SAN SALVADOR, El Salvador – Salvadoran micro-entrepreneurs are overwhelmed by gangs’ constant extortion demands.
Seventy-nine percent of the 585 National Small Business Council of El Salvador (CONAPES) members frequently pay protection money to gangs, according to a survey conducted between December 2013 and February 2014.
The survey revealed that 80% of micro-entrepreneurs are worried about crime, with 74% stating the Mara Salvatrucha (MS-13) and Barrio 18 (M-18) gangs control the area where they own their businesses. While not closing down, 65% aren’t willing to invest more in their business for fear of further losses.
Extortion payments exceeded US$18 million in 2013, in addition to the US$500 million invested in private security for small, medium-sized and large companies, according to the National Private Enterprise Association (ANEP).
Two small businesses close weekly nationwide due to gang activity, affecting employment and the economy, according to CONAPES President Ernesto Vilanova.
“Many small business owners who closed their companies moved over to the informal sector, meaning they no longer pay taxes or record their sales,” he said.
The latest Multi-purpose Household Survey (EHPM) from 2012 highlighted that 30.7% of 4,308,637 Salvadorans of working age don’t earn the monthly minimum wage of US$225 since they work for informal businesses.
The National Civil Police (PNC) recorded 501 murders, 715 robbery reports and 402 cases of extortion between January and February 2014 nationwide.
During the same period in 2013, 380 recorded murders, 864 robberies and 477 cases of extortion were recorded.
A taxi owner in San Salvador, who did not disclose his name because of security reasons, was forced to close his business at the end of February when armed gang members tried to extort him for “protection money.”
“One afternoon they told me that I had to pay US$300 a month. Where am I going to get that kind of money?” the owner said. “I had only five taxis, I paid salaries, legal benefits and gas is expensive. I didn’t have any more money. I fired all my workers and closed up shop. I just didn’t want the hassle.”
He didn’t report the incident to the PNC for fear of reprisals.
In fact, cases rarely are reported, as 75% of those surveyed by CONAPES said police officers are involved with criminals.
PNC General Director Rigoberto Pleités regretted business owners don’t report extortionists, adding more than 90% of extortion cases go to trial.
“We regret they do not use the tools we have for making reports [since] there is a process for investigating extortion,” he said, urging residents to report officers involved in extortion to PNC’s Control Unit or the General Inspectorate. “We cannot make anyone who is paying protection money stop if they don’t lodge an official complaint. We expect them to make a report.”
El Salvador’s Penal Code establishes a 15-year prison term for extortion, with the term increasing by five years if the defendant is a gang member.
Since last January, PNC’s Anti-extortion Sub-directorate (SAE) has allocated more officers to special investigations, intelligence, prevention, public engagement, legal issues and local anti-extortion teams.
Those being extorted can file a report by calling the PNC’s hotline at (503) 2511-1111.
Boosting the economy
Since 2008, the Salvadoran Foundation for Economic and Social Development (FUSADES) has sponsored the Promotion Program for Technological Innovation in Small and Medium-sized companies (PROINNOVA), a platform for helping technology, design, Internet, tourism and entertainment entrepreneurs obtain finance.
“Young people are seeking to transform and modernize family businesses by introducing innovation in service, production, management or human resources,” said Antonio Carbonero, the program’s business consultant. “The country should build bridges between current production processes and the abilities of younger generations. They best understand today’s society and how to create value.”
About 50,000 young Salvadorans are positioned to join the job market annually, according to FUSADES.
PROINNOVA receives around US$600,000 annually from local and international development partners to train entrepreneurs to start their own businesses, according to Program Director Samuel Salazar.
Thanks to these resources, PROINNOVA assisted innovators with 20 business plans, and 30 small businesses received technical assistance for innovation projects in 2013.