Last month, I had an opportunity to travel to Lima, Peru with eleven other Badgers (including fellow RMI MBA candidate Hernan Burgos), for a global business classroom experience. The eight-day trip involved visits to nearly a dozen different businesses, ranging from large multinational enterprises like Ferreycorp, start-up incubators like Krealo, and smaller operations like Elemento Chocolates. Each visit was not only an opportunity for me to learn about the strategies and operations of each company, but also a chance to further understand the risks associated with operating in an emerging market economy.
Peru is an interesting nation in many regards, business included. The nation is considered a developing economy; however, this label may betray the formality and innovation that can be found across the nation. Krealo, referenced above, is a venture capital firm dedicated to funding and supporting fintech and insurtech ventures within Peru. Aji, a Peruvian soft drink company, is active in 20 national markets across South America, Asia, Africa, and Europe. Yape is a powerhouse of a fintech company that is a hybrid payment service and platform company (think Venmo combined with your favorite delivery service app). As one of the fastest growing economies in South America, we can expect continued advancement of the economy.
Although the economy has made significant improvements since the 1990s, it is not without its challenges. Peru’spoverty rate is nearly 30%, which was exacerbated by the Covid-19 pandemic. Moreover, the nation is in the midst of a political crisis having gone through five presidential elections in three years, with the previous president’s impeachment and arrest sparking widescale protests that resulted in dozens of deaths by security forces. The political volatility has tangible effects on the economy, and the companies we visited were not exempt. Ferreycorp, an importer and distributor of Caterpillar earth moving equipment that primarily services Peru’s mining sector, has experienced a dip in its revenues over the past several years due to the political instability, reducing investment in the mining sector from the government and scaring off foreign investors. Interestingly, companies like fintech Yape have been relatively unaffected by the Peruvian government’s troubles, highlighting that even in the face of volatile situations, stable investments and enterprises can be found.
My conversations with these companies – as well as the trip in general – have helped to confirm my interest in working within Latin America and the Caribbean. I have been fortunate to have had several opportunities to briefly live in several emerging market economies. I have witnessed the challenges first-hand, and I have also witnessed the innovativeness and potential that can be found in developing economies. Having thought a lot about what I want to do professionally post-MBA, I keep coming back to the idea of pursuing a career that allows me to work within emerging markets. Understanding that a significant barrier to foreign entry within these markets is the risk, I have set my sights on a career within financial lines insurance (with a particular interest in trade credit and surety) as I believe these products can help spur investment by entities that would be nervous to invest. My experience in and takeaways from Peru have given me the confidence that this is the right path for me.
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