Interim evaluation¹

Core learning partnership and evaluation users

The Office of Evaluation of the International Fund for Agricultural Development (IFAD) has conducted an interim evaluation of the Development of the Puno-Cusco Corridor Project. An evaluation mission visited the country from 13 to 30 March 2006, concluding its activities in the field with a meeting in Lima on 31 March at which the preliminary findings were presented to stakeholders.

IFAD's project evaluation process is based on learning among all stakeholders. A core learning partnership (CLP) is therefore set up to facilitate participation by all those concerned. For this project the partnership includes, in addition to IFAD, the Government of Peru, represented by the Ministry of Economy and Finance, the Ministry of Agriculture, the Ministry of Women and Social Development and the Social Development Cooperation Fund (FONCODES).

On 29 September 2006, a workshop was held in Lima to present and discuss the evaluation findings with CLP members and a broad range of representatives of the organizations involved and interested in the project. The workshop provided an opportunity to share comments, express views and make suggestions for inclusion in the final evaluation documentation.

Main evaluation findings

The project was assessed as successful overall, having implemented strategies that were innovative for Peru, particularly its use of the economic corridor approach, focus on economic relations between urban and rural areas, development of the technical assistance services market and transfer of resources through competitions to user groups to hire such services. The latter two in particular confirm the validity of non-traditional approaches to technology and knowledge transfer. In addition, the project demonstrated that lack of access to credit was not an obstacle to the viability of the technical changes promoted, and bet on women's savings confirming both their ability to save and the key role such capacity plays in the survival strategies and initiatives of poor families.

Project design and implementation were deemed highly relevant in terms of IFAD's strategy in Peru. Experience with earlier projects [e.g. the Promotion of Technology Transfer Project to Peasant Communities in the Highlands (FEAS); and the Management of Natural Resources in the Southern Highlands Project, (MARENASS)] was taken into account, and the factors underlying rural poverty were analyzed adequately. The project's objectives, strategies and actions were also highly relevant from the point of view of Peru's public policies and the problems and potential of the rural poor.

Highlights of project implementation are as follows: (a) the strategy and mechanisms in support of the development of the technical assistance services market were consistent with public policy in Peru; (b) the project was able to adapt to the decentralization policy introduced in the course of implementation, by working actively from the field with local governments, some of which incorporated elements of the project strategy in their operating policies; (c) the learning methods applied (internships, learning tours) were highly effective and appropriate to the characteristics, problems and potential of the target population; (d) valuing the users' cultural assets and identifying the market potential of goods and services with cultural content proved to be a sound approach; (e) the project demonstrated the importance of recognizing citizenship, in the form of an identity card, to facilitate mainstreaming the poor into public and economic life; and (f) a flexible planning, monitoring and evaluation system provided feedback on project innovations.

From the point of view of achieving its objectives, the project was evaluated as partially effective. Virtually all of its stated objectives were achieved, with a single exception. Nearly all the targets and goals set (especially for promoting the development of the technical services market and marketing improvements) were reached, and many of them were far exceeded. The technical assistance market was strengthened from the point of view of both demand (greater capacity and willingness to pay, new capacities for selecting, hiring and evaluating) and supply (increased technical capacity, new service providers). The number of beneficiaries was much higher than anticipated (more than 48 000 from 44 000 families, close to three times the 15 000 families provided for in project design). Through the savings programme, close to 3 500 women opened savings accounts and approached formal financial institutions.  The only objective not met was to involve intermediate financial institutions (IFIs) to strengthen the supply of financial services in the form of new products appropriate to the target population. Owing to design deficiencies and little interest in generating innovations on the part of IFIs in the field, the component had to be redesigned in its entirety.

The targeting of activities and impact on the poor population was good, and the number of women beneficiaries exceeded the targets set. Women's participation in business plans and profiles (36.6 per cent) was greater than anticipated (20 per cent), and 407 of the groups were made up exclusively of women. The percentage of women in leadership positions within farmer and microenterprise groups (38 per cent) also exceeded the target (30 per cent). In addition, the project created new avenues of work that favoured women significantly. Prominent among these are the savings promotion programme and support provided for obtaining national identity cards (5 985 women). Moreover, these results have been achieved some two years before the project's end.

In terms of impact, the project performance was successful, achieving the desired impact as well as unforeseen impact in some cases. The most important point here is the widespread adoption of new production techniques by users, facilitating an increase in both farm and off-farm production and productivity, an increase in income -estimated in more than 20 per cent- increase in income and tangible assets, improved access to food, and new knowledge and skills among men and women in several areas (production, marketing, resource management, and the ability to deal with financial institutions). It is worth highlighting impacts on self-esteem, empowerment² and social capital (strengthened organization and cohesion within communities and production groups). A positive impact was also observed on financial assets (savings accounts opened by rural women who had never had access to such services, and greater access to information), market access (access was obtained to new markets outside the region, both in major cities inside Peru [e.g. livestock breeders, artisans and leather workers selling in Lima and Arequipa] and in external markets [crafts]) and reduced adverse environmental impact for various productive activities.

Resource use was efficient and featured relatively low operating costs, a high proportion of resources transferred to users in relation to total investment³,unit costs for technical assistance and training well below design estimates and reasonable costs for each savings account opened by beneficiary women. The project is considered likely to be sustainable, and performance was successful also from the point of view of innovation, replicability and scalability – all considered strong points.

Key issues for the future 

Access by the rural poor to technical services

• The project´s impact on production and user's productivity shows that limited access to technical assistance is one of the greatest obstacles faced by smallholders and microentrepreneurs in Peru in raising their incomes. Continuing to invest in developing rural services markets for the poor, as opposed to direct technology transfers via traditional extension systems, appears to ensure a more significant increase in their income and assets.
• Developing and strengthening markets for goods and services relevant to farmers and rural microentrepreneurs is an effective strategy to reduce rural poverty. Transferring resources to users to cofinance technical assistance services also proved to be an effective means of promoting learning about managing resources and technical assistance. This also entailed a real transfer of power to users, so that neither the project nor other actors interfered in the selection, hiring and supervision of technical service providers. A counterpart contribution in cash was required to promote a sense of ownership.
• The business plans and profiles used in the project, and similar instruments, together with the setting of deadlines for implementation and increasing percentage counterpart contributions for new applications, provided an incentive for hiring technical assistance consistent with well defined needs and geared to achieving economic results within definite periods of time. Generalities and lack of definition are to be avoided since they can lead to services being provided over a number of years that do not focus on solving specific problems and produce scant results – ultimately costly and inefficient.
• The principles of learning by doing and farmer-to-farmer transfer of experience and knowledge proved to be highly effective in promoting learning on issues of production. This suggests that it is possible to take advantage of the potential for innovation among the rural poor, working with learning tours and exchanges to disseminate progress and successes – both inside and outside the region – as well as working with expert farmers who can become non-professional service providers of high quality and low cost.
• The development of technical assistance services can be adversely affected by institutions or projects that operate under principles contrary to the market, providing services free of charge and extension without any concrete requirements for achieving economic results and with no user participation in contracting and supervision.
• Accordingly, promoting the development of a market for rural technical services calls for instruments that:

• Facilitate access to a diversified and flexiblesupply of technical services that includes different types of providers (farmer providers, professional generalists, professional specialists, semi-technical service providers); services (for instance to develop investment projects, assist with specific problem-solving, marketing or management issues, etc.); and  production activities (farm and off-farm); and
• Act upon the development ofdemand for technical assistance services, by means of: i) Transferring resources and power to users to manage (without interference) technical assistance, including the selection, supervision and evaluation of technical assistance providers; ii) A clear definition of technical assistance objectives in business plans, profiles and similar instruments, together with deadlines for completion; iii) Training users to identify the best options in the market for rural technical assistance services, seeking out and selecting technicians and evaluating their performance; iv)  Requiring cash counterpart contributions that increase over time; v) Multiplying internships to promote learning by doing, access to fairs and markets and knowledge of potential service providers to resolve marketing and other problems.

Access by the rural poor to financial services

• The positive outcomes of business plans and profiles supported with technical assistance under the project, without the support of credit services, suggests that a lack of access of credit was not an obstacle to the viability of the technical changes promoted. Users made use of savings, family remittances and wage income to finance the small investments required.
• The results of the project's savings programme for rural women confirmed the savings capacity of poor families and the crucial importance of savings in their survival strategies, particularly to reduce vulnerability to contingencies (health, climate, etc.) and to gain access to credit services and transfers through this link to the formal financial system.
• The experience with the savings promotion programme demonstrated the importance of an enabling environment (low inflation, positive real interest rates, economic stability, banking legislation encompassing different types of entities with different clientele, a microfinance system with a strong presence by regional entities, a deposit insurance system). Moreover, it demonstrated the importance of having information on these favourable elements to gain the trust of savings programme women participants.
• The project's experience with the savings promotion programme suggest that it is effective to combine group work with individual accounts as mechanisms to promote collective action and social capital, while at the same time making use of individual savings advantages (greater savings incentives, boost to self-esteem).
• The response by financial institutions to the call to promote pro-farmer innovations was very limited and did not meet expectations, evidencing the conservative attitude underlying their plans for expansion of rural services.

Resource allocation mechanisms

• The project showed that allocating funds through the local resource allocation committees (CLAR) representing central, regional and local governments as well as local actors and users, and by means of public competition, ensured transparency and generated a positive impact on human and social capital.

Making the most of cultural assets

• The project showed that identifying the potential of users' cultural assets can lead to excellent results in terms of new, high-value goods and services that take advantage of specific market niches (e.g. experiential tourism, crafts, obtaining copyright for designs, registration of traditional products).
• Valuing cultural assets in project implementation can also contribute significantly to social capital and self-esteem and other aspects of human capital, which in turn can contribute to a potential positive impact on other dimensions of rural poverty. The project gave priority to the use of the Quechua and Aymara languages and traditional dress in competitions, and made fluency in Quechua or Aymara a requirement for all project personnel, including the director.
• The project conducted pioneering research on identifying and valuing the assets of project users and, on this basis, has adjusted its monitoring and evaluation instruments, serving as a benchmark for other programmes and projects to better measure the impact of public investment.

Recommendations

The project results suggest that both IFAD and the Government of Peru should make use of this valuable experience to gain a deeper understanding of the positive outcomes obtained. In particular:

Improving the grasp of underlying factors. Support studies that contribute to a better understanding of the factors underlying good performance by project implementation mechanisms and strategies, as well as the influence of environmental conditions and replicability. In particular, continue research on assets variation and differentiated strategies to combat poverty in the various segments of target groups, in prestigious research centres.

Dissemination. Promote widespread dissemination of project results through internships, learning tours, study grants, publications and events.

Promote participation in research and discussion. Promote participation by the stakeholders of rural development -public institutions, non-governmental organizations, universities and professionals- in research about mechanisms and strategies adopted by the project, and in discussions about their usefulness.

Experiences. Promote experiences in other regions/contexts that leverage, adapt and improve upon mechanisms or models used by the project.

Mainstreaming in public policy. Discuss the usefulness and possible inclusion in public policy of the project experiences and mechanisms -for instance, the allocation of public investment resources by local competition and mechanisms such as the local resource allocation committees- including an analysis of comparative advantages and possible constraints.

Avoid distortion. To the extent possible, in developing a technical services market, avoid the distortions caused by institutions and projects acting under contradictory principles, especially when they provide services free of charge, with no counterpart requirements or concrete action plans, and without user participation in managing technical assistance.

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1/ This document reflects the understanding among the Government of Peru and IFAD with respect to the conclusions and recommendations stemming from the evaluation, and the agreement to adopt and implement such recommendations.

2/ Understood as power transferred incrementally to beneficiaries under the project. Highlights include the ability to propose and compete with their own initiatives in their own language and environment, to contract their own technicians, to reach agreement with the latter on payment terms and fees and terminate the contract if applicable, to access new services and the fundamentals of citizenship (e.g. national identity card, bank account, legal incorporation, etc.).

3/ More than half the resources were transferred in cash directly to the accounts of beneficiaries and their organizations.