President Cristina Fernández de Kirchner announced yesterday a measure obligating banks to give loans to Argentine businesses equivalent to 5% of their total deposits. The new measure will result in $15bn in loans towards the production of goods and services on a three year term minimum with a fixed interest rate of around 15%. In addition, 50% of the credits will go to small and medium enterprises.

The measure has been put in place to tackle the reluctance of the banking sector to invest in Argentine business.  Credit represents only 15% of GDP in the country, a low for the region. Despite the robust nature of the financial system, credit is increasingly limited.

Banks must pay 5% of the level of private sector deposits in June. 31 public and private banks will be taking part, comprising 20 private banks that make up 1% of the Argentine financial system and 11 more that act as financial agents for the provinces.

“We will ask a group of banks to do in a year what the National Bank did in four and a half years for Argentine businesses and workers,” said president Fernández, speaking at a press conference at the Casa Rosada yesterday.

She criticised the lack of investment made by private banks in comparison to the efforts made by the state to support business.

“The state shows a lot of confidence in business, from the credit lines of the National Bank, which give $1.3bn loans a week to business, to the Bicentennial Programme” she said yesterday

Ex head of the Central Bank, Martin Redrado criticised the policy on Radio10 this morning however as “kind but ineffective.”

Speaking in a press conference he agreed the need for more investment in Argentine business but questioned President Fernández’ solution:

“This measure relies on a trust in economic policy which doesn’t exist” he said.“The real question is why is there no investment in Argentina:  Is there a lack of investment because of a lack of credit or because of a lack of conditions?”

This new measure will add to the reform of the Charter of the Central Bank which has given the financial sector a more active role in the promotion of long term credit to industry.

It comes amidst a series of policies targeted towards consumer credit in Argentina. Unlike consumer credit programmes however, loans to enterprises require longer term and more involved negotiations.

Critics argue, however, that these longer time frames are still not long enough to make effective business loans.

Redrado pointed out this morning that few businesses have investment plans which fit the three year time frames necessary for the credits to work.

The policy will today be improved by the board of the Central Bank, led by Mercedes Marcó Del Pont who yesterday held a talk with banking leaders to discuss the implications of the measure.

From 31^st June, banks will have up to six months to make loans to companies purchasing capital assets. The deadline will be extended for more complicated investments.

Construction in Palermo (Photo: Beatrice Murch)

Today’s Argentina is experiencing some troubles within. The effects of globalisation and the economic reforms pushed on its name, population growth, and the looming global financial crisis, mean that the country is experiencing housing and employment issues that need to be confronted sooner rather than later. Through the recently announced Argentina Credit Programme (ProCreAr), there is hope that these issues affecting Argentina will be addressed, keeping the country on the path to recovery and growth.

Although housing issues and unemployment may not be apparent to someone casually walking the streets of downtown Buenos Aires, the city’s beautiful architecture hides a housing crisis that a decade of strong growth has not eased. Over a year ago, in the Buenos Aires neighbourhood of Montserrat, a couple of blocks from the famous Avenida 9 de Julio, the street was steel-gate barricaded and within its confines were families with tarps pitched and camp-stoves, cooking. Multiple families had been kicked-out of the abandoned building where they were all living. To say that they had been “evicted” would imply a formalised tenancy they did not have.

This was not the first or the last indication of the housing crisis affecting Argentina. The figures spell it out: almost 1,000 villas miserias (shanty towns) and precarious settlements in the Buenos Aires metropolitan area alone; 40,000 inhabitants in just one villa close to the Jose León Suarez train station; four or five (exact number unknown) families living in that one improvised home next to Avenida 9 de Julio. But, who’s counting?

According to Omar David Varela, a professor at the University of General Sarmiento, there is an approximate 3.5 million nation-wide housing deficit. The City of Buenos Aires and the Greater Buenos Aires area hold an approximate 14 million inhabitants of the nation’s 40 million. Official estimates show that, out of 4 million homes in this area, 1.25 million need some type of repair or extension to be considered up to standard, whilst 46,000 are beyond repair and need to be replaced.

Furthermore, Argentina’s housing deficit is intertwined with its employment issues. There are still many people who are not making adequate pay, falling into an income bracket much lower than “middle class” standards. They are, for example, the urban recyclers (cartoneros) and the domestic and construction workers.

Inside Jobs: Globalisation’s Impact on Buenos Aires

According to academics and their numbers, globalisation has exacerbated a series of issues in Argentina, and specifically in the Buenos Aires metropolitan area.

Although these issues stem from further back, the politic and economic climate since the 1970s up to the financial crisis in 2001 is often referred to as the apex of social struggle. The deterioration of socio-economic indicators during this period and the lack of appropriate urban planning, coupled with an ongoing historic process of increasing urbanisation, put a great strain on the housing situation in large cities as internal migration expanded.

Villa 31 is one of the more famous Villas (shantytowns) in Buenos Aires located alongside the traintracks in Retiro. (Photo: Professor Guillermo Tella)

Guillermo Tella, professor of Architecture and Urban Studies at the University of General Sarmiento, refers to these years as the phase of Argentine capitalism when the country moved towards an economic model favouring the free market and causing an inequitable re-distribution of housing. Tella’s colleague, Professor Juan Lombardo, agrees with his observations that the current situation and social make-up is a result of the free market practices implemented since 1976.

“[Those years] signified the destruction of Argentina’s industry… increasing poverty and marginalisation. The tertiary sector as the core of the economy meant that capital financing was directed externally, and it also produced a transformation of class systems and occupational categories,” he says.

The transformation in employment meant lower pay and, ultimately, the inability of accessing home ownership, especially within the downtown core. As affluence moved into neighbourhoods like Palermo, the price of housing increased, making it impossible for low income families to continue living there.

“Where do they go?” asks Professor Varela. “They are pushed out and they move into the villas.”

Growing from Within: ProCreAr-tion

Recently, President Cristina Fernández de Kirchner stated that, “just as work is a great social organiser, the home is a great family organiser”.

On the 12th June 2012, President Fernández announced a formalised plan to address this housing deficit. It is called the Argentina Credit Programme (ProCreAr) and its objective is to offer 100,000 credits to build homes or improve existing ones. The initial contribution by the Treasury will be of $3 billion, but the final amount destined to these credits will be determined by demand. It is estimated that the credits will benefit up to 400,000 people.

Table of plans available by ProCreAR

According to Varela, the programme will benefit applicants through two streams. The first is for those who already own land, and will use these credits to construct homes or to build additions to existing ones. The second stream will use the credits to build new homes on land that is currently owned by the national state, and that will eventually be sold to private owners. This land is not just within the city of Buenos Aires, but also scattered throughout the provinces. Some academics see this as an attempt at equal opportunity of home ownership, as it offers houses to the middle and lower classes.

The credit programme is financed and run by the National Administration of Social Security (ANSES) in collaboration with Banco Hipotecario. Together, they have developed a credit-repayment system that varies according to each applicant’s income and amount needed to construct a new home. Instead of a standard rate, those with lower incomes will pay back the loan at a lower interest rate over a longer period. Those in a higher bracket will have a higher interest rate over a shorter time.

As the programme commences, the question of accessibility remains. According to the ANSES website, the prerequisites are simple, yet extensive. People between 18 and 65 years of age with proof of income and no negative financial records can qualify for a credit, although that does not guarantee they will obtain it. Over 300,000 applications were received within the first week of the announcement, after 1.4 million people accessed the ANSES website looking for information.

A Twofold Aim

Due to the programme’s accessibility, academics point to ProCreAr as a chance to seriously address two major national issues: housing and employment.

Construction in Puerto Madero (Photo: Beatrice Murch)

Varela points out that at least one-third of the housing deficit is strictly lack of buildings, whereas the other two-thirds are due to lack of adequate living standards. Therefore, he says, ProCreAr “is a way to solve at least one-third of the housing deficit.”

However, Varela is concerned about how these home improvements will also raise the land value of the areas where they are located. For example, if a plot of empty land is worth $100 per hectare, building a complete and modern complex will add architectural value to the land, raising its value to, say, $200 per hectare. This shift would make it more difficult for those with lower incomes and/or who do not have access to the credits to afford to purchase land. It could mean that those locations will not be available to them and they will potentially have to move into areas that are within their means, usually the villas miserias or other precarious settlements.

Still, ProCreAr is considered a step forward. Tella refers to it as the “gradual recuperation process … [to] a dignified and sanitary environment, open and integrated, that contributes to the integration of the urban social and economic fabric”. He also mentions how the credit programme is not the only way to push housing reform, which should also include measures that are “based in the intermediate and ground-level organisations, that have the people as their principal protagonists.”

The second way in which ProCreAr may help Argentina is by stimulating the economy and providing jobs to construction companies and independent contractors. With the potential for 100,000 new homes and additions to be made over the next year, the initiative will, according to the government, “provide jobs for hundreds of thousands of Argentines”.

As part of the application process for the loans, applicants must provide proof that blue-prints have been officialised and that a construction company or independent worker has been contracted. Although it is not yet known how many companies will be used or available, or whether these will overlap, there is hope that the construction projects will be sourced from within Argentina as opposed to using companies from abroad. The plan is “to move the economy inwards and sustain it with an internal market,” as Lombardo states.

ProCreAr is more than just credits, housing and employment. It is also seen as an assertive action against the international free-market policies previously applied in the country. Although the programme is a movement inward and can be seen as part of a re-nationalisation process, the credit programme could also offer a sense of stability to Argentines. For some academics, it provides a chance for the nation to flourish from within.

Do Argentines think that ProCreAr will help solve the housing crisis? Click here to find out.

Housing has become a big news topic in Argentina since the announcement of the ProCreAr credit programme two weeks ago. The national government launched ProCreAr in order to finance mortgages and housing construction, and plans to fund the construction of 400,000 homes over the next four years. The amounts provided (up to $350,000 per family), interest rates, and monthly instalments, all vary according to a family’s monthly income.

Unlike the average, largely inaccessible bank loan, ProCreAr doesn’t ask for a minimum income.  The idea is that every Argentine be able to access a house of their own. The government also hopes to give the economy a boost by increasing production and employment through the construction incentivised by the programme.  During the official announcement of the loans last week, Deputy Economy Minister Axel Kicillof referred to a “housing crisis” in Argentina that ProCreAr aims to revert. It all sounds pretty good in theory, but the Indy headed to the streets to see what Argentines are really thinking – about this plan, but also about accessibility of housing in general. Here’s some of what we heard.

Portraits by Beatrice Murch

Horacio Asenjo, 70, Gardening Teacher, Lanús

My opinion is that if a young (married ) couple wants to buy their own house or apartment, both of them have to work and try to save as much as possible, because if not they can’t do it … For older people, like myself, we had different opportunities. You could build your own house or inherit your parents’ house, these things are more difficult now…It’s also hard to take out a loan because you have to meet a lot of requirements. You have to have a steady job, you have to have been working for a certain period of time. There is an incredible housing deficit here. The government is doing what it can. This government inherited a destroyed country, they’re doing what they can with measures like this one. They’re going to build 400,000 houses… but there is still going to be a lack of housing.

Lucas Cardozo, 32, Print Shop Worker, Pilar

For people who come from neighbouring countries like Paraguay or Bolivia it’s easier to access their own house, because they’re used to living in places that don’t have running water or gas. It’s very expensive to buy your own house, to buy a lot, to pay for the labour it takes to build a house. It’s also hard to sell properties right now, I’m trying to sell my house in the Province of Buenos Aires and it’s hard, because sales have been kind of stopped, because of the problem with dollar. You can’t take out loans in dollars and no one wants to sell houses in pesos, everyone wants to sell in dollars. Now, they came out with the new loans, and they give you $300,000, but it’s hard to buy anything with that money. I don’t know if the new program will make much of a difference because at first people will be able to buy more, but then they won’t be able to because they’ll have less of their salary at their disposal, because they’ll pay these instalments for many years and they’ll be losing a large part of their salary.

Norma Villafañe, 64, Housewife, Mendoza

We live in Mendoza. Luckily, we have our own house. I think the credit programme is a good thing, it’s good for young people. Hopefully it will work out and they’ll be able to carry out the plan like they say they will. It’s good that the government take care of these things. You have to invest in those kinds of things, and you have to make sure instalments are accessible. It’s very difficult to get a loan from a bank, but with this program people will be able to access housing, I think. There are many people living in very bad conditions. There are many slums, a lot of precarious housing, and there is more poverty lately. So it will be a very good thing, I think.

Juan Muñoz, 21, Graphic Design student, Colombia

I think that for a young person aspiring to have their own home it can get very complicated. I think that the new government programmes are a good option, but that there aren’t really many other options. It’s very difficult to get a loan from a bank because of the requirements. Obviously, for me it would be amazing to have my own house or apartment here, to avoid paying rent. With what you spend on a rent you could easily be paying for the instalments of a loan for a house, and then you have something of your own. I think it’s very necessary, and basic, but because of the way things are right now, it’s difficult for young people to have something of their own. I think the government’s program is a good measure, but we need more political programs of inclusion. Because even if the government loans don’t have so many requirements for income, for example, you still need to be earning a legal salary; people who don’t have a place to live or who live in precarious housing, they don’t have stable jobs, or if they do they’re paid under the table. Many things have to be regularised so that everything is a little more fair.

President Cristina Fernández de Kirchner announced that Banco Nación will now offer soft loans on the sales of locally manufactured trucks.

The loan amount will cap at $8,500 million, and will have a fixed rate from 5 to 9%, depending on the geographical location of the borrower. According to president Fernández, the subsidies will benefit the most remote areas of the country.

The launch came yesterday during the president’s speech at the government house.

“We will finance not only through Banco Nación, but also through the terminals and its dealers,” she said. “Those that really know their customers.”

The slogan of the new program is “Go kick doors to renew their trucks with soft loans.”

According to Télam, the loans are intended to spur corporate and individual purchases of new and used trucks, trailers and semitrailers around the country.

“The domestic mills will create 2,500 new jobs from increased demand, generated by the injection of $8,500 million pesos in the first year,” said Débora Giorgi, minister of industry.

“It is a virtuous circle where the driver finds a way to renew his unit, and the terminals increase production to meet growing demand.”

Photo by Beatrice Murch

Six years ago Brendan Martin, 36, was working on Wall Street in the world of global finance. Then a friend suggested he watch a new film that had just been released in the United States; Naomi Klein’s ‘The Take’. The film documents the struggles of Argentine factory workers laid off during the 2001 economic crisis to reoccupy their former workplaces and rebuild them as democratic, worker-controlled enterprises.

Brendan was so inspired by this social movement that he immediately resigned his comfortable job and took off to Argentina to set up The Working World, a non-profit foundation which gives financial support to factories and businesses under worker or co-operative control. He has been here since November 2004, and to date his organisation has authorised 200 loans to retaken businesses and co-operatives, totalling over $3m. So is Brendan a visionary for the future of Argentine industry, or simply someone who watches too many films? The Argentina Independent visited him at the office of The Working World (which doubles as Brendan’s home) to find out more.

So what does your organisation offer collective factories and businesses in Argentina?

I guess you can say that we offer credit, but specifically the type of credit that we offer closer resembles microcredit, except that we spend a lot more time with each business and make it a lot more like an investment. We earn a fixed income which means that the businesses we support share all of the profits from the venture. Because it’s socially motivated we try to go into these poor areas where there may be a newly retaken or collectively organised factory, and we’ll try to develop a project with them. We can loan the money and if the project doesn’t work for whatever reason they don’t have to pay it back. The major difference in what we are doing here is that we really do try to take the risk on ourselves, while ensuring the factories are the ones who will profit from their own success.

Photo by Paula Surraco

And were you involved in similar ventures back in the US?

I worked in finance, but they were just normal financial ventures. I worked on Wall Street, I worked for hedge funds.

So you come from a financial, capitalist background?

Well I studied economics in college, but secretly my undergraduate thesis was on co-operatives. But the better story is the conversion story.

Please tell us then, what converted you and motivated you to come here and form this type of organisation?

Well this kind of organisation has interested me for a long time. I’ve always been interested in industrial production, in modern work and especially in worker control. I like to experiment, to try things; I believe in taking whatever there is and then seeing what else could be done. So that’s the way I feel about any sort of social quest, I believe it should be done like Edison and not like Lenin! And Argentina became the best place to form an organisation like this by far. Especially after the crisis a social experiment occurred where people tried to fill the vacuum and one of these methods was the workers taking over the factories. Whereas there had always been a handful of cooperatives in the country, slowly building up and developing, suddenly you had 200 brand new worker-controlled businesses, which already had developed products; they just didn’t have any co-op background. The chance was just too incredible so I quit my job, within two months we were down here and we haven’t looked back.

Photo by Paula Surraco

On your website you mention the influence of ‘The Take’. Do you think this focused attention on the co-operative movement in Argentina?

Well it certainly was an influence for me! That’s how I heard about the situation, that’s how I learnt about it. When the movie came there were at least two people that called me up and said, “Hey there’s a movie about co-ops, aren’t you interested?” And actually at the movie theatre I met [the director] Avi Lewis and he was the one who brought me down here originally, he introduced me to all the different players in the movement. It also increased international awareness, the movie has travelled all around Europe and it definitely has been one of the best ambassadors for this movement.

Are collectives able to compete on a level playing field with conventional manufacturers?

Without a doubt, I’ve seen it far too many times. Studies show over and over again that worker run companies can operate so much better, in so many ways. When managed effectively these businesses can run rings around conventional industry. If you look at any treatise from any management guru, they’ll tell you “we’ve gotta have a motivated team, that feels like they’re part of a family.” They want workers to feel like it’s their company. Not that working in a co-op is a utopia, not everyone is happy: people get pissed off; argue with each other, just like any other democracy.
But you get people who are much more involved; if they see something not running they’ll fix it. And trying to unlock that kind of knowledge of workers on the ground, and making sure it comes back to those at the top is one of those great management holy-grails, and this is where co-ops really excel.

Photo by Paula Surraco

What do you see as the future of the co-operative movement in Argentina?

Well I would love to think it can grow and grow, and just go crazy. I think it’s a great opportunity. Since 2001 it’s reached a level, with all the new enterprises that have sprung up since then, where it can sustain itself for at least the next ten years. Before we didn’t know, especially back in 2003 when we were just beginning. There were many companies just forming and you don’t know if they’re going to peter out or fail like so many businesses do. But now I think we have a situation where nothing is going to collapse in the next two months, it can continue for at least ten years and maybe a lot longer.

For more information on The Working World and the projects it supports, visit www.theworkingworld.org