Empowering the poor by shifting from a supply to a demand-driven approach

The Management of Natural Resources in the Southern Highlands Project (MARENASS) and the Development of the Puno-Cusco Corridor Project (CORREDOR) were launched by the Government of Peru in 1995 and 1997, respectively. Both projects operate in the Southern Highlands, where about 73 per cent of the rural population is poor, and 27 per cent is extremely poor. The projects work to reduce poverty by enabling families and communities to offer competitive goods and services that help free them from dependence on agriculture and herding.
Consulting with rural poor people during the planning phase is key. Both projects build on the earlier successes of the Promotion of Technology Transfer Project to Peasant Communities in the Highlands Project (FEAS), which ended in 1999. Funds are provided directly to rural poor people, who can contract technical assistance services of their choice. The shift away from a supply-driven system of extension to one of demand-driven assistance creates a more dynamic market.
The new USD 21.7 million Market Strengthening and Livelihood Diversification in the Southern Highlands Project will further build on IFAD's experience in Peru.

The four projects represent an investment of more than USD 98.6 million in the Peruvian Highlands. To date, the projects have reached about 1,000 communities and 1,100 farmer organizations – almost 100,000 families.

Lessons Learned

• Transferring decision-making power and control over project resources to rural communities helps increase incomes, assets and self-esteem.
• Trained local service providers are better able to respond to rural communities' needs.
• Relationships between local service providers and the community can bridge rural and urban areas and expand marketing and other small-business opportunities.
• Involving rural poor people in all stages of project planning and implementation legitimizes their perceptions and needs, creates realistic expectations and reduces controversy.
• "Innovative technology" competitions between communities are an effective way to encourage better resource management and sharing of ideas.
• Projects that are designed to be flexible enable practices to be abandoned or reinforced as necessary.

Results

Communities that are directly responsible for managing their financial, natural and social resources have a sense of ownership over development activities. This in turn boosts self-esteem and empowers them to negotiate with local government, civil-society and other institutions for vital services and assistance. The impact has included:

• 500 farmer organizations have contracted their own technical assistance services for a total cost of USD 7.5 million, contributing USD 1 million themselves (FEAS).
• Almost a third of the families have set up new microenterprises (MARENASS).
• Incomes of rural poor families rose 64 per cent between 2000 and 2003 (MARENASS).
• 60 per cent of communities improved their household assets, such as homes, gardens and stables (MARENASS).
• About 2 300 microentrepreneurs and 1 800 artisans are engaged in new income-generating activities (CORREDOR).
• Women in 360 communities are setting up microenterprises with the support of a special fund administered by local women's groups.
• Every dollar spent by projects is getting a direct return of USD 3-5 in communities through the increased value of participants' assets.

Scaling Up

The basic principles of the projects' demand-driven approach have been incorporated by the National Compensation and Social Development Fund, which is one of Peru's largest national development programmes. Some of the innovative features are being taken up by Peru's Ministry of Transport and the World Bank in a new project in the southern Sierra. These features are also being incorporated into European Union-financed projects in Guatemala and Chile. In addition, the World Bank has integrated the concept of transferring resources directly to beneficiaries into its rural development operations.