Bolivarian Republic of Venezuela: economic development of poor rural communities project (PRODECOP) - IOE
Bolivarian Republic of Venezuela: economic development of poor rural communities project (PRODECOP)
Interim evaluation 1
The core learning partnership and the user of the evaluation
The Office of Evaluation (OE) of the International Fund for Agricultural Development (IFAD) conducted an interim evaluation of the Economic Development of Poor Rural Communities Project (PRODECOP) in Venezuela. An evaluation mission visited the country in May and June 2005, concluding its field activities with a workshop held in the city of Caracas on 3rd June 2005 at which a summary of preliminary findings was presented.
The IFAD project evaluation process is based on a shared learning approach with all stakeholders. Accordingly, the PRODECOP interim evaluation took place with a core learning partnership (CLP) comprising the IFAD Country Programme Manager for Venezuela; the Supervisor from the Andean Development Corporation (CAF), as the cooperating institution; the Project Manager; a government representative [Director of the Foundation for Training and Innovation in Rural Development (CIARA)]; a representative of the project beneficiaries, the Interim Evaluation Mission Leader, and the OE Senior Evaluation Officer, responsible for the evaluation exercise. The CLP members began to work together in April 2005, when the lead evaluator drew up the approach paper in preparation for the mission. In early May, the mission's terms of reference were circulated among the CLP members and approved, after which the mission took place. The draft evaluation report was completed in late June 2005 and distributed to the CLP members, forming the basis of this agreement at completion point.
On 21 November 2005, the members of the CLP and of the broad learning partnership (BLP) met in Caracas to review the agreement at completion point. The major evaluation users included in the BLP are as follows: the Government of Venezuela (GoV), represented by the Ministry of Popular Economy (MINEP) 2, the Ministry of Agriculture and Land (MAT), the Ministry of Planning and Development and the Ministry of Finance. GoV authorities from the states included, mayors from the project areas and representatives of co-implementing agencies. Meeting participants discussed and approved the present agreement, which sets forth the main evaluation findings and recommendations. The Senior Evaluation Officer responsible for the interim evaluation facilitated this process together with the Mission Leader.
PRODECOP may be summed up as a project with satisfactory implementation. This should be understood as a positive judgment because the project obtained results and generated significant beneficial impact for the rural poor despite deficiencies of design and a number of contextual obstacles. Moreover, PRODECOP has generated a sound and sustainable basis for maintaining and expanding a positive dynamic for rural development, a high level of community participation and an expansion in local financial institutions. The project should be considered to be a successful first step, yet to be concluded, in the necessary process to fully achieve the original objectives.
The project has met the user coverage targets originally set for the main components. Under the training component, at least 13 000 families and/or 15 542 persons have benefited (82% of the target); under the financial services component the target of 9 500 was exceeded, with 11 458 users counted (121% of the target). Slightly more communities have been served than originally planned (779 compared to 760), while the number of organizations registered exceeded by far the original target (655 civil society organizations, or CSOs, compared to 334 planned). The number of rural credit unions established is 151 (compared to a target of 150). According to available information, approximately 9 000 women have used the project services, exceeding the target.
The targets set for beneficiaries of technical assistance programmes were not met. Nor were the targets for training of municipal officials. The project had virtually no effect with respect to targets for loans to savings and loan associations and the establishment of guarantee funds. Finally, targets set for projects and resources to be funded under the FIC were not met, although disbursements were made and numerous projects were financed.
In terms of financial performance, project disbursements stood (as of end 2004) at 56% of the total as scheduled. According to the financing sources, the GoV disbursed 75% of its scheduled contribution, CAF disbursed 100% of its loan and the IFAD loan was 34.7% implemented (with the expectation of exceeding 40% by mid-2005). The training component was virtually fully disbursed, the project management component exceeded scheduled expenditure by 20% and the monitoring and evaluation (M&E) component spent 11% more than planned. The community infrastructure fund (FIC) made just 32% of scheduled disbursements. The financial services component disbursed 20% of funds for the guarantee fund and none for the rediscount fund. Given the concentration of IFAD loan proceeds under these headings, the failure to fully execute these components explains the low disbursement rate for the IFAD loan. Most of the unused funds had been allocated to the design of a complex system of rural financial services (including a guarantee fund and a rediscount fund) that is not considered to be viable given the country's historical, geographical and institutional circumstances. On the other hand, beneficiary contributions were larger than planned.
Performance by the project executing unit has been more than satisfactory. The project enjoyed continuity in management and among most professional and technical staff for close to six years. This continuity enabled activity lines, consistent approaches and continuous actions to be maintained to benefit the target group.
The training, selection, operation and supervision of social promoters hired through co-implementing enterprises is considered to be a highly effective management policy that has empowered the project's positive impact. Given the country's lack of prior experience, the success achieved demonstrates very effective human resources management by the Project Executing Unit (PEU)
Performance by members was generally satisfactory. However, the design deficiencies and the failure to remedy them in a timely manner during implementation are an indication of poor communication between IFAD and the GoV. The design errors that had the greatest impact on the project have to do with agricultural technical assistance and the design of the guarantee and rediscount system. These components were not properly reformulated, either during implementation or during the mid-term review mission. The failures affected the level of disbursement of the IFAD loan and the achievement of greater positive impact on users.
It is concluded that the project and its beneficiaries need additional time with external support in order to secure the advances made and obtain better conditions for sustainability. Extending the current stage of implementation and a second phase of PRODECOP would be very appropriate ways of achieving this mandate.
Organization and civil participation
PRODECOP has achieved the most important objective in qualitative terms: the "ciudadanización"3 of tens of thousands of rural poor settlers. Through training and promotion activities by community organizations, users have "recognized one another", "grouped together", "awakened" and learned to exert the citizen's right to petition authorities in an organized and articulate manner. This formation of "social capital" is the project's most significant accomplishment. However, strengthening of mutual relations between PRODECOP and town halls and local governments remain a pending issue.
PRODECOP shows that investing in development and citizen participation generates significant impact on building social capital and has an immediate effect on socioeconomic demand by the organized population. Training in the rights and responsibilities of citizens and their application through participation in decision-making on development planning and public investment promotes more inclusive, more sustainable democratization processes. Rural poor communities demonstrate a high degree of sensitivity and responsiveness to the presence and action of adequately trained development agents. This sensitivity increases in direct correlation to the prior absence of the public sector in these localities, and generates demands that transcend the local environment. The GoV's overall policies in the past three years of project implementation provided a highly favourable context for participation by the population. In this sense, an ongoing, enriching interaction exists between organizations promoted by PRODECOP and those having emerged from the new legal framework promoting participation.
Using adequate instruments for promotion and community organization makes for a rapid and intense process to formulate participatory diagnostic assessments, set priorities based on needs and plan petitions and follow up on initiatives. PRODECOP has mobilized investments and services in basic and social infrastructure in amounts and quality far superior to original plans and estimates. A large number of basic and social infrastructure and services projects have been implemented or are being implemented in many rural communities served by the IFAD project. These investments, funded publicly at various levels, would not have reached the communities without PRODECOP training and organization activities. This generates a need to make adequate provision for resources and delivery mechanisms to meet increased demand. Otherwise, expectations will be frustrated, leading to highly adverse effects for rural development.
Although contextual variables prevented the objective of strengthening town halls and local governments from being fully achieved, this mandate should nevertheless be taken up again in future stages. The sustainability of citizen participation at the local level is fundamentally contingent upon these dimensions of local development.
Geographical Coverage and Impact on Conditions of Production
PRODECOP has been implemented with great dynamism and increasing effectiveness and efficiency, covering vast geographic areas with heterogeneous and complex characteristics that have not always been considered as a whole. On the other hand, PRODECOP has not carried out actions with substantial impact on the conditions of production of beneficiaries. The fact that the working agreements with PREA did not materialize led to virtually no activity in this regard.
Actions in the indigenous areas included, and in a good part of the eastern region, should have been further strengthened to reach accomplishments similar to those of other regions, given unequal starting conditions.
PRODECOP did not carry out actions that had a substantial impact on the production conditions of beneficiaries because the working agreements with PREA did not materialize. These agreements were not properly included in the design and did not explicitly provide for coordination of such activities by the World Bank, in addition to the deficient coordination by CIARA. Beginning in 2004, however, corrective action was taken in the form of modifications to the messages conveyed by rural promoters, although these were not presented within the framework of local development strategies.
Rural Financial Services
The promotion of rural financial services based on a rural microfinance approach with comprehensive community training generates important benefits beyond the purely financial. PRODECOP shows that creating dozens of rural credit unions addressed the problem, correctly identified, of a rural financial market with little depth, competitiveness or equity. The PRODECOP rural credit unions are currently the most successful experience in rural microfinance in the country and probably the region. Their replication in other national programmes and projects is a significant impact and an indicator of their success. However, if rural financial services remain circumscribed to small microfinance institutions, substantial demand for financing investment to transform the current technological profile of the rural poor will remain unmet. Designing adequate long-term financial systems to operate through local financial institutions remains a challenge.
The dynamics of growth and expansion in many rural credit unions has laid the groundwork for setting up more complex networks and starting up financial markets in the rural environment. The rural credit unions have transcended the financial sphere to become grassroots social organizations that are sounder and more sustainable than other kinds of organizations. The design adopted for these mechanisms generates processes that favour the inclusion of the poorest as well as gender equity.
PRODECOP showed that mobilizing savings and loans from the rural poor is a complex process that requires a much longer maturation period than assumed in project design. It also showed that rural credit unions face constraints on their growth and soundness because they tap savings on a scale and timing that may not be compatible with the investment financing that can bring about a structural transformation in current technologies. This experience indicates that the use of such mechanisms is an effective and efficient response to the need for savings in terms of transactions and safeguards, as well as the need for credit to meet short-term demand. This provides a background for criticism of the design of overly ambitious proposals that link these local institutions to commercial banks prematurely. PRODECOP generates a series of questions about the future of such instruments and the need to come up with mechanisms to complement investment financing.
The relative immaturity of the credit unions is apparent in the modest range of long-term financial services they offer to productive units. In many cases, credit unions have diversified their lending portfolios with short-term working loans. Some well-established rural credit unions are expected to finance productive projects on a larger scale and over longer terms shortly. The instruments proposed in the project design (guarantee fund and rediscount fund) were neither timely nor adequate (see paragraph 7). PRODECOP can guide, advise and provide more room for manoeuvre for credit unions, but cannot force linkages between rural credit unions and the formal banking system. This does not mean that external financing in greater amounts would not have been helpful. Had the component been reformulated during the mid-term review, a significant portion of the funds set aside for the rediscount and guarantee funds could have been allocated for an external financing fund. Such an adjustment in the PRODECOP architecture was sacrificed to a more ambitious and less achievable objective. The changes achieved in Venezuela's rural financial landscape warrant shared reflection by the national government and international organizations on the question of how to build upon the rural credit union experience in the country. The credit unions have amply demonstrated that their model works in the absence of an external structure of incentives, and that opportunities to expand, deepen and capitalize on experience do not always present themselves in such a way as to foster linkages with other economic and social spheres and other financing models.
PRODECOP in Indigenous Areas
PRODECOP's actions in indigenous areas and with indigenous groups present a number of shortcomings as well as some successes. The project design called for special treatment for indigenous areas that would take into account the cultural characteristics of Warao and Kariña populations. Although a differentiated approach was developed for each ethnic group, the treatment for indigenous areas was similar to that of the project areas as a whole. Projects that include indigenous communities should have a strong cultural content, give priority to own technologies, traditional educational and health practices, and festive expressions invariably kept in the memories of elders. Project design and implementation should consider these aspects so that sufficient resources in terms of quantity and quality may be allocated to address specific cultural problems.
The actions carried out in the indigenous areas included and a good part of the western region should have been strengthened further to attain achievements similar to those of other regions. The mission observed that, with the exception of a CAF supervision report, very few persons have visited the area, either from missions or the Project Executing Unit (PEU). Constant turnover in promoters occurred throughout the life of the project.
Focusing action exclusively on combating material poverty when working with indigenous populations can reduce and/or mask the contribution by indigenous peoples to building more equitable societies living in harmony with ecosystems.
Nevertheless, the mission observed the enormous value placed by these populations on the project actions. This led to an appreciation of the importance of strengthening socio-community organizations and implementing social projects in this area.
The Gender Approach
The gender approach was adopted and implemented successfully by PRODECOP. However, following the gender approach effectively and in a sustainable manner requires not only that staff, co-implementing agencies and promoters are properly sensitized to gender, but also that this be an integral part of planning field work, and of training materials and methodologies at all levels and the design of technical and advisory assistance provided to organizations.
PRODECOP developed strategies for innovative and creative action that fostered gender equity naturally. In this way, the successes of the rural credit unions' organizational design generated a significant feminine presence and leadership. Moreover: (a) affirmative action in hiring PEU staff empowered the project in terms of equity and inclusion; (b) including women in project decision-making led to improvements in the quality of life for the beneficiary population as a whole; (c) disaggregating information by sex was a way of allowing the project to add value to its intervention under a differentiated vision of effects and impact; (d) promoting active participation by women in financial organizations lent value to their productive work; (e) purchasing shares and accessing credit in their own names placed women in an equal position to men for decision-making on the organizations' administration and management; and (f) women's participation in diagnostic assessments and community planning provided a more comprehensive view of problems and their possible solutions.
The work done by the project with co-implementing agencies, professionals, local technicians and promoters -both in raising awareness and training and in developing teaching materials and methodologies for the gender approach with rural populations- makes a contribution towards future interventions dealing with rural development themes generally. Several of these actions still require a consolidation phase.
Monitoring and evaluation
Monitoring and evaluation functions performed unevenly, with some successes and a considerable number of shortcomings.
The M&E unit was responsible for producing dozens of quarterly progress reports, which are very complete and adequate for analysing each time period. Nevertheless, the reports were not consolidated, either for each year or on a cumulative basis, such that the project's overall progress on various aspects could be evaluated.
No unique registration system was established for project users, leading to serious problems in identifying the number of users discriminated by type of service and avoiding duplication. The formulation of impact indicators, contracted out to a specialized enterprise, took a protracted period of time and an appreciable expense to produce inferior instruments. Much data and information was gathered in the field and from regional offices that was neither centralized nor centrally processed, impeding an overall appreciation of the project's impact. No baseline survey was carried-out at the appropriate time. An impact assessment on beneficiaries was conducted in 2003 on the basis of a well designed survey that does not however permit comparisons with the pre-project situation given the lack of a baseline survey.
Recommendation approved by all partners 4
General and institutional aspects
Extension in PRODECOP implementation. It is recommended that the Government of Venezuela ensure budgetary credit to use the remaining IFAD loan proceeds, in the event of an extension in the closing date for Loan 427-VE, as well as the local counterpart contributions, in order to complete a set of pending activities (Ministry of Finance).
Feasibility study for a second phase of PRODECOP. It is recommended that the feasibility of carrying out a second phase of the project be analysed, taking into account the findings and recommendations set forth in this interim evaluation (MINEP-CIARA-IFAD-CAF).
Stability of the PEU. It is recommended that a stable technical team be ensured within the PEU until the project is complete, particularly during the transition to an eventual second phase (MINEP-CIARA).
Deepening of linkages with PRODECOP and systematization of experiences with other national programmes. It is recommended that, given the dynamic implementation of many national programmes targeted to rural populations (e.g. the "Missions", INAMUJER, BANMUJER, etc.) in recent years, PRODECOP deepen its linkages with these and share the systematization of experiences resulting from their work (MINEP-CIARA-PRODECOP).
Youth-based approach. PRODECOP included youth groups dynamically in all of its activities (e.g. rural credit unions, cultural promotion, training, etc.), although they are not explicitly included in the project objectives. It is recommended that this dimension be explicitly addressed in future work plans and in recording the actions and achievements attained (IFAD-CAF-PRODECOP).
Specific Issues
Organization and Citizen Participation
Linkages with local authorities. It is recommended that greater depth and dynamism be given to linkages between community organizations and municipal and state bodies. This implies developing training for local governments to enable them to incorporate these demands and visions of the future and medium-term planning (CIARA-PRODECOP).
Training in participation beyond the local level. It is recommended that training be strengthened to generate capacity among community organizations to participate in decision-making beyond the community or immediate interest group level and to adapt to variations of the regulatory and political-institutional context (PRODECOP).
Use of FIC resources. It is recommended that FIC (or other sources) allocate resources in a more dynamic and executive manner to address unmet demand for community and productive initiatives and projects still at the stage of formulation and negotiation (CIARA-PRODECOP).
Gradual co-financing for services. It is recommended that the notion of cofinancing be introduced for training and technical assistance services at the local level by selected organizations, in order to gradually assure the sustainability of these services beyond project completion (CIARA-PRODECOP).
Geographical Coverage and Impact on Conditions of Production
Formulation of local regional development strategies. It is recommended that strategies be formulated by region and by area to adequately evaluate the medium and long-term economic and productive development potential for increasing income, with economic and productive organizations presenting the greatest potential and interest (CIARA-PRODECOP).
Programming of technical assistance for production. It is recommended that extension and technology transfer work be programmed on the basis of identified demand and potential, and that productive plans and projects be formulated together with communities, determining financing needs and sources (CIARA-PRODECOP).
Rural financial services
Systematization of experiences. It is recommended that the experiences acquired by participants in credit unions be gathered and systematized to address the deficit in narrative documentation on the creation and development of rural credit unions by PRODECOP (PRODECOP).
Systematized database. It is recommended that a single database on rural credit unions be set up, by state and municipality, to serve as a guide for any organization or agency that wishes to learn more about and replicate the credit union model (PRODECOP).
Training programme for rural credit union executives. It is recommended that staff exchanges and training be established with national and international organizations specializing in executive coaching and training (including succession planning). Topics such as arrears analysis and policy, application of different interest rates, balancing portfolios with different costs and returns, interpreting rates of return, creditworthiness and liquidity have not been covered in support provided for credit unions, yet are indispensable to access to the formal financial sector (CIARA-PRODECOP).
Prudent approach to assistance. With respect to the development nature of the credit unions, it is recommended that an interactive approach be taken that does not impose foreign judgments. To the extent feasible in terms of time and resources, PRODECOP can assist in drawing up more business plans than has hitherto been the case (PRODECOP).
Support for interaction among rural credit unions. A number of credit unions are preparing for growth in a coordinated way (in the western region), either through trust operations among themselves or under a plan to create a "credit union of credit unions" within a single municipal area. This calls for a multiyear strategy based on a consensus among individual credit unions and representative, competent local leaders. Projects of this kind call for preparing with an investment and institution-building plan, and it is recommended that PRODECOP prepare adequately for this mandate (under a possible extension or during a possible second phase). (CIARA-PRODECOP).
Channelling "external" resources. The institutional and policy context has altered substantially since the start-up of PRODECOP. Several sub-sectoral financing programmes directed to longer-term investment have been developed and will be placed into effect using national resources (e.g. Plan Café). It is recommended that PRODECOP establish and maintain continuous relations with these programmes, either to assist rural credit unions eligible to receive "external credit" from these sources or, alternatively and when considered advisable, to channel these resources through other community organizations (e.g. OEPs), within the framework of medium-term sustainable development strategies(MINEP-CIARA-PRODECOP).
PRODECOP in indigenous areas
Building capacity in indigenous issues. It is recommended that PRODECOP enter into agreements and alliances with research centres and programmes interested in indigenous issues, to expand project capacity, strengthen and add value to the participation of technicians and promoters and generate an impact that will translate intervention on poverty into recovering and strengthening culture (IFAD-MINEP-CIARA-PRODECOP).
Greater emphasis on cultural values. It is recommended that in planning work with indigenous populations, actions to treat poverty be differentiated from those valuing culture, and that additional efforts be made to recover cultural expressions of indigenous peoples to promote economic alternatives and better living conditions (PRODECOP).
Greater resource allocation. It is recommended that actions in indigenous areas be explicitly strengthened through the allocation of greater, better targeted resources and better working conditions for promoters. This shift in emphasis for resource allocation should commence as soon as possible and should characterize actions by PRODECOP in an eventual second phase (CIARA-PRODECOP).
Systematization of gender experiences and systematic identification of inclusive organizations. It is recommended that PRODECOP's gender experiences be systematized, in particular the features of organizations promoted for their potential for inclusion and adaptation to the needs and interests of men and women (PRODECOP).
Empowering the inclusion of women in implementing agencies. It is recommended that women be empowered to participate in implementing agencies. It is not sufficient to deploy actions to raise awareness and self esteem among women unless they are accompanied by affirmative action and policies fostering economic undertakings by women (PRODECOP).
Monitoring and evaluation
Improving records and data processing. It is recommended that a significant improvement be made, through contractual and/or consulting services, in the quality of technical resources and processing of information centralized in the PEU in connection with users, training events, extension events, etc. (e.g. a centralized unique roster of beneficiaries). This will make it possible to sift through the variables and indicate actual project coverage during the entire implementation period. The aggregation and consolidation of relevant data (e.g. number of users, number of activities, number of initiatives) must be processed by time periods relevant to results and impact evaluation (e.g. by year, cumulatively from start-up) and not disaggregated by implementation units (e.g. by quarter) (PRODECOP).
Reprocessing information at the regional level. It is recommended that steps be taken at regional offices and co-implementing agencies so that decentralized information can be captured to build up the M&E system mentioned previously, to complete the systematization of experiences with rural credit unions, indigenous areas and other aspects mentioned herein (PRODECOP).
Preparation of updated socioeconomic diagnostic assessments. It is recommended that resources be allocated for an updated socioeconomic diagnostic assessment on the PRODECOP communities. This will serve as a baseline study for subsequent phases of the project (PRODECOP).
Use of IFAD methodological instruments and support programmes. It is recommended that instruments developed by IFAD and its regional programmes [Programme for Strengthening the Regional Capacity for Monitoring and Evaluation of Rural Poverty Alleviation Projects in Latin America and the Caribbean (PREVAL)] be used to improve aspects of the project M&E system (IFAD-PRODECOP).
Communication among partners
It is recommended that, in all operations, communication between the Government of Venezuela (PRODECOP-CIARA-MINEP) and external donors (IFAD and CAF) be more fluid and timely. This will minimize and perhaps avoid delays and failures in implementing PRODECOP through the needed reformulation of the guarantee and rediscount funds component (IFAD-CAF-GoV).
IFAD advises that specific consulting support will be provided to PRODECOP (probably for February 2006) to collaborate on the design of the Action Plan for 2006-2007 and on issues relating to the financial services component, following the recommendations of this Agreement (IFAD).
1/ The agreement reflects the understanding among the institutions involved in project implementation and included in the core learning partnership (CLP), with respect to the evaluation findings and recommendations and the willingness to adopt and implement such recommendations.