael Community near Riobamba
Photo Credit: Chelsea Arndt

The indigenous populations of the Ecuadorian Andes have been particularly active in pursuing development with an indigenous focus. They represent the continent’s strongest indigenous movements, employing a variety of strategies to improve economic opportunities for their communities while maintaining and defending their culture. Among these efforts is their participation in the first World Bank program dedicated to specifically to ethno-development.

For more stories from the country, read some fun facts about Ecuador in Kimia Raafat’s Motorcycle Diary from Guayaquil!

Stay tuned this month as we continue to explore Ecuador's microfinance sector and highlight Ecuadorian borrowers!