EL ALTO, Bolivia (Reuters) — President Evo Morales boasted he would turn Bolivia into “the Switzerland of South America” by nationalising the energy industry, but channelling the new funds to the poor is proving tricky.A year after the state took over oil and natural gas reserves and forced energy firms to pay a larger share of profits in taxes, analysts say corruption and inefficiency hamper Morales’ anti-poverty drive and could cost him support.

“The government is not having success because it lacks the capacity to administer resources efficiently... its policies do not have a positive effect on people’s pockets,” says Jimena Costa, political science professor at San Andres University in La Paz.

There are few signs of change in the tough slum of El Alto, outside La Paz, where pestilent waste water from homes without indoor plumbing dribbles through the muddy streets.

“Nothing much has changed here, but we know that this is a long-haul process,” says Raul Condori, a 31-year-old university student from El Alto, a Morales stronghold for now but in the past the epicenter of rebellions against leaders who did not keep their promises.

Bolivia is the poorest country in South America despite having the region’s second-biggest reserves of natural gas after Venezuela, and its energy earnings surged 61 percent last year, injecting an extra $620 million into its small economy.

Morales, its first indigenous leader, says Bolivia will pocket $82 billion from energy exports in the next 25 years and has pledged to invest in roads, hospitals and schools.

But so far the windfall has mainly served to pump foreign reserves up to a record $3.4 billion, and Bolivia ran a budget surplus last year for the first time since 1956. Experts say that shows bureaucracy is strangling Morales’ spending plans.

“It will take longer than a first term to make sure that the hydrocarbons revenues are used to reduce poverty, increase access to health care, and equally important, educate people,” said Mark Weisbrot, co-director of the Center for Economic and Policy Research, a US think-tank.

Regional governors and town mayors have been accused of misspending their part of the energy revenue on salaries, and red tape has slowed down new anti-poverty projects.

Late last year, regional governments had not spent about 50 percent of their share of the Hydrocarbons Tax, and almost all of city governments’ share was parked at the central bank.

A $25-a-year benefit encouraging children to stay in school is the government’s biggest new social spending policy, although branded a populist hand-out by the opposition.

A recent poll showed Morales’ approval rating remains strong at 65 percent but analysts say impatience over the pace of change could emerge as a threat.

Miners, teachers, truck drivers and health workers have staged protests in recent months to demand cash benefits, reminding people of the massive street protests that toppled two presidents between 2003 and 2005.

“Support (for Morales) could wane... if time goes by and people realize there is not a palpable improvement in living standards,” said Costa.

Morales is trying to follow in the footsteps of popular leaders in Argentina and Venezuela who have shunned Washington’s free market economic recipes and given more support directly to the poor.

Condori, who recalls fighting police using a corrugated roof as a shield in protests two years ago, is confident the volatile masses of El Alto, for years at the forefront of political activism, will give Morales room to maneuver.

“Bolivians have waited for 500 years, sure we can wait a bit more,” said the student.