 |
|
|
|
While area development and rural development projects have brought some benefits to the rural poor, they have tended to by-pass the poorest, especially those without land, who are forced to depend on non-farm employment. On the other hand, evaluations have indicated that where the poorest are strictly targeted for credit for income-generating activities, such projects have benefited the landless, who have turned the credit almost exclusively to non-farm activities. The issue relates to the advisability of including credit components for income generation for the poor within agricultural, area or rural development projects.
The proposal is that a credit component for poverty alleviation of the poorest should logically and functionally form an essential part of most area development projects for three reasons:
- Such credit serves as a net to catch the landless poor, who are often by-passed by projects (e.g., as pointed out by the evaluation of the Kegalle Rural Development Project in Sri Lanka).
- Such undirected credit is especially appropriate for the landless poor, since they are able to divert it almost exclusively to non-farm activities, which are their only feasible enterprises.
- Such a component within a larger area development project, or as a separate project operated in the same area, would enable the exploitation of the production and consumption linkages created by the main project's activities, thereby enhancing their multiplier effect on the incomes and employment of the poor.
Such
complementary activities in the agricultural and non-farm sectors of the
rural economy reflect reality and what is feasible among the poor, who
straddle both sectors, eking out a living where they can. This "double-barreled"
approach has been applied with success in Indonesia (215 ID and 255 ID),
where the East Java Rainfed Agriculture Project overlaps with the project
for credit to the landless and marginal farmers (P4K). The result has
been to reinforce the effectiveness of both projects. The Pakistan Country
Portfolio Evaluation (CPE) showed that credit had been used in a number
of projects to promote rural non-farm activities as a method of reaching
women beneficiaries (162 PA, 257 PA, 319 PA and also in the design of
319 PA).
It is necessary, however, that the proven methodology of "Grameen Bank-type" credit be rigorously maintained, because: (i) targeting needs to be precise; (ii) such credit components/projects are the best means of reaching the landless poor, who have often been by-passed in IFAD's area development and rural development projects; (iii) this credit has been used by the landless poor almost exclusively for non-farm activities and is an effective means for spreading non-farm employment; and (iv) such a double-edged approach greatly accelerates economic development and diversification, thus helping the transition to rural industrialization, which will greatly benefit the incomes and employment of the rural poor.
Select any of the following related project profiles for background information: 166 NE.
