Release number IFAD/02/07

Rome, 22 January 2007 – A US$22.2 million development project will assist over 70,000 poor rural people in El Salvador’s eastern region to develop and transform small-scale farming activities into rural businesses.

The Rural Development and Modernization Project for the Eastern Region will be partly financed by a US$15 million loan and a US$1 million grant from the International Fund for Agricultural Development. An agreement was signed today by El Salvador’s Ambassador to Italy, José Roberto Andino Salazar, and IFAD President Lennart Båge, at IFAD headquarters.

The Government of El Salvador will provide the balance of the total funds for the project.

Poor rural families in the La Unión, Morazán, San Miguel and Usulatán municipalities usually grow fruit, vegetables and nuts, and raise pigs, poultry and cattle. Most of the produce is used for their household consumption. 

The project will help these families access the rural financial services they need to develop their farms into income-generating businesses. Project participants will mainly be small farmers but microentrepreneurs, artisans and young people will also be included.

Technical assistance will provide farmers’ organisations and informal interest groups with a range of training programmes, including leadership, skills and management training. Members of these organizations will also be able to identify new opportunities for business development and evaluate the potential of certain products in the agricultural and non-agricultural sectors.

Remittances from Salvadoreans working abroad are the country’s biggest source of foreign exchange and an important resource for poor rural people. Through the IFAD/Inter-Development Bank Multilateral Investment Fund programme, remittances in this region may be used more productively to finance investments such as small irrigation schemes, equipment and infrastructure, including the repair of rural roads.

The project also has a strong focus on the rehabilitation of natural resources and their management. Soil erosion, loss of water quantity and quality, and desertification are problems to be addressed by plans to increase the vegetative cover, improve soil and water management, encourage the appropriate use of crop residues, and conserve bio-diversity.

El Salvador is the smallest and most densely populated country in Central America. It is also one of the poorest countries in the region with more than half of the rural population living in poverty.

Since starting operations in 1978, IFAD has provided financing for seven projects and programmes in El Salvador, with loans and grants totalling US$94 million.

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IFAD is a specialized agency of the United Nations dedicated to eradicating poverty and hunger in rural areas of developing countries. Through low-interest loans and grants, it develops and finances projects that enable rural poor people to overcome poverty themselves. There are 196 ongoing IFAD-supported rural poverty eradication programmes and projects, totalling US$6.6 billion. IFAD has invested more than US$3.1 billion in these initiatives. Cofinancing has been provided by governments, beneficiaries, multilateral and bilateral donors and other partners. At full development, these programmes will help nearly 89 million rural poor women and men to achieve better lives for themselves and their families. Since starting operations in 1978, IFAD has invested US$9.5 billion in 732 programmes and projects that have helped more than 300 million poor rural men and women achieve better lives for themselves and their families. Governments and other financing sources in the recipient countries, including project participants, have contributed US$9.0 billion, and multilateral, bilateral and other donors have provided another US$7.1 billion in cofinancing.