Project ID: 1240
Executive Board Document: EB-2002-77-R-24-REV-1

Market Strengthening and Livelihood Diversification in the Southern Highlands Project

Who are the beneficiaries? The population of the project area comprises approximately 120 000 households, 81% of which live in the rural areas. They are mostly Quechua or Aymara indigenous people, and 87% of them are poor or extremely poor. The intended beneficiaries are indigenous peasant communities, high-altitude herders, small-scale farmers and micro and small-scale entrepreneurs in the smaller cities and villages, where infrastructure is lacking and financial services are limited. These groups are poor by all standards as they lack access to rural services and, given the poor quality and volume of them, their products are not competitive.

Why are they poor? The beneficiaries are fundamentally peasant farmers and herders who are marginally inserted in the local markets as most of their production is of a subsistence nature. Peasants in the project area suffer from poverty conditions resulting from the harsh agro-ecological conditions, excessive land fragmentation, limited access to technologies and credit, and lack of information and adaptation to growing market opportunities. From the social and political standpoints, poverty conditions are the result of skewed income distribution and ethnic alienation.

What will the project do for them? Prior to project formulation, the Government of Peru requested IFAD to make an indepth study of lessons learned in the country with regard to natural resources management and technical assistance (TA). The results of the study showed that providing incentives to beneficiaries to improve natural resources, as well as funds to enable them to contract TA, was the most innovative way of tackling poverty in the Sierra region.

The project will assist peasant communities to upgrade their physical resources while recognizing their knowledge and rewarding achievements. By providing incentives for such communities to contract TA, the project will strengthen their negotiating capacity and create social capital. It will also make a significant contribution to reducing marginality among the target group by providing matching grants to associations of emigrants, interest groups and local government to preserve and exploit their cultural heritage and patrimony and thus boost their self-esteem. The project will also test three innovative approaches: encouraging poor rural women to save; collecting and classifying beneficiaries’ knowledge of their environment and ways of managing it; and analysing the coping strategies of the poor.

How will beneficiaries participate in the project? Beneficiaries will participate fully in project implementation through a decentralized mechanism that has proved effective and efficient. The project will promote a self-evaluation approach. No preconceived ideas or models will be imposed, and beneficiaries will be free to decide on how to improve the natural resources at their disposal and thereby increase the productivity of their endeavours. Lessons learned from previous IFAD experience in the country have been discussed with potential beneficiaries, who wholeheartedly committed themselves to the new approach and showed willingness both to compete for project funds and to share in the cost of TA.

Loan Amount:

SDR 12.1 million (equivalent to approximately USD 15.9 million) on ordinary terms

Total project cost USD 21.7 million

Cooperating Institution:

Andean Development Corporation (CAF)

Project ID: 1044
Executive Board Document:

Development of the Puno-Cusco Corridor Project

The main objective of this seven-year project is to increase rural and urban incomes on a sustainable basis by supporting agricultural production and the development of the manufacturing and services sectors by micro and small-scale enterprises. It will strengthen economic and functional integration within the physical and socio-economic context of the Puno-Cusco Corridor. The project will increase agricultural added value by providing financial and marketing support services; improve the production capacity and technologies of micro and small-scale enterprises; support employment-generating activities in local urban centres; promote linkages between the agricultural sector and the micro and small-scale-enterprise sector; promote and generate an explicit demand for viable investments and services; and strengthen the economic organizations of the poor.

Project components are:

- incentives for strengthening rural markets;

- rural financial services; and

- project administration, monitoring and evaluation.

The target group will be approximately 30 000 families. The direct beneficiaries will be 15 000 families, of which 14 400 are involved in agricultural production and 600 are small-scale entrepreneurs. The credit component will benefit a total of 5 000 families. Approximately 20% of the direct beneficiaries will be rural women and youth.

Loan amount:

SDR 13.9 million (approximately USD 18.9 million) on ordinary terms.

Total project costs are estimated at USD 30.9 million, of which USD 4.9 million will be provided by the borrower and USD 7.0 million by the beneficiaries.

Cooperating Institution:

The project will be directly supervised by IFAD.