III. PROJECT RESULTS

31. The projects executed in Honduras have had effects which can be analysed at three levels.

32. First, with respect to decision making relating to policies and institutional decisions at national and sectoral levels. Secondly, in relation to project results with regard to increased income and well being of the rural poor. And thirdly, with respect to the geo-political effects of the project beyond its immediate geographical context.

33. Effect at national and sector levels. The influence of the Fund's projects on the decisions taken by the national authorities has been limited. The Government has looked on the projects cofinanced by IFAD more as specific actions taken to reduce poverty in a particular region than as part of a long term national programme of rural development. No means of approaching the problems of rural poverty from a wider angle was generated nor was the Fund able to collaborate on a national or sector strategy aimed at putting into operation a plan or national programme to fight rural poverty.

34. Such limited impact on a national level also characterised other international and bilateral entities which had been working at the same time with similar objectives also through individual and scattered projects.

35. Even though from the end of the 70's to the middle of the 80's, several rural development projects were implemented, later this policy lost ground as new priorities were introduced by structural adjustment programmes. It was precisely during this period when IFAD exercised greater influence on rural development since it was the only international financing institution in Honduras (apart from some bilateral cooperation agencies such as COSUDE) which continued supporting rural development. During the period from the end of the 80's to the mid 90's, negotiations between the Fund and the Ministries of Natural Resources, and Finance and Public Credit, resulted in the normalization of relations between IFAD and the country, in spite of a great lack of internal interest. In this way, one project, which was almost totally inactive, was reactivated (Intibucá-La Paz), whereas another was closed (PRODESBA), since it was not considered feasible to continue it and an agreement was reached on the preparation and approval of a new project (PLANDERO).

36. Effect of the projects on the target population. the deficient functioning of the monitoring and evaluation systems of the projects has limited the possibility of including a quantitative analysis of the effects, particularly with regard to changes in income. Because of this, and rather than generating partial data which could give misleading information regarding the extent of the projects’ effects, CPE Mission decided to combine its judgements, based on field work, with data from several sources. In addition, special attention has been paid to the assumptions of the IFAD funded projects’ strategies in Honduras.

37. Project focus. When evaluating the project design assumptions, one crucial aspect to analyse is whether the strategy of the projects took into account the needs of the target population. It was found that even though the target population was heterogeneous and lived in rural areas, their income did not just depend on agricultural production, which had been the focus of the operative strategy. In fact, an important part of rural dwellers have no land or so little that they cannot live only from agriculture. On average, agricultural production generates only 50% of the income of the rural population in Western Honduras. Those with no land depend far less on agriculture and have to find most of their income by working as labourers, or in non agricultural activities.

38. This shows that the project strategy, focused on increases in production and agricultural productivity (what can be defined as a 'productivist' point of view) tilts most of the direct benefits (technical assistance, credit) offered by the projects towards only one part of the target population, that is, towards those with sufficient land. Benefits for the poorer sectors are indirect and result from employment generated by their more fortunate neighbours. Other benefits, however, such as employment and improved access to communities derived from road construction and other infrastructure, had effects on a wider population.

39. Changes in production and productivity at farm level. The available evidence shows that yields increase in productivity were positive but less than expected. The initial IFAD projects concentrated on improving basic cereal crops out of a total peasant production consisting of products for home consumption (maize, beans, sorghum and rice), products for sale in local markets (banana, vegetables, potato, poultry, pigs, cattle) and products for export (mostly coffee). Gradually, as the projects were implemented, they were extended to include a wider range of products, once it was realized that it would be difficult to increase income solely on the basis of cereal production.

40. One of the main difficulties encountered was that the conditions in most of the small farms as well as cereal production technology, were not appropriate for generating the large increases in physical yield per area as assumed by the projects’ design. Existing technologies were designed to increase cereal yields in the valleys but were in no way adequate for doing this on infertile, mountainous land. It was not, therefore, feasible to reach the yield levels programmed by the projects and this, combined with the increased costs demanded by the proposed technology (intensive use of improved variety seeds, fertilizers and other agrochemicals) had a negative effect on net income. The peasants, always cautious, took the credit offered for cereals and invested part in their maize patch to ensure food for their families and part in other uses which were more urgent for their needs or were more cost effective.

41. The soil conservation techniques which were programmed for use with the credits were better received, even though the targets were not fulfilled. This positive effect resulted partly from the fact that information was given before the start of the projects and continued once the projects were under way. Currently, in the west of Honduras, soil conservation techniques used by a minority of peasants, can be seen. It should be pointed out that PRODERO is acknowledged at a national level as a pioneering project in the diffusion of conservation techniques and particularly in developing environmental awareness among the poor population and technical staff.

42. Right from the first project (PRODERO), it was seen that the initial plan for increasing cereal production was not cost-effective for the farmers. So in the following projects, an attempt was made to include other crops as well as traditional cereals. In this way, coffee production was encouraged as it was seen to be cost-effective and, with time, demand for credit for this crop within the projects increased. This financing was initially channelled through PRODESBA and La Paz-Intibucá for setting up new coffee lots. But when funds for credit began to become scarce (at the beginning of the 90's), financing was directed mainly towards maintaining the coffee planted. This change could mean that credit given during these last years has gone to small farmers who already have coffee planted. So even though credit for coffee financed more cost effective activities, it only reached a small part of the project's clients.

43. However, despite that IFAD projects directed credit and technical assistance towards certain crops, the fungibility of the resources allowed farmers to use them in order to satisfy other needs and for other investment opportunities. There is evidence that a good deal of capitalisation took place among many members of the groups, shown not only in the case of coffee plantations as mentioned above but also in the buying of cattle and land, and in the improvement of their housing conditions. According to information gathered by the Mission, it is estimated that a significant minority of the participants has managed to improve its standard of living thanks to the access it had to project services. It should also be pointed out that, within the groups which received services for a long time, as was the case with the groups which operated within PRODERO for many years, distribution of benefits within the groups was very unequal since resources and capacities of each of the members varied.

44. In short, from the point of view of the overall increase of production and income, results were less than planned. Moreover, the project design did not take sufficiently into account the possibilities and the limitations of the target populations and institutions. Nevertheless, it is important not to underestimate the large number of poor farmers in the west of the country who benefited from the projects.

45. Organisation of beneficiaries. Nine hundred thirty five groups participated in the implementation of the projects, including almost 170 women's groups. Between 14 000 and 15 000 peasants and 2 500 peasant women were involved in the groups. Organisation and training efforts produced important results since they promoted cohesion among the farmers, at least as a way of obtaining credit. Some groups were active for more that ten years and the development of peasant leaders was stimulated within these groups. In the specific case of PRODERO, a wide organisational base was set up which was later used by other entities as well as for new projects in the private and public development sectors. The formation of women’s' groups helped encourage higher self esteem among the members, created bonds of solidarity at the local level and gave a chance to work together on common, income-generating activities.

46. But the effort to organise the groups through the projects had its limitations. The main one was that of maintaining the groups. In many cases the new groups were formed more around the need of the projects themselves to generate a demand for credit than as an answer to the peasants' own needs. Thus most of the groups were dissolved once members felt that they no longer had access to credit.

47. Another negative aspect was that since the Project Executing Units felt the urgency for creating many new groups, the members of the group did not have much say in who formed part of the group. In the case of those groups formed prior to the beginning of the projects, a 'self selecting' process took place since the members had had to fight together to overcome certain problems such as obtaining land. Groups organised initially by the projects (as was the case with most of the CAs) did not go through such an intense process. The groups were much less effective and cohesive and had to go through a later process of "self-screening' if they wanted to continue having access to credit. If problems persisted between the members, these groups rapidly disappeared. Thus, in the case of PRODERO, almost half the groups had problems with members and had to be regrouped once the problem members had been eliminated.

48. Thirdly, the projects did not link group formation with the aim of strengthening the organisation of the poor population and encouraging its participation in important decisions to be taken concerning design, implementation and evaluation. This meant that these concepts were hardly applied in practice during execution. In this way, projects did not make the most of the support which these local organisations and their members could have provided them with during execution and after external funds finished. Since no mechanisms had been established for consulting with the grassroots on priority actions to be developed, opportunities were lost for those involved to become active stockholders of the projects. This lack of identification on the part of the groups organised by the projects, has led to a lack of local support which is a threat to project sustainability in the long term.

49. And finally, channelling the main services of the projects through groups which were dominated by men, meant that access for women to these services was restricted.

50. Sustainability of credit and technical assistance. As indicated above, the projects’ design established a close link between credit and technical assistance as a means of increasing production and income of poor farmers. The projects supplied the necessary resources for developing and widening such services in the west of the country. Once payments from external sources to the projects had finished (including those of IFAD), the loan contracts established that these services would continue to be given to poor farmers in the project areas for several years. Credit would be given on the basis of trust funds established (one per project) and technical assistance for farmers would still be supplied by the Ministry (SRN), using technical personnel and equipment financed by the projects.

51. With regard to the trusts, a wide range of situations is found: these range from the relatively successful case where long term services have been maintained as in PRODERO to another case which, in practical terms, ceased to operate when external payments finished, as in PRODESBA. In the case of the Intibucá-La-Paz, a project which is still active, the trust operates under difficulties which could be overcome by making certain adjustments.

52. With regard to the PRODERO trust, there was no follow up by the external bodies which financed it (IFAD and IDB), but it has functioned for fifteen years from 1981 to 1995 having given US 10.5 million dollars in total (the original fund was US 3.3 million dollars). Placements with this fund continued increasing in real terms even several years after payments by IFAD had finished. They diminished drastically only from 1994 onwards. But amount disbursed during the four years after the project’s closing date was higher than for the last four years of the project.

53. The sustainability of the PRODERO trust over a longer period is now in jeopardy. Since the functioning of the trust depends directly on Ministry (SRN) field staff, disbursements (and recoveries) are strongly affected by the reduction and later elimination in 1994 at a national level of the extension service. Even in 1995, the trust disbursed loans for US 300 000 dollars to 120 farmer groups (with 2 500 members), so it is still important. The new PLANDERO project is negotiating to incorporate the farmers’ groups and healthy loans into its initial actions in the area. Delinquency rates have been high (exceeding 30%) and among its key factors two that should be pointed out are the lack of timeliness and the pressure to disburse.

54. Greater security in land property deeds. One of the most important problems for poor farmers is access to land in the case of those who have none, and security of holding for the rest. The latter issue was incorporated into the Intibucá-La Paz project which proposed that one of its aims should be to normalise the holding situation for 14 000 families in 61 agrarian reform settlements. This goal was only partially achieved since firm titles were given to only 14 of the agrarian reform settlements. However, in terms of number of people getting titles, this doubled the programmed figure. One important result which had not been programmed was that, among the zones given titles, there were some native Indian Lencas communities. Thus effective support was given to ethnic groups which were fighting for their territorial rights. To date, the INA has given titles for 646 hectares to 91 Lencas beneficiaries and is handling titles for 555 other indigenous people in an area of 22 785 hectares.

55. Improved access to communities. In terms of results, over the last fifteen years, there has been a notable improvement of roads to the communities. This has opened up the way for services for the farmers and for the marketing of their products. Travelling time to and from the communities and the main regional centres has been reduced, round the year access is assured and costs have been reduced since there are fewer transport losses. As well as building the roads, in several cases these were constructed using labour intensive systems, thus generating local employment. The roads built, with very few exceptions, have not had negative environmental effects.

56. Development of local human resources (human capital formation). All the projects contributed in a significant way to increase local capacity for carrying out development tasks. Training was given to technical workers and in particular to the inhabitants in the project areas where these were recruited as agronomy assistants, or when particular attention was paid to them in their role as leaders of production groups. They were trained in different aspects of rural development, ranging from the application of new production technologies and soil conservation techniques to how to improve organisation within the communities. For the most part, those who benefited from this training have remained in the area, spreading their knowledge, or have emigrated and applied this knowledge in the new areas where they have settled. IFAD projects have been an important source of trained technical personnel that are now working on other projects or with different NGOs in the area. In some cases, those who were trained by and participated in PRODERO have set up their own schools or enterprises and are themselves training farmers and technical workers in the West of Honduras to use improved production methods and to conserve natural resources.

57. Geo-political effects. One aspect which is not always taken into consideration when the effects of rural development projects are analysed, is how these projects influence the way rural populations view their future prospects. When a rural area has been neglected for years and a project is introduced which offers improved or new services, this can be an important factor in channelling the energies of this segment of rural society towards development activities. The policy followed in Honduras of channelling resources to zones near areas of conflict helped to reduce social tension and contributed to social peace. This was the case with the PRODERO-PLANDERO and La Paz-Intibucá projects which neighboured on areas of serious conflicts in El Salvador.

58. There were other political effects which had not been foreseen in the design of the Intibucá-La Paz and PLANDERO projects, which included indigenous Lenca groups in their respective target populations. In spite of their numerical importance, these ethnic groups had not been referred to explicitly in the project documents. In 1990, there was a sudden awakening of these groups to their rights and cultural importance. Demonstrations in Intibucá and Lempira as well as marches on Tegucigalpa, made this evident. Due to the existence of the Intibucá-La Paz Project, the Government was able to respond immediately to the demands of these groups. Had the projects, financed with IFAD support not existed, then it would have been far more difficult to channel resources to these areas and social tension would have been much higher.

59. The projects cofinanced by IFAD in Honduras during the period being analysed came across important obstacles while they were implemented. These were due both to organisational problems within the projects themselves as well as to external factors which made it difficult to carry out the projects as they had been designed and within the time schedule.

60. Among the significant external factors, one of the most important ones to affect the implementation process was the economic crisis of the 80s, which resulted in a less dynamic economy, thereby affecting public finances. The repercussions of this were felt in two ways: a) the national counterpart funds budgeted for the projects by public institutions in the agricultural sector were less than planned and fewer personnel were allocated to the projects; and b) reduced capacity for paying the national debt meant that Honduras defaulted on payments of IFAD loans, so that IFAD had to stop payments on current loans.

61. Other external factors are related to the administrative mechanisms of the State. The first of these was the contracting of personnel for the projects. The managers and technical staff, as well as the administrative personnel assigned to the project’s executing units, did not come from the permanent body of personnel working at the public institutions responsible for carrying out the project. Instead, they were contracted specifically for the project. They were provided with annual contracts, which meant that there was a high turnover of personnel. Personnel was often left for months without pay because the government system for paying by contract was inefficient. Added to this was the fact that the level of those contracted varied considerably and personnel was often chosen or removed for political reasons.

62. A second factor which made it difficult to implement the projects was the fact that procedures for buying goods and services were slow and complicated and this affected the efficiency of the projects. The control systems applied did not ensure the good use of resources.

63. A third area which proved to be problematic concerned the transfer of credit funds from the central BANDESA bank to its branches in the project areas. On several occasions, there were delays in the disbursement of subloans which had already been approved. This caused problems to the clients since funds were not available in the local offices of the Bank.

64. In order to overcome some of these factors in new projects, measures were introduced in the loan contract of the last project (PLANDERO) to the effect that: a) a good part of the services (credit, technical assistance) were to be contracted from private entities in order to reduce the dependence on public institutions and their budgeting problems as well as to increase efficiency; b) mechanisms were established for the selection and evaluation of personnel and for contracting them for the entire period of the project; and c) the project would operate with more autonomous administrative and resource management systems, including working with new executing bodies such as NGOs and private banks.

65. As far as internal factors which affected project implementation, the most relevant ones were: a) centralized decision mechanisms, with little or no participation of the beneficiaries; b) little capacity within the executing units for drawing up well-conceived annual working plans to guide the actions of co-executing institutions; and c) ineffective monitoring and evaluation (M&E) systems. It should be pointed out, given its importance, that there was little integration between the M&E units and the project executing units because each belonged to a different Ministry. Moreover, there was an inconvenient merger between the monitoring and the evaluation function in a single unit (this point is elaborated below).

66. With regard to supervision of the projects by cooperating institutions, it was carried out according to their own norms and without sufficiently taking into account IFAD’s specific needs.. Problems relating to supervision were particularly acute in one project (PRODESBA) and this was one of the contributing factors in having to cancel that project prematurely.

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