TRANSFERRING DECISION-MAKING POWER TO THE RURAL POOR

1. TRANSFERRING DECISION-MAKING POWER TO THE RURAL POOR INNOVATIVE EXPERIENCES OF IFAD PROJECTS IN PERU Pietro Simoni IMI Workshop What are the Innovation Challenges for Rural Development? Rome, 15-17 November 2005

2. IFAD projects in Peru

3. The three pillars of IFAD strategy in Peru • Transferring responsibility, power and financial resourcesto the organizations and beneficiaries • Projects based on demand and auto-implementation • Development of local markets for goods and services These concepts have been consistently applied during almost15 years involving more than 60,000 poor rural families (4 projects) and obtaining very positive results (*) (*) IFAD (OE )and other sources evaluations

4. The central axis of the innovative experiences in Peru is: THE TRANSFER OF DECISION-MAKING POWER TO FAMILIES AND COMMUNITIES

5. The Andean Communitiesengine for development • The Communities are similar to local mini governments. They have a political, regulatory, guidance and facilitating roles • The Communities are responsible for the management and administration of the common goods and interests (irrigation, land, common services, etc.) and institutional relations • Some communities have land and common goods, others don’t, some have big extensions of land, others don’t

6. Conceptual premise -1- The farmers, as well as their communities and organizations, have their “own” plans, aspirations and social and economic strategies THE CENTRE OF THE DECISION-MAKING PROCESS SHOULD BE UNDER THE FAMILIES AND THEIR COMMUNITIES CONTROL Projects conceived as Public Investment to accompany farmers private initiatives

7. Projects do not subcontract services (outsourcing) This responsibility is transferred to beneficiaries organizations Projects do not co-execute Beneficiaries organizations have the responsibility of making the decisions and executing them Projects do not propose initiatives or “packages” to which the beneficiaries “participate” The initiatives are identified and prioritized by the farmers and their organizations Conceptual premise -2- To achieve empowerment of farmers and their communities, outsourcing, co-execution and participation are not enough. Therefore, it was proposed that:

8. In Peru IFAD aimed to modify the power relation between: the public sector (State, Municipality, etc) • Farmers and Communities • Communities empowerment • Services privatization (creation of a market in which the Communities have the power to contract) the private sector (services suppliers and markets) • Farmers and Communities

9. HOW? IFAD has captured, applied and created strategic, methodological and instrumental activities that conform an evaluated and validated “box of tools”

10. PROJECT DESIGN • Communities actively participate in project design and a continuous process of consultation is put in place • Demand-driven approaches • Transfer of financial resources to make demand effective • Use of competitive awards • Flexibility in project design: - additional innovations included during implementation

11. The Starting Point • The Technology Transfer to the Peasant Communities in the Highlands Project(FEAS) -1992 From a traditional system for the provision of goods and services by institutions or projects (a supply-driven extension service) to FINANCING DEMANDS (demand-driven system) Strengthening capacities for generating demand and transferring funds directly to communities for them to contract services and acquire goods

12. The Management of Natural Resources in the Highlands Project (MARENASS) -1996 • Emphasis in strengthening social structures and community empowerment • Farmer to farmer training • “Pacha Mama Raymi” competitive methodology • The Puno-Cusco Corridor Project - 2000 • Rural-urban linkages • Micro entrepreneurial activities • Use of Business plans • Development of local markets

13. Aggregate value to the knowledge and cultural assets of the rural poor Insures the participation of migrant associations y furthering local initiatives • Southern Highlands Project - 2004 • Stakeholder Assets - Project Under Preparation • Values physical, technological and cultural assets • Mobilizes or leverages additional resources of the public sector, mining companies and migrant associations

14. Conditions for effective empowerment of Communities Strengthening capacities for generating demand and provision of funding to materialize it Improving market conditions Strengthening private supply of services Implementing simultaneously activities in three complementary ambits with demand focus as the principal intervention

15. Ensuring a leadership role to Communities and Families • Make demand effective • Expand potential demand • Transfer financial resources Demand • Expand and improve services supply Supply • Linkages and pre-financing • Reductions in transaction costs • Access to information Markets

16. THE DEMAND and THE COMMUNITY PLAN

17. Demand identification process:responsibility oforganizations and families • Training on auto diagnosis and micro planning • Simple methods of participatory planning (graphic planning tool known as “Speaking Transects”) • Identification and prioritization in community meetings without intervention or presence of third parties • Definition of a community plan and group sub-plans • Transfer of resources for a methodology of demand identification and development of plans • Incentives and awards for the best demands or plans • Awards for the best plan and sub-plans implementations

18. Prioritization of linkages (present and potential) between communal economy, family economy and markets Opportunities to develop urban/rural relations Community planning Families and/or interest groups prioritization Business plans as another “format” of community demand Business plans are identified by: Financing approval is at community/organizations level: local committee, users (beneficiaries) plus local authorities through a selection of proposals in a public act

19. RESOURCES TRANSFER AND SELECTION OF PROPOSALS

20. Transfer of funds The project transfers co-investment funds so that the Community • Contract services and support business plans The Communities define who how what for when for how long • open and maintain a bank account • prepare a status of expenditures • supervise and evaluate The communities are responsible for • services • competitive resources to award success • competitive resources to finance business • plans (CORREDOR) Financing

21. Communities and families (the case of Technical Assistance services demand) • Internships • Training • TA farmer to farmer • Professional suppliers • Chose the methodology: • Select service suppliers • Define terms of reference • Negotiate services costs • Establish terms and modalities • Sign the contract • Supervise and control • Pay for the services

22. Strengthening the role of the community responsible for organizing competitions Using clear equity and transparent rules by the Communities Using mechanisms to avoid exclusion of beneficiaries with less capacities and resources Using efficient mechanisms for evaluating results of services with the use of graphic tools (Speaking Transects) Competiveness and competitive awards: the role of Community organizations Competitions are managed and organized by the Communities themselves allowing for

23. Development of market relations “Markets to be understood as a system of monetary and non-monetary transactions, relationships, exchan-ges, access and flow of information and valuing knowledge as well as physical, social and relationship capitals. Insertion in local and regional and national goods and services markets, allows the poor to have a larger and active presence in the social and economic fabric”

24. Empowerment overcomes dependency and asymmetric market relations • Rigorous selection process • Contractual obligations • Negotiated costs • Reduced fixed costs in contracting and supervision • Use of adaptable technologies • Diversification of service providers • Equilibrium between family and • communal interventions • Services markets • Identification of business opportunities • Capacity to generate supply volumes • Assurance of quality through contracting of • services • Negotiating capacities • Goods markets

25. CONCLUSIONS

26. Lessons learned • Small-scale farmers and their organizations have their own strategies and are able to identify their demands • Empowered organizations play a strategic role in relations between beneficiaries, the project and other institutions • Strengthened communities are able to administer public funds efficiently

27. Conclusions and Recommendations Good practices • Planning and prioritization of demands led by small-scale farmers and their organizations • Delegating decision making, administration and supervision to the communities • Using contractual instruments regulate relationships between the project and beneficiaries • Transferring sufficient funds for co-financing through the formal financial system (opening of bank accounts) • Requiring commitment of counterpart funds on behalf of the beneficiaries • Using competitive incentives mechanism based on results

28. TRANSFERRING DECISION-MAKING POWER TO THE RURAL POOR INNOVATIVE EXPERIENCES OF IFAD PROJECTS IN PERU Pietro Simoni IMI Workshop What are the Innovation Challenges for Rural Development? Rome, 15-17 November 2005